Do you know people in your circle that are already living debt-free lives? Well for us 20-something’s, that feels nearly impossible with our entry level jobs and never ending student loan debt. As hard as it seems, it is not impossible. If you look at people who are successful they will tell you it wasn’t easy, but I bet they will tell you that it was worth all the sacrifices. For those of you who envy those debt-free people, let’s take a look at why they now live a financially savvy life. According to the Business Insider, here are 10 Characteristics of Debt-Free People:
1. They Pay Attention to Details
People without debt monitor their personal finances closely. They know how much money they have coming in and how much they are letting go, and I can assure you they aren’t forgetting about payment due dates or overdraft fees. If this is something that you struggle with, the key here is to just 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 your budget a few times a year to stay on track. This is a great time to evaluate your needs vs. your wants.
2. They Know Their Stuff
Debt-free people do their own research. 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.
3. They Pretend They Make Less
Imagine you make 10%, 25% or even 50% less than you do now. Make a budget using that math. It may be hard at first, but start making cuts to your spending. Debt-free people live on less than they make. Do you ever look at a Millennial with expensive clothing or accessories and wonder how they can afford them? Over and over I see poor people spending all of their money on luxury items, making them appear to be rich. Yet at the end of the day, they are broke and can’t afford to pay their bills. I have been guilty of this in the past but have successfully changed my habits. Be smart and live within your means. One quote that I will always try to live by and I think you should too is, “Have more money at the end of the month, not more month and the end of your money.”
4. They Think Long Term
Many of us focus on instant gratification. Sure, it would be nice to have this season’s hottest gadget, but how will that help your long-term financial goals? This doesn’t mean you can’t ever buy nice things! It just means you have to save up before you buy them. Avoid making impulse purchases. Take a couple of days to think about if you really want it or if it was just something you felt you had to have in that moment.
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, don’t be afraid to ask how they did it. Talk to a representative at Community 1st Credit Union to help you get started! They are here to help you with your financial needs.
6. They Save
Whether you got a significant bonus or earned extra cash on the side, you should think first of paying yourself. This is true of your regular paycheck as well. You know you have to pay the rent and bills, so treat your savings account the same way. Make it a habit. And better yet, make it an effortless 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 that must have item, 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
Don’t let tempting offers by your friends or family influence your decision to spend money. It is okay 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. Going out for dinner and drinks can add up quickly, so instead, invite friends over for a party or host a pot luck dinner. Have everyone bring a side dish and their beverage of choice and let the party begin!
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. Swiping your card here, swiping it there…. it adds up and you may not understand how much you actually spent. 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 several meals at home with the family? To become debt-free, you will have to get rid of your bad habits and take on some new, more constructive ones. Use this list to help motivate yourself!
If you want to get out of debt and stay debt-free, IT IS POSSIBLE – no matter how much money you owe! Even if you don’t think you display these characteristics, you’ll be amazed by how your perception of wants and needs change once you start and stick with it. Don’t let your circumstances or income ever be an excuse. Remember, everyone has the ability to change their ways and work towards a better financial future!
Until Next Time,