8 Strategies To Live Within Your Means To Become Debt Free

Most of us have a craze for using credit cards. Well, using credit cards is not bad when you pay the balance in full on time.

Most of the people in our nation love their credit cards but they hate paying the bills on time. As a result, they fall into the debt cycle.

According to the Federal Reserve figures, consumers in the U.S. have a total of about $1.0004 trillion credit card debts. The overall household debt has increased by 11% in the past decade. The average household credit card debt is $16,883 and deliberately creating financial pressure on people.

However, another significant reason for the increasing debt load is the rapid growth in medical and lifestyle costs. Due to the rising living cost, the average household owes a total of about $137,063 debt including the mortgage.

Though the debt burden is increasing at an alarming rate, this doesn't mean we will be in debt forever.

Thoughtful spending and following smart financial strategies can help you live a debt-free life.

Here are 8 strategies to live within your means to become debt-free.

8 Strategies To Live Within Your Means

1. Know Your Financial Ability

To live within your means, you need to know your financial ability. You need to decide the net income that comes from your monthly paycheck. After that, you need to calculate your expenses including the monthly bills.

Now, list your expenses and subtract the total expenses from your total income. If you get a negative number, then either you need to cut down your expenses or increase your total income. This way, you can decide your financial ability, which means how much you can spend on your livelihood and how much you can save for your financial future.

2. Spend Less Money Than You Earn

It is important to spend less than your total income. Thus, you can fit your spending with your income and you don't need to incur added debt to make ends meet.

What if You Struggle To Spend Less Than What You Earn?

Most of the people fail to spend less than they earn. Usually, they don't follow a budget and spend the entire monthly income before the month ends. To overcome this problem, you need to plan a budget to plan the monthly expenses and to keep the spending on track.

What if the Budget Doesn't Work?

Most people claim that their budget never worked and they hate to follow one. They say that budgeting is an overwhelming task for them.

Well, budgeting can be difficult for beginners, but it's not as scary as you think. If you have tried once and was unable to follow it, then try it again.  Sometimes, you need to review your budget and make the necessary changes to get it to work better.

3. Stop Using Credit Cards!

Simple math is to live a debt-free life; to do so, you have to live within your means. So, you shouldn't rely on credit cards because using them will not let you live within your means. Avoid using credit cards; use cash instead. A pay-in-cash lifestyle can help you to avoid the debt trap.


When you carry cash, you know how much you can afford. You will only spend the amount that you have. By doing so, you can stick to your budget as well. Also, you can avoid costly interest on your credit cards.

4. Save Money to Buy Big-Ticket Items 

People prefer to buy a big-ticket item using their credit cards that they can't pay upfront. Often this kind of purchase invites debts as you have to repay credit card balance in full within the billing cycle to avoid interest charges.

Instead of buying a costly item using the credit card, try to save up a certain amount every month until you have saved up enough money to buy the item. Thus, you will be able to buy things without incurring debts.

5. Build an Emergency Fund

Most of the time, people have to take out a loan or use their credit cards to fund an uncertain emergency. Having some additional fund ready for the unforeseen emergency will help you to avoid debts.

Try to keep an emergency fund of 6 months of living expenses to combat emergencies like job loss, accident, car break down, and sudden health issues.

6. Cut Down Junk Expenses

Often people say that they struggle to live within their means. They fail to live within their means because they overspend. They often lose their hard-earned money on junk expenses.

How Can You Find Out Your Unnecessary Expenses?

You just need to take a close look at all your expenses. Go through the bills and mark the expenses that are less significant and you can live without them like a gym membership, club membership, salon membership, shopping trips, cable service, online subscriptions, etc.

Cancel the services that you rarely use or ask the service provider to win a better deal. You will be surprised to see how easily you can free up some money that can be used for some important purpose.

7. Increase Your Income

After cutting down your unnecessary expenses, if your income is not enough to meet the necessary expenditure, then you have to try to boost your income. Work hard to get a good raise at your current job.

You can also earn extra money by doing a part-time job. You can also increase your income by turning a hobby into a source of income.

For example, if you love to write, you can start online blogging to earn money. Also, there are many online jobs available that you can consider to earn extra dollars.

8. Save Money Consciously

The purpose of living within your means is to save a certain amount into a savings account. When you have good savings, you can secure your financial future. Thus, try to save money whenever you can. For example, if you get a cash gift, try to save the money instead of spending it. Also, try to save at least 15% of your income into a savings account.

Lastly, living “within your means” mantra works great to live a debt-free life, but it can be difficult for beginners. You may feel demotivated at the initial phase. Thus, it is important not to deprive yourself.

Remember, “living within your means” doesn't have to be about sacrifice. It is about dealing with finances more meaningfully.

For example, after meeting all the necessary expenses, if you have some extra money, you can spend it the way you want.  You are not allowed to eat out at restaurants often, but you can dine out 1  or 2 times a month.

Try to pay yourself a certain amount every month. Include it in your budget. For example, set aside at least 5% of your income as your reward. Spend the money on your wishes to feel motivated.