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Learn the debt free habits from those who’ve done it
What would you do if you were debt free? Would you fire your boss? Travel more? Spend more time with kids? Focus on your well being? Lounge in the AM drinking your favorite coffee?
Being debt free can help you do that and more. It’s not to say it’s easy. It surely is not. It is more than worthwhile. Knowing how to stick with it after the shininess of the goal fades is what separates the starters from the finishers.
Creating debt free habits can help you stay the course when you’re starting or are tired of doing the cheap stuff over the fancier options. To help, I’ve heard from hundreds of families who are debt free. They’ve shared with me their routines and habits they used to be debt free. These tips work on any income no matter how small. You don’t need to make six figures to be welcome here. <3
You don’t have to earn a million dollars make this way of life easy. With the right mindset, you can reach any money goal you want, which in turn helps you follow your real passions.
Spend less than you earn
Debt free families spending less than they earn almost always. When they do this, they have less dependence on their incomes because their lives don’t cost the full amount of their paychecks. This gives them freedom to run their life as they want. They have the choice to travel, invest, parent, and work as they please. It might look like luxury, but actually, it’s a lot of saying no to purchases that don’t meet their biggest goals.
Budget every paycheck
Once they get their paychecks, they plan their spending on what they earned. They make a plan that gives every dollar a job. Once they spend their money, they match what they planned with what the real expense was. This helps them stay within their budget. Checking your numbers with their budget keeps them from overspending. They move forward no matter what happens. If they need to make changes, they change their budget. It becomes a living tool for running their lives.
Automate your savings
Because you can’t be everywhere at once, some debt free families use automatic savings finders (hello! free money) like Ebates and Honey. They pay you to shop for items you’re already buying. Gone are the days of clipping coupons by hand and organizing them. The pains! Ebates and Honey do it all. Best yet, you can get $10 by signing up through my exclusive link for Ebates.
The other option is Honey, which is coupon finder that’s new to me. It’s like Ebates but tracks prices of products you want to buy and can alert you of price drops. I use this for vitamins and products I can’t find cheaper in town. Honey also saves you hours of time and money, making paying off your debt (or going on a vacation) that much closer.
Research planned purchases
Debt free people practice researching the market for products they plan to buy. Knowing what the cost is for products they buy can save them lots of cash. When sales come they know if the deal is really good or just marketing. Some will make a price book for regular purchases from the grocery store or other places. This can change what you think of the bright red “BUY NOW” sales prices if you know they’re not the deal they seem to be.
Tune out marketing
Debt free people are somewhat immune to traditional marketing. They notice car dealerships talking more about “low payments” than anything else. They notice how much companies focus on lending over selling the products because lending can be very profitable for the business.
They also don’t feel pressure to buy when something is on sale unless they need it. They know companies use sales to get sales. Surprisingly enough, you save 100% if you avoid buying unneeded items. they know the good deals and buy those.
Track your progress
Debt free families track their progress in reaching their goals. What gets tracked gets managed. To do this, many use Personal Capital, the best free money app on the market.
Personal Capital tracks all of your financial accounts in one place. More information about it is available in my review. I personally stand by it 1,000%. It’s so much better than other apps like Mint and gives you a better picture of your financial life and what you need to do to get to the next level.
Take it one day atta time
They take their journey one step at a time by remembering life is not a race. There is room for everyone at the top. If where they want to be feels light years away, they do what they can to make today count. Those one days at a time add up to astonishing progress when no one is looking. Soon, they’re considered an overnight success even if they’ve worked on their goals for years!
Ignore pressure to buy new
While friends are doing fun (and expensive) things, debt free people don’t feel the pressure to buy new all the time. If they have the money to spend they might buy it used to avoid the killer depreciation rates that hide everywhere. They don’t worry about what anyone will think about their used purchases. In fact, they might pride themselves when someone says they didn’t know they bought it used!
Find cheaper alternatives
Debt free people look for ways to cut costs without compromising. Those are the easiest ways to save money if you don’t feel like you’re depriving yourself.
- Buying bulk household goods at Costco
- Brewing a tasty coffee at home over buying takeout
- Getting Netflix rather than paying for spendy tv packages
- Making their home energy efficient especially when traveling
- Learning how to cook
Be willing to get uncomfortable
There are only two ways to change your numbers. You can cut expenses and/or you can increase your income. Doing both are crucial. While frugality is amazing, sometimes it’s not enough if you have a low income. Families on Team Small Shovel still have to pay for the basics. Adding in more income like a side hustle is the only way to make progress.
For the debt free family, they look at their expenses and income. If they have a lower income and want to get rid of their debt fast, they focus on getting more income!
There are many ways to do this. A few of my favorites are in order of fastest way to get income are:
- Work overtime
- Pet sit
- Sell items
- Start a blog
- And others
If doing some side work takes time out of your life now, it won’t be like this forever. Getting a little uncomfortable with your status quo by trying some new ways of earning money will give you the change you want faster. You’ll have more income to get freedom faster.
Plus, you never know where a side hustle can take you. Doing something fun in the wee hours could catapult you into a different life.
Embrace minimalism and organization
Debt free people don’t always like buying items, so some embrace minimalism. This can mean buying one quality item over 25 so-so ones and then taking care of it throughout its useful life.
They also sell or donate what no longer serves them to avoid disorganization. Not having an organized home can lead to spending more money. By having a good idea of what you already own, you can save lots of money by not overbuying.
Learn how money works
Debt free families make a plan and follow it. They borrow personal finance books and may enjoy reading new money perspectives. There are many amazing personal finance experts that don’t have the fame of say Dave Ramsey but can provide some great advice. It pays to read a variety of perspectives and decide for yourself and with guidance from a certified financial adviser what’s best for your situation.
They also pay special attention to how marketers, even bloggers, earn their income. How someone earns income can change their recommendations if they are not upfront and honest. That doesn’t mean all recommendations are bad, but it does give you an idea of why someone talks about certain products more than others.
Watchdog your money
They have healthy cynicism of business and banks and expect occasional human error. To protect themselves, they check every financial statement they receive. They make sure they get credit for the dollars they spend and don’t overpay. When an error happens, they ask for a fix. This can save them lots of financial stress depending on the error.
No joke, a relative of mine had a bank error totaling over $40,000. I’ve also had a lender not apply our principal only payments in the month I’ve paid them. If no one is looking, it can go missed and hurt you! Knowing your money solves this.
Watch the “little stuff”
Some advisers say to not worry about the “little stuff.” Things like coffee, clothes, toys and more. Debt free people do factor these costs into their spending because they know they add up. No matter how someone spends, the math will be either positive, negative, or equal at the end of the month. In a year, the little stuff can add up to more than what you’d spend on a car if you let it.
Shop with purpose
Rather than using shopping as entertainment, debt free families shop from a list and for a purpose. They know wandering aimlessly in Target, while fun, could land them with cute products that don’t help them reach their biggest goals. Shopping with lists keeps these families mindful of their spending and reaching their goals.
Never pay fees
Debt free people work hard to avoid fees as much as possible. They pay their bills on time to avoid any late fees. They return library books to avoid extra charges (plus, it’s courteous to do so). They also look for companies who provide the best deals without added fees. They are fee ninjas!
Some of the silly fees they try to avoid like the plague are from
- Paying late
- Returning items late
- Account maintenance
- Investing fees
- Withdrawing early
If something happens and the business charges a late fee, they ask to remove the fees if they fix it. This can help protect your credit score and keep your accounts in good standing in case there’s a mistake.
Commit to never using debt again
Debt free people know what it’s like to feel weighed down by debt. After they pay it off, they commit to not using debt in their life to build wealth or run their lives. This requires some patience to wait to buy but gives them more freedom to run their life.
The debt free people who do use credit cards pay them in full every month and don’t consider it free money. Natural human behavior is to not do this. Debt free people see a credit card as something you charge and pay for in full every time. Some track their credit card purchases in their budget as they happen to avoid spending too much. They are comfortable saying no to credit cards if it’s too much temptation to overspend. There shouldn’t be shame in either preference as long as you can manage it well.
Debt free people also decide not to finance cars ever! It’s the same as paying someone else to light your money on fire. The effect is the same with how much new cars depreciate over time. Instead, debt free families buy gas efficient vehicles that hold their value and that they can buy in cash. Sometimes these look like Hondas and Toyotas and not Beamers or dually trucks. To afford this, they plan their next car buy and save small amounts of money from their paychecks to make it happen. Then, when they need to buy a new car, they have cash and its no stress!
If you liked this post, please share it with a friend or loved one. Heck, grandma might even like it. 😉
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