When I first met my husband I knew that we shared two important things in common that was truly the glue that bonded us together. We both wanted to travel the world and we wanted to learn the habits of debt-free people.
My love for traveling was undeniable, although he hadn’t traveled as much as I did he truly had a passion for it. I remember how we use to sit in our cars, under the stars at night and talk about the places we wanted to see together plus how it would be to experience a life without debt.
One Huge Problem
Our bucket list was extensive but there was one problem. Our pockets and bank account didn’t match our desires for traveling plus we didn’t currently have the habits of debt-free people.
Nevertheless, I had fun thinking about all the places we could enjoy together if we could become debt-free. As we began to join our families together we were faced with the hard truth.
We both had debt that we needed to eliminate. What helped us was to sign up for a class to better manage our money, create a budget and how we could actually practice the must-have habits of debt-free people.
We read blog posts, listen to podcasts, and read books to help us figure out how to be strategic with our money problems.
Over time, we both realized we had to better understand those that were already debt- free.
This list of successful habits of debt-free people will change your life forever.
1. Set Goals
People who become debt free, set short-term and long term financial goals.
When you are really ready to tackle your debt and start saving money you have to sit down and look at the raw data. The numbers don’t lie.
To get started you should set aside about 45 minutes to 1 hour of uninterrupted time to understand your current financial situation. Once you have a clear understanding, you should jot down your goals.
You can start by making weekly or monthly goals. That’s how we started our process. Then we came back together and we discussed our long term financial goals which ultimately is to become totally debt free.
2. Create A Budget
I cannot stress enough the importance of having a budget. For so long, I wanted to do the math for our bills and extra curriculum activities in my head.
The thought of creating a budget literally made me sick. I didn’t deem it necessary to account for every dollar we spent.
Well, guess what until we created a budget for our family, we were constantly living paycheck to paycheck. We barely had enough money to make it to the next payday.
You have to understand where your money is derived from and where it’s going. If you don’t take the time to do that, it will be nearly impossible to effectively pay your debt off.
The possibility of paying off your debt without a budget could be true if you win the lottery or inherit a lot of money. Realistically you will struggle month to month unless you really take a deep dive into your finances and create a budget that works for your family.
3. Use Cash
Do you shop with cash? If not, you should start. Have you noticed how fast $20.00 can disappear if you don’t manage how you spend it?
Sometimes, you have to wonder if it really vanishes into thin air. You went to the store to purchase $5.00 worth of stuff but when you leave you have spent the whole $20.00.
Trust me I know, it’s unreal. However, when you use your debit card it doesn’t hold you accountable to the amount of money you are spending. When you have cash, it’s good to take a calculator with you unless you are a math genius that can quickly do the math in your head.
Since I have a set amount for groceries every week I always use cash. This helps to hold me to my budget. Any items over the amount I allotted for is left at the store.
I can personally tell you, there have been numerous times, I have been down the grocery aisles trying to decide which ingredient I should purchase.
You can start using the cash envelope system to help you stay on track with your budget.
I like to use cash whenever it’s possible especially places like the grocery store, gas station, local eateries, and entertainment. It really helps us to stay on track financially.
4. Save and Save More
Creating a savings account is one of the best attributes to becoming debt free. I would consider this to be one of the most important habits of debt-free people.
First, you should create an emergency fund with at least $1000.00.
After that, if possible you should at least try to save three months of living expenses. I think the government shut-down in February of 2019 was truly a testament of saving for the unknown.
Some people were barely able to live their current lifestyle for 30 days. The thought of not receiving a paycheck was crippling to some people.
You should make sure you plan and save for normal yearly expenses such as birthdays and holidays.
I remember one year we had 4 weddings to attend and two of the weddings, my husbands had to participate in. To be honest, I pulled some of my gifts from our wedding to give to the newlyweds. Nothing wrong with recycling unused gifts right?
Sometimes you will be faced with an unexpected expense like car repairs or medical bills. This is why having an emergency fund is super important.
5. Limit Your Take Out Meals and Restaurant Spending
This one is really hard for busy families. I know because I’m one of those types of people. I could financially afford to eat out at least 4 times a week, I would.
However, when you are on a budget and trying to grow your bank account eating out all the time is a big fat NO. My husband has strict dietary needs which forces me to meal plan on Sundays.
The time it takes to meal plan on Sunday is not bad, maybe 3-4 hours max. I prepare enough lunch and dinner for five to six days. If you have a busy lifestyle choosing one or two days a week to meal plan is optimal.
Plus it will help you to make healthier food choices. My family loves salads and it’s so much cheaper to eat a salad from home than a $9.00 – $10.00 salad from our local restaurants.
If you find yourself in a bind and you have to eat out then you need to know where to go for the best deals. Check out this list of restaurants that are great for those on a budget.
6. Be Patient
Do you have the “shiny object syndrome”? Today, with the presence of the internet it’s so easy to get caught up into impulse buying.
What do I mean?
You are scrolling through Facebook and all of a sudden this woman is rocking this cute handbag. All you have to do is click the link and it literally takes you to a “buy now” page.
Before you know it, every day you are clicking different links to make purchases. This type of behavior is negative energy towards becoming debt free.
Social media makes it so easy to learn the latest trends and fashion must-haves. But, don’t get tricked by those cute outfits, handbags, shoes, and accessories.
You have to stay focus on your goal. Patient is a necessary component to help you on your path to financial freedom.
Think about it.
You will not spend the rest of your life paying off debt. This is just a season in your life, be patient and embrace the journey.
6. Know Your Progress
With any goal you set, it’s imperative that you track your progress. When I create our monthly budget, I have no choice but to review it weekly.
This helps me to stay on track and learn any pitfalls along the way. The creation of short and long term goals requires you to do a pulse check.
This helps you determine if you are on track to complete your goal in a timely manner. For example, one of your short term goals is to make a large purchase in six months.
If you have experienced a few bumps along the way, you will need to adjust your timeframe to accommodate. You wouldn’t be aware of this if you didn’t track your goals from beginning to end.
Plus, seeing your progress, helps to keep you motivated.
7. Do Your Due Diligent
If you are making plans to go on vacation, make sure you do the proper research. One thing about traveling, is there are numerous websites and travel agencies competing for your business.
You can find last minute deals all over the internet. You can find pleather of articles about how to save money when you travel.
On the road to becoming debt free, you must understand what’s truly important. For example, if you have plans to retire early you know there has to be a plan in place to accomplish this.
You have to do the necessary research to figure out how you can make this dream come true.
Financially free people make it a priority to find the time to research products and services before spending their hard earned money. Take the necessary time to find the best, most economical deals.
8. Realize Saying “No” Is Ok
One of the hardest things to do when trying to save more money is learning to say “no”.
Do you know how many times we wanted to go out to dinner with friends, go to the latest movie, get a massage, go to a concert but we had to say no?
Countless times we had to say no to the things we wanted to do. Guess what, we didn’t get to enjoy the activity but it helped us get a little bit closer to our end goal.
You can learn quickly how to scour the internet, social media, and local libraries for free events. Normally when it’s cold, my family hibernates but when it’s warm we like to be outside.
You would shocked by all the free events hosted by your local community.
We love to go to our local farmer’s market for the strawberry festivals, wings cook-off, peach kick-out, and herb season. All the events are free and it’s nice to see local businesses showcase their talent and products.
You can find a number of free events at your local parks especially to entertain your kids. Some fun events you might find can range from movie night under the stars to street festivals.
Don’t be afraid to look for free events or events that fit well into your budget. If it doesn’t fit into your budget, just say no.
9. They Teach Their Kids About Money
When I was growing up my parents taught me how to manage my money. I remember my mother never went to the grocery store without a list and she always had cash.
She told me to stay away from credit cards and to always be mindful of how much I spend. Well, all of that went down the drain when I went off to college.
I was broke and there were “apply for credit card” stands in every corner of campus. They didn’t care if I had a job or not at the time, they just wanted me to apply.
I was approved for ten different cards and I used all of them to fund my college life. I had no problems keeping up with the latest fashion and buying off-campus food.
My parents had no clue how much credit card debt I was in. All they knew was I never asked for money.
Seriously…. That was the worst decision I had made for myself.
Pay It Forward
After I had my daughter I was on a mission to help her stay clear of debt. I showed her our budget, I showed her the cash envelopes we keep, and I showed her how we save each month.
You can train your kids how to start saving money when they complete their chores around the house. You can also share the importance of donating their money to a good cause.
Teaching your kids how to make purchases is importance. You can show them the difference between impulse buying and buying out of need.
Training them early will save them a lot of financial rollercoasters in the future. Remember if they go astray as I did, something will click and bring them back to your earlier teaching. I’m living proof of that.
10. Communicate With Your Spouse
Communicating with your spouse is important when you’re trying to become debt free. Not only did I study but my husband studied the habits of debt-free people too. This shouldn’t be handled as a one-person show when you’re a family.
You and your spouse should always keep the communication channel open.
There should be no secrets or surprises about your finances. Both parties should be well aware of what comes into the house and what is spent.
There has to be equal accountability on how the money should be spent. Your money goals should be made together.
One person should not be responsible for making all the financial decisions without consulting the other spouse. Your spouse is your accountability partner.
Sometimes you might feel the urge to splurge and buy some new shoes but your spouse will remind you of your money goals.
You and your spouse are responsible for keeping each other motivated through effective communication.
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Do you have some of the necessary habits of debt-free people? These habits will help you get –closer to becoming debt free? I would love to hear what is working for you. You can use the comment section below to share your idea.