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New Year Finances

10 Tips for Becoming Debt Free

By Deborah Nayrocker
Guest Writer

CBN.comThe current economic state is causing many families to confront their inadequate money habits. A myriad of signs indicates that this time of serious recession may or may not get better in coming months.

When it comes to managing personal finances, families find they have difficulty keeping their household expenses in check and increasingly spend more than they earn. According to, in the past 15 years income for the median American household grew only 11 percent, compared to debt outstanding, which has jumped by 80 percent.

Many consumers and businesses have been hit with the realization of how close they have lived to the financial edge. They’ve charged for unaffordable stuff. They’ve lived from paycheck to paycheck. The party appears to be over.

It’s time to become fiscally smart.

To avoid perpetually wallowing in debt, it’s time to take off the rosy glasses. It’s time to realistically assess the circumstances, put the financial situation into perspective, and act responsibly.

By following these tips, you can improve your money management skills and be more prepared for what the future may bring.

Do track and analyze spending. If you don’t know where all your hard-earned money goes, it is difficult to know how to begin making necessary changes. Keep all the receipts for cash, debit, and credit card purchases. Take the time to review your spending patterns at the end of the month.

Do develop a spending plan. For outgo to be less than income, weigh true needs vs. wants, and spend accordingly. Prioritize and justify your spending. Make wiser spending decisions right away. Be sure to continue the new and improved spending habits for the long-term.

Do leave home without credit cards. Studies show that shoppers spend 33-34 percent more when making purchases with credit cards instead of cash.

Do pay off outstanding debts. Tackle these debts by prioritizing them. What debts have the highest rates? How many payments are left? Focus efforts on paying off one debt ahead of schedule, and then continue on to the next one.

Do save for a better future. The average American saves less than a dollar of every $100 earned. Find workable ways to begin saving now. It won’t be any easier to save tomorrow. Since the federal government is not fiscally responsible, you can’t depend on Social Security as known today to be around later. Recent figures show that as 78 million baby boomers head to retirement, they have the fastest growing debt problem. Experts predict the numbers to rise as the cost of living increases and retirement funds fall short.

Don’t spend impulsively. It’s the discretionary expenses that often get consumers into financial trouble. These include entertainment, recreation, vacations, discretionary clothing, and other incidentals. When you cut these expenses, there is more money left to pay down debt and to save.

Don’t create any new or unnecessary debt. Making minimum payments and adding more debt gets you nowhere. Resolve to wipe out debt.

Don’t charge anything on your credit card that can’t be paid off at the end of the month. This eliminates interest on purchases.

Don’t make financial promises you can’t keep. MoneySmart states that rising numbers of cardholders are defaulting. Moody’s Investor’s Service says there’s been a 48 percent increase from last year. The number of home foreclosures and auto repossessions is higher now than ever. The Wall Street Journal states that more than $7 billion of student loans are delinquent debt. The federal government will no longer be lenient with late student loans. It can seize a person’s Social Security benefits to collect delinquent payments. Remember that lenders expect borrowers and co-signers to keep their commitments to pay their loans and revolving debt.

Don’t forget to seek out a licensed credit counseling agency, if necessary. If you find your financial situation too overwhelming to handle alone, it is wise to get outside help. Look for a reputable agency that is a member of the National Foundation for Credit Counseling (NFCC).

Deborah NayrockerDeborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. Deborah is the award-winning author of The Art of Debt-Free Living: Living Large on Less Than You Earn and Living a Balanced Financial Life, a popular Bible study focusing on money management. She writes the column “My Money” for More To Life ( and has a Q&A finance column on  Her Web site is

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