How to Build a Debt-Free Life

Building a debt-free life has numerous advantages. People with fewer debts may enjoy more disposable income to build their personal savings. The less debt a consumer carries, the higher his FICO credit score. Excessive debt doesn't mean you're enslaved to a life of paying creditors. Specific techniques can help eliminate debt.

Instructions

1

Buy with cash. Don't cancel credit cards, but pretend you don't own one, and use cash to avoid accumulating extra credit card debt. The less you spend with credit, the quicker you can eliminate balances and live debt-free.

2

Pay more toward debt. Paying a little more toward your debt balance each month can make a difference and help reduce principal quicker. Send two or three times the minimum payment when paying credit cards, and if you have an installment loan, consider rounding up to pay extra each month. For example, if your car payment is $350, consider rounding up and paying $400 each month.

3

Earn extra money to become debt-free. Forfeit your free time and apply for a part-time job to help get rid of your debt quicker. This short-term sacrifice can help provide the funds necessary to become debt-free. Earn an additional $75 to $100 a week, and you will increase monthly earnings by approximately $300 to $400 a month.

4

Renegotiate your interest rate. Take charge of your debt and credit, and ask your card companies for a better rate. Some companies quickly oblige and offer on-the-spot reductions. If a rate reduction is not possible, start searching for a low-rate card and transfer your balance, although be aware of the fees required to make those transfers.

5

Speed up debt elimination with biweekly payments. Paying credit cards, mortgages, auto loans and other installment loans every two weeks rather than monthly can save money on interest and help pay off the principal quicker. A quicker payoff helps you build a debt-free life sooner. Pay half of your payments every two weeks. Discuss plans to make biweekly payments with your creditors and lenders first. Some companies do not accept this type of payment schedule.