Three Quick Steps To Get Out of Debt

At present we are debt free. It's a great feeling to have no financial debts. In fact it's said that the first step to save is to get rid of our debts. We agree.

Debt-Free LifeYour lifestyle can siphon off cash faster than the rate at which you earn it. More so if you lead a fast life where you are conscious of status symbols, social image and can spare no time to manage your finances. Such a life puts one in a perennial race to update stuff to keep up with the latest trends. The result is debt, debt and more debt. Credit card debt, car loans, housing mortgage, student loan(s), insurance payments and more. Consequently you are weighed down by a mountain of debt which can suck fun out of life.

Experience has taught us that it's possible to escape the debt stranglehold. The answer is commitment. We were determined to get out of debt and we stayed on course till we were debt free. There were difficulties but we made no compromises and surged ahead. In the process we developed a simple strategy to a debt free life. We call it TCT - Track Compare Trim.


To keep a tab on the cash flow we recorded each and every expense (outflow) as well as income (inflow). We divided our cash outflow into three sections:
  • Fixed - Mortgage, Insurance Payments, Utilities, Phones & Internet, Loan Payments
  • Variable - Food, Car maintenance & Gas, Household, Medicines, Travel, Charity
  • Miscellaneous - Entertainment, Memberships, Hobbies, Gifts
When we started out, we used Excel sheets to track our cash flow. Now a days we use QuickBooks Pro.

However, it's not necessary to use a software to record cash flow, you can do so using an inexpensive paper notebook. We love small ruled moleskin notebooks and use them to record our daily expenses. But a software is definitely more powerful and empowers you with the capability to generate a lot of useful reports and views.


Once we started recording our cash flow, every week we added up our expenses and compared it with our weekly cash inflow. In the beginning we were shocked to see the huge difference between our cash outflow and inflow. Our expenses greatly outweighed our income. But since we started tracking and comparing the cash flow we could see where we were at the end of each week. Earlier we'd be clueless about where our money went!


The final and most difficult step towards becoming debt free was to trim our expenses. Since we had implemented features for tracking and comparing our cash flows we knew where our money was going. Now all we had to do was to eliminate unnecessary expenses and optimize the necessary ones. We figured ways to cut down expenses on dining, gas, and groceries. We sold old electronic gadgets, reused mailers, car pooled whenever possible, had haircuts at home, and tried many more frugal hacks. We constantly looked for new ways of optimizing our needs creatively and it led to hundreds of dollars in annual savings.

In the process of becoming debt free we didn't deprive ourselves of fun. All we did was to identify where the money was going (Track), analyze the inflow and outflow (Compare) and reduce our expenses by identifying our needs and eliminating our wants (Trim). We simply paid careful attention to how we were spending our hard earned dollars.

In short, we took one baby step at a time and slowly paid off our debt every month with great determination. Today we are debt free and it's a great feeling.

Debt Free LifeTCT has helped us to gear up towards FIRE (Financial Independence Retire Early). It really doesn't matter that we don't have some of the latest electronic gadgets, the trendiest car, a fancy home, and expensive clothes. In the long run, we felt we'd be happier if we had a worry free life replete with simple inexpensive pleasures rather than a mountain of unpaid debt. Being debt free is truly wonderful and we can vouch for it!

We are looking forward to hearing about your creative ways of debt reduction. Please feel free to leave a comment :).

Image Source(s): iStockPhoto

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