10 Habits of Debt-Free People To Start Now

Written by: Alexis Schroeder

Publish Date: January 23, 2023

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If you want to be debt-free, it’s 100% possible and you can get started now.

We’re going over the top 10 habits of debt-free people to start now. You can make your dreams come true of living debt-free and gaining financial freedom. This post was inspired after reading Atomic Habits.

In this post you’ll learn:

  • 10 habits of debt-free people
  • How to get started with each habit
  • Tips for saving and earning more money

Waiting to buy something

Before you make a large purchase (and even small purchases), you should practice waiting periods. This is where you wait a period of time before making a purchase.

For me, I find that going into stores gives me a mini high. I get a boost of happiness when I think about buying stuff, but once I get home, I’m happy I didn’t purchase anything or get anything that wasn’t on my shopping list.

This is why it’s important to wait to buy stuff.

Instead, ask yourself these questions:

  • Is this purchase a want or a need?
  • Does this purchase fit in the budget?
  • Will I be happy with this purchase one month from now?

Setting goals

Debt-free people always have a financial goal in mind. Goals are important because they keep you motivated and your eye on the prize. Without goals, you’re wandering around aimlessly and have no reason to save any money.

Instead, you’ll spend more, not invest as much, and buy more things you don’t even need.

Example of financial goals:

  • Investing enough so you can retire at 65
  • Paying off credit card debt in full
  • Paying off student loans
  • Saving 20% for a house down payment

Once you pick a financial goal, it’s important to make a clear, specific plan. For example, if your goal is to invest enough so you can retire by 65, you’ll need to invest enough each month to reach your goal. You might also need to cut back on spending so you can meet this goal. Find out how much you need to invest each month by using this retirement calculator here.

Read this: 8 Finance Goals For A Wealthy Life

Not carrying a credit card balance

Debt-free people do not carry a credit card balance. They might be taking advantage of credit cards for their bonuses and cash back, but they’re immediately paying off the balance once using the card.

This is a great habit to practice because you’re never spending more money than you have. As we’ve seen since the inception of credit cards, people lean toward treating credit cards as free money because it’s so easy to swipe a card and forget about it.

You need to be intentional when using credit cards and if you can’t, there’s no problem with not having a credit card. It’s not for everyone.

Negotiating bills

Did you know you can negotiate bills like credit card late fees and interest rates, bank fees, cable and satellite bills, cell phone bills, internet bills, and even medical bills. Debt-free people are doing this all the time. Time has a helpful article here on 3 people who successfully negotiated bills.

Not only that, debt-free people are making sure they’re getting the best price possible for recurring bills. For example, my family and I switched from T-Mobile to Mint Mobile and this change is saving us over $55,000 in our lifetime.

Start to question if what you’re paying for is worth it and if you can get a better deal elsewhere. Likely, you can.

Using cash

Debt-free people love using cash. I do a caveat that I’ll talk about later in this post, but this habit is still relevant. Buying things in cash is physically handing something over to someone else and getting it taken away from you.

Imagine spending cash versus a credit card. It’s a lot easier to spend money with a credit card because nothing is physically getting taken away from you.

If you’re someone trying to get away from credit cards, take advantage of the cash envelope system which will drastically reduce your spending. The cash envelope system works by you putting cash into different envelopes based on budget categories. If your grocery budget is $300, you only have $300 for the month.

Talking about money with significant other

It’s so important to talk about finances with your spouse or significant other. This is because it gets you both on the same page and the same financial goals in mind.

This is incredibly important because if you’re sharing finances, you’re technically spending each other’s money.

Talk to your signifiant other about the budget, retirement plans, debt, etc. It’s especially important and beneficial to do this early on in a relationship. One of the number one causes of divorce is money-related, so this is a crucial conversation to have.

NPR has a great article on how to talk to your partner about money here.

Having an emergency fund

An emergency fund is a set amount of cash you have set aside in case of emergencies. You have peace of mind with an emergency fund because you know you will have everything covered financially in case anything happens. 

Some experts recommend having $1,000 saved as a starter emergency fund. That’s a great idea, but the main goal should be 6 months of living expenses.

You should only use your emergency fund in real emergencies like:

  • Job loss
  • An unexpected trip to the vet
  • Medical emergency
  • Car or house repairs

Your emergency fund needs to be accessible at a moment’s notice. It’s also beneficial to park your emergency fund in a place that is going to grow some money without risk. 

Park your emergency fund in a high-yield saving account like Ally, Betterment, Marcus by Goldman Sachs, or CIT Bank. You have many options, so do your research on high-yield savings accounts and see which best suits you. 

Read this: 5 Step Guide To Starting An Emergency Fund

Not falling for sales and clearance gimmicks 

Only buy something if you need it, not just because it’s on sale or on clearance. It’s so easy to fall for a good sale when in reality you might have not even bought the item if it wasn’t discounted.

Debt-free people aren’t falling for sales or clearance tricks.

Sometimes sales and clearance items aren’t even that discounted, but the big sale sign can get us. Just because something is 10% off doesn’t mean its a good deal.

Be intentional with your purchase and ask yourself if you would buy the item if it wasn’t on sale.

Always learning

When you’re constantly taking in personal finance education, you’re more wired to want to complete your financial goals and stay on the right path.

If you’re following people on social media and listening to podcasts that are all about financial freedom, just imagine what this can do to a person. You’re going to start to think it’s possible for you too.

I highly recommend following people on Instagram like @personalfinanceclub and listening to podcasts likeThe Dave Ramsey Show. Read books like Broke Millennial: Stop Scraping By And Get Your Financial Life Together and The Simple Path To Wealth.

There are also affordable courses online that teach you everything you need to know about personal finance. How To Make Money Like A Millionaire is a course that teaches you how to budget, be frugal, credit cards and debt, banking, insurance, taxes, and even estate taxes. If you’re like me and no one taught you about managing money, this course is for you.

Read this: 10 Best Personal Finance Books To Read

Taking advantage of credit card rewards

Though this is a controversial habit, we are debt-free and take advantage of credit card rewards. This year alone, we received over $3,200 from cash back on our credit cards.

We used our credit cards for everything like groceries, gas, medical bills, and other necessities. I highly recommend taking advantage of credit cards if you’re responsible with them and can pay off the balance the same day you use the card.

My top credit card recommendations are the Chase Sapphire Preferred card and Chase Freedom card. 

Key takeaways

10 habits of debt-free people

  • Waiting to buy something
  • Setting goals
  • Not carrying a credit card balance
  • Negotiating bills
  • Using cash
  • Talking about money with significant other
  • Having an emergency fund
  • Not falling for sales and clearance gimmicks 
  • Continuing education
  • Taking advantage of credit card rewards

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