We all know that living in debt is a recipe for disaster. But how can you enjoy all the things you want in life without falling into that trap? The key is building good financial habits. If you start emulating these 10 simple habits of people who are debt free for life, you’ll be amazed at how easy it is to get more life out of your money – without a mailbox full of credit card bills!
Debt Free Lifestyle Habits
1. Practice deferred happiness
You don’t have to have it right this instant! You’re not a two year old. Whether something caught your eye at the mall, or you suddenly got the urge to redecorate or go on vacation, don’t pull the trigger right away just because you happen to have available credit.
First, give yourself a cooling-off period. Think about how this purchase would fit into your life and decide if it’s actually worth the money. Consider how many hours of work you need to sacrifice for each purchase. Try making a rule for yourself that all impulse purchases over a certain amount (say $15 or $20) need to be considered for 24 hours. If you still want the item the next day, then you can go back for it (or find it online and order it).
For larger purchases, take the time to save up so you can actually pay cash when you’re ready to take it home. The interest you accumulate by taking it home early isn’t worth it!
2. Practice gratitude
Living in gratitude can keep us from getting so far ahead of ourselves that we mindlessly buy things when we’re bored or feeling down. Just the simple reminder of how fortunate we are to have food, clothing, shelter, and people who love us can put life back into perspective when life (or finances) start to get frustrating.
Of course, it is human nature to desire things! But remember that we draw to us things that match the vibration we are already putting out there. If you’re practicing gratitude every day for what you already have, more and more things to be grateful for will naturally be drawn to you!
3. Save for emergencies first
If you have an emergency fund, you won’t have to run up debt when those unexpected (but inevitable) expenses pop up. Build your emergency fund into your budget by putting aside a specific percentage of your money each month before you start buying groceries and paying bills. Treat your emergency fund like another utility bill and make funding it a priority.
You’ll feel so much better when your car needs a new transmission or your washing machine needs to be replaced if you can pay for it with cash you already had laying around! If you’re worried that a pile of cash sitting in your sock drawer or in a savings account at your regular bank would be too tempting, start a separate savings account at a different bank, so you’ll have to make the extra effort to access it.
4. Pay cash
Get in the habit of carrying cash with you for all shopping trips. If you pay with cash, you will likely spend less, because it feels more like “real money” and it’s harder to part with. Also, once it’s gone, it’s gone, so sticking to cash will force you to stay within your budget.
5. Use credit wisely
Credit is not inherently evil. There are some circumstances where it can be helpful. But if you must use it, use it wisely! For example, store credit cards will often run special discounts if you pay with your card. And you can usually make card payments right there at the counter – letting you get the better price and leave the store with no debt.
It can be a little harder with those cash-back, airline miles, or other “rewards” credit cards since you have to make the payments by mail or online. Only use these for the reward benefits if you know you will be disciplined about paying them off in full right away.
6. Make your own meals
Cooking food at home is almost always cheaper than going out. And do you really want to pay interest on food you’ve already eaten? Save those restaurant meals for truly special occasions (the same goes for all those little trips to coffee and doughnut shops!). You’ll save a ton of money and have the option to make much healthier choices when you prep your own food.
7. Find free entertainment
You don’t have to spend money to have fun! All it takes is a quick Google search to find all of the free events coming up in your city. And if there’s a sport or hobby you’ve been curious about, see if you can borrow equipment from a friend or family member to see how you like it, before investing a bunch of money on brand new gear.
Thanks to your local public library, you don’t have to shell out for the latest bestseller the instant it shows up on the shelves. Nor do you need to sign up for a recurring Netflix subscription when you can get nearly any movie out there for free. If you live in a small area with a tiny library, ask your librarian about requesting materials from another local branch. This is often something you can do online from the comfort of your own home!
8. Don’t jump on the newest trends
If you wait a year or two, the latest and greatest version of any electronic device, from television sets to cell phones, will be so much cheaper. Don’t buy into the hype – most of the time what you already have at home is just fine! And you don’t need all of those “As seen on TV” gadgets – most of them never get used more than once or twice anyway.
Be wary of anything that feels “trendy.” If you’re going to spend your money on something, make sure that it’s something that actually matches your personal style and lifestyle!
9. Plan your spending
This is a little different than building an emergency fund or a regular savings account. Planned spending is preparing for larger purchases by building them into your budget. If you’re getting ready to invest in a new car, a vacation, or a new living room set, get an idea of how much you’re willing to spend, then start putting aside a specific amount of money per month until you have enough to go for it.
10. Don’t let mistakes go into free-fall
If you mess up and overdo it with your credit card, recover quickly. It’s so easy to say “well, I’ve already used the card for this and that – one more thing won’t be so bad.” But when you add interest, it can quickly go from bad to worse. Stop right there and rework your budget so you can make bigger credit card payments until the debt is cleared back up.
With mindfulness and a little practice, you can build the financial habits that will let you enjoy your life without the stress of credit card bills hanging over your head. So don’t wait, start with this month’s budget! Your future self will thank you.