6 Habits of Debt-Free People that Will Change your Life
Many people are trapped into a cycle of debts, and ironically, even individuals earning six figures are still victims of this cycle.
However, did you know that you can unchain yourself from the shackles of debt, and live without having wait for your next paycheck? Yes, it`s possible, millions of people around the globe do it every year. How do they do it? You ask.
It all about changing your way of life, which entails dropping some bad financial habits and picking new ones. A word of caution though, becoming debt free is not easy as it sounds.
Nonetheless, there is no such greater feeling than not having a debt looming over your head. Having said that, let us have a look at some of the key or rather effective habits that debt-free people engage in. Most of these tips are going to change your life
by providing you with inspiration on how to get started on your debt-free financial journey. Additionally, the tips will also ensure that you manage to stick within the debt-free zone without sliding back to debts.
Here are the top 6 habits of debt-free people that will change your life.
#1 Live Below their Means
Living within or even below your mean is the foundation on which financial freedom is built. Living below your means is not very complicated as it basically entails living a lifestyle below your net income. This is to mean that you do not have to spend more than you earn. Regardless of whether you can afford to live beyond your means allows you to make more savings than expenses. See, the beauty of getting content and deriving satisfaction with already what you have steers you away from overspending and borrowing, which ultimately results in debt.
Debt-free people never overstretch or rather strain their budget to live a lifestyle they cannot match or sustain. What matters to most of the debt-free people is not living a life of extreme, but rather having a safe future, investing and building wealth.
#2 Have a Budget
Creating and sticking to a budget is probably one of the most powerful and effective traits that all debt-free people have in common. See, even if you earn a six-figure income, it`s always a good idea to plan for your income. As a rule of thumb, you should first allocate your budget to your basic needs such as foodstuffs, and utility bills, before allocating to other needs. Also, your budget should factor savings and emergency funds. A word of caution though, you should have a budget that aligns with your life goals and have a realistic budget, which is in tune with your monthly income. If you develop and strictly adhere to your budget, you are sure to successfully launch your personal journey towards financial freedom.
#3 Avoid Credit Cards and Opt for Cash
This habit may not be true for every debt-free individual, but most of them elect to use cash over credit to make purchases.
Using cash over credit card serves a lot of benefits. First, it frees you from the monthly interests and the risk of falling into debt. Secondly, it teaches you that if you do not have the money, you can never spend. You will not be tempted into buying now, and then worry about how to pay it later. You can do this too: ditch your credit card today, employ the cash system and follow some rules.
What`s the point of tirelessly working for money, if you cannot manage it? Look, if you desire to become debt-free and gain financial freedom, you must learn the discipline of setting financial goals. Debt-free people love setting financial goals, which they strive to achieve within a time range. Having clearly defined goals allows them to focus on their efforts as well as remain focused during their journey. For instance, a debt-free person may want to go on vacation during summer or get a new handbag for themselves. Therefore, rather than expecting the bank to finance their trip, they plan, set a goal on how to pay for the trip, and then work diligently with their eyes set on the prize.
#5 Culture of Saving
In the same breath of income allocation or budgeting, debt-free people are known to allocate a percentage of their income stream to savings. To them, saving is seen as a way of “paying” or rewarding themselves for their effort. And savings is not only manifested from their income streams, but rather from a gamut of areas. For instance, the debt-free individuals are known to use coupons and rebates, whenever they make their purchases. Similarly, they cut out monthly subscriptions for utilities they do not actually require, and seek alternative options including free activities. If you are looking to free yourself from debt, you do not only have to have a 401 (k) account or regular account but also have a keen eye out for great deals and savings.
#6 Learn When to Say No
Learning when to say no is not easy as it sounds. See, you might be on an extremely limited budget, but I guess you would opt going out to the bar for a fun Friday night with your friends. Sure, going out with friends is fun, but if it`s not on your budget, it will surely mess you. Debt-free people have learned to let some of the things, events, or purchases pass, regardless of how the deal is tasty. Learning how to say no from unforeseen and unnecessary expenses is one way of getting yourself from debt. Learn to say the two-syllable word, and voila, you`re free from debt. And if you have good friends, they will understand.
As you have seen, debt-free people are just regular people, but financially principled. Do not allow yourself to think that having more money, or a salary addition is going to set you free from debt. No. Financial freedom is more of becoming principled and changing your way of life. Finally, have patience and self-control. This is evidenced in delayed material gratification among the debt-free people. Learn to save, and build up cash for a future investment.