10 Characteristics of Debt-Free People
Whether you’ve resolved to get debt-free in 2014 or you have a long way to go, it’s good to be inspired. Look at people you know who are already living debt-free lives. Whether it’s a friend, family member or co-worker, the person you are thinking of probably shares similar qualities with other debt-free people. Here are 10 common characteristics you can copy to live within your means.
1. They Pay Attention to Details
You won’t notice that recurring fee on your credit card for the gym you’ve stopped using if you’re not checking your statement regularly. People without debt monitor their personal finances closely. They are less likely to waste money by forgetting about payment due dates or overdraft fees.
You can start paying more attention also. The key is just to start. Try looking at your credit card statements every month. Next monitor all of your spending. Now add up your income. Compare the two and see where you could cut back. Re-visit this budget a few times a year to stay on track.
2. They Know Their Stuff
Debt-free people do their own research. They might have an accountant, but they don’t send over paperwork or sign their taxes without looking them over. If you want control over your finances, you need to learn about them. It may feel overwhelming but the sense of security you will feel in understanding what’s happening with your money will outweigh the discomfort.
[Editor's Note: If you want to get an idea of where your credit currently stands and how your debt is impacting it, the free Credit Report Card will provide you with two free credit scores and a breakdown of your credit profile.]
3. They Pretend They Make Less
Even if you are already deep in debt, you can start to improve your situation by immediately changing the way you look at your money. Imagine you make 10%, 25% or even 50% less than you do. Make a budget using that math. It may be impossible at first, but start making cuts to your spending.
Debt-free people live on less than they make. This allows them to put money aside for buying a house, retirement and an emergency fund. This provides a financial independence that allows you more options in the future.
4. They 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 shoes, but how will they help your long-term financial goals? This doesn’t mean you can’t ever buy shoes! It just means you have to save up before you buy them. This also gives you the time to consider if you really even like the shoes and avoid impulse purchases.
5. They Aren’t Afraid to Ask
Ask for help. Ask for lower interest rates. Ask for forgiveness when they make one late payment. Debt-free people take control of their finances and they aren’t meek about it. If you know someone who has met a financial milestone you admire (saved $1 million for retirement, bought a car in cash, etc.), don’t be afraid to ask how they did it.
6. They Save
Whether you got a significant bonus or a $25 check from Grandma, you should think first of paying yourself. This is true of your regular paycheck as well. You know you have to pay the rent (or mortgage), so treat your savings account the same way. Make it a habit. And better yet, make it a mindless habit by setting up automatic deposit. Debt-free people know adding even small amounts now will give you more financial freedom later.