In today’s economy, it’s somewhat unusual to not have some debt hanging over you: student loan debt, credit card debt, or some other kind of outstanding financial obligation. When you meet someone who doesn’t have any debt, it’s only natural to want to know how they managed to reach this lofty financial status. If you asked them how they achieved their debt-free standing, they might attribute it to wise investments or their income, but the truth is actually much simpler: debt-free individuals tend to share certain habits and characteristics they may not even be aware of.
Luckily for the rest of us, these are all behaviors that can be learned and incorporated into our lives, affording us the opportunity to achieve the dream of living a debt-free life.
People who are debt-free tend to be individuals who are able to think in the long-term, even if that means going without in the moment, denying themselves certain luxuries, or even simply ignoring the everyday temptations to spend money. It’s an underappreciated skill, but one you should work very hard to cultivate. Always be aware of how your actions in the here and now will affect you in the future.
Part of the way debt-free people are able to think in the long-term is that they lay out specific goals for themselves. Achieving financial security does not happen by accident or by setting non-specific goals with no concrete plan or timeframe behind them. Instead of having an indistinct notion of being rich one day, they think in specifics. After all, you can’t win the race until you define what winning means or where the finish line is.
To expand on the point above, concrete ideas are always easier to understand than abstract ones. What does that actually mean when it comes to money? Debit cards and credit cards remove the actual exchange of tangible currency from a financial transaction, making it much easier to spend beyond your budget or means. Many people have found great success by returning to a cash-only existence when feasible. This trend is most evident in the surge in popularity of the envelope system, a form of cash-only budgeting developed by author, businessman and radio host Dave Ramsey.
Spontaneity is a great thing when it comes to romance or adventure, but it’s very much a detriment when you are working toward a debt-free existence. How many times have you looked back at something you’ve purchased on the spur of the moment and realized that in hindsight you didn’t really need it? A big part of staying financially stable is being able to rein in your spending impulses and think about their long-term impact.
Part of being able to rein back your impulses is knowing that you have a plan you have to stick to, and that’s exactly what a budget is. Debt-free people never leave their finances to chance, but instead plan and organize and set limits on them. By budgeting and keeping track of your expenses each month, you have you finger on the pulse of your financial health, allowing you to address problem areas quickly and effectively before they get out of control.
Knowledge is power, and the more of it you have when it comes to your finances the more control you’ll have over them. Part of this learning process is being humble enough to know when you don’t know something, and seek out the information to fill in the gap. This may mean doing online research, taking a finance class at your local community college or seeking the help of a financial advisor. There is no shame in not knowing; the shame lies in not finding out.
Even the smallest of mistakes can have substantial consequences, the same way small investments can yield large returns. You should always be aware of that when it comes to making financial decisions: don’t let the details slip by, because they may end up being more important than you think. Taxes, for example, are something that you should be careful to get every detail of right. Always read the fine print, never rush into any financial decision, and never be afraid to secure the services of a legal professional or financial advisor.
Investing is a tricky business, but for those of us who plan on retiring someday, it’s important to learn and master unless you plan on living off your credit cards in your old age. Start investing in your retirement early, and contribute regularly. Money grows over time with the power of compound interest, and the later you start investing the more vigorously you will need to contribute to making up for lost time, the most precious commodity of all.
The way most of us get into debt is directly correlated to this point. When you aren’t cognizant of your cash flow, you are more likely to spend more money then you have. And that’s a problem when the interest rate on credit cards can be in the double digits.
Sometimes getting a loan is just an inescapable part of life. If you’re at the point in your life where you need a quick boost to get on the right track to long-term financial success and stability, a title loan is one of the fastest and easiest loans you could qualify for. Sometimes a little push is all it takes to effect positive change, and being flexible and open to new ways of doing things is another part of achieving the freedom of a debt-free life.