Financial Life
9 Habits of Debt-Free People
26May 2015
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King Solomon said, “The borrower is slave to the lender.”

When you take on debt, you become a slave. Your future earnings become spoken for… You’ve spent your money before you’ve even earned it.

Debt is a mortgage on your future.

But what actually separates those who are debt-free from those who are debt-enslaved?

We know it isn’t income.  We’ve all heard of the man who makes only $30,000 per year, yet manages to live debt-free and save millions of dollars over the course of his lifetime, while the millionaire declares bankruptcy because he fails to manage his cash flow and live within his means.

The truth is anyone – and we mean ANYONE – can become debt-free.

Dave Ramsey said, “People who become debt free have decided that enough is enough.  They know that their old lifestyle isn’t working, and they’re ready to make some serious changes.”

Here are 9 habits you can adopt to wipe out your debts and take one step closer to financial freedom:

1.  They widen the gap between income and expense

More than any other behavior, the most important habit for avoiding debt is to live within your means. The financially free know what it takes, and take great pleasure in watching the gap widen between their income and their expenses. Whoever you are, wherever you live, whatever you make, spend less than you earn.

2.  Instead of paying debt, they pay attention

Debt-free masters pay very close attention to their finances.  They know exactly what they earn, exactly what they spend, and they keep a wide enough gap between the two.  They live on less than they make and avoid buying things they can’t afford. Keep a finger on your financial pulse, so you can make smart, well-informed financial decisions.

3.  They are masters of delayed gratification

Debt-free people didn’t get out of debt by giving into impulses and following their every whim. They made conscious daily decisions, and avoided impulse purchases or financial decisions that lead to instant gratification. They allow themselves time between deciding that they want something and actually buying it.  During that time they save the necessary money, comparison shop, and wait for sales… and oftentimes get a much better deal than the person who impulse shops.

4.  They aren’t afraid to say “No”

We’re all faced with financial decisions every day that can either move us closer to being debt free, or farther from it.  We are all tempted from time to time… by social functions that we don’t want to miss, meals that we don’t feel like making at home, and that seemingly insignificant $5 daily coffee that we justify as “so cheap we won’t even notice,” but that makes it onto our annual expense list at a whopping $1825 per year.  And while these tiny decisions feel freeing in the moment, they are actually enslaving our lives long term.  Debt-free people know their “no’s” and aren’t afraid to use them.

5.  They budget

The key to living within your means AND being able to afford a comfortable quality of life is budgeting. To budget means to have a financial intention… Debt-free people consciously define where each of their dollars should go, and see to it that they arrive there safely. This doesn’t mean they don’t allocate funds for fun and indulgence… it simply means that they define their indulgences in advance, and keep their cost within reason.  Paula Pant says you can afford anything, just not everything. People that are debt free still indulge every now and then; the difference is that they know when they can, and when they can’t!

6.  They aren’t materialistic

You won’t find debt-free people keeping up with the Joneses. That’s because, instead of finding gratification in their “stuff,” they find immense fulfillment in their own personal power. They don’t feel a need to impress other people in an attempt to win their approval or esteem. While some may still prefer high quality material goods, they remain in integrity, only buy when they can afford, and don’t define themselves exclusively by their possessions.

7.  They are prepared for unforeseen circumstances

Debt-free people know that the only thing they can plan on is that nothing goes according to plan, and they are prepared when the time comes. They have to discipline to put aside a specific amount of money each month that exists solely for their security and peace of mind in the event of an emergency. One of the easiest ways to start an emergency fund is to average out all of the “unforeseen expenses” over the last 12 months, and use that number as your starting point.

8.  They’re self-reliant

People who achieved a debt free status did so by making no excuses and accepting full responsibility for their financial lives. They don’t wait around for luck to fall into their laps, for someone to bail them out, or to win the lottery.  They know it’s up to THEM ALONE to earn a sufficient income, to have an emergency fund, to live on less than they make, in order to create the financial future they desire. They take full control of their financial fate and they’re willing to do the hard work now so they can reap the benefits later.

9.  They consciously CHOOSE their financial fate

Debt-free people live consciously, and shape their lives as they see fit.  They know how to set goals and follow through.  They are the CREATORS of their future.  Somewhere along the line they made a conscious choice to become DEBT FREE, and they continue making that choice every single day.


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