Debt Free in 2025 – A Roadmap to Financial Freedom

In 2024 our family became debt free. We have been working at this for years and it’s rewarding to now have achieved such a major goal!

The only debt we have been willing to take on is a home mortgage. We have never used credit cards and always lived a frugal lifestyle, living within our means and saving for important purchases. Using these principles, we have been able to pay down our mortgage and have reached a new level of financial freedom.

Debt freedom is such a wonderful feeling and I want you to be able to achieve it too!

Debt Free in 2025: A Roadmap to Financial Freedom

As we approach a new year, many of us are setting resolutions, and one of the most powerful goals you can set is to become debt-free by 2025. Personally, I don’t make resolutions, but I do have a lot of goals and am constantly working towards them.

Living without the burden of debt opens up a world of financial possibilities, promotes a simple lifestyle and reduces so much stress!  For me, one of the best things about debt freedom is the ability to give more to others and improve their lives as well.

Here’s a comprehensive roadmap to help you achieve this goal, particularly if you have multiple sources of debt.

Step 1: Assess Your Current Financial Situation

Before you can tackle your debt, you need a clear picture of where you stand. Take some time to have an honest look at your true financial situation, even if it’s difficult to face:

• List all debts: Include credit cards, student loans, personal loans, and any other obligations.
• Calculate total debt: Add up the amounts owed to see your total debt load.
• Review interest rates: Identify which debts carry the highest interest rates.

Step 2: Create a Budget

A budget is helpful for managing your finances effectively. Here’s how to get started:

• Track your income and expenses: Use apps, spreadsheets, or good old-fashioned pen and paper to see where your money goes.
• Identify areas to cut back or change: Look for non-essential spending that can be reduced, eliminated or reassigned.
• Allocate funds to debt repayment: Designate a specific amount each month to pay down your debts.

Step 3: Choose a Debt Repayment Strategy

There are several strategies for paying off debt. Here are two popular methods:

• Debt Snowball: Focus on paying off your smallest debt first while making minimum payments on larger debts. Once the smallest is paid off, move to the next one. This method provides quick wins and can boost motivation.
• Debt Avalanche: Prioritize debts with the highest interest rates first. This method saves you money in the long run by reducing the total interest paid.

Choose the method that resonates with you and fits your financial situation. You could even do a mix of the two if you can afford to. For example, make extra repayments on the debt with the highest interest whilst also hitting your smallest debt in order to eliminate it.

Step 4: Increase Your Income

Besides decreasing spending where possible, the other reliable way to get in control of finances is finding ways to increase your income. This can significantly speed up your journey to being debt-free:

• Side hustles: Consider freelance work, selling unwanted or un-needed items from your home, start an online business.
• Ask for a raise: If you’ve been performing well at your job, and if it’s appropriate, discuss a pay increase with your employer.
• Monetize skills or hobbies: If you have skills in crafting, tutoring, or consulting, explore ways to turn them into additional income streams.
• Start an online business: There are so many online opportunities and many of them can be started while still maintaining a job.

Check out My Story to see how I increased our income to such an extent that my husband retired from his job in his early 40’s, we paid off our first mortgage, saved for our dream property and are now completely debt free!

Step 5: Build an Emergency Fund

While paying off debt is crucial, it’s equally important to prepare for unexpected expenses. Aim to save at least $1,000 as a starter emergency fund to avoid falling back into debt when emergencies arise. Even in our days of living below the poverty line as a family, we still had an emergency fund.

Step 6: Stay Motivated and Accountable

The journey to becoming debt-free can be challenging, but staying motivated is key:

• Set milestones: Break your goal into smaller, achievable milestones and celebrate each one.
• Join a support group: Connecting with others on the same journey can provide encouragement and accountability.
• Follow others who are or have been on a debt free journey
• Visualize your goals: Create a vision board or write down your financial goals to keep them front of mind.
• Have fun: Did I just tell you to have fun?! Sure I did! Believe it or not, the process to debt freedom can be fun! Ticking boxes, getting loans paid down, seeing progress and eventually achieving financial freedom? Now, that’s my idea of fun 🤩

Step 7: Educate Yourself

Knowledge is power. Take the time to learn about personal finance through books, podcasts, and online resources. Understanding financial principles can help you make informed decisions and avoid falling back into debt in the future. It can also be super inspiring to read other people’s stories and learn more about how they did it.

Becoming debt-free by 2025 is a realistic and empowering goal. By assessing your finances, creating a budget, choosing a repayment strategy, increasing your income, building an emergency fund, staying motivated, and educating yourself, you can take control of your financial future. Remember, the journey may have its ups and downs, but the reward of financial freedom is worth every effort. Start today, and take one step closer to living a debt-free life!