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Is a Debt-Free Lifestyle Possible for You?

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Content was accurate at the time of publication.

A life free from debt requires careful planning, a lot of work and even a little luck. Depending on your financial situation, a debt-free lifestyle may not be a goal that’s easily attainable. Here’s what it takes to live debt-free.

What is a debt-free lifestyle?

Living debt-free means not having any outstanding debts in your name. That includes everything from credit cards to your mortgage.

Having zero debt comes with many perks. Imagine a life where other than your basic housing and food expenses, you have just a few other bills. Your stress would likely decrease and you could travel more or give more money to charity. And, with a solid plan in place, you’d have money left over to save for retirement and invest in your family’s future.

But having zero debt doesn’t happen overnight at least not for most people. Working toward that kind of financial freedom takes a lot of sacrifice to not only eliminate existing debt but also avoid new debt. It also takes having the money to make that kind of lifestyle work.

What it takes to live a debt-free lifestyle

Cash flow and savings to fall back on

Becoming and remaining debt-free generally requires you to already be in a solid financial position. Having cash leftover after paying your bills means you can not only get ahead on debt payments but also save for emergencies and other costs that would otherwise cause you to take out new debt. The ability to weather an emergency vet visit without relying on credit card debt, for example, allows you to avoid high interest charges and having to make extra payments on that debt until it is repaid.

If you’re struggling to make minimum payments on debt, a debt-free lifestyle may not be possible for you. And that’s OK. If it’s a long-term goal for you, you may first work toward increasing your income so you can start saving money or making additional payments on your current debt. You may even decide that a debt-free lifestyle means having no debt except for your mortgage. That could be a more attainable goal.

Tracking every dollar earned and spent

Those who embrace debt-free living make a habit of exercising financial self-control. Instead of just spending money whenever a desire or need arises, they follow a monthly budget and track the funds that flow into and out of their bank accounts. Budgeting and tracking are two powerful tools that can help make becoming debt-free and staying that way a reality.

Prioritizing savings and sacrificing luxuries

People who embrace debt-free living have clear priorities about how to spend their money. Over time, they’re quick to differentiate needs from wants. They resist impulse buying and consider long-term value when they make small and big purchases.

But living debt-free also means giving up certain luxuries in the short term. To avoid a mortgage, for example, you might choose to live in a paid-off RV while you save your money. That may not be the ideal living situation for everyone.


Becoming debt-free and staying that way are two different goals. People who lead a debt-free lifestyle aren’t afraid to ask themselves hard questions. It’s not uncommon for a person to live without debt for a few months, but then revert to building credit card debt or take out a home equity loan. A cyclical return to debt may indicate that the habit of paying down what you owe is there but the self-reflection that keeps you out of debt isn’t.

Start by creating a sustainable emergency fund and sinking fund, so you don’t have to rely on credit when things get tight. Or, you may have to assess your own emotions as they rel;ate to spending. Do you have difficulty waiting to make a big purchase because you feel like you’ve earned it? Assessing what happens right before that cycle restarts can offer a lot of insight into what it will take to acheive a debt-free lifestyle.

A reward system

Don’t be afraid to reward yourself as you take on all the challenges that come with a debt-free lifestyle. Small perks along the way will keep your spirits up and inject positive reinforcement into the process.

Maintaining the change can be very hard. Whether you take a staycation when you hit a big milestone or cook yourself something fancy, it’s important to reward yourself so debt freedom doesn’t feel like a burden.

5 tips for adopting a debt-free lifestyle

  • Create a budget. It’s crucial to create a written plan to help you prioritize how you will use the money you earn, especially if you’re on a debt-free journey. Your budget doesn’t need to be complicated. You can use a simple sheet of paper, a detailed spreadsheet or even a budgeting app to get the job done.
  • Achieve positive cash flow. There are two ways to accomplish this goal – raise your income or reduce your expenses. Doing so gives you a better chance of earning more than you spend, which is “positive cash flow”. Achieving a surplus each month gives you more choices and money to work with as you cultivate a debt-free lifestyle.
  • Pay attention to your credit. A good credit score can sometimes help you get out of debt faster. With excellent credit, you might qualify for debt consolidation at a lower interest rate so that more of your payments go toward your principal balance and less goes toward interest.
  • Make extra debt payments. Once you free up extra funds, either through spending cuts or additional income, Ashburn advises using the money wisely. One of the best places you can apply your extra dollars is toward debt.
  • Create an emergency fund. It may seem counterproductive to save more money while you’re trying to pay down debt. However, an emergency fund can help you avoid debt when unexpected expenses arise. Reaching your goal of zero debt isn’t just about paying off your debt as fast as you can; it’s about planning for the future, too.