8 Admirable Habits of Debt-Free People

Updated: August 4, 2023

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, 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.

Saving Habits

1. Building an emergency fund is a priority.
People go into bad debt because they don’t have money when they need 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 to why they’re good at 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 cash flow — both income and expenses. They’re always on the lookout for opportunities and do constant checks on their spending.

Spending Habits

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 can afford.

7. Purchases only what their cash flow 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 cash flow 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 the 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 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.

Read more: How To Get Out Of Debt With The Snowball Method

What to do next: Click here to start your financial journey with IMG Wealth Academy


  1. Great article with some invalid advice however I’m always surprised at the automatic recommendation to prioritise an emergency fund. Surely, if someone’s in debt then the priority is always to pay off debt before building an emergency fund. Two scenarios, in both you are in debt by $50k. In the first you prioritise your next $3k to building an emergency fund, suddenly you have an emergency and use your fund to pay it. Second scenario: you pay of $3k of debt first and then have an emergency. In this case you just go back into debt to $50k. In both cases you’ve still got $50k of debt, however at least in the second scenario you went some time with paying slightly less interest on $47k of debt as opposed to $50k of debt. Pay off the debt first. once that’s done then you can build you emergency fund.

  2. @GreenDollarBills
    Yes, that is true. But personal finance is not all about money, interest rates and figures; it is also about mindset, positive habits, and personal rewards. My answer is based on these principles.

    Saving money while paying debts gives you two emotional rewards — seeing money in your savings increase AND your debts decrease.

    While you do pay more interests for paying less on your debts because you’re also saving money — the motivation to follow through is stronger.

    When you have no savings and you have to borrow money again due to an emergency, it gives you an impression that it’s a never ending cycle.

    But with some savings on the side, it gives you a feeling of gratitude that you have to borrow less money (or not borrow at all) for the emergency because you had savings.

    I discussed this strategy further here: https://fitzvillafuerte.com/should-you-save-money-if-you-have-debts.html

  3. Hi Fitz,

    What a great topic! I totally agree that debt people have these qualities or they invest in improving them over time. And I would also add that debt free people should also grow a investing fund. It can start with just 1% of the monthly income but it should be there as soon as possible. The simple act of having such a fund is amazing as it shifts your thinking from debt to investing. It’s essential to pay debt as soon as we can and at the same time we should strive to build a budget for investments in stocks, binary options, cryptocurrencies and so on.

  4. I agreed with Fitz, I am OFW in Saudi for more than 25 years. I tried to pay may Debts first and before I do savings. Sad to say before I achieved to be Debt Free then it will come unknown expenses. Since I don’t have Emergency Fund then I’m going back using my Credit Card or borrowing money from friends.

    Since I’m reading your Blogs “Should you save money if you have Debts”. We try to followed your recommendation and strategy and it’s work’s on us. Paying our Debt’s on time and at the same time we Building our Emergency Fund. This year priority is to be Debt’s Free and continued Building our Emergency Fund. By God Grace next year we are Debt’s Free and we can start saving’s for our Vacation Fund and Building’s Fund for our future Real Estate Investment.

    Thank’s Fitz for your continued writing in your Blog’s. A true to Life experiences of OFW like me. We are very grateful on your Mission to Educate the OFW’s Communities around the World and It’s gives us Educational experience and inspiration that we are not alone on this.

  5. I always teach my children to embrace delayed gratification and understand that they will not always have their way. Similarly, I avoid getting into debts for simple pleasures.

  6. @GreenDollarBills you are right to prioritize paying off debts over establishing an emergency fund. But Sir Fitz was talking about the habits and mindset of people. Without the habit or discipline of saving, you may never fully pay off your debts. But then again, it is still a personal thing, depending on preference, behavior, stress management, etc.

  7. I hope my words do not sound as the words of an arrogant person. This, for me, was a feel good in fact FEEL GREAT article. Why? What Fitz has penned is like a financial pat on the back for me. I followed this advise since learning these concepts from my great depression era Grandparents. It worked all through my first marriage until my first wife was called home at a very young age. It is still working for my beautiful Filipina wife of three years, myself and the three children she brought to our marriage. If you ask which part of the article is my favourite, I would answer ALL OF THE ABOVE!!! Avoid that debt, it is a demon in my opinion.

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