When you’re living and maintaining a debt-free life, there are certain habits you create to ensure you stay on top of your finances and don’t slip back into the debt cycle.
These are 9 habits of people who are debt free (and who stay debt free):
1 – They Talk About Money
Your parents may have taught you that money is a topic that you aren’t supposed to talk about, but people who are debt free know that talking about money is one of the ways we learn more about money.
While they don’t go sharing all the nitty gritty details, they don’t shy away from a good money conversation either. They’re happy to share their tips and what worked for them, knowing that sharing stories and experiences can help others too.
2 – They Know All About Their Own Money
People who are debt free know all the details about their own money. They know every account, every amount and every detail because this is how they became debt free.
Hiding from their finances isn’t an option, and they wouldn’t want it to be either. Money isn’t something they fear, it’s something they understand and they know how to make it work for them.
3 – They Know The Cost Of Debt
It takes a lot of motivation to stay debt free, especially when there’s so much temptation out there. But, people who are debt free know the cost of debt. They know that it costs them so much more in the long run and they choose to not have this extra cost in their life.
They know it’s not just the interest rate, but the fees, hidden costs and the stress that all factor into the cost of debt. Not to mention that paying the extra money to someone else (interest and fees) means they have less money working in positive ways for them.
4 – They Live Within Their Means
No champagne lifestyle on a beer budget here. People who are debt free live within their means and they are happy to do so. This doesn’t mean they feel like they’re going without or missing out, it means that they know how much they can spend in order to live the life they want and they make it work for them.
One of my most favorite tools for managing and tracking my money is PocketSmith. It syncs all of our finances, including our loans and assets – which means it shows us our overall wealth. It’s also great for finding and tracking changes in our spending (so we can budget accordingly). I’ve tried so many different apps and this is the only one that I loved. PocketSmith is so easy to use and my husband loves how he can see how much we have left in our budget at anytime.
5 – They Set Financial Goals And Work Towards Them
People who are debt free know the value of setting clear financial goals and working towards them – that’s how they achieved their ‘debt free’ status in the first place.
But they also know that just because they’ve achieved one financial goal, it doesn’t mean they don’t have any more goals to pursue. People who are debt free continue to set new financial goals and create action plans to work towards them.
6 – They Have Multiple Income Streams
Multiple income streams allow people who are debt free to achieve their financial goals and to reduce the stress in their life. They know that if one of their income streams was to stop, they have contingency plans in place and they wouldn’t be left stranded with no income.
They are always looking for ways to expand their income streams and know that having one job, with one income, can be risky.
7 – They Have An Emergency Fund
Having an emergency fund is like creating your own insurance – it’s your backup plan and your ‘get out of jail free’ card. People who are debt free know the importance of an emergency fund (before you work on paying down your debt) and know that this fund is to be used for emergencies only.
They also have built their emergency fund up more to cover a longer timespan of expenses once their debt has been paid off, giving them more financial freedom and security.
8 – They Enjoy Their Money
People who are debt free know that money isn’t evil, they know it’s just a tool that is used by people. They have created a positive relationship with money, one where they no longer stress about it, and no longer fear money (or lack of) and one where they welcome money into their lives.
They enjoy their money, the use it for fun and for living. They know that there are necessary expenses that money needs to be used for, and that the remainder of their money can be used for fun and adventure. They know that debt and borrowing money isn’t an enjoyable way to interact with money and that it only brings more stress and negativity energy.
9 – They Budget Like A Boss
Budgeting isn’t just for people who are on a low income or who can’t manage their money. Budgeting is what smart people to do manage their money, to understand their money and to make their money work for them.
Budgeting doesn’t have to be restrictive or difficult, and those who are debt free know that creating a good budget is all about using their money to achieve their financial goals.
They know that budgeting isn’t supposed to focus on what you can’t spend, but more on what you do have to spend on the things you love, while also adhering to your financial commitments (rent, mortgage, insurances) and working towards your financial goals (buying a house, going on a holiday).
People who are debt free have worked out a budgeting system that works for them (because they know not all styles work for everyone) and they have upped their budgeting game to boss status.
Being debt free isn’t just something you achieve, it’s a series of habits you create that take you from being in debt, to being debt free, to keeping you debt free.