10 Habits of People Who Are Debt Free
After helping consumers file bankruptcy for as many years as I have, I have become very aware of the power of debt and the havoc it can wreak on someone physically, mentally, and emotionally. I have seen marriages tested (or destroyed) because of money. I have met with clients who suffered heart attacks or stokes because of their lack of money. Watching these situations play out have forced me to think about the ways that people can and do stay out of debt. I believe that people who are debt free more or less follow the following habits, and if you start to change your habits to follow these, you may see a change in your financial situation as well:
1. Live On Less Than You Make
People who are living below their means have a debt free life. The key to this is being happy with what you have. Having the newest car or home doesn’t matter to debt-free people. What matters to them is that they have a safe future and a nest egg to fall back on if they have an emergency. Letting go of other’s opinion of your car, home, clothes, and vacations is life changing.
2. Surround Yourself with Like-Minded People
Your relationship with others greatly influences you and your financial habits. Take a look at your network. Do they make you feel comfortable when you’re with them? Do they keep you inspired to spend less and save more? Do they motivate you to reach your goals? If not, then maybe it’s time to surround yourself with like-minded people who are aiming for a debt-free life.
3. Make a Budget That Aligns with Your Life Goals
Just because you’re earning a good income doesn’t mean you need to over spend and not have a budget. This kind of thinking can get you in trouble and in debt. I have met with several clients who make six figures but spend more than they make and are forced to file bankruptcy.
4. Make Thoughtful Purchases
Debt-free people know when to say “no”. They work hard to stick to their budgets and avoid impulse purchases.
5. Be Patient
Debt-free people have patience; it’s not always perfect but they’ve learned to grow in self-control. They demonstrate this in the practice of delayed material gratification. For example, if they need a new computer, they start saving now and build up the cash. They are not trying to keep up or impress anyone else by having the newest trends.
6. Maintain a Solid Budget
Make choices today that benefit you in ten years. When you live paycheck to paycheck and forget about the big picture, you end up in the same stressful situation at retirement.
7. Think Long Term
When the focus isn’t on immediate gratification, you can make smarter decisions. Sure, it would be nice to have this season’s hottest purse, but how will that help your long-term financial goals? This doesn’t mean you can’t ever buy a new bag it just means you have to save up before you buy it.
8. Keep Things Simple
When life gets messy, so does our money. We lose sight of our spending and our money management. Debt-free dreamers keep their eye on their daily money activities and make sure they are never too busy to sort receipts, pay bills, and manage each bill with respect and diligence. Don’t procrastinate on managing money well.
9. Check Finances
There is an empowering feeling in staying on top of our finances. Reviewing your finances every week keeps your eye on the ball and can keep you motivated to maintain your finance goals.
10. Have And Emergency Fund
It is very important that you always have access to cash should you need it. Assets are amazing and so important to growing your net worth, but having fast access to cash is crucial. You should have an emergency cash fund that would allow you to pay your bills for at least 6 months.