Unfolding the Secrets of Debt-Free People
At a time and age where one in four millennials owes more than $30,000 in college debt, being debt-free seems almost impossible. While many are continually on the look out to refinance their student loans, there are people graduating from college with almost nothing in debt.
Similarly, there are many who are earning average salary who are debt-free and actually closer to financial freedom than those who are making millions yet can barely keep up with their piling debt. What, then, is the secret to being debt-free?
While there is no single determining trait that makes a person more successful at managing their personal finances than others, we’ve found 8 traits shared by many debt-free people that help them stay financially secure.
1. They’re meticulous
Debt-free people pay close attention to their personal finances. They know how much they earn, budget their spending accordingly and keep track of where every penny goes. Being aware of their spending patterns enables them to make any necessary lifestyle changes – what not to spend too much on, what to invest in, and most importantly to never spend beyond their means.
2. They’re disciplined
Debt-free people know that buying something you can’t afford today means you’ll have to pay even more in interest later – and that the instant gratification is seldom worth the premium. They won’t let themselves take a loan unless extremely necessary like a mortgage to buy a home. Even then, they’ll try to pay off their dues as soon as possible. Financially savvy people understand that, in most cases, it is always better to actually save before spending, rather than the other way round.
3. They’re practical
Debt-free people are pragmatic and know the meaning of value. They see cars as a means to get from one point to another, and that brands don’t matter. The pursuit of expensive cars and luxury goods gives temporary happiness that fades once you have them in possession, at an often unjustifiable cost. While we’re not telling you to stop eyeing those Chanel bags, we don’t recommend getting into debt for one. Also, debt-free people tend to buy store-brand groceries – while they’re not the most attractive on the rack, why spend more for a packaging you’ll throw away anyway?
4. They’re self-reliant
Debt-free people hustle towards financial freedom and take pride in their self-reliance. They live within their means, and know that they shouldn’t rely on others (or a bank loan) even when times get tough.
5. They’re visionary
Rainy days are inevitable. But if you’re prepared, they won’t derail your financial future. Debt-free people usually set aside an emergency fund of 3–6 months worth of expenses which could be used in the unfortunate event of sudden retrenchment, unforeseen large expenses or hospitalization. This helps them keep out of taking out a costly consumer loan. Look at your current finances – when disasters come knocking, are you ready?
6. They’re patient
Debt-free people don’t believe in instant gratification, and so will always be on the lookout for the best deals in town. They won’t buy things in full price where possible (for clothes, almost always) and constantly look for coupons to get more bang for their buck. And if their money isn’t yet available, they’ll save before buying. I mean, what could be so urgent?
7. They’re confident
Did you realize how much money goes into building self-worth and confidence? Luxury goods is a billion dollar industry that leverages low self esteem, with expensive brands promising a boost in your social status and ultimately confidence. Debt-free people are confident and don’t let material possessions define their self-worth. If you’re in need of a little ego boost, try these instead!
8. They’re resourceful
Credit cards are double-edged swords – while they help people in financially tight situations, they often get people into financial trouble too. Financially savvy people, however, embrace them as money-saving tools. All that cash back, bonuses and discounts at partner stores add up to a lot of savings – as long as you treat them like cash and pay your bills on time.
While this list is by no means definitive or exhaustive, aspiring to these traits may help you get closer to financial freedom. So which of these traits do you have?