How Do You Live a Debt Free Life?

Why do people wind up in big debt? You probably weren’t born into debt like was common back in the feudal age hundreds of years ago, so why does it seem so many wind in debt that way today?

It's possible to live a debt free life, but to do so, you need to prepare and to have the right attitude. Read on to learn how to plan to avoid debt.

These days when someone has a money problem, like when and if their car dies or they need to replace something like an air conditioning system for their home or pay off a big shopping spree that they impulsively made on their credit cards, they don’t have the money to pay for it all when the bill comes in. They really need the car fixed to get to work or the air conditioning fixed in the middle of a sweltering summer, so they end up having to purchase it on credit. Ironically sometimes that debt lasts longer than the item that they purchased! And then there is student debt, and we all have either heard about that disaster or worse, experienced it. So that raises the question, can anyone actually live a debt free life?

Debt Free? Are You Kidding Me?

One of the ways to avoid having debt sprung on you without an alternative is—wait for it—to plan ahead!

Compare someone who knows they’ll want or need a new car in the next year or two and carefully plans and puts money aside each month for this future purchase to someone who just wakes up in the morning to find his car is shot and now he has to repair or replace it. Which one is fully prepared for that situation? Planning ahead for financial needs is a fundamental big step in chasing after a debt free life and the avoidance of debt!

Take Holiday Shopping, For Example

It really makes no sense. The holidays, like Christmas, come at the same time each year, so how hard should it be to actually plan ahead for it, right?

Just put a little money aside each week or month leading up to December and when it comes time to do your Christmas shopping, you’ll be fully armed and ready. Seems pretty simple, doesn’t it? Unfortunately, with the dependence on credit cards these days, the plan most people have is to whip out the cards at the sales desk during holiday shopping and smugly trot home with their holiday bundles—and then worry about their debt and bills later, or perhaps never.

We all need to think about and plan ahead for the future and look at our bigger purchases like property, vacations, gifts, and birthdays, and not to let any of those “surprise” us. It won’t aide you in avoiding a debt free life if you skip that kind of plan. When you set up the targets to ensure your spending is under control and you can meet your financial wants without relying on debt, you can actually see a debt free life on the horizon.

Emergencies Will Happen

No one has a crystal ball to know when a financial emergency is going to happen, but we do know this: It will happen and you can’t factor in such expenses into your budget specifically or exactly. But, you can budget a generic emergency fund every month to build up your protection from it. It’s just another line item in your budget plan that needs to be budgeted.

Personally, I recommend an easily-accessible fund equivalent to around three months of your expenses, but even larger than that if you can. That way, even if you lose your job you wouldn’t be in crisis. And even when a surprise purchase pops up, it means you won’t have to access other funds to cover it by having to worry about using a credit card or a loan or worse yet, retirement plans.

Take Pleasure in Your Self-Denial?

Most of us seem to have unrealistic expectations. By that I mean that we expect a new car, a nice house, and all of those “trimmings” no matter what our finances look like. I blame TV a lot for that because all we see are “average” families living very “un-average” lifestyles and we think we deserve that same thing. Heck, even the kids expect $500 iPads and expensive game consoles and all that luxury costs money, and it has to come from somewhere. Maybe I’ll espouse on my “TV” theory one day, but that’s a whole other story on my philosophy of life. I’ll save that for another day and spare you that right now.

Denial Is Not Just a River in Egypt

Denial…it may be one of the best ways to becoming a success in living a debt free life. It involves changing your expectations.

First, try to adopt a mentality where money in the bank is worth more to you than money you spend. Take pride in managing to avoid unnecessary spending and building up your savings. Every time your savings account goes up, you should get more excited than when you buy some new shoes or a shiny new laptop or cell phone that you don’t really need. It’s so important to adjust your attitudes.

Learn to Appreciate What You Do Have

Boy, this one seems to escape so many of us. Take a look around you and consider all the things you already have. Look at your home and all the belongings it contains. Look at the furniture, the TV, the computer you’re using right now. The mobile phone you have and the kitchen you have full of stuff. And, consider all the non-physical things you have.

You have heat and light when you want it. You have friends and family. Hopefully, you also have your health. You have passions, interests, and things to look forward to—every day. There are millions of people who would give anything to have what you have right now, and live the life you live right now. Let all that sink in for a few minutes.

When you start to appreciate what you already have, upgrading or adding to your lot suddenly seems much less important. A huge step in living a debt free life and perhaps the most important of all is in learning to truly value what you already have.

Final Thoughts

Your happiness doesn’t have to equal the amount you spend with your money; focus on valuing what you have and you’ll find far less temptation to spend money and get into debt.

Some debt will probably always be there and it probably can’t be totally avoided. If you buy a home, you will almost certainly need a mortgage. If you attend college, you probably will have to borrow and repay some kind of loan. But those things can be planned and dealt with in advance, and you being moderate and controlling your expectations can and will really help you deal with them. So try to start seeing your life with fresh wide open eyes.

Look at all the good you have around you and appreciate it. Get out that box of old DVD’s and re-watch them; they’re just sitting on a shelf collecting dust. Try to re-read some of those old books you held onto packed away in your basement. Arrange for some quality time with your friends and relatives or take a long walk along the beach and play with your kids. You have an awful lot to pay attention to that costs you little or nothing except your attention.

For more ways to live a debt free lifestyle, check out this round-up at

Are you debt free? Are you even close? Is that your goal and will you really achieve it? How are trying to accomplish it and where are you right now on the path to it?


  1. Jen Pattison

    Great post Gary – it does take a lot for some people to let go of peer pressure and giving in to wanting a load of stuff that they don’t need. The problem I had for years was thinking that if I had £1000 of credit on my credit card, I had £1000 to spend, as if it were money in the bank – it’s not! It’s DEBT!

    One thing that you realise when you break free of consumerism and get rid of all your debts is that you notice that the dark, heavy weight on your soul has gone. When you live with that for years, you don’t realise how enslaved you are to it until it’s no longer there.

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