Tips to Be Debt Free

Write down every penny you take in and every penny you spend. Chart your income on one side of a piece of paper, your expenditures on the other. All of them. Indicate how you pay for your expenses -- cash, check, debit card or credit card. Scrutinize your fixed expenses, such as cable or satellite TV, landline and mobile phone accounts and utilities. There's bound to be some savings potential right there. Evaluate your entertainment and other discretionary spending. Don't rob yourself of much-needed fun, but look for areas where you can scale back or cut corners. Redirect any savings toward accelerated debt payments. And if you're paying for any items on your list with credit cards -- and running a balance -- splash some cold water on your face, look in the mirror and check yourself.

If you make $50,000 a year, you probably should not be eating dinner at your city's version of New York's Tavern on the Green once a week. if you take in six figures, you probably can, but do you really need to? "Slum it" at a less expensive restaurant for a year and use the savings to achieve your debt-free goal. It's about more than living within your means; it's about making smart choices to facilitate the paying down of debt.

Your credit card company, student loan firm or auto loan shark licks its proverbial chops when you pay the minimum amount due on your accounts with them. Paying more than the minimum makes you debt-free faster. Consider a $15,000 credit card balance with a 19.99 percent interest rate and a minimum payment of $300. You're looking at 108 months (that's nine years!) to pay off the balance. Double the monthly payment to $600 and it will take you just 33 months (under 3 years) to bring the balance to zero.

Don't go all willy-nilly into a plan to pay down debt. There are a million strategies out there. Among the most popular -- several variations on the snowball method. Financial expert and radio host Dave Ramsey suggests putting all of your resources toward your smallest balance first and just paying the minimum on your other cards. When you pay off the smallest balance, repeat with the next smallest. Ramsey contends that by seeing results faster, you have the intestinal fortitude to stay the debt-free course. You can also snowball by tackling high-interest-rate cards first.

Duh! It's tough to live without a credit card. They make it easier to rent a car or check-in at a hotel. No doubt. You don't, however, need to use your credit card for everyday purposes. Granted -- if you're responsible it's good to use your card to help improve your credit score or rack up frequent flier miles, but only if you are the type of person who is able to pay off the entire balance each month. If you've struggled with credit card debt in the past, you might not be. Same goes for things like auto loans. If you can buy used or at least live with a less expensive vehicle -- or heck, ride a bike, walk or take public transit to get around -- by all means, do it.