Introduction:
People without debt are considered the exceptions rather than the rule. Between mortgages, credit cards, student loans, and auto loans, it’s not uncommon for the typical American to have one or more types of debt.
Those living without debt may seem rare, but they are not special or superhuman, nor does it necessarily mean they are wealthy. What sets them apart from those still struggling with debt is their willingness to utilize available resources, whether financial or non-financial, to pay off debts or avoid them entirely.
While some individuals may learn as children to avoid debt, others adopt a debt-free lifestyle after years of experiencing debt and financial stress. In this way, they develop certain traits that distinguish them and allow them to enjoy a lifestyle undriven by debt.
If you are interested in this matter, here are seven traits you can develop to achieve debt freedom.
1. Specific Goals:
People living without debt understand that if you don’t know where you’re going, you’ll never get there. They set financial goals, starting with getting out of debt, and organize their financial lives around those goals. If you lack financial goals, it’s time to create some.
According to Sarah Newcomb, behavioral economist at Morningstar, one of the primary factors contributing to high debt-to-income ratios is waiting, which can lead to paying interest on your purchases. She has found that when you ask people how much they think about the future, there is a statistically significant correlation: those who think more about the future are better at managing their money.
When setting financial goals, make them SMART – specific, measurable, achievable, realistic, and time-bound. When you achieve a financial goal from your list, create a new goal to replace it.
2. Smart:
People living without debt do not fall for the marketing hype that tells them they “deserve” a new luxury car, even when they feel they can get a good deal. It can be easy to feel like you’re saving money when you buy something on sale, especially when the original price or the percentage-off is continually echoed. But if you weren’t actually planning to buy that item, you’re not saving anything.
Those who live without debt do not believe that debt is a powerful tool to help them create the life they want. They understand that carrying debt can limit their financial options, both today and tomorrow.
If you have debt now, ask yourself what behaviors or attitudes contributed to that. For example, if you took out a large auto loan, was the motivation to buy a reliable car or to keep up with the neighbors? Looking at debt from a motivator’s perspective can help make wiser decisions about when to borrow and when not to.
3. Disciplined:
Staying debt-free means being consistent, day after day. Debt-free individuals stick to their budgets. They endure small sacrifices so they can truly afford what matters. They understand that not dining out or skipping the new family movie (until it streams on Netflix) is a temporary sacrifice.
If you’re struggling with discipline, try waiting until you actually need something to go buy it. In fact, it’s better not to buy anything that isn’t on a pre-determined list.
And if you find it difficult to pay off debt, think about the type of system you have. Do you pay your bills on a specific day of each month? Do you commit to paying a certain amount over the minimum? Establishing some discipline and consistency in your debt repayment efforts can make it easier to stay on track.
4.
Non-material:
When debts are incurred simply by purchasing “things,” you can end up paying more money in interest fees on them. Rethinking how you spend and making purchases with intention and a clear purpose is one way to avoid new debts. People who live debt-free tend to be less interested in accumulating “things.” They derive their happiness not from possessions, but from experiences and from knowing they are financially secure. The same mindset can benefit your financial balance in the long run.
When shifting spending habits from “things” to experiences, beware of FOMO – the fear of missing out on important events. Set a budget for experiences to avoid overspending and incurring new debts.
5. Patient:
It’s incredibly easy to spend money in the age of scrolling, and mobile payment technologies like Apple Pay and Google Pay have made it even simpler. This is a problem because it removes the gap between your decision to buy something and actually paying for it.
People who live debt-free are able to delay instant gratification. They know the joy of paying cash for something they want and saving up to purchase it. They have a vision for retirement and other long-term goals and the ability to work steadily towards achieving them.
If you struggle with impulse purchases that lead to debt, consider imposing a 24-hour or 48-hour rule on new purchases. With this type of system, you commit to waiting 24 or 48 hours before buying something. This waiting period can help you decide whether the purchase is truly worth it if it means incurring debt.
Do not save credit card numbers or allow sites to remember them for you. And when you decide to buy something, focus on the pain of loss in addition to the joy of gain. Better yet, when you make a purchase, get into the habit of converting its cost into the hours of work it takes you to earn the money.
6. Responsible:
For someone who is debt-free, family needs always come first when allocating resources. They put in the hard work necessary every day to ensure real needs are met within the budget, resisting the temptation of debt for wants.
This trait stems from learning how to live within financial limits, not at or below their level. Reassess your family budget and ask yourself which expenses are truly necessary to maintain your current standard of living. You may find that by eliminating non-essential expenses, you can incur less debt and have more money available to pay off what you already owe.
7. Confident:
People who are debt-free exhibit some unusual financial behaviors – from not carrying a credit card, to skipping the vacation this year, to paying cash for cars. But those who are debt-free do not care what others think. They are confident they are doing the right thing for their families’ futures.
How confident are you in your financial situation? If you don’t feel in control of your money, you may be more likely to drift into purchases that don’t fit you or your family budget. If you feel uncertain about managing your money on your own, consider talking to a nonprofit credit counselor or a financial advisor who can help you create a clear financial roadmap to follow.
Conclusion:
If you want to be someone who doesn’t struggle with debt, you need to cultivate these seven traits. Clear goals, intelligence, discipline, non-materialism, patience, responsibility, and confidence are the foundations for achieving debt freedom. Implement these traits in your financial life and you will find yourself on the path to living debt-free and enjoying financial stability.
Source:
https://www.thebalancemoney.com/debt-free-characteristics-4059833
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