How to become debt free in five years

By Izzy M
Modified on February 20, 2024
how to become debt-free in 5 years

Has your life become burdened by debt? When you’re stressed about debt looming over your head, it can be hard to imagine a debt-free future. But it’s entirely possible for you to become debt-free in as little as five years! Learn what financial steps you can take to successfully get out of debt.

Become Debt-free by Altering Your Lifestyle

One of the best ways to become debt-free is to alter your lifestyle. If you want more money leftover at the end of the month, start with small financial changes after you pay your monthly bills.  

Start Meal Prepping 

Eating out at restaurants and ordering delivery are convenient and easy solutions. After a long hard day at work, the last thing you want to do is slave over a hot stove or cut vegetables. But preparing your own meals can help you save so much extra money! And it’s entirely possible to make a grocery list for $300 a month! You pay extra for convenience, but that money could be better spent paying down your credit card debt. 

If you cannot cook, there are simple recipes online that have minimal ingredients and few steps. If you lack the motivation, take the time to meal prep. One large hearty meal, such as meatloaf and veggies, can be split into five lunches! If you enjoy soup, you can cook a large pot and then freeze the leftovers to enjoy at any time. A lot of work now can save you time and effort later on. 

Cut Unnecessary Expenses

An unnecessary expense is any bill you don’t have to pay but choose to. These bills may be small, but they can quickly add up over time. For example, a $15 Netflix bill is $180 annually. Instead of paying for ad-free streaming services, you can opt for free subscription options like Peacock. Companies enforce higher fees for convenience, but you can opt out to save money!

These are a few ways you can cut unnecessary expenses:

  • Change or cancel a gym membership plan
  • Switching to free music streaming apps
  • Changing to a cheaper cell phone plan
  • Quit a smoking habit
  • Getting rid of cable

Change Your Housing Situation

If you rent and the end of your lease is almost up, consider looking for a new apartment. Financial experts recommend spending no more than 30% of your monthly income on housing. This ensures you have enough money left to pay bills and put in a savings account. 

If you have a small housing budget, consider getting a roommate. Sharing a living space is hard, but consider the amount of money you could save by splitting bills. It’s easier than ever to find a room to rent online. Before formally signing a lease, you can meet your potential roommates to see if your lifestyles and personalities are compatible. 

These are a few insightful questions to ask potential roommates:

  • Do you work from home? 
  • What do you want in a roommate? 
  • How much of a clean freak are you?
  • What do you like to do for fun?
  • How do you handle roommate issues?

Become Debt-free by Increasing Your Income

In addition to saving more money every month, increasing your income is a great way to work towards being debt-free. There are numerous ways to get more money in your bank account. You just need to consider how much free time you have and how much effort you want to put in. 

Get a Second Job

If you have time and energy to spare, getting a second job for supplemental income can make it easier to make debt payments and save money. These are a few side jobs you could get quickly:

Ride Share/Delivery Driver

If you have a vehicle, you can be a rideshare or delivery driver. For example, working for Uber Eats means you get paid per delivery. The qualification requirements to be a rideshare driver or delivery driver are minimal. You typically need a valid driver’s license, proof of residency, proof of car insurance, a good driving record, and a smartphone. You can choose your own hours and tasks. Best of all, you can earn extra money through tips!


Signing up to be a caregiver can help you earn enough money to pay off credit card debt and personal loans. A caregiver is a person that assists individuals with day-to-day tasks. You may have to administer medication, but providing companionship is the primary task. The requirements to be a caregiver are flexible. You could qualify if you have a high school diploma, a driver’s license, and a friendly demeanor! 

Pet Sitter/Dog Walker

Consider working as a pet sitter or dog walker if you love animals! You can sign up through an online service or market yourself on social media. Pet sitting is easy if you already have pets of your own. If you don’t have any pets but love animals, you can see what it’s like to have one! You can earn extra money to pay off credit card companies on your free days by simply spending time with animals. If you enjoy the outdoors, you can walk dogs for an hour or two. While there is typically a base rate, you could earn more money in tips.  

Customer Service Representative

A customer service representative addresses customer complaints and issues with a cheerful demeanor. If you are a patient, level-headed person, you could secure a second job working as a customer service representative. All you need is a high school diploma and a professional attitude. You may have to work specific hours, as some businesses close on weekends. But you can find a company that has weekend availability if you already have a full-time job.

Freelance Gigs

If you have marketable skills, you can freelance and become self-employed. Employers look for workers with skills in writing, editing, social media management, design, tech, and more. You can set your preferred rate and filter jobs based on your preferences. Working freelance can help you earn more money, so you are not living paycheck to paycheck after covering your monthly payments.

Ask For a Raise

If you already work a full-time job but want to be debt-free sooner, you can try asking your employer for a raise! If it’s almost time for your annual performance review, make a list of your accomplishments throughout the year to confidently request more compensation. Suppose the company has reported incredible profits, or you have taken on more responsibility. In that case, it may be a good time to ask for a raise. Though you may not receive a raise, you can request feedback that may help you work towards a raise in the near future. 

Sell Your Personal Property

You can make extra money for debt payments by simply selling what you don’t use! You can sell just about anything online or by hosting a yard sale. Consider selling clothes, electronics, furniture, toys, shoes, accessories, etc. When you sell items online, you can choose a selling price or list your item for auction. The buyer typically pays for shipping, so your only job is to package the sold item and drop it off at the post office. 

Become Debt-free by Prioritizing Your Debts

If you want to become debt-free and keep more money in your pocket every month, it’s time to start prioritizing your debt. By focusing your extra income on debt payments, you can get out of debt swiftly! Check out a few ways to start chipping away at that credit card debt and other loans.  

Use Extra Income on Your Debts

If you have money left over once all your monthly payments are paid, use it to pay more than the minimum on all your debts. Making minimum payments means you waste your extra cash on interest fees. You can become debt-free sooner and save money on interest rate fees by working harder to pay down your consumer debt. 

Consider Getting a Debt Consolidation Loan

Debt consolidation can make it easier for you to become debt-free if you have a lot of credit card debt. Credit cards have high-interest rates, which means monthly payments can be costly. Having too many credit card balances can make budgeting unnecessarily tricky. 

But by applying for debt consolidation loans, you could roll multiple credit card balances into one monthly payment. A debt consolidation loan could help you secure a lower interest rate to save money and pay fewer bills every month. Debt consolidation can make your life a lot less stressful. You may even be able to get consolidation loans with no credit check!

Negotiate a Lower Interest Rate

If you have been making your monthly payments on time, and working towards raising your credit score, talk with your creditors to negotiate a lower interest rate! Your finances are not the same as when you first applied for credit cards or loans, so you could secure better terms now. Getting lower interest rates can help you keep more money in your bank account because your monthly payments will be lower. Paying fewer interest fees can quickly help you become debt-free! 

Use Your Tax Refund for Debt Repayment

You may be excited to receive your tax refund and start spending money. But using that tax refund to pay all your debts is a better option for your finances. Reducing your monthly payments now can help you achieve debt freedom. 

A low debt to credit ratio can significantly improve your credit history. Borrowers with excellent credit can receive better financial terms that help them save money. Suppose a lender sees you have a good credit score on your credit report. In that case, you can get lower interest rates, a higher loan amount, and an extended repayment length. 

Become Debt-free by Starting a Budget Plan

Managing your money is an important step you can take towards becoming debt-free. Budgeting and having a plan for your debt can help you stop spending money carelessly and keep more cash in your bank account. Keep reading to learn a few budgeting tips for beginners along with debt repayment strategies:

Debt Avalanche Method

The debt avalanche method is a plan that focuses on paying your debt with the highest interest rate. The higher the interest rate, the more money you waste on interest rates. By paying off a high rate debt, you end up saving money on interest fees. 

To get out of debt using the Debt avalanche method, use your extra cash to pay as much as you can towards that debt. Though you may want to spend your money on worthwhile expenses, focusing on debt repayment can improve your financial situation. 

Debt Snowball Method

The debt snowball method can help you live a debt-free life. The debt snowball is similar to the debt avalanche method. However, you focus on the debt with the lowest balance instead of the debt with the highest rate. You can quickly see financial results by paying off the easy loans first. 

Having to pay fewer bills can make your life less stressful. It can be hard to stay motivated with the debt avalanche method. If you have a high-interest debt with a high balance, paying it off can take time. But by paying off your smallest debts first, you can quickly see your finances improve. This may keep you motivated and focused on obtaining debt freedom. 

50/30/20 Rule

One of the most popular budget plans is the 50/30/20 method. This budget plan helps you determine how much of your paycheck can go toward certain expenses so that you do not overspend in any one financial category. 

When using the 50/30/20 budget, half of your paycheck will go towards your basic needs. These are the necessary bills you repeatedly pay, such as housing, gas, groceries, credit card bills, etc. After you have paid your bills and taken care of your monthly expenses, 30% of your paycheck can be used for things you want rather than things you actually need. This includes takeout, entertainment, clothes, travel, and more. The final 20% of your paycheck after taxes will be used for debt repayment or put into a savings account for financial emergencies. 


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