Blog How to pay off debt and become debt free and shift your money mindset

How to pay off debt and become debt free and shift your money mindset


For most of my adult life I had debt and lots of it. In fact, all total I had over $60,000 total of credit card, income tax and personal loan debt over a span of 10-12 years.  It didn’t happen overnight and there were a lot of reasons for it from losing my job when I was younger and not having savings, from trying to live beyond my income, from not having the right money mindset, from bad business decisions…

I understand the guilt and shame that comes from being in debt, from struggling month to month and wondering when things will change. A big part of my debt and mismanagement of money came from my mindset about money. The stories I had let myself believe about money, about wealth, about whether I could handle money or deserved it, they kept me in this cycle of famine or feast, make money, pay off debt, spend money, go back in debt and repeat.

It wasn’t until I began to deal with those mindsets and my beliefs about money that I was able to finally get a handle on my finances and get myself out of debt. I had to do a lot of forgiveness work both for others and myself. I had to learn to have more of an abundance mindset and trust that God would provide. I had to become a better steward with my money and be more grateful.

My life and my finances are completely different today than they were even just a few years ago. It is due to the steps I took to change my mindset about money, to face my debt, to become more grateful, to be more responsible and finally get in control of my money so it didn’t control me. Not only am I almost completely debt free now ((I have a small amount of student loan debt still remaining & have some medical debt I’m working on paying off ), my credit score has improved from 515 to 830 and continues to rise each month! (Anything 800-900 is considered excellent!)

In this post, I want to share what I did and how I shifted my mindset and my actions around money to become debt free. I hope these steps and tips will help you.

10 Steps to Pay off Debt, Shift Your Money Mindset and Live Debt Free

1. I had a debt intervention and faced my debt. I sat down and added up the credit card balances and all the debts I owed. The total number was astounding! It was way more than I realized. I made myself actually look at my income vs my expenses and the true amount of debt I was in.

Before that, I was living in denial as I never looked at (or wanted to know) my actual total debt number. I was paying a little on each card, transferring balances and still using my credit cards.  The day I really added it up and looked at it I had a breakdown. I cried the ugly cry. I felt so ashamed, so guilty and so burdened.  I had not been a good steward with my finances or possessions.  I had to come to grips with the fact that I had a spending problem and a debt problem and face it head-on.

2. I had to decide to do something about it, stop making excuses and to live my life differently.  Many people say they want to be debt free or financially stable. In fact, that was one of my main life goals and a big reason why I decided to be self-employed was so that I could create my own financial future.  Like Dave Ramsey says, “You have to live like no one else in order to live like no one else”(or something like that). I had to stop saying I wanted to be debt free and stop making excuses for my debt. I had to start living like someone who wanted to be debt free.

I didn’t go all crazy and sell my car, stop eating out or stop buying new clothes.  I just started making better choices and thinking more about what I was doing with my money.  As a Christ follower, I was extremely convicted about being a good steward with my finances and possessions. I was not an overly materialistic person, but I did often use shopping, traveling, spending money on things I did not need to fill a void in my life or make me feel better about myself. I had to have a heart shift along with a mindset shift on possessions.

Whenever I would want to buy something or go do something I would have to stop and think about the long term consequences of spending that money. Sure, it would make me feel good for a moment but I could take that $100 and put it towards my debt and be debt free a few weeks sooner.  Being debt-free and financially stable/independent became more important and fulfilling to me than spending $ I didn’t have and trying to impress people I didn’t need to impress.

3. I created a Spending Plan and tracked every dollar going out and coming in. I still to this day use a simple Excel spreadsheet as a Spending Plan & an Income vs Expenses Tracking Sheet.  I do not like the word “budget”. It just feels too restrictive and depressing to me.  Mentally, a “spending plan” makes me feel like I am more in control of my money and still able to spend it – just spending it responsibly.

In my Income vs Expenses Sheet I include my estimated income for the month and then a list of my regular monthly expenses, amount to put towards savings and extra to put towards my debt. I also included bonus expenses like family birthdays, holidays, Eye Dr. Visits, annual car registration renewals and so on.  Each month I record the date I pay each expense and the amount. This helped me make sure all the bills were paid on time and keep track of any extra money left or if I needed to make more money to cover the bills that month. If there was a bigger expense coming up, I would create a savings plan to make sure I had the money in advance for it so I did not end up having to use a credit card.

This is such a simple solution and something I still implement today to help me stay in control of my finances. I now also track my daily income in it which also helps me remember to be grateful and feel more secure about my future.

4. I contacted my credit card companies to see if they would work with me on lowering my interest rate & increasing my minimum monthly payment.  A few of the companies were willing to do this. Lowering the interest decreased the total amount I would be paying back. Increasing the minimum monthly payment meant that I would have to make a certain amount of payment each month which would help me pay it off faster.

5. I transferred some of my balances to cards with a 0% interest for 12 months on balance transfers. The credit cards with higher interest or those who didn’t want to work with me, I transferred to other cards with 0% interest for 12 months on balance transfers.  This saved me even more $ by not paying that 10-24% interest and it also gave me extra incentive to pay those smaller balances off within 12 months before the interest kicked in.

6. I cut up all of my credit cards except for two – 1 for my business expenses & 1 for emergency personal expenses.  This helped me not be able to use the cards in stores or even shopping online. I did keep one card that had the lowest interest rate and a lower credit limit in case of emergencies.  Many people will actually cancel their cards. I had read that doing this was bad for your credit score, so I only canceled a couple of them.

I still have several credit cards but only use those 2 cards – 1 is for my Business Expenses to earn miles for free flights and the other is for Personal Expenses that I use to earn Amazon credits. I pay both balances off in full each month.  There is a time and place for credit cards as long as you control them instead of them controlling you.  If you feel like you can’t control using cards then by all means call and cancel them all once they are paid off.

7. I still spent money on things I should not have spent money on but within reason and with a limit.  This might sound like strange advice, but I knew if I totally cut myself off from splurging from time to time or from going out with friends that I would be completely miserable.  I gave myself a certain amount of “Misty money” each month that I could use towards anything at all that I wanted, a cute pair of shoes, getting my hair highlighted, going to the beach for the weekend with friends… Depending on my income & expenses for the month, it might be $25, $50 or $100.

By having that amount in my budget I never had to use my credit card for those things and I did not feel guilty for spending that money on myself. I now budget for extras and even have a savings account that I have money automatically drafted into each month named my “adventure fund”.

8. I set a realistic goal of when I wanted to pay it all off.  When I got serious about paying off my debt in 2010, I set of goal to have my credit card debt paid off in 4 years. Then I figured up how much I needed to pay each month total to reach that goal.  The interest was higher on my credit cards so I put more money towards paying those off than my personal loan and student loans. When the cards were paid off I begin putting that extra amount I had been paying each month on the cards towards the personal loan. 

9. I kept track of how much I had paid off and how much was left to pay off.  This made me see just how much of a difference I was making on tackling my debt mountain each month. As the total number got smaller it fueled me to keep going.  It almost became like a game. Any extra money I got I would see which card I could apply it to so I could get it paid off faster or get it below a certain dollar amount. After 12 months I had put a huge dent in my debt pile.  When my debt went under $20,000, then $10,000, then under $5,000 and I could see the light at the end of the tunnel, it just felt amazing! This made me want to work even harder and I am proud to say I reached my goal a full 10 months earlier than  I originally planned!

10. Most importantly, I worked on my mindset around money and material possessions. I worked to understand why I acted the way I did with money, why I spent my money faster than I could get it, why I felt I wasn’t capable of having money, why I couldn’t resist all the sales and bargains and why I thought I had to hustle and work hard to make money. A lot of those mindsets came from my parents and grandparents and the stories I had seen and been told about money and not really being taught how to handle to money or that women could be financially stable without a husband or 2nd income. I had to discredit those stories and rewrite new ones that reflected how I really felt about money and what I wanted my new money story to be like.  I also had to get into a place of deep gratitude and begin valuing myself and focus on investing (financially & emotionally) in what was really important to me instead of impulse shopping and spending.   I  had to change the beliefs in order to change the patterns and habits.   The biggest thing that helped me with my money mindset and turn around my financial story (as well as triple my income in the past 2 years) was Denise Duffield-Thomas’ Money Bootcamp program which you can find out more about here.

The bottom line with getting out of debt is that you have to decide you are sick of it and to make choices that better reflect the life you want to live in the future and not just in the present.  I cannot tell you the load that has been lifted off of me since getting all this paid off.  I was still able to live a normal life and splurge a little from time to time. I was still able to pay off a huge amount of debt in a short amount of time on just one income.  I continue to keep up with my Spending Plan and track all my income and expenses. It was a lifestyle change that I am very proud of and plan to stick with.  I am also starting to build up my retirement and savings account now too which considering I just turned 36, it’s about time!

I know that if I can get out of debt that anyone can! Don’t give up if you are fighting the debt monster too. Make better choices and begin living more wisely. Remember, whatever mindsets or beliefs you have about money and whatever habits you have developed over the years do not have to stay that way. You can develop more of an abundance mindset, you can change your financial future and you can definitely be in control of your money instead of letting it control you.

What about you, have you paid off a large amount of debt or are you working to be debt free too?  Or are you ready to tackle your debt mountain too?  I would love if you would leave a comment with your thoughts or advice below & share this post on social media too. Thank you!


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