10 Habits of Debt-Free People You Should Start Right Now

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Becoming debt-free is a goal for many of us.

And let me tell you, there is no feeling like making that final payment on your credit card, car loan or even your mortgage (that event is deserving of a party!).

10 Debt-Free Habits to Adopt

No matter what level of debt you’re tackling, there are 10 simple habits you need to succeed in eliminating your debt.

1. Create a Budget

You simply cannot become debt-free without a budget.

If the B-word scares you, try to think of it as a spending plan.

That’s all it really is—a plan for where your money will go so that you can meet all your payments and other obligations, including debt repayments.

There are many different ways to budget, including the 50/30/20 budget, where you work out the percentages of income you can spend in each category; the zero-based budget, where you make every single dollar work for you and loads more (including my fave – the Backwards Budget).

2. Start a regular savings habit

Saving money is the opposite of getting into debt.

When you have savings in the bank, you don’t need to increase your debt levels to cover any shortfall.

That’s why savers are much less stressed than people in heavy debt.

They know they’re not one faulty washing machine away from the edge.

Start saving a regular amount each time you get paid – even if it’s only $5 – and you’ll start to see the balance grow quickly.

3. Be prepared to make sacrifices

There’s no way around this.

Paying back debt requires you to make some changes to your spending.

That could mean eliminating meat from your diet for a month or walking and cycling to and from work instead of driving.

This might seem tough, but humans are adaptable creatures, and you can absolutely do anything you put your mind to if you’re prepared to make sacrifices.

More frugal living tips here

4. Find ways to boost your income

Sometimes your budget is so tight, you simply cannot find another dollar to put towards debt.

In this case, you have to increase your income.

That could mean asking for a raise at work, applying for a promotion, or changing jobs completely.

The easiest route for me was to build a side hustle.

I like online gigs that let me make extra money from home. Here are some ideas>>

5. Start talking about money and debt

Your friends and family will notice that you aren’t offering to meet them for coffee, or you’ve recently discovered the joy (and low cost) of cycling as a mode of transport.

So talk to them about it.

Open up about what you’re doing and why.

In my experience, people light up every time I talk about money, saving and debt.

We just don’t talk about it enough, and by sharing your story, you might help someone else take that first step towards a better financial position.

6. Negotiate prices and shop around

Now you’re starting to view your money as a powerful weapon in your fight against debt, it’s time to get ruthless with your spending.

Here in New Zealand, we all know that shopping at Pak’n’save  (a barn-like budget supermarket for my non-Kiwi readers) is cheaper than New World (a delightful but much more expensive supermarket).

Using a cheaper supermarket, you can easily knock $20-$30 off your weekly shopping bill.

Other ways to spend less on essentials include cutting your power bill, using cashback sites for online purchases and earning free gift cards from doing surveys to use as gifts. 


If you want to try out a new product, requesting a free product sample from the manufacturer can be a good way to try before you buy. 

Debt-free people keep saving and reducing expenses as a habit for life.

7. Avoid taking on more debt

Once you’ve implemented a savings plan, found ways to increase your income, and started reducing your spending, the main thing you need to do is avoid more debt.

Now, that’s a hard thing to do because credit card limits don’t automatically reduce just because you make a payment.

If you think you’ll likely start spending any available funds, it might be worth consolidating your debt into a loan with a reducing balance and cutting up the plastic once and for all.

Do whatever you need to do to avoid getting back into debt.

Remember, the goal is to live debt-free.

8. Set a big goal

If motivation is waning, setting a goal to go on a holiday or buy your first home might get you back on track.

In our home, we need something to work towards and obsess about when saving.

If it’s an overseas holiday we’re planning, we like to think of each dollar we save in the local currency.

I tell my husband, “This is ten pesos in Mexico, which is enough for a taco” or something similar.

It helps us remember that every dollar counts.

9. Patience is a virtue

Most people who live debt-free understand that getting out of debt is no quick thing.

Finding ways to embrace frugality and enjoy the free things in life while you’re paying back debt will help you get through the harder times (there will be many).

10. Celebrate the milestones

You’ve come a long way, baby!

Celebrate the crap out of your achievements.

Whether it’s getting your debt down to five figures or eliminating one payment altogether.

Recognising how far you’ve come with a picnic, a nice bottle of wine, or even going to the movies on tight-arse Tuesday will help you reach the next level.


About Emma Healey

Emma is a recognised family finance and budgeting expert and founder of Mum's Money. Her advice has been featured in Readers Digest, Yahoo Finance, Lifehacker, The Simple Dollar, MSN Money and more.

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