People have debts with many creditors and with different interest rates. Knowing how to be debt free can save you a great deal of money if you are willing to become a true master of the art and science of managing money.

Realistically, there is NO magic formula for getting rid of debt. Check the debts you owe: credit cards, car purchases, finance companies, remembering that loan charges can vary from year to year between financial institutions.

Interest on auto loans is known to vary by as much as 10 percent. Finance companies often charge much higher rates than banks and credit unions. Credit cards and department store accounts can be insidious ways to incur additional debt. That is, unless you use them correctly.

When it comes to challenging all your beliefs, it is a fact of the modern financial system that loans generally incur higher interest rates. For example, let’s say Ford Motor Company goes to your bank. The business pays interest that is a fraction of the prime rate, which is the lowest rate that banks charge their favorite customers. Surely you are paying several points above the principal.

You may not be able to change the fact that the bank is giving Ford a better interest rate than it is giving you. But you can control, to some extent, the interest rate you pay based on the amount of money you borrow.

Look at the interest schedules on your credit card bills. You will see information that tells you something like this: On the balance of up to $ 2,000, the finance charge is 18 percent per year, while on the balance of more than $ 2,000, you pay 12 percent. Remember, these numbers are generalized.

You may owe $ 2,000 or more in credit card bills, but if that debt spreads to multiple cards with low but persistent balances, you’re paying 18 percent of every penny. And if you pay the minimum amount due to each creditor every month, it will take 18 percent until all balances reach zero.

Mastering a debt free plan can be achieved by strategically refinancing your debt. In fact, you can renegotiate and finance both smaller and larger loans. However, be careful. Make sure you can benefit from refinancing before renegotiating.

Suppose you have a 10 percent car loan and your bank is willing to loan you the money to pay it off at 7 percent. Sounds like a good thing, right? Well maybe. If a large portion of the loan has been paid off, refinancing may not be worth it because new debt is usually paid off over a longer period of time and will ultimately cost more.

Rule of thumb: The more recently the loan was made, the more likely it is that refinancing will work for you. Take out the papers; go to your accounts online, look at your loans today. Watch to see if you can make some changes that get your money moving, working for you.