10 Characteristics of Debt-Free People
AJ Smith | Credit.com – Tue, 4 Feb, 2014
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
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
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
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
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
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.
7. They Set Goals
You’ll find it easier to put aside money if you have a strong sense of what it’s going toward. This
works for when you are saving up for those shoes, planning a vacation or thinking about
retirement. Debt-free people set specific goals so they know what they are striving for. This
helps you stay on track. Retirement can be a hard one for young people. It seems so far away!
Think about what sounds appealing about retirement. If it’s travel, imagine the places you will
visit. Now the goal seems more specific.
8. They Say No
You may get lots of tempting offers throughout the week for lunch with co-workers or dinner
with friends. Don’t be afraid to say no. Debt-free people know that saying no to smaller expenses
can add up to big savings. This doesn’t mean you can’t have any fun. Host a potluck dinner
instead of trying out the new, expensive restaurant. Meet up with friends in the park for a walk
instead of taking an expensive exercise class.
9. They Know the Value of Cash
Debt-free people know the value of a dollar… because they see it! It can be easy to overspend
when you are never seeing actual money. Having to part with some cash can remind you the
transaction you are making is real. Plus, once that cash is gone, it’s gone. Try only using cash for
a while and see how it changes your perception of purchasing.
10. They Value Experiences Over Stuff
Debt-free people aren’t focused on things. They value experiences more than having the latest
things. The average person will list family and friends high on what they value. But are your
choices reflecting that? If you are working extra hours to pay for a fancy meal with the family,
think about the tradeoffs. Would you be better off not working late and having two (or five or
10) meals at home with the family?
To become debt-free, you are going to have to shed some of your current bad habits and take on
some new, more constructive ones. Use the people who already living debt free as inspiration.