How To Become Debt-Free With Simple Planning
May 13, 2025
Debt is common. It affects many parts of your life and can overwhelm you. In 2024, the average Indiana resident owed about $73,995 in consumer debt and $133,314 in mortgage debt.[1]
No matter how much debt you have, you can still learn how to live debt-free. Becoming debt-free helps you feel less stressed, save more money, and reach your financial goals quicker.
Here, learn exactly how to become debt-free. Explore proven methods, easy-to-follow tips, and ways to eliminate debt faster.
Is It Possible To Become Debt-Free?
You might wonder if becoming debt-free is realistic, especially if you owe a lot. The good news is, yes, it is possible. Many people eliminate debt every day, even if their debt feels unfeasible to tackle at first.
With clear steps and patience, you can pay off your debt and build savings. It takes discipline and planning, but it is achievable.
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Methods To Get Rid of Debt
There are several ways to eliminate debt. Two popular methods are the debt snowball and the debt avalanche. Both work well, but they use different approaches.
Debt Snowball
The debt snowball method helps you eliminate debt by focusing on paying off your smallest debts first.
Here’s how it works:
List all your debts from smallest to largest.
Pay the minimum payment on each debt, but put extra money toward the smallest debt.
Once the smallest debt is paid off, use that payment to tackle the next smallest debt.
This method works well because it helps you feel motivated. With proper implementation, you may see progress quickly, giving you the confidence to keep going.
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Debt Avalanche
The debt avalanche is another method for getting out of debt, but it focuses on the debts with the highest interest rates first.
Here’s how it works:
List your debts from the highest interest rate to the lowest.
Pay the minimum payment on all debts, but put extra money toward the debt with the highest interest rate.
After paying off that debt, move to the next highest interest rate.
This method may help you save more money over time. Because you tackle high-interest debt first, you may pay less interest overall. To see how quickly you can pay off your debts, use our easy-to-follow Loan Balance Calculator.
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6 Practical Tips To Get Out of Debt
Aside from using methods like the debt snowball or avalanche, here are other practical tips to help you eliminate debt even faster.
1. Make a Realistic Budget
A clear budget helps you see exactly where your money goes each month. Write down how much money you earn and what you spend. Check if you're spending too much on extras like snacks, games, or going out.
When you budget, you’ll have a plan to use the money you have to pay off your debt. Plus, making a budget helps you build good money habits for the future.
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2. Cut Unnecessary Expenses
Look carefully at your monthly spending. Small changes can make a big difference. Try eating at home more instead of restaurants. Cancel subscriptions you don’t really use, like extra streaming services or forgotten gym memberships.
It might feel tough at first, but every dollar you save can go directly toward paying off your debt faster.
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3. Create an Emergency Fund
Having an emergency fund of $500 to $1,000 may help if something unexpected happens. Consider an interest-earning Savings Account to start your fund easily.
With savings set aside, surprise expenses like car repairs or doctor visits are less likely to put you deeper into debt. This can help you stay on track.
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4. Increase Your Income
Finding ways to earn extra money helps you pay down debt faster. You could get a side job, sell things you no longer need, or do chores for neighbors. Every dollar you earn can help pay off debt quicker.
Think about your talents or hobbies. Babysitting, mowing lawns, or selling crafts are all good ideas. You might also consider keeping money in Certificates of Deposit or a Money Market Account to grow it safely.
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5. Negotiate Lower Interest Rates
Call the companies you owe money to and ask them for lower interest rates. When your interest rate goes down, your monthly payments become smaller. Lower rates can help you pay off debt faster.
Many lenders will agree to lower rates if you show you're trying hard to pay off what you owe. This saves money in the long run.
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6. Avoid Taking on New Debt
While paying off your current debt, don’t borrow more money. Try using cash or your debit card instead of credit cards. The less new debt you add, the faster you’ll be debt-free.
Plan ahead if you need to buy something big. Saving money to buy things with cash helps you avoid needing loans or credit cards.
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Start Paying Down Debt With Centier by Your Side
Becoming debt-free is achievable with the right approach. Whether you prefer the debt snowball for quick wins or the debt avalanche to save on interest, taking steps now will help you eliminate debt and improve your financial health.
Remember, each small step gets you closer to becoming debt-free. Start today, stay focused, and enjoy the financial freedom that comes when you no longer owe money.
To learn more about saving and smart money moves to help you get debt-free faster, visit our Savings Resources or open an account today.
Source:
[1] https://www.debt.org/faqs/americans-in-debt/consumer-indiana/
