10 Spending Habits Shared By The Debt Free

Monday, June 30, 2014

Living a debt-free life isn’t just about earning more money or living frugally 24/7. It’s about living within your means and getting the most out of every one of your dollars.

It’s also about living your life thinking about your long-term future rather than focusing only on the short term.

Here are 10 spending habits shared by those lucky enough to wear the debt free badge.


They value substance over style

Many of us get caught up with image. We need to have the latest brands, the newest toys - whatever is currently in vogue.

Not debt-free people, though. They just want and need enough to survive and live a comfortable life, not necessarily an extravagant one.

A car that works rather than the latest model suits, as does a wardrobe that is serviceable but not necessarily filled with brand names. They’re more likely to have a phone that works but doesn’t sport the latest bells and whistles.

They look after their properties to ward off unnecessary repair bills and maintain warranties, and they replace goods as needed rather than simply because they want the latest.

You get the picture.  The debt-free are not tempted by outside forces. They march to their own tune and purchase practically.


They don't have deadlines   

It’s almost impossible to be debt-free if you are a creature of immediate gratification.

That’s not to say debt-free people never experience of ‘see it, want it, need it’ or that they never buy anything just for fun. They just know (or have taught themselves) that too much impulse buying is the quickest way to waste money.

Instead, as a general rule, they go away, think about how much they really want or need the item and come back again – perhaps during an annual sale – with a confident self-justification for their purchase. Or they don’t come back at all.


They are detail-oriented

A laissez-faire approach to money is never going to stem the flood of funds leaving your wallet.

Most people know the importance of budgeting – even if they don’t do it - but debt-free people also know the importance of reconciliation.

Reconciliation involves keeping track not just of your bank balance, but also of all your expenses via bank statements, receipts and the like.

Not only does this ensure you’re not being cheated through overcharging or mistakes etc, it’s also a great way to pick up on ideas for saving money.

For example, you mightn’t notice the odd ATM transaction fee from a balance, but see three of four examples of $2.50 come up in a statement, and you’ll quickly learn which machines to avoid.


They have an emergency fund

There’s a pretty common saying, that most people are only two or three pay packets away from being homeless. And boy, is that a scary thought, but one not lost on the debt-free, who differ from the norm by insiting on turning that fear into action.

The debt-free will always make consistent and decent-sized donations to an emergency fund.

That way, as the name suggests, they’ve money spare for if the walls cave in – money to cover the payment of expenses like mortgage repayments without having to consider alternatives like payday loans which carry significant interest rates.


They do the boring stuff

Financial research can be eye-glazingly boring. After all, who cares about interest rates or early exit penalties?

The debt-free, that’s who.

Those who are free of debt wouldn’t dare enter into a contract or make a purchase without knowing every last detail. They wouldn’t, for example, take out car insurance and let it automatically renew the following year. Instead, they’d research what else is available, and, if there are savings to be had, they’d move the following year.

For these customers, brand loyalty must be earned, not just rolled over.


The lie to themselves about what they earn

You’d think it would be almost impossible to lie to yourself, but debt-free people know it can be done.

They do it by having their salary split so part of it isn’t immediately visible, encouraging them to live on less.

One simple way to do this is to have your wage paid into a special savings account with no key card access – perhaps even with another financial institution.

If you never see it, you’ll never miss it, so it’s almost like being forced to save – in a good way.


They ask for a better deal

Pride never comes before a fall for a debt-free person as they’ve learned there’s no harm in asking for the best deal possible on anything that involves spending.

They’ll ask for a better deal on their home loan, they’ll ask for discounts at stores when using cash, they’ll team up with friends in order to negotiate for bulk buys.

In short, they understand the value of their money and have no problem in seeking avenues to make it go a little bit further.

It’s a good theory as even the smallest savings can add up nicely during the course of a year, so don’t be too shy to ask for a better deal.


They've learned to say 'No!'

Debt-free people aren’t Yes Men. They understand that sometimes, you just have to say, ‘No’, even to yourself.

It’s simply not fiscally possible or sensible to buy and do everything that’s in front of you and a little short-term pleasure could lead to considerable long-term losses.

Don’t say ‘Yes’ to everything just because you have the funds. That’s not to say that you never go out to an expensive restaurant, or that you refuse every last-minute excursion to the movies, just make it a treat rather than the rule, or a ‘right’ because of what you earn.


Weirdly, they save 

It seems an obvious one (and of course harder than it sounds), but you’d be surprised how many people don’t do it. And it boils down to a simple equation – don’t spend or allocate everything you earn.

Instead, make a plan to leave a certain amount of your pay in the bank each pay period. And then do it.

Take pride in saving and don’t get caught up in ideas such as: “Oh, we’ve got $5000 in the bank now, we should probably think about going on a holiday!”

Enjoy watching your dollars grow.


They value the free as well as the paid

Our culture can be pretty materialistic, often placing the greatest value on such things as who has the biggest home, who’s eaten at the best restaurants and who’s been on the most exotic overseas holiday.

But debt-free people know a price tag is no indication of value.

There are so many wonderful free things available to see and do, and they take full advantage of them – from free author talks and art gallery exhibitions to guided walks through gardens and movies on free-to-air TV. Then, when something comes up they want to pay for, they value it even more that someone for whom huge outlays are an everyday occurrence.

The debt-free may seem like a whole other species to anyone in debt, but they’re not. Believe it or not, they’re just like you, only they think long-term – and they exercise those alien discipline muscles every day.