It’s a sorry state of affairs when personal finances punctuated by large-scale debt are the norm instead of the exception in our society. It may not be your fault, however.

The average college students graduates with nearly $30,000 in debt. Buy your first car and that tacks on another $20,000. Add in the average household credit card debt and you’re looking at around $60,000 total in debt. That’s a lot.

This debt-load may end up costing you your dream house. Lenders want buyers who have excellent credit scores. A large amount of debt can reduce your credit score. A large debt-to-income ratio can also be quite damaging.

Living a debt-free lifestyle is possible and there’s no better time to start than now.

1. Create a budget.  Reveal your true spending habits by tracking your money for a month. How much is spent on food, bills, dining out, travel, etc? Many households are surprised to find how much miscellaneous spending is taking place. 
2. Reduce spending.  You know where you can make cuts. These cuts might hurt a bit at first, but stick to your guns and funnel that extra money into savings and paying off existing debt. 
3. Eat at home.  The average household in the U.S. spends $100-$200 a month on dining at restaurants. That translates to as much as $2,400 a year. Funnel this savings into paying off existing-debt and building up a savings fund so debt scenarios don’t happen again. 
4. Decipher wants versus needs.  With readily available credit it’s too easy to buy items we can’t really afford that we don’t need. A need should be defined as something related to health, food, or a roof over your head. Wants are things like new clothes, the latest DVD release, or that big blow out anniversary vacation. 
5. No Impulsive Shopping.  “It’s 80% off. Sale Ends Today” You’re still paying 20% on an item you never considered buying. Step back and ask yourself, “Do I need this item. Will I be sorry next week if I didn’t buy it.” Impulse buys can be big or small. The rule applies across the board. Reduce impulsive shopping by working from a list. 
6. Refinance for lower monthly payments.  Interest rates are at historic lows. It may be well worth the cost of refinancing in order to save on monthly payments. For large loans, such as home mortgages, the saving may be hundreds of dollars a month. 
7. Make more than the minimum payment.  Don’t fall victim to debt’s worst trap: paying only the minimum. Let’s say you have $50,000 in credit card debt (yikes!). It would take 42 years of making minimum payments to pay off this debt and you will have paid way over $50,000 in interest by the time you’re done. This means you should make payments directly towards the principal of loans. 
8. Make payments directly to the principal of loans. You may have to call your lender and let them know specifically that you’re paying down principal. Otherwise the extra money you lay down may actually just go towards monthly payments.

Getting out of debt is a noble and worthy cause. True freedom comes when your monthly expenses are next to zero. You can then make big decisions on what job to have, where to live, and how to spend your hard earned cash. Let the real living begin!