Getting out of debt is a huge milestone, a moment of triumph. But here’s the thing—staying out of debt? That’s where the real challenge begins. It’s like reaching the top of a mountain and realizing the only way to keep the view is by staying vigilant. It can seem daunting, but I promise you, living debt-free is not only possible—it’s entirely achievable.
Imagine the people you know (or have read about) who have freed themselves from the weight of debt. They’re not magicians; they’re just using a set of habits that anyone can adopt.
Today, I’m sharing 10 life-changing habits of debt-free people that you can start using today to take control of your finances. Let’s dive in!
1. They Stick to a Budget Like Glue
Most people associate budgets with financial constraints, but debt-free individuals see them as a roadmap to freedom. A budget helps them decide where every dollar should go—whether it’s groceries, savings, or an emergency fund.
They don’t just set a budget and forget it. Take Emma, for instance, who tracks her expenses religiously with a budgeting app. She allocates a portion for fun spending but never lets impulse buys dictate her finances.
Debt-free people understand the power of planning and won’t let a sale or temptation throw them off track.
2. They Live Below Their Means (Even When They Don’t Have To)
Debt-free people master the art of pretending they earn less than they actually do. When John got a promotion, instead of upgrading his lifestyle, he chose to continue living on his old salary, putting the extra cash towards investments and savings.
This habit not only keeps them out of debt but also allows them to build a solid financial cushion for unexpected expenses, like a car breakdown or a sudden medical bill.
3. They Use Credit Cards Sparingly
Credit cards are convenient, but they also encourage overspending. Debt-free people understand the trap that credit cards can become and are careful about using them.
Take Sarah, for example, who once racked up thousands in credit card debt. Now, she uses her card only for essential purchases, like groceries or bills, and always pays off the balance in full each month. That way, she benefits from rewards without falling into the debt cycle.
4. They Prioritize Their Goals
Debt-free individuals don’t just think about today—they’re thinking about tomorrow. They know their financial priorities and make spending decisions based on long-term goals, like buying a house, early retirement, or starting a business.
For instance, Tom resisted the urge to upgrade to a flashy car and instead directed that money toward his dream of taking a year off to travel the world debt-free.
5. They Always Look for Ways to Save
Debt-free people have a knack for saving, whether it’s by cutting unnecessary expenses or finding better deals. They ask questions like, “How can I lower my grocery bill?” or “Do I really need that subscription service?”
Take Anna, who managed to save an extra £50 a month just by meal prepping and avoiding takeout. Over a year, that’s £600 back in her pocket—money she can invest or save for a rainy day.
If you’re looking for more ways to save, check out my post on the best side hustles you can start today while working full-time!
6. They Plan for the Future
Debt-free people are not just focused on the now—they are constantly planning for the future. They know that each financial choice today will impact their life tomorrow. Whether it’s planning for retirement, paying off their mortgage early, or saving for their children’s education, they always keep the bigger picture in mind.
Jane, for example, started contributing to her pension in her 20s, even when money was tight. Now, in her 40s, she’s set up for early retirement, thanks to her forward-thinking.
7. They Embrace Patience
Living debt-free requires patience and discipline. It’s about delaying gratification in a world that constantly pushes you to have the latest gadgets or the trendiest wardrobe. Debt-free people understand that the thrill of a new purchase is fleeting, but the burden of debt can last for years.
When Alex wanted the latest smartphone, he decided to wait and save for it instead of putting it on a credit card. A few months later, he was able to buy it outright—no lingering payments, no stress.
Here are three additional habits that can complement your list:
8. They Automate Their Finances
Debt-free individuals often automate their savings and bill payments to ensure they stay on track without relying on memory or willpower. By setting up automatic transfers to savings accounts or scheduling regular bill payments, they avoid late fees and ensure they’re consistently growing their savings.
For example, Mike, a busy professional, automated his savings to transfer 10% of his paycheck into a separate account each month. This small step helped him build an emergency fund without feeling like he had to actively save.
9. They Avoid Lifestyle Inflation
One of the biggest pitfalls of financial success is lifestyle inflation—the tendency to spend more as you earn more. Debt-free people resist the temptation to upgrade their lifestyle just because they have more income. Instead, they maintain the same spending habits while increasing their savings or investment contributions.
Take Lucy, who received a significant salary raise at work. Instead of upgrading to a bigger flat or buying luxury items, she funneled her extra income into her savings and investments. This allowed her to build wealth while avoiding the debt trap that often comes with a higher-cost lifestyle.
10. They Track Their Progress Regularly
Debt-free individuals don’t just set goals—they track them. Whether it’s checking their bank accounts weekly or reviewing their budget monthly, they stay aware of where their money is going and how close they are to their financial goals. This habit keeps them accountable and motivated.
Samantha, for instance, uses a financial tracking app that shows her net worth in real time. Seeing her debt shrink and savings grow serves as a constant reminder of her progress, helping her stay on course toward her debt-free goals.
These additional habits focus on strategies like automation, avoiding lifestyle inflation, and regular tracking, which provide extra layers of control over personal finances, helping to maintain a debt-free life.
The Takeaway
Staying out of debt isn’t something you master overnight. It’s a process that requires discipline, sacrifice, and constant attention. But, if you’re willing to adopt these habits and stay consistent, you’ll not only keep debt at bay—you’ll thrive financially.
So, let’s start today! Which of these habits will you incorporate into your life? Share your thoughts in the comments below, or drop me an email. I’d love to hear about your journey!
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