How to Be Debt-Free

how to be debt free

1. They’re always saving

People who are financially stable know that the number one rule to being good with money is to save — a lot. All the time. They curb their impulsive spending habits and instead put that money to productive use in a savings or investment account.

2. They set goals

Debt-free people know the value of setting goals. They take the time to calculate how much they need to be saving, how much they are currently saving, and how much they want to save. They take stock of their various disposable incomes, and they keep track of every nickel and dime spent.

3. They plan for the future

One of the most important aspects of being financially secure is planning ahead for retirement. People who are good with money know how important it is to invest in the future, and they’ve been contributing to these investments for years.

Unfortunately, according to a recent USA TODAY report, more and more people are putting off retirement because they need more money.

4. They know how easy it is to fall into the credit trap

Debt-free people know how dangerous credit cards can be. That’s why they use cash as their preferred means of payment. Not only does paying in cash help you steer clear of impulsive purchases, it helps you keep tabs on how much you’re spending. With cash, you have a limited amount of money at any given time, so once it’s gone, it’s gone.

5. They’re frugal

Not only do debt-free people keep their credit cards close to home, they use them rarely as well. Instead of making impulsive purchases, they take the time to contemplate whether or not a particular purchase is a good idea. They know what they want, and they make sure their budget allows them to buy it beforehand. Although they appear to live a frugal lifestyle, behind that shroud of modesty is a hard-earned accumulation of wealth.

6. They have a nest egg

Let’s face it: Accidents DO happen, and whether you like it or not, having an emergency fund stashed away will help ward off any sudden expenses and fees.

One of the most important aspects of being financially stable is having a rainy day fund in case of emergency. That way you’ll be better prepared for the unexpected.

7. They’re extremely patient

Being good with your money means knowing when and where to make a purchase. Practicality goes a long way when it comes to your finances. That’s why it’s so important to plan your purchases out beforehand.

Maybe you’ll find something you really want while window shopping. Instead of buying it on the spot, do a little research — 9 times out of 10 you’ll be able to find it for cheaper somewhere else.

8. They pay extra special attention to the details

Debt-free people make it a habit to go over each and every bank statement with a fine-toothed comb. They look through every transaction to make sure their account is accurate. They’re on top of their finances, and they know exactly how much is coming in and how much is going out every month.

9. They use credit to their advantage

People who are financially sound know that credit cards, when used wisely, can be a powerful tool to improve their credit. Some people use credit cards for major purchases only; other people use credit cards for everyday purchases, like gas, food and the like. No matter how you use your credit card, it’s important that you only purchase things you know you can immediately pay off.

Falling prey to long, drawn-out interest rates can be devastating. However, when you’re able to pay your bills off in a nice and timely matter, your credit score will increase, which in turn helps open your credit lien to other, potentially bigger opportunities.

10. They set budgets

As if frugal spending and saving for tomorrow weren’t enough, debt-free people go a step further and actually plan out a budget for the month. In accordance with the above traits, they’re able to stick to their budget by practicing both pragmatic and meticulous spending habits.

When it comes down to the nitty-gritty, debt-free people know the value of money—that’s why they’re so good at managing it.