Being debt-free is not about having a huge income to cover your expenses. In fact, it’s not just about the numbers. When look into the bottom of it all, being debt-free is about having characteristics and habits that make for a healthy financial life.
Do you know people who are debt-free? Then it might be time to start asking what do they do, what characteristics they have and stop asking how much they make, or how much assets they have.
Here are some of the characteristics of debt-free people that you might want to copy.
Their eyes are trained to look at minor details
Mortals like you and me might not make so much fuss about little details such as a minor fee charged on your credit card for reasons you cannot remember, or recurring fees for subscriptions that have already expired, or the banking fee charged upon withdrawal on a different ATM machine. Many of us might think that this is too much — a waste of time for such minor stuff. But that’s exactly the point. Debt-free people have both their eyes on their finances. They are closely monitoring it.
The same level of attention to detail could make the difference between getting a higher tax refund, a higher savings rate, or if you’re a businessman, a percentage of profit.
We encourage you to start paying attention to details, too, for example by having a budget and continuously updating it every day. See what difference it makes when your finances are transparent to you more than before.
They pretend they have no money to spend
Debt-free people create an artificial environment of scarcity. In other words, they pretend they have no money when in fact they do have. This helps them avoid spending and put their money on their priorities, i.e., make their money make more money.
If you are currently in debt, you could do that trick, as well. Pretend as if you don’t have money during paydays. Try making an automatic monthly transfer, such as 20%, from your paycheck to a personal account. Then from that personal account, make an automatic schedule of monthly payments to your credit card.
One day, when you’re already out of debt but have planted this habit, you could simply continue what you’re doing to start saving for your retirement.
They are practical
People who are pragmatic generally spend less. They don’t care if they are not driving expensive cars, or wearing signature bags and clothes. If something does the job, as long as it’s good quality, practical people take it. What good is driving a European turbo car if it’s a gas guzzler? Japanese cars work fine. They’re quality, require less maintenance, and they’re cheap on the gas. Tell you what: impractical buying of cars is one reason why some people go into debt.
They are patient
Debt-free people wait. They wait for black Friday sale. They wait for their savings to grow before purchasing something you and I might purchase on impulse. They have patience to look for the best deal, rather than buying right away the first item they can tick off on their shopping list.
Impatient people are careless about their spending, while patient people, because of their amazing ability to fight their urges, are able to stop the outflow of money from their accounts.
Acquire such ability and see if your debt won’t dwindle in the next few months.
They set their eyes on the future
Debt-free people are not reckless. They know that living today as if it’s the last day is not right. There is still a future ahead, and with that, enough time to save and grow their money. They see a bright future ahead.
On the contrary, people who go into debt are the ones who can’t delay gratification for the sake of their future. They take “living in the moment” literally and to the extreme. For them, now is the only time that matters so buy what you can buy now (and pay later with debt).
They set goals and they follow through
Debt-free people set financial goals. It’s probably the biggest difference between them and people who are in debt.
When you set goals and are serious about it, the goals will live inside your head and become the force that drives your forward. Every single day. It’s the motive power in most – if not all – of your actions.
If they set a goal such as to save money for retirement or for a permanent roof above your head, debt-free people believe that nothing could stop them, except debt. So they eliminate that barrier and reach what they had in mind.
They use cash more than credit
Debt-free people understand that credit cards will only put them behind bars – the prison called debt. When using plastic or electronic cash in paying for purchases, you can’t feel the money escape from your hands. You can’t feel the pain of letting go of your hard-earned money, that’s why people who use credit cards are prone to spending more than what they can afford.
They understand credit
More importantly, people who are debt-free understand both sides of a credit card. There is good and there is evil. Debt-free people, however, avoid the evil, and use the good more often. They use credit cards to their advantage, by earning rebates, cashbacks or flyer miles as they do transactions they would do in cash anyway.
And not only that. By using credit properly, they are able to build better credit rating, giving them access to better loan rates, which they can further use to their advantage in building their wealth. For them, credit should be a tool, not a slave driver.
They accept their mistakes
Debt-free people, especially the ones who have just recently gotten out of debt, are people who have accepted their past mistakes and have taken actions to correct them.
They listen to other people for practical advice, and they are open to alternatives and solutions that can help them get out of debt.
Examples of these people are our previous clients who have called us back only to thank Financial Rescue for helping them pay off their debt. They have found the reset button that they need to press, in order to start afresh with their financial life.