When I was growing up I aspired to become an actress. My mother graciously signed me up for a small theater camp where I was confident that I would be “discovered” and land my first gig in a movie (I’ll let you take a guess on how that turned out). Regardless of the outcome, I was eager to learn from the best (or what my 11 year old self thought was the best) so I could add to my skills set. Well, I’m definitely not an actress, but I did learn something valuable at that theater camp. I realized that if I wanted something bad enough, that I had to study the habits of successful people in that field.
Well, 13 years later my husband and I faced our challenge. Over $111,000 of debt to student loans and car loans. Ouch. In that moment we decided to study the habits of debt free people. What did they do? What do they eat? How can I become friends with them? I read books, blog posts, and listened to podcasts. I asked friends somewhat uncomfortable questions to determine if they held all the answers. Over time, I realized that people who have become debt free share 10 common habits:
1. They Use Cash
Yes, cash. It’s much harder to part with cold, hard cash than your debit card. When I use cash for groceries, I know that I can’t go over my budgeted amount. Otherwise, something has to be put back on the shelf. Same goes for clothing (which hurts, even more, when I have to put those cute shoes back). Currently, our family uses the cash envelope system (read more about that HERE and get your free printables!) to stay on track financially. Now, I’m not saying that you have to use cash for every single bill you pay, but you can use cash for certain categories. The categories we always pay in cash are groceries, restaurants, car maintenance, Christmas gifts, and fun money.
2. They Don’t Eat Out Every day
Going to restaurants every day (or even 5 days out of the week) can get expensive! When you go to a restaurant you are paying for convenience. Yes, it is convenient to be served food that someone else has prepared, but it also costs serious money when you add it all up. If you want to save hundreds of dollars each month, make a meal plan, buy only the food you need (no impulse grocery purchases), and cook at home. Limit how many times a week you go to a restaurant, or consider not going at all!
3. They Save
You know what is definitely going to happen in your life? You are going to want to retire. Also, you will probably want to buy Christmas or other holiday gifts this year. There is no surprise that these things are coming. There is no moment where debt free people think “Hey, it’s December 23rd and OH MY GOSH I have to buy Christmas gifts for an entire family.” What is happening in your future? Do you have a vacation you would like to take? A kid you would like to help send to college? People who are debt free anticipate these big expenses and plan for them in advance.
4. They Set Goals
Debt free people did not make only the minimum payments on their loans. They didn’t wake up one day and say “Oh wow, look at that! I paid off my student loans 10 years earlier than the bank said I would.” No, they sit down and make goals. They might even sit down monthly to make goals. Find about 30-45 minutes of uninterrupted time in the next few days. Write out your weekly goals, monthly goals, yearly goals, and long term goals. Might I suggest a financial goals spreadsheet that you can print directly from home? Get that HERE.
5. They Track Their Progress
What good does a goal do if you write it out, declare it, but never track your progress? If your goal is to become debt free and you have a large amount of debt like our family did, then it might take you several years to get rid of it. As two teachers with a growing family, it was not feasible for us to get out of debt in just 2 years. We had to track our progress on our goal often because things came up. We paid for 2 births, 2 surgeries, 1 new car transmission, and many other small emergencies. When you track your progress, you become even more motivated to finish the job. Check out the FREE printable debt thermometer that I have made! It will be sent directly to you along with 6 days of information on how to budget, stay on track with money, and pay off debt! This thermometer will help you track your payment progress as well as provide a little motivation along the way.
6. They Sit Out
When we were working on becoming debt free, I cannot tell you how many times we said “no” to dinners out with friends, pedicures, new clothes, vacations in the summer, and extra fun activities. Instead, we cooked dinner with friends at home, I painted my own nails, we made our clothes last longer, and found free activities in our town at summertime. The thing is, you won’t have to sit out of fun opportunities forever. In fact, you can still have fun by prioritizing what you want to do and saying no to the rest. People who are debt free know that they can’t do it all, so they choose what is most important.
7. They Do Their Research
Debt free people tend to take time to research the important things in life. They make sure that they are saving enough money to be set up for retirement. If there is an upcoming vacation, debt free people take the time to research good deals on hotels or condos. When it is back to school time, they shop around so that they are not paying the highest price for supplies or clothes. Take a little bit of extra time to make sure that you are not spending too much on what you are buying. Do your research so that you spend less and not more.
8. They Are Patient
In a world saturated with social media, it is next to impossible to not see or know what everyone around you is doing. You know where people are eating, vacationing, and spending their weekends. Once you see all this, the comparison game starts to creep in. It makes you want to do all these things and more! People that are debt free exhibit patience and realize that paying off debt is just a season. Seasons pass and once it’s over, then it’s your time to do all these things. Our family only took one vacation while we were in the trenches of paying off our debt. And that vacation was a gift from family members that we tagged along with. We stayed patient and celebrated our debt freedom with a beach vacation once the season passed.
9. They Teach Their Kids About Money
One of my hopes in life is that I will be able to teach my two boys the importance of being debt free and how valuable it can be. One aspect of that is to teach them how to be responsible with money. Children need to know that money is not handed to them, but it is earned for hard work and effort. Currently, our children have jobs around the house. Granted, my children are only 5 and 3 years old so their jobs include picking up toys, feeding the dog, and bringing the plates to the sink after dinner. They get paid in the evening if they completed their jobs (three quarters each) and immediately take their money to 3 different jars: save, spend, donate. If children have a strong foundation in money before they turn 18, they are less likely to sign up for a credit card in college in exchange for an extra 15% off their purchase.
10. They Communicate
Now, this is the biggest one of all! Couples that are debt free communicate well and they communicate often. There are no secrets in the finances and one person is not in charge of all the money making decisions. They are completely honest with each other when it comes to spending money. Couples that are debt free make goals together. They are the accountability partner when someone else wants to go out and spend all the money. When you’ve been slaving away at paying off debt and all you want is to splurge on an entirely new wardrobe, your partner pulls you back down to earth and motivates you to keep going. If you need any tips on how to get a partner on board with budgeting and tracking finances, check out this great article.
What habits do you need to work on to help you become debt free? And which ones are you already rocking? Comment below because I’d love to know!