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If you owe a lot of people a lot of money, you may feel like you are never going to be able to become debt free. Even if you pay all of your bills on time every month, the balances just don’t seem to go down, do they? And if you get behind just a little bit, late charges and interest charges can quickly reverse any headway that you have made.

Fortunately, there is a plan for becoming debt free. You don’t have to have a lot of money to make it happen either. You can become debt free regardless of your financial situation or income level. Here’s how:

1. The first thing that you need to eliminate is credit spending. Put your credit cards away. Don’t just move them to the back of your wallet; freeze them in a block of ice or put them in a safety deposit box. Put them anywhere that you will not use them. Do not purchase anything on credit. Yes, you may have to do without for a little while, but you really need to eliminate all credit spending.

2. Pull your credit report and study it. Figure up how much you owe and who you owe it too. Pay special attention to accounts that have defaulted or placed in collection. Write down the dates of last activity for each account, and make a list of your bad debt with the newest defaulted debt at the top of your list and the oldest at the bottom.

3. Continue to make all of your payments that you have been making every month. You do not want to start making these payments late as it will further affect your credit score. Start paying off your bad debt one account at a time starting with the first account on your list. Negative accounts lose power over time. Newly defaulted accounts hurt your credit rating more than old accounts. After seven years, defaulted accounts fall off your report regardless if you paid on them or not.

If you cannot spare any extra money for your debt free strategy, you will have to get creative. Think of ways that you can make extra money or save extra money. You might be able to sell some unwanted items on eBay or you might be able to turn off your cable for a little while. The goal is to free up some cash that can be put toward your debt repayment plan. If you can’t afford much, don’t worry. It only takes a little bit of money each month to make a huge difference.

Living in debt is stressful. If you want to be debt free, you have to break the cycle of credit spending. Once you have learned to live differently, you can clean up your credit report by paying off old bills. Once you are debt free, you will be able to live comfortably and breathe easily.

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