Debt Free Living: 10 Habits of Debt Free People

Whether you are drowning in debt and need to dig out of it or are already debt free looking to stay there, you’ve come to the right place for helpful information. Below are 10 habits of debt free people. Use them to help plan your journey.

Debt Free People;

1. LIVE UNDER THEIR MEANS:

To be and live debt free, you need to live below your means. PERIOD. This is the single most important thing you can do to become and stay debt free. The additional funds between your lifestyle and what you're take home income are, is what you use to pay down debt and build wealth. There is no room for “keeping up with the Joneses” in this lifestyle, I will put that out there right now, right away.

2. MINIMAL INCOME MINDSET:

The fastest way to save money and/or pay down debt is to put large amounts of money into it, no easy task. Like living under your means, a great way to manage your money is to change your money mindset. First off, tell yourself that you make less than you do.

Imagine if you pretended that you made say, $1000 less than you do each month. That frees up $1000 for debt repayment or savings. Set it up as an automatic payment so that it’s gone right after pay day.  This way it’s planned and committed to and you avoid temptation. $1000 is just a round number to use as an example. Can you live off half of your income? Try it!

A lot of people who are debt free, are so because they live on less and think this way. They have never let their lifestyle keep up with (or exceed) their income. If the income increases please remember that the lifestyle doesn’t have to inflate too. The best tip here is keeping the same or similar lifestyle even after a raise or promotion. Change your mindset to convince yourself you make less than you actually do.

3. BUDGET AND STICK TO IT:

Did you cringe at the “B” word: budget? You don’t have to! Creating a plan where YOU tell your money where to go instead of wondering where it went is, hands down the BEST way to ensure you never end up in debt again.

Your budget lets you see exactly where and when your money needs to go to an allocated destination.

People who are debt free are great at budgeting. Usually because it is how they rid of their debt in the first place.

4. EMERGENCY FUND:

The last thing you want to do is work your tail off to get rid of your debt only to have an emergency arise and not be prepared for it. This is where people can slip back down the credit hole all over again. Such a dark, gloomy place. Keep your financial freedom by being prepared for life's inevitable happenings. I recommend a minimum of 3-4 months worth of expenses in a fully funded emergency fund. 6 months is even better.

Debt free people have a fully funded emergency fund available for them to draw from when needed. Emergencies that can be cash flowed are less stressful in many ways.

5. COMMUNICATION:

Communicate consistently and openly about money. READ THAT AGAIN.

Personal finance is personal, sure. Not when it comes to marriage. Team work makes the dream work. Talk to your spouse about money. Plan and assess together and also discuss what money goals and lessons you want to instil upon your family. There can be no secrets and certainly no secret debt.

6. AUTOMATE YOUR MONEY MOVEMENT:

By now, you likely have automated payroll deposits. If you automate your bills and your savings, it makes it easier to ensure money is there and stick to a plan rather than tell yourself you can spend now and save later.

7. HAVE LONG TERMS GOALS:

Saving for a house? A trip? A new vehicle?…….

This is not true for all, but most debt free people were not always that way. Most had to decide to make a change, then create and work on goals, to become debt free.

To reach your full potential in life you need long term goals in all areas. Finance being one of them of course. Don’t be afraid to stretch yourself outside of your comfort zone. You may surprise yourself!

8. DO YOUR HOMEWORK:

Do you shop around when making a big purchase? Do not impluse buy anything and always put the work in to ensure you are getting the best deal you can.

Debt free people always think of the hard work they have had to do to be debt free, so they make sure to buy the best value, not just what’s trending or fancy.

9. MAKE A MENU:

Meal planning is a favourite activity of most debt free folks. They understand that failing to plan, is planning to fail. Here’s where you fall down and eat out, or buy a bunch of food items and ingredients that later get tossed if you don't have an intended purpose for them. Overspending at the grocery store is one of the biggest budget killers.

10. PRACTICE GRATITUDE:

A habit debt free people practice is one of gratitude. No matter how much debt you’ve paid off or how much money you may have, to be grateful for it all. Remember the law of attraction?

In Closing:

If you are debt free, that’s so awesome! Keep at it! I hope you build wealth, I hope you give generously and I also hope that you enjoy the freedom. If you aren’t debt free yet, you’ve started your journey in the right place by being here and reading this. You are learning the habits your successors practice and that’s a great first step.