Friday, February 7, 2014

Habits of the Debt-Free

I saw an article on Yahoo earlier this week HERE.

It is a list of 10 traits that Debt-Free people have.
The author states that in order to be debt-free you need to think and act as those who are debt-free.

There are many lists of ways to improve your life out there, but I thought this one was pretty spot on.
At least, these are habits that I have made my own and I have been totally debt-free since March 15 2007.

Here's a brief synopsis of the list in my own words......

1. They pay attention to the details.
If you want to be Debt-free, pay close attention to the details of your money.  Things like always checking your account statements, reconciling your statements each month, always recording withdrawal/deposits/debits.  If you have auto withdrawals coming out of your accounts, keep an eye that they are accurate.  Keeping an eye, as well, on your credit card statements that all purchases are correct.  Stay on top of payment due dates and avoid overdraft fees.  Pay off your credit cards each month to avoid interest charges.  Debt-free folks avoid late fees, overdrafts and interest charges whenever possible.

2.  They understand their finances.
Not everyone has a finance or accounting degree or knows tax law inside and out.  But even if you can't do all the legal/tax/investing work concerning your money, you make a point of learning as much as you can, so you can understand what your financial planner, tax expert/preparer, stock broker, insurance agent is telling you.  Debt-free folks never just hand over their financial information to another to manage blindly.  They have some level of knowledge about all things financial and ask questions if they don't understand something.  They never make financial decisions without knowing something about that decision first.

3.  They live on less than they make.
Debt-free people know exactly how much they bring in each month or year and make a point to live below their means.  They know where their money goes each month because they put it on paper and tell their money where it is to be spent(or saved).  They know they need money for unexpected emergencies and they know they need to think about their future(retirement), so they plan to live on a percentage of their income each year instead of squandering their whole paycheck every month.

4.  They plan for the long term.
Debt-free people don't just live for today, they think about their tomorrows.  Because they live below their means, they can accomplish saving for their financial future.  This takes a lot of discipline and avoiding instant gratification in a society that only values the "here and now".  Some times debt-free people feel at odds with our society and are often labeled freaks.  Wave that freak flag proudly! 8-)

5.  They aren't afraid to be bold.
Debt-free people aren't shy about asking others how they achieved a goal that is worthwhile to them.
If you want to be debt-free and you know someone who accomplished some financial goal, ask them about it, and then apply that advice to your situation.  That's probably how a debt-free person got there.....they saw or asked how others who were debt-free did it and applied those same principles to their own lives.
Be curious how people you know, who have won with their money, did it and don't be shy about getting some tips from them.

6.  No amount of money is too small to save it.
Debt-free people know that any little bit you put away for tomorrow will help you reach your financial goal.  $10, whether from your regular paycheck or some unexpected windfall, may not seem like much and not worth putting toward retirement savings so you may be tempted to spend it on some frivolous want now.  But getting into a habit of putting into savings regular small amounts can add up over the long haul(yah for compounding interest!).

7.  They set goals and can see the "Big Picture".
Debt-free people set goals, both short term and long term.  They have more focus because of their goals.  Like the snowballing debt principle(paying off debts helps you build momentum toward paying off More debt), setting financial savings goals helps you to keep moving forward with your money.  You reach one goal and that helps you stay focused on reaching the next goal.  All these interim goals eventually add up to your complete financial plan for your life.  Debt-free people don't like surprises, especially where their money is concerned.

8.  They can say No to their wants or find ways to satisfy them cheaper.
Debt-free people are good at telling themselves no yet not feeling like they are sacrificing all the joys in life.  They can deny themselves many of the "lifestyle inflation" wants in our culture that end up sucking up all that extra money people make as their salary increases.  It is very frequently that as people make more money they spend more money.  Debt-free folks are able to avoid letting their lifestyles expand at the same rate(or even a higher rate)as their salaries do.
Yet they are still able to satisfy their wants and have a balanced life by finding ways to enjoy the fruits of their labors in less expensive ways.  Find the priorities in your life and make trade-offs to achieve what is important to you.

9.  They know what everything costs them, not just in money.
Debt-free people know the value of a dollar.  They understand how hard it is to earn those dollars and how much of their life everything they have to pay for costs them.  When you think about that $500 designer purse you lust after as not just $500 of your money, but you having to work for 30 hours for to afford to buy it, does it still feel so appealing versus 30 hours of your life?  If you stop buying $500 purses, how many less hours over the course of your lifetime could you work and be able to do some activity you enjoy more than working?  Could you have retired years earlier if you didn't spend money on "things" you don't really need and spent your time how YOU wanted to instead of slaving for a boss?
Debt-free people know that things cost you in time out of your life, not just in money.  Money is merely a tool to get you somewhere you want to be in life.  The hours of you life are FINITE so spend those judiciously.

10.  Their values are different from most of society's values.
The majority of debt-free people value people more than things.  I'm not talking about the 2nd generation wealthy who have always had wealth, though some of them also value people more than things.  Most Debt-free folks have different priorities in life than our society.  Money is not the "end all" and "be all" in life.  Sure money is important, but it is just a tool.  A too that when used effectively can help give you a happier life.  It can take care of some problems in your life and keep stress away when you have enough money to avoid financial problems in life.  It's a tool to give you time with the people you love and help you to keep them healthy and happy and use it to make their lives better. 

So what do you think of  this list?
Or a Load of bullshit?

I didn't always have these habits.
They have evolved over the years.
Some where naturally easier for me to take up and some have been difficult......very difficult in some instances.  Like the money only being a tool to happiness and not the end goal in life, to just have money.

These aren't hard things to do if you just keep trying them.
They say an action only becomes a habit once you've stuck to it for 30 days or so.
That's all it takes to get it to become routine in your life.

Anybody can form a habit at any time in their life by just sticking to it for 4-6 weeks.
But it's all about WHAT we want to become our habits.
Try picking one of these 10 characteristics above and focus on making it a habit in your life for the next 30 days.
If you need support don't be afraid to ask someone for help too to keep you on track either.

If you want to be debt-free DO what the debt-free do.
A better life is in your hands!
So why not start now toward the life you want.



  1. Awesome post, Sluggy. Bravo!
    Carol in CT

  2. I've been 100% debt free since 2001-2002. I agree and follow all of the points listed, but please be aware of point#10. I don't now anyone who thinks like me, plus it is very, very difficult to maintain friendships. Be prepared to spend a lot of time alone. Be prepared to spend more time with family since they will think more like yourself (and come from the same type of background).

  3. Some great ideas here. I think, for many people #10 is the hardest. Lots of debt is acquired because people want to fit in with the society views, with how the neighbors live. Realizing and changing it would definitely benefit this country :)

  4. I'm sure I could be debt free if I didn't have all these people holding me back...

  5. I agree with this list. The biggest thing we do is disregard advertising (interesting since hubby made a career in advertising sales) and always live below your means. Don't every care what the Joneses have compared to you. We are also debt free. We use credit cards but pay them off several times per month never paying a cent in interest. We do so for the points which we rack up into several air tickets per year. We set budgets for things even when we don't have to and we don't pay by the month unless we absolutely have to (like a phone bill). We pay our house tax in a lump sum every year which means we have to save all year and in April we are going on holiday which is 100 % saved for upfront. The only kind of debt I consider ok is mortgage debt which fortunately we no longer have. That includes vehicles, as monthly payments can kill you. Drive a beater until you can afford better. PS your feedburner issue is fixed as your blog updated on my sidebar today!

  6. You are right. And once it becomes a lifestyle, you don't have to work very hard at it.

  7. I read this on Yahoo Finance,or something a kin to it, i have some of these qualities but not all of time, just trying to develop good habits is a life time struggle.

  8. I think that the term debt free can be confusing to some people. Although we have no outstanding debt (no mortgage, no loans and we don't carry cc balances), we still need $2500 a month to pay for health insurance, gas, food and utilities. It adds up quick. We're having trouble seeing The Big Picture right now because we're working so hard on the day to day stuff, but hopefully we'll get it in focus soon.

  9. I learned very early in my singlehood that some people don't want to be a friend unless money is spent for every occasion we did anything. I was not interested in going out every Saturday night or shopping at the mall. I had a house and car to pay for and am happy to say both are paid for! However, I still struggle to pay monthly bills and cannot afford things I need to have surgery.

    I have a very good friend who has more money than God. She never knows how much anything costs. I am not talking about personal information since she often tells me what she pays for things. We have know each other for about 30 years. I have always thought she likes to have the attitude that price is not a consideration. However, we talk prices all the time. I tell her about something and she gets it, even if I cannot afford the item. This affected attitude comes over her, then the next day we are back to talking the price of things.

  10. Excellent post--high school students everywhere should be exposed to the ideas on this list BEFORE college, marriage, first job, credit cards etc.

  11. Excellent words! Debt free ourselves. Worth it to note that the skills we exhibit in practicing our frugality, the thing that kept us out of debt, transfer over in other areas...and it is a thrill to see my kids tapping in to their creative resources too. There are far better ways to solve daily problems than tossing money at it. Just last night, my dd and her little friend were very carefully using a library card to scrape off the pictures on their last year's science fair project, so they could reuse the display board, as the didn't want to fork out he $3.50 for a new one. They didn't even ask me if I would pay, rather they sought to solve a problem on their own. I hope that when dd is in her first post college apartment in a decade or so, she will still use this sort of thought process to attack problems that arise.

  12. I saw a version of this on Facebook earlier this morning and feel it describes me pretty well. I've always been a saver and thankfully have passed that on to Kazi. I'm good at denying myself but allow myself a little splurge once in a while. My weakness is books and there are about 10,000 I'd like to buy right now but I'm sticking to cyber-borrowing from the 3 libraries I have memberships with. I might not get the book I want immediately but will get it sooner or later. And that's ok. I'm good at waiting.

  13. I'm taking Dave Ramsey's Financial Peace with a small group at church and decided to invest in a 'financial coach' to help me figure out a good balance of saving and spending..hoping it will be successful. I'm not doing too bad - managed to get debt free with some emergency savings (though due to an inheritance mostly rather than my own doing) I'd like to retire in 8 yrs at 55 since we can take our medical with us (supposedly) I'll likely still work but hoping I can hold out where I am now since it's not a long drive and I have senority and good benefits but it's stressful with the coworkers and rotating shift.
    I've never been good at waiting - well not in a long long time- but am trying and have been doing pretty good (at least the month I've been doing the course!) I'm bad at emotional spending but know in my head things don't really bring happiness- I want to save to spend on some travel. these tips make sense -w ill go back and re-read when I have more time! thanks for sharing!


Hey there! Thanks for leaving a comment.
All Anonymous commentors will be deleted.
Please include your name in your comment, or choose the 'Name' option and put your name or whatever you call yourself, in the box. Thank you.

Though I moderate it's partly to keep trolls at bay but also partly so that I read every comment. I don't often respond to comments so if you need me to answer you please write me at my email addy posted on my "About Me" page, linked on the side bar.