When everyone is facing the current global economic crisis, to be totally debt free is an amazing achievement which requires a lot of good financial planning and self disciplined.

Do you wish to know how to become debt free? Are you determined to be debt free? To be totally debt free, you need to make a dramatic change in your life style as well as your long term plan. Are you really ready for it?

You should start your effort by evaluating your assets and your liabilities. List down all your assets on hand and the liabilities you owe. Then compare it. If your liabilities are very much more than your assets, you should start planning to get rid of your liabilities, especially your current liabilities, such as credit card debt, home loan, car loan, study loan, insurance, etc. Look for ways to save more money to pay your debts. Reduce your liabilities by paying more amount and settle the debt in a shorter period.

Put the priority to clear your credit card debts if any. Having a housing loan is unavoidable if you really want to possess a house. Once you settle your loan, then the liability will become your asset. Unless you don’t want to own a house at the moment, then it is much easier to be debt free.

Next, make a realistic budget. You have to identify what you want and what you need. Those things that you need are normally things necessary in life, i.e. utility, food, transportation, clothes. Of course it is necessary for you to eat but it is not necessary for you to eat at high class restaurant. Same principle goes to clothing, it is a must for you to wear formal wear if you are working in the office but it is not necessary for you to buy Chanel, Guess, Prada, etc.

To be debt free, first of all, weigh the amount you earn monthly and the amount of your expenses. If you are getting high salary, it is no problem for you to spend on luxurious items as long as your income is sufficient to pay the bills.

However, if your monthly income is less, it is definitely incorrect for you to purchase luxurious items by using credit card and yet your income is not sufficient to cover at all. Luxurious items are not essential for living. Another example would be traveling. Traveling can be fun and exciting, but it is not necessary if your financial status does not encourage.

As a result, one of the steps to be debt free is to follow the budget you have worked out accordingly. Discipline yourself in following it and you have to make the very right choice in your lifestyle. You may be “seduced” by the luxurious lifestyle and it is very important for you to control your spending wisely.

Do not be “seduced” by the attractive promotion of credit cards by charging as much as you want to the credit cards for excessive shopping. It is really a big trap for you to be in deep debt. To avoid this, commit to yourself to discontinue the use of credit cards.

In fact, cutting up the credit cards that you have and calling the banks or credit card companies to close the accounts will be the best and most effective method. However, if you really need to have a credit card for work or other important purpose, settle the card payment immediately once you have swapped it. Make sure there is not outstanding balance.

To be debt free may be very difficult to somebody as it needs a lot of self disciplined. You must always remind yourself that there are so many problems you need to face when you have debts on hand. If you don’t wish to suffer from financial stress, start up with the debt free practices as mentioned above today!