How to Plan to Become Debt Free – Esther Mwale

Esther Mwale
How to Plan to Become Debt Free Esther Mwale

How to Plan to Become Debt Free

One day I found myself $1500 in debt! I wondered “how did I get myself into this?” I then chose to ignore it and pretend all is well financially. I was hoping that one day, it will disappear, or that someone will be graceful enough to offer me a lot of cash. Which never happened. Though I ignored it, it still nudged me in the background. I wanted it gone but was not willing to spend any penny on it. When I realized the debt was increasing, I knew I had to do something.

Are you in that position too? It might be much more than $1500 which keeps you awake at night. Though you are afraid to open its accounts, you would like it gone for good. If you are in that position, this article is for you. Also, for those who want some financial management advice, take time to consider what is written here. I will share with you a plan I made to pay off my debt and to take control of my finances. This is what Gail Vaz-Oxlade uses to help couples get rid of their debt in her show “Till Debt Do Us Part”. I have applied it, it is working for me and I am 100% sure that if you commit and follow the plan, you will be on your way to financial freedom too!

Having debt is something that no one wants. Unfortunately, so many of us have accepted the fact that it will remain part of our lives. The good news is that no matter how big the debt is, there is a light at the end of the tunnel if you come up with a good plan. If you still do not want to get rid of the debt, remember how it bothers you every day. Studies show that having money problems is the number one cause of relationship breakups in the world. Do you want to add to that statistic? If you are tired with your debt and want a change, take this planning process serious. You might not be debt free in a month or a year, but five years from now you can be debt free.

Disclaimer: This is not a plan that will be easy. It will require a lot of work on your part. If you are not ready to sweat to make it work, then this is not for you. You will be in debt forever.

  1. Find Out How much you Owe

When I was in debt, I feared opening my accounts because I did not want to see the big debt I owed staring at my face. For some reason I thought not knowing how much I owed will take away the stress. You might be like me or you might know yourselves. Either way list down all the people you owe money to, be it $20 or $50,000. Write down their interests too. How much is it in total?

Work on reducing interests

One way of reducing how much you owe is by asking the credit card companies to reduce the interests. You might think you have a low interest, but just getting on the phone and explaining how hard it has been for you to pay back and that you are making a plan on how to do it, you will be surprised on how much they can lower it. If they are a bit hard, bargain with them.

Some also people consolidate all their debts into one account to be paid on one interest. I am not sure how that is done, I will advise that you see a financial advisor or just talk to your bank to see if they have such options. Lowered interests are one step to becoming debt free.

What are monthly variable expenses?

You are in debt because you are spending over budget. So, get your bank statements out and list all items you buy every month and how much you pay for. I advise that you look at more than 2 months and find the averages. After that, add the total expenses. Are your monthly expenses within your monthly income? It is also good here that you know exactly what your monthly income is because the next steps with largely depend on it.


Most people do not budget where to spend their money. As a result, they spend too much on unnecessary things forgetting what they need to pay, like paying off debt. There is a recommended way to divide up your income to ease the budgeting. 10% of your income should go into savings (retirement, emergencies and children’s education fund), then 35% should cover all housing bills, 15% should go to paying off debt, 25% should cover life expenses like food, clothing, entertainment and gifts. Finally, 15% should go to transportation. The other mistake that people make is paying too much on debt forgetting their monthly expenses. As a result, they go back to the credit cards and take out the money which brings them back to zero. So, while keeping your fixed expenses intact, budget your variable expenses to stay within the 25% of your income.

Boost Your Budget

In some cases, you will find that you still need some money to make sure you do go overbudget; that is where budget boosting is needed. Find what else you can do to bring in an extra income. You might take extra shifts at work, sell off some of house equipment, get a part-time job or change jobs to a higher paying one. Anything that can bring in money. Be creative! Sometimes, money making opportunities are right at our doorstep, we do not just utilize them.

Learn to live on a cash budget

After trimming your variable expenses and planning for what you will spend on, consider getting rid of credit cards entirely. Then, on a weekly basis, withdraw money from your bank (not other banks ATMs to prevent fees) and then divide it according to what you are spending on. Then, keep track of every money taken out by writing it down in a binder.

Be Disciplined

This is a tough list to go through. But to get rid of debt, you do not have any other choice than to put in the time and effort.

I wish you all the best on the journey. Shoot me any questions you have.

Thanks for reading!

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