For some reason, Americans have been taught to view debt as a tool. We max our credit cards on “life-changing” purchases, and we take on mountains of student loan debt to get a degree. What we don’t consider is how long it truly takes to pay back that debt, and how it can cripple our ability to save for retirement, start our dream business, and put money toward our investments and emergency funds.

It’s hard to understate how financially liberating it can be to live a debt-free lifestyle, so with that in mind, here are five easy steps to get you started.

Step 1: Pay Off Your Balances

It might seem obvious, but the first step toward living a debt-free lifestyle is to pay off your existing debt. When you sit down at your desk each month to pay your bills, make the decision to pay off your credit card debt instead of letting it roll over to the following month.

If you have accumulated a large amount of credit card debt over time, think about how much you can reasonably spend each month to chip away at it. If your goal is truly to live debt-free, commit as much as you feasibly can towards your credit card debt payoff each month. Eventually, you will work that number down to $0.

Step 2: Establish a Budget

If you don’t want to take on additional debt, you need to establish spending habits that allow you to keep your spending to a minimum. One of the best ways to do this is by establishing a budget.

The Elizabeth Warren Budget: There are many different budgets out there, but one of the most effective is the 50/30/20 budget, designed by presidential candidate Elizabeth Warren. Using this strategy, 50% of your income is dedicated to your “needs,” such as rent and bills. 30% is dedicated to your “wants,” or things that you enjoy but aren’t necessary, like Netflix (sorry). 20% is dedicated to saving and debt repayment, which could allow you to put substantial money toward your IRS payment plan or your student loan debt.


Step 3: Downgrade Your House or Apartment

Most people prefer to live outside or right on the cusp of their means. When they get a pay raise at work, they will immediately start looking for a more expensive apartment or home to buy. However, in the process of upgrading their home, most people end up taking on a large amount of debt.

If they choose to move in the other direction and live below their means, they would be able to save additional money, exactly what’s needed to live without debt.

Step 4: Eliminate Unnecessary Expenses

While living in a home that you can easily afford is a great way to stave off debt and save money, many of your everyday choices can also help you eliminate the chance of falling back into debt.

There are countless unnecessary expenditures that the vast majority of us make every day. For example, ask yourself how many subscription services you are currently signed up for. If you are like the majority of Americans, you can cancel several and find that your life is hardly affected. Other strategies, like shopping from thrift stores instead of buying brand new clothes, is another great way to save money.

Step 5: Choose the Right Friend Group

You might not have thought much about it before, but our friends have a huge impact on our spending habits. If the people in your friend group are not also trying to live a debt-free lifestyle, they may have no problem splurging on the weekend, constantly going out for drinks and dinners, and spending money that could otherwise be saved. If you are constantly hanging out with them, it may be difficult for you to avoid spending money.

We’re not saying that you need to cut people off, but we do recommend that you pick and choose when it is wise to hang out. If you know that everyone is planning to spend a lot of money, consider staying in for the evening instead. Or, call someone else to spend some good, clean, free fun with you.

Final Thoughts on Living Debt-Free

If you’re losing sleep over the amount of debt you have to repay, you might be overdue for a debt-free lifestyle. Once you take steps to eliminate your existing debt, it’s relatively easy to keep additional debt away by following the steps listed above. Remember to take it one day at a time, and to forgive yourself if you make a debt-related mistake. No one is perfect, but with some self-discipline, living debt-free is totally possible. After all, it’s a lifestyle.