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Home / Debt / 3 Steps To Eliminating All Of Your Debt, Part 1: Prepare


DebtTalk about an ambitious title! Ambitious or not, I am going to deliver as advertized. What are these three magical steps, you wonder. Simple really: prepare, plan, execute. Sounds a whole lot like what my high school football and baseball coaches said. I think I used the same speech when I coached my son’s tee ball team. Now, within each step there are several things to do and walking through them is going to take three separate posts. To make it easier for you to navigate through each successive post, you will find a link to the next post at the end of each. So, on to the first step, prepare.

Preparing to pay off all of your debt is very critical. It is much like watching film of an upcoming opponent. The main difference is that you are the star player for the opposing team and you must get to know your every financial habit so that you can control it and prevent yourself from hurting you. Here is how you can do just that.


I have run out sports analogies, actually I got bored with them, so let’s just go straight from the hip here on out. You must track your spending. You will have to track everything from a pack of gum to a tank of gas. Include all of your monthly expenses as well. There are several ways to do tackle. You can try one of the hundreds of smartphone apps available, a software program, or an old fashioned piece of paper. Whatever way you choose, you will have to start by collecting all of the receipts and making sure everything is entered or written down at the end of each day. I used the paper method. To make it even easier to remember, I collected paper receipts in my wallet(hard to sit on a lumpy wallet) and wrote everything down after the supper dishes were done. I found that doing it at the same time every day helped turn it into a habit.

How Long

In order to lead into the next steps, you will need to track your spending for at least three months. I say at least three for one reason; the first month or two you may find yourself missing things or forgetting entire days. That month, or months, must be thrown out. What you need is three months of consistent data. Personally, I still track my spending on a daily basis. I have been doing so for about five years. I still catch myself wasting cash needlessly from time to time, albeit much less frequently than in the beginning.

Self Examination

Many have recommend self examination as a path toward enlightenment. Nothing could be truer if you are able to do an honest assessment. With personal finance, it can be hard to do an honest assessment as long as you are confused by wants and needs. What does this bit of philosophy have to do with getting out of debt? In order to get out of debt you will need more cash to attack it with. Where will that cash magically appear from? It is in already your spending records if you can take the wants/needs blinders off and find it. Let’s start with the larger ticket items first, then work our way down.

Look at your insurance needs. Are you over-insuring a car that is paid off and past its prime? Could you raise your deductible to $500 and save? Raising it to $1,000 will save even more, but can you realistically afford to drop a grand in the event of an accident?  Now, have a look at your smartphone. Do you need it at all? I have used the same slider for three years at a cost of $28 a month. Granted, I am on someone’s plan and do not have a data plan, but I do not need it. If you just cannot conceive of a world where you can not tweet or Facebook from your phone, look at your data plan. Cell carriers have released stats that show nearly 80 percent of customers pay for data plans that are larger than their needs. Heck, Jay over at recently posted about saving $700 per year by switching to a prepaid smartphone.  You could make triple your minimum credit card payment with the savings in this paragraph alone.

Other Savings

You can find other savings in your cable bill by bundling or eliminating your home phone. Do you rent a wireless router from your internet provider? Why? Companies charge an average of $15 a month to rent a wireless router. Depending on your needs, you can buy one for $30 to $90. Shop around for you utilities when possible. There so many aggregates around that many people have the ability to save on gas and electric, but throw the offers away because they do not realize what they are looking at. Let’s move outside the home now. Look at your records, what do you buy consistently. Is it coffee (getting cliché in personal finance blogs, isn’t it?), ordering food for delivery, etc. Try turning your ”item” into a treat. If you have the pizza guy on speed dial, make his visit a Saturday night affair. If you have a gym membership that you do not use, try actually going. That way you are not wasting the money and helping yourself avoid doctor visits by getting healthier. Eliminate the membership if you can not find the motivation to visit at least twice a week.

As you can see, self examination will lead to additional savings. I am not recommending that you eliminate all of your wants. If you deprive yourself too much, you will never pay off your debts. It will also cause you a great deal of trouble with the next step: budgeting. Good luck with this step and I hope that you will read the next post in this series.


About the author: Jerry Coffey


Jerry Coffey spent many years in a debt-riddled gray area somewhere between broke and desperately broke. His seemingly endless need for more and more cash led him to payday loans, repossessions, bankruptcy, and depression. After years of the same financial style, he heard a piece of advice that inspired him to find a way to change. The advice: ''The very definition of a fool is someone who continues to do the same things, but expects different results.'' This led him to a much more frugal lifestyle that sees all of his bills paid on time and a growing savings account. Even the seed of a retirement account has begun to sprout.


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