Debt Is Your Worst Enemy: 7 Ways To Defeat it and Become Debt Free

TLDR: In this post, you will find 7 practical tips that will help you to become debt free and improve your overall financial health

I wrote this post at first as an answer on Quora where someone asked the below question.

I’m 26 years old and not financially stable. I don’t know where to take my life to get better financially. What should I do?

I could relate because I asked myself that question, not in my 20s, but in my mid-30s. But as they say, it’s better late than never.

7 Tips and Tricks to Help You Become Debt Free

When I scrolled through the answers, I was surprised to see that there was hardly any practical advice. 

Most answers were pseudo motivational stuff like have faith and work hard.

So, I decided to share the lessons I learned from my journey of broke to debt-free.

I’ll be happy if it helps even one person.

Like a lot of people from my generation, I grew up without any financial literacy. 

Though I always had a decent job and earned a comfortable salary I hardly saved anything. It was well beyond my 30s when I woke up to the reality that I am almost broke.

I still remember the night when I was walking, and talking to a friend on the phone in a bid to recover some money she owed me. I am bad at asking for my money back. But on that day I was desperate.

I just shifted to a new city to take up a new job and yet to receive a settlement from my last company. I was staying in company-provided accommodation for the first few days and needed to find a place urgently.

That day when I looked back, I was amazed that after years of a decent professional career I didn’t have money for my necessities. 

And that moment I decided to do something about it.

It took me about two years for me to go from almost broke to becoming debt-free and achieve a balanced financial state.

I continued with those initial lessons learned and over the years they have paid off.

Today, I am debt-free except for a home loan. I have two credit cards which I use only for digital purchases, and I pay it off in full every month. Have a near-perfect credit score and have enough liquidity to survive for a year if things come to that.

Building financial health is a long term process. It’s a process of taking small steps towards a bigger goal.

In this post, I am listing 7 such practical steps that have helped me to go from broke to debt-free.

7 Tips and Tricks to Help You Become Debt Free

#1 To become debt-free, start with an honest audit


You must know the exact nature of your financial health.

Most people that are in debt don’t even know how much money they owe.

You need to do a hard audit of your loans, credit card debts, EMI, etc. and arrive at a number.

Once you have that number put it everywhere.

Print it in large fonts and keep it in your wallet. Put it on your fridge door. Display it on your desk. Put it on a sticky note on your computer.

This single action will make you rethink every time you feel like spending on something unnecessary and that’s the first step in becoming debt-free.

#2 To handle your debt, make a repayment plan


Once you understand your debt, plan for repayment.

As a rule of thumb, you should focus on paying all your credit cards in full. With up to 36% interest rates, credit cards are money-sucking black holes.

The only way to get rid of credit cards is to pay in full. When you are at it, use an app like Cred, to get some extra benefits out of those payments.

Next, pay any personal loans you might have.

Education loans and home loans are long term and can be viewed as investments.

#3 To improve your financial health, save like a maniac


Anyone who shops in a supermarket will relate to this experience.  

In your mind, you are picking up low-cost items, but at the payment-counter, you end up getting a bill that runs into thousands.

The same applies to your financial life. Small expenses total to big amounts.

So, try to control those small expenses.

For example, can you do your chores on your own, rather than hiring a maid? Even if you save 2K per month it calculates to 24K in a year (and you can learn stuff listening to Audiobooks while doing your chores).

Can you make your own coffee rather than going to a cafe?

Is it possible to cook rather than eating out?

Can you take the bus rather than Uber?

I know it sounds petty.

But remember, we are trying to get into a new money-saving mindset.

And small things add up to big things.

#4 To be more aware of your debt, use the rounding off hack


This is a neat trick to increase awareness about financial health.

At the end of each week look at your bank account and transfer the change to another account. Make the amount in your primary account a rounded number.

Say you have 9,856 in your primary account. Transfer 156 to another account. Now you have 9,700 in your main account.

This action will help you remember exactly how much money left in your account and get a grip on your spending habits.

#5 To become debt-free, open a recurring account


Open a recurring account for all your big buys. Every month, transfer some money towards that buying goal.

Say you want to buy a new phone. Save money for that buy until you can buy it in cash (or at least 50% cash).

Whenever possible use cash or a debit card to buy things.

Escape the EMI trap.

#6 To handle your debt well, be part of like-minded communities


We buy many unnecessary things because of peer pressure.

Change your peers.

Be a part of communities such as F.I.R.E ((Financial Independence, Retire Early).

Read and watch videos on minimalism.

Follow people like  Matt D’Avella and Leo Babauta.

If your social media feed is full of content that supports a frugal lifestyle, it’s much easier to avoid the temptation of splurging on stuff.

Read books about money.

I’ll recommend two books as must-reads. I Will Teach You to be Rich by Ramit Sethi and Rich Dad Poor Dad by Robert Kawasaki.

#7 To decrease your debt, try to increase your income


As Ramit Sethi says, cutting back is not the only option. You can also increase your income.

It’s not an easy option, I agree.

But can you find a higher paying job than your current one?

Can you do some freelancing work?

Personally, I dislike doing gig work. But during the initial phase, I took up some freelance work to increase my earnings.

So, look out for opportunities to increase your current income and use that extra money to pay some of your debts.

Once you have some control over your finances, start to invest. 

The best way to go is to automate your investments using a service like Scripbox.

You can start with a small amount. 

But what matters is establishing the habit of investing.


Building financial health and becoming debt-free is similar to building physical health.

If you want to get fit you need to commit to exercising regularly, eating healthy.

You also need to have the patience for results to show.

Similarly, to become debt free commit to spending less, saving more, and apply the 7 steps I outlined in this post.

 I guarantee in two years you will be in a much better place.

7 Tips and Tricks to Help You Become Debt Free

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Image credit: @dgtportraits

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