Dear Deborah,

This year I’ve decided to get serious about getting out of debt. In the past I’ve tried to stick with this financial resolution, but it hasn’t been easy. Now I’m resolving to do better. What are some tangible ways I can make real progress to get out of debt? – Lara

As you’ve discovered, saying you’re cutting your debts sounds simple but can be difficult to achieve. Without some basic guidelines, it’s harder to follow through on this important goal. Attaining this goal is an important step to reach your financial independence.

Consumers can improve money management skills when they objectively evaluate their financial situation. This means reflecting on past money habits and mistakes and having plans in place to reduce the debt load.

Every dollar that doesn’t pay a debt allows you to have more financial freedom.

Here are eight do’s and don’ts for becoming debt-free:

1. DO track and analyze spending. If we don’t know for sure where all the hard-earned money is going, it is difficult to know where to make the necessary changes. Keep all the receipts for cash, debit, and credit card purchases. Take time to review spending patterns.

2. DO develop a spending plan. To have outgo equal income, consumers need to weigh their true needs vs. wants, and spend accordingly. Prioritize and justify the spending. Start by making spending changes for a month. Be sure to continue the new and improved spending habits for the long-term.

3. DO pay off outstanding debts. Tackle these debts by prioritizing them. What debts have the lowest balance? What ones have the highest rates? How many payments are left? Focus efforts on paying off one debt ahead of schedule, and then systematically continue on to the next one.

When borrowers do not pay what is due the lender, this creates hardship for lenders. They trusted in the word and integrity of the borrower to pay them back on time all the time. Psalm 37:21 states: “The wicked borrow and do not repay, but the righteous give generously; those the LORD blesses will inherit the land” (NIV).

4. DO save for a better future. The average American saves less than a dollar of every $100 earned. Find workable ways to begin saving today. It won’t be any easier to save tomorrow. 

5. DON’T spend impulsively. It’s the discretionary expenses that often get consumers into money  troubles. These include entertainment, recreation, vacations, discretionary clothing, and other incidentals. When we decrease these expenses, there is more money left over to pay down debt and to save.

Leave the credit cards at home. It’s easier to spend impulsively when depending on credit cards to finance one’s lifestyle. Studies consistently show that shoppers spend 34% more when they make purchases with credit cards instead of cash.

When grocery shopping, show up with a list. In Thomas Stanley’s book, The Millionaire Mind, he states that more than 67% of American grocery store shoppers are impulse buyers. They do not have a shopping plan. The longer they’re wandering around in the store, the more they spend.

How much can you cut from your weekly food expenses?

6. DON’T create any new or unnecessary debt. Making minimum payments and then adding more to our outstanding debt gets us nowhere. It’s as if we are rowing our boat forward, then the current takes us right back to where we started.

7. DON’T charge anything on the credit card that can’t be paid off at the end of the month. Make it a habit to pay the credit card bill in full every month, with no exceptions.

8. DON’T make financial promises that cannot be kept. MoneySmart stated that 30 million consumers are either past due or over the limit on their credit card accounts. Lenders big and small expect borrowers to keep their commitments to make payments on their loans.

By following these tips, you can position yourself for fewer money worries for years to come. When  paying off your debts, you’re sailing on the ship to financial freedom.

Copyright 2014. All rights reserved. Permission to reprint required.

Deborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. She is the award-winning author of The Art of Debt-Free Living and Living a Balanced Financial Life. Her website is www.ArtofDebt-FreeLiving.com.

Publication date: January 1, 2014