7 Common Characteristics of Debt-Free People

7 Common Characteristics of People Who Are Debt Free

We all have heard about the first couple who pay off a $50,000 debt in two years with a combined incoming of $65,000 yet the second couple makes over $110,000 per year and cannot make even the slightest scratch into their ever $40,000 (and growing!) debt.

Why does that happen, and what separates couple #1 and couple #2? In this article we will go over 7 very common characteristics that are found among people who are debt free.

Without digging too deep, it’s pretty clear that couple #2 has a spending problem.  There are lots of people who spend a little too much money but are still able to manage their debt and remain debt-free. Couple #2 makes more than enough money to pay off their $40,000 debt sooner rather than later, but the problem is they have so much money being spent they cannot pay down their debt.  Often times, which is the scariest fact of them all, they have no idea where the money is being spent!

Paying Down DebtSometimes the out of control expenses can be in a form of an domineering mortgage, other times it’s a car payment, often it is credit card debt or a combination of poor financial choices such as designer coffee every day and eating out for dinner 5 nights a week. The fact of the matter is that any one of these poor financial decisions on their own might not make your debt unmanageable, but if you bundle up two or three of these… look out, you’re in trouble.

What is happening is all the income is getting eaten up by other expenditures, which puts debt payment on the back-burner and never gathering any inertia or weight. Ask anyone in debt, and it is both a difficult and stressful way to live knowing that the high interests rates are compounding over and over and your payments are just barely making a dent into the principal each month.

One characteristic of people who became debt free is that they reached a point and decided that enough is enough, and that they were ready to make some serious changes. Just like a bad habit, it takes time and effort and a proven system to change a habit.  Changing financial habits aren’t any different and you need to understand some of the characteristics that you will need to change in order to pay down your debt and become debt free, once and for all.

Here Are 7 Common Traits That Debt-Free Individuals Typically Posses

1. They understand and are willing to make sacrifices

Starbucks, eating out, ordering in, iPhone data plans, cash advances, using other bank’s ATM machines are all habits that rack up unnecessary expenditures and debt. What you need to remember is budgets, new ways to save money and sacrifices are only temporary. When you become debt-free you can start to re-introduce the extra money back into your life in a more manageable way to avoid going right back into debt.

2. Debt-Free people View Debt Differently

People who have become debt free have come to the realization that debt is not a tool, but rather a chain. Yes, reducing the amount of available credit might make their credit score go down a little bit, but their overall income (and more importantly, quality of life) goes up, up and up since they don’t have too much available credit where they can rack up debt again. They avoid debt and treat it like a communicable disease like the flu.

Please note: Using a credit card to earn travel point and paying the balance off in full each month is very different than using a credit card and NOT paying it off in full each month.  The first is okay, the second should be avoided at all cost.

3. Patience is a virtue

There is a lot to be said about being patient. People who have paid down their debt know that little by little (or hopefully a lot by a lot) eventually will win the race.

4. Responsible Spenders

Getting out of debt takes responsible spending. It involves creating a budget and adhering to it.

5. They set goals (and keep them)

By Feburary, 93% of New Year’s resolutions are not kept. The best thing people can do is set realistic goals and then work towards these goals. If unable to keep these goals they modify them and continue workings towards the goal set. Remember it is better to set two small goals than one large goal. It’s best to break large goals into little ones.

6. Self-assured and positive

Debt-free people and people getting themselves out of debt are not concerned about what other people think. They know they are getting themselves into a financially sound position. Getting yourself out of debt can take some significant sacrifices, but knowing you are on the right track and are at peace with this.  While you are committed to paying down your debt, don’t be ashamed to tell your friends and family that you can’t afford something.

7. Materialism is not a part of their vocabulary

Becoming debt-free is not compatible with having the shiniest car, nicest six-bedroom house, or essentially having the most “stuff.” The point of getting yourself out of debt is to make positive changes in your life, and children and grandchildren and generations to come.

At the end of the day, you have to choose to be motivated and understand that solid results will take time to achieve. Know that you can get out of debt, even if you owe tremendous amounts. All it takes is willpower and discipline. If you’re willing to do what it takes, know that you will be in a good financial shape once you’re done.

What about you?  What do you think is another common characteristic of people who are debt free and manage their money well?  Did you dig yourself out from under a mountain of debt?  If so, what did you do?  Do you want to share your story with the readers here at Vosa?  If so, contact me today.

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Comments

  1. April says

    Thanks for the tips. I can agree with you that it’s mostly mindset that is responsible for getting into and out of debt. I went on for years paying the minimum balance due on my credit cards yet still buying $500 shoes. As soon as I drew the line in the sand, I was able to pay down my debt quickly and didn’t miss all the new pairs of $500 shoes!

  2. Nate says

    I don’t have anywhere near as much credit card debt as the two couples that are in the above example but I am (very) guilty of procrastinating to pay it off. This past summer I went to more than a dozen Cubs games then at the end of each month I paid the minimum on my credit card balance.

    At 23, I feel lucky to have read this article as it’s just the kick in the pants that I needed to work on my mental game and make the commitment to get this stupid credit card debt paid off.

    Thanks Brent!

    • says

      Great job on making the commitment to pay down your debt! You should count yourself lucky, because at 23, you still have lots of time on your side to let the magic of compounding interest work for you. Start saving and investing now and you should be pleasantly surprised how much you will be able to amass over time!

      Thanks for the comment and let me know if I can help in any way!

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