Updated: August 3, 2020
What is it like to be debt-free? What does it take to live a debt-free lifestyle? Is it possible to become debt-free on a low income?
For me, the biggest advantage of being debt-free is never having to worry about debt collectors. And consequently, avoiding the emotional distress caused by their constant calls and letters.
However, more than this, living a debt-free lifestyle also means being one step closer to reaching true wealth and financial freedom.
So, if you want to be debt-free, where or how do you begin? I believe it all starts with learning these eight financial habits.
1. Building an emergency fund is a priority.
The reason why people go into bad debt is because they didn’t have money when they needed it. Fortunately, having an emergency fund is the simple solution to this problem.
2. Patience through delayed gratification.
When it comes to their mindset, debt-free people are patient. They know the importance of practicing delayed gratification, especially when it comes to buying luxuries and unnecessary stuff.
3. Eyes are focused on financial goals.
The secret why they’re good with saving money is because they are clear with their intentions. They don’t save just for the sake of saving. They save because they want to buy or spend on a specific financial goal.
For example, by committing and focusing on a goal such as having an out-of-town vacation with your family, it will be easier to resist the temptation of making an impulse buy when there’s a mall sale.
4. Proactive with their finances.
Being proactive means creating and following a budget. They monitor their cashflow — both income and expenses. They’re always on the lookout for opportunities, and do constant checks on their spending.
5. Spends less than what they earn.
This is of course, the foundation of wealth building. By spending less than your income, you’re assured of extra cash when financial emergencies occur. Additionally, this habit allows you to create an investment fund.
6. Never buys stuff to impress other people.
Debt-free people buy things for themselves – because they either need it or they personally want it. They don’t spend on things just because they want to impress or brag to other people. They simply enjoy what their money could afford.
7. Purchases only what their cashflow can afford.
Being debt-free doesn’t necessarily mean they don’t use credit cards or they avoid getting loans. Most of them do. The only difference is that, they make sure that they can afford it before taking on the debt.
For example, they can apply for a housing loan, especially if buying their dream home is one of their financial goals. However, debt-free people will check and double-check their budget to ensure that they can afford to pay the mortgage.
8. Pays attention to details.
Speaking of loans, debt-free people are meticulous when it comes to interest rates and other details. They often simulate their cashflow to have a good overview of how a debt or loan will affect their finances.
Moreover, they don’t mind shopping around for the best deal. Sometimes, they delay their plans and save some more money just to be in a better financial position to manage a bank loan.
Everyone can be debt-free
If you’re struggling with debt because of wrong financial decisions you made in the past, then remember that you are not alone. What’s important is you’re now aware of your mistakes, and you now have the opportunity to correct them.
And just like the hundreds of people I’ve met who eventually became debt-free after years of financial hardship, you too can become debt-free one day with enough patience and discipline.