Five steps to becoming debt free forever

If you want to be debt free for good, here's how to take control.

Some people think we say the same things over and over again, and they’d be correct. We know our three favourite words are budget, credit and debt. But you know this stuff. It’s the implementation that’s the hard part.

Yes, we admit that we repeat ourselves a bit. We talk about budgeting incessantly, we tell you to avoid taking out unnecessary credit and we issue dire warnings about debt on a weekly basis.

We know that our advice is only as good as the encouragement we give and the motivation you have to achieve it.

Here are five simple steps that can help. But the devil’s in the detail. There might only be a few psychological tips but these involve major changes requiring a lot of willpower.

Understanding your motivation, how your mind works and how to change your situation will go a long way to achieving a debt free goal.

1. Take stock

How much did you spend on cigarettes last year? How many coffees did you buy last month? How much can you save by buying an own-brand instead of a premium brand?

Decide where you can save money and what’s achievable as a goal. An example: we advise clients to cut their tobacco costs and recommend that they stop, but we can’t make them. They have to decide for themselves on the level they can cut down to. What can you do realistically?

2.  Map out your goal

We all get sick of writing documents at work. But a good plan is written for a reason, because it tends to work. For those of you lucky enough to have avoided writing proposals and plans thus far, a good one should:

• Present the current situation and the opportunity to strive for (in detail)
• Have a specific target
• Detail the measure used to record the progress
• List the milestones, along with a timeline.

In life as in work writing down your goal and breaking it down into achievable steps is a good way to visualise it. If the goal is to save £1,000 towards a holiday in five months’ time, then not planning how to achieve it will hinder your progress.

You can see how the bullet points above can be used to create a plan that breaks the goal into smaller, attainable stages.

3. Learn self-control

Having written down the goal, you need master self-control. As behavioural economist Dan Ariely blogged recently, experiments have found that children resist temptation when they “reconfigure their environment” (most obviously when they sit on their hands). He also gives the example of Ulysses avoiding the temptation of the sirens by tying himself to his ship’s mast.

Related how-to guide

Destroy your debt

If your credit card bills and debts are getting you down it's time to make a stand - here are five easy ways to start.

See the guide

We’re not saying that tying yourself to a lamppost outside your favourite store or sitting on your hands in a Starbucks is worthwhile, but assess where you give into temptation and learn self-control.

Spend more during your lunch break? Go out but don’t take your wallet/purse with you. Buy a coffee on your way to work? Walk past the shop without stopping or go a different route. Buy products online? Delete your accounts on shopping websites.

4. Learn to relax

However, all that self-control is exhausting. Experiments have found that self-control can only work for so long – you’ve got a limited supply. So when you’re using your self-control remember that you’ll get tired.

Spend some quality time on yourself – read, go for a walk, or listen to music – and your self-control will return. So alongside this…

5. Understand about the elephant and the rider

It sounds like management speak but understanding the elephant and the rider can be helpful. In essence your mind is the rider and your heart is the elephant.

You know exactly why you should avoid debt but this knowledge can only get you so far. You procrastinate and think over it too much, or you rush headlong into it and fail when you run out of steam (and you ‘reward’ yourself, with the justification that “you deserve it”). You need to ensure both the elephant and rider (heart and mind) are together.

Chip and Dan Heath’s Switch and Made to Stick are great books to read about changing your mind for the better, and sticking with a goal. Buy them (unless your goal is to stop buying books).

A final word

If you repeat these psychological steps over and over with every goal you want to achieve you’ll get a long way towards a permanent debt free existence. And you’ll do so without even preparing one budget.

But remember, if the elephant tramples the rider, the goals go out of the window and the self-control gives up, we can help. Use our online debt help and take a first step towards getting yourself debt free, hopefully forever.

Do you have any tips for learning self-control, or for avoiding temptation over the long term?