7 Habits of Debt-Free People You Should Copy (2024)

Have you ever wondered how debt-free people got that way? Or more importantly, how do they stay that way?

It’s not magic, and it’s not luck. Debt-free people develop and maintain a set of deliberate habits that put their financial health first. What’s more, they leverage tools and resources that make those habits easy.

These are the 7 habits of debt-free people and how to make them work for you.

1. Debt-Free People Monitor Their Money

Here’s the deal: debt-free people are engaged with their money. They know where it’s going and what it’s doing at all times. That means tracking their income, spending, and saving to make sure it aligns with their goals. It also means keeping an eye on their net worth. Net worth is the value of your assets minus your liabilities, and it is a powerful indicator of financial health.

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  • Related: 7 Habits of Women Who Always Have Money

2. They Grow Their Money

Paying off debt is an accomplishment to be proud of, but the name of the game is to grow wealth. Paying off debt = growing wealth. People with savings stay debt-free because they never have to turn to credit when an unexpected expense comes up. They have at least three to six months of expenses in a savings account, ready to cushion any financial emergency. How do they do it? They spend less than they earn and save every month.

  • Related: How to Invest With Little Money

3. They Don’t Waste Money

Debt-free people don’t waste money, full stop. That’s because they always know what’s going on in their financial picture and are in control of their spending. They know the value of money and aren’t willing to squander it. If they notice they’re spending money on something that doesn’t align with their values or priorities, they put on the brakes and make a change.

  • Related: Ultimate Guide to Saving Money

4. They Are Not Cheap

Debt-free people don’t waste money, but they aren’t cheap, either. Being cheap happens when you’re not aware of your money. You don’t know what your money can afford, so all you buy is cheap stuff.

Be intentional with your money. Know exactly what you can and cannot afford. You won’t overspend which means you will become debt free. Debt-free people have learned not to afraid of buying high-quality items or experiences. If something they want is expensive, they create a savings plan to pay it. They buy everything they can afford. They enjoy their money.

  • Related: How To Stop Living Paycheck To Paycheck: An Actionable Guide

5. They Are Patient

Debt-free people know that buying quality with cash takes time. They resist the desire for instant gratification. Watching a savings account earmarked for a special purchase or goal grow consistently can be more satisfying than settling for something inferior in the moment — not to mention it prevents you from taking on more debt. Be patient. Buy quality stuff, but don’t take on debt.

  • Related: 9 Things to Stop Buying to Save Money Fast

6. They Set Financial Goals and Priorities

Debt-free people are clear about what’s important to them, and they use that clarity to set financial priorities and goals for their future. Whether it’s saving for a down payment, planning for retirement, or building an education fund for their kids, they always have a plan. No one reaches their financial goals (big or small) by winging it, and debt-free people don’t risk their futures to chance.

7. They Proactively Learn More About Money and How to Best Manage It

Financially woke people didn’t get that way by accident. Those who enjoy the debt-free life hone their money smarts by learning everything they can about how to manage their resources. That means reading personal finance books and blogs, listening to podcasts, and joining enlightened communities. In this digital age, almost everything you need to know is available for free online — there’s no excuse.

Save More Money! Read these next….

  • 7 Habits of Women Who are Never Broke
  • 43 Hacks to Live on One Income and Never be Poor
  • 9 Essential Dave Ramsey Tips You’ll Wish You Knew Sooner

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7 Habits of Debt-Free People You Should Copy (2024)

FAQs

How to live debt free on one income? ›

7 strategies for living on a single income
  1. Have an emergency fund. Having a healthy emergency fund can help reduce anxiety about living on one income. ...
  2. Set a new budget. ...
  3. Start cutting costs early. ...
  4. Pay down debt. ...
  5. Consider tax withholding. ...
  6. Spend time, not money. ...
  7. Determine how you're going to manage finances.

How to be debt free? ›

First, always pay the minimum requirement payments on your credit cards and loans. Then allot extra money toward paying down more debt and saving, according to your goals. A debt consolidation loan or a balance transfer credit card can also help lower overall interest payments.

How to budget to get out of debt? ›

  1. Prioritize which debts to pay off first. Not all debt is bad debt, but some forms are worse than others. ...
  2. Consider budgeting strategies. ...
  3. Consolidate your debt. ...
  4. Consider refinancing. ...
  5. Find a side hustle. ...
  6. Use any extra windfall. ...
  7. Adjust your spending to your goals.

What percent of Americans are debt free? ›

Around 23% of Americans are debt free, according to the most recent data available from the Federal Reserve. That figure factors in every type of debt, from credit card balances and student loans to mortgages, car loans and more.

What is the average debt for a single person? ›

Research from financial services company Northwestern Mutual found that excluding mortgages, the average personal debt per individual sat at $21,800 in 2023, significantly lower than the $29,800 recorded in 2019.

How to pay $30,000 debt in one year? ›

The 6-step method that helped this 34-year-old pay off $30,000 of credit card debt in 1 year
  1. Step 1: Survey the land. ...
  2. Step 2: Limit and leverage. ...
  3. Step 3: Automate your minimum payments. ...
  4. Step 4: Yes, you must pay extra and often. ...
  5. Step 5: Evaluate the plan often. ...
  6. Step 6: Ramp-up when you 're ready.

Is living debt-free worth it? ›

More financial security: Monthly debt payments can limit your available cash to save for an emergency fund, invest or even start a business. By freeing up cash in your monthly budget, you'll have more freedom to fortify your financial health and take advantage of new opportunities.

Is it smart to have no debt? ›

Having no debt has many advantages, including financial stability, increased flexibility, and a significant sense of accomplishment. But it's important to remember debt isn't always bad, and in some cases, you can leverage debt to reach your financial goals more quickly.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

How to get rid of $30,000 credit card debt? ›

How to Get Rid of $30k in Credit Card Debt
  1. Make a list of all your credit card debts.
  2. Make a budget.
  3. Create a strategy to pay down debt.
  4. Pay more than your minimum payment whenever possible.
  5. Set goals and timeline for repayment.
  6. Consolidate your debt.
  7. Implement a debt management plan.
Aug 4, 2023

How to pay off $5000 quickly? ›

Debt avalanche: Make minimum payments on all but your credit card with the highest interest rate. Send all excess payments to that card account. Once you pay that account off, send all excess payments to your next highest rate. Repeat until all of your debts are paid off.

Is it possible to live off one income? ›

While today, dual-income households hold a slight majority, single-paycheck households can sail smoothly. Think of how many of our ancestors navigated life with one breadwinner per family. It is indeed possible to survive on one income and even thrive.

Is it possible to live completely debt-free? ›

So, when you hear about people who have absolutely no debt, live on less than they make, and have a stash of cash for emergencies, you might think they're . . . weird. But living a debt-free life isn't only for a special group of people. It's something anyone can do with hard work and some special characteristics.

Can you really live debt-free? ›

Becoming debt-free can take time, but it's certainly achievable if your effort is consistent and you take the right steps, including the following: Write down all your debts, including your current balances, interest rates and monthly payment amounts.

How much debt-to-income is ok? ›

A general rule of thumb is to keep your overall debt-to-income ratio at or below 43%. This is seen as a wise target because it's the maximum debt-to-income ratio at which you're eligible for a Qualified Mortgage —a type of home loan designed to be stable and borrower-friendly.

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