Having no debt hanging over your head causing distress to you and everybody else involved is one of the greatest feelings you can ever have. If you are among the lucky ones that have either never got themselves into a financial bind or have managed to pay off their debts with hard work and the right moves, then you know how important it is to stay out of debt. This can be particularly tough, especially in our overly materialistic world, where people always want something they feel they should have, from the simplest of things to the most expensive stuff one can ask for. All these add up and eventually tie us up financially, turning us into debt slaves.
So, what does it take to not only get out of debt but also remain debt-free? Those in the know insist that a change in lifestyle is indeed necessary. It is pretty much like when you want to live a healthier life. What do you do? You stop smoking and eating junk food three times a week and, at the same time, you start exercising more and adopt a healthier diet. Likewise, to stay out of debt, you must give up some bad habits and pick up some better ones. To be more specific, here are some of the habits of debt-free, happy people that should give you an idea how to become debt-free yourself.
They don’t jump into buying the first shiny thing they see
They are extremely patient because they know that good things come in time. For instance, instead of getting into debt to take out a loan to buy a new car, they start saving now and intend to pay in cash when they have saved the money they need. This might take them a couple of years, but they resist temptation and only buy when they have the money.
Trying to save money to pay for something you need, such as a fancy new handbag or vacation, might mean less dinners out. But it is paramount to set a financial goal, plan how to pay for it and then do what needs to be done to achieve it. If others can do it, so can you!
Another thing debt-free people do is wait for discounts, Black Friday sales, and other deals that will allow them to purchase what they need at a lower price. All in all, their patience pays off as they don’t pay full price for something they can have for less. This includes buying anything from groceries to clothes and furniture. Among the realistic and pragmatic ways to save money is also cutting coupons and buying second-hand.
As you can understand, learning to say NO is a vital component of your success to remain a debt-free person. If you have set specific financial goals and you want to see them fulfilled, then you also know what you can spend money on and what you can’t. Sure, it might be great fun to go out with friends on Saturday night and have some beers over dinner or go on a shopping expedition at the new mall, but if your budget is limited and that expense in not in the budget, you must know and pass.
How to create a budget: Monitor your expenses and spending. Add up your income and see where you could cut back. To be able to stay on track, it is best to revisit your budget every few months.
They Are Responsible With Money
If you have ever struggled to get out of debt (and made it eventually), then you probably know the value of a dollar and how hard you need to work to make some. Being responsible for your actions is critical to stay out of debt. So, whether it is $10 or $1000, debt-free people are solely focused on not getting themselves back into financial troubles and follow a budget to make sure they don’t. Of course, overspending is easy when you don’t see actual money and with plastic money having replaced actual dollar bills almost entirely, being responsible with money is a bit difficult. Try using cash only for a little while and see how you feel when you part with some. That might be enough to change your perception of purchasing and keep you within your budget.
Speaking of budget, it is important to spend only what you can afford to spend rather than spend haphazardly. Even if you do use a credit card to make a purchase, always ensure that you charge the money you have available in the bank and NEVER more than that so that you can pay off the statement every month. Why put yourself in a position where you are worried about how to pay the debt off and dread next month’s bills when you can have a stress-free experience?
They Enjoy the Essence of Life Rather than Stuff
Material items have never brought long-lived happiness to anybody. After all, you can’t live trying to keep up with everyone, right? Having the fastest car, the latest 4K TV or the biggest house are not the most important things in life for debt-free people. Sure, you can have all the stuff you like, but at what cost? What all debt-free people know is that the things money can’t buy are the things most worth living for, such as friends and family, and they make sure their choices reflect that.
Ask yourself this: How many times have you spent money trying to fill an emotional void rather than a true need? This is emotional shopping and does not cover a need; it only gets you into debt. The best thing to do when you are considering a purchase is to figure out why you shop.
Do you also find yourself working extra hours to pay for the latest things or a fancy meal with the family? Wouldn’t it be better to work less and have a few meals at home with the rest of your family members? You see, every choice we make has a trade-off.
Trying new life experiences and creating memories that will last forever instead of collecting fancy things, which will eventually break down or be out of fashion soon is one the most common habits of debt-free people.
They Think Long-Term
When you are in debt, it is impossible to see further than what is in front of you – debt. Those that no longer have that burden over their shoulders can plan ahead. They create an emergency fund, just in case, and are prepared for the big purchase or the unexpected.
To create an emergency fund, debt-free people make sure they pay themselves. This can be anything from regular savings to a company-funded 401(k) account. What is most important is to find a way to save; which way you choose is up to you!
Tip: Don’t leave out windfalls. If you, somehow, end up with a bonus or extra money, do set it aside or, at least, some of it.
They Negotiate Everything
Asking for discounts is nothing to be afraid of. In fact, it is a great way to get something cheaper by using cash. Most of the times, you will be able to get a 5%-10% discount if you are willing to negotiate the price. Dare to negotiate everything that could save you money, including credit card interest rate if you really need a loan. Chances are you will leave the negotiating table with a smile.
They Monitor their Personal Finances Closely
It is essential to be fully aware of your personal finances. For example, you might have stopped going to the gym, yet your credit card statement shows that you still pay a recurring fee for it. If you don’t check it regularly, it is very difficult to catch on such waste of money. Also, make sure you are always a step ahead of payments. Note down payment due dates and plan to make the payment on time to avoid late fees. That aside, look over your bills when they arrive to see if they are accurate.
Now, if you are still in debt, try to pay your credit card(s) in full or, at least, pay a bit more than the minimum balance will help keep your credit with credit card companies in good standing and, of course, pay less (no fees of interest adding up) and get our of debt faster.
They Avoid Loaning Money
Family and friends may require financial aid and it is okay to help them in a time of need. However, it is important not to make lending people money a habit. Continuing to do so not only drains you of your money but also teaches others a bad habit. Sometimes (you get to decide when) some tough love is what others need so they learn their money lessons.
- Make shopping lists and ensure you stick to them.
- Avoid instant online ordering.
- Use a budgeting app.
- Unsubscribe to sales-alert emails.
- Redeem your credit card rewards
To become debt-free or move from being debt-bound to a happier, wealthier person requires a lot of work, focus, patience, and dedication. There are many examples of now rich and famous people making millions that have been homeless at some point in their life or were into debt up to their neck. There are also cases of once wealthy A-lists that did not make good use of their money and have ended up living on a very tight budget.
Using money wisely and leaping out of debt (and staying there) is not rocket science but it does take a lot of determination and courage. Draw some inspiration from those that have made it. Perhaps, some of the ideas highlighted here work for you and help you pay down your debts more quickly!