Consumer Comeback Blog

10 Ways the Debt-Free Think Differently

Written by Jeffrey Trull

debt-free-happyThose trapped in debt and always struggling to get by might wonder “What am I doing wrong?” The answer is there might be a lot of things that they do differently or opposite from those on the other side of the fence — the debt-free.

If you’re wondering how the debt-free think and behave differently, here are some characteristics that separate them from the rest.

1. They don’t make excuses for keeping debt around

People in debt love to use the excuse that they have “good” debt. Sure, mortgages are low-interest compared to “bad” debt from credit cards, and mortgages even come with a tax deduction. But no matter how you look at it, the interest still adds up to thousands of dollars over the life of the loan and the tax savings only covers a small portion of that.

The debt-free see all debt as bad and try to get out of it as quickly as possible. They know that the interest they’re paying is costing them money they could be investing or saving for a more useful purpose.

2. They never rely on credit

The debt-free have money and plans in place so they’ll never need to rely on credit to get out of trouble. In fact, they know that they’ll be in even worse shape if they use credit in emergencies.

Instead, they build emergency funds so they can pay for car accidents and unexpected medical bills with what’s in the bank, not with a credit card.

3. They like plans and details

Those who are debt-free don’t get there by chance — it’s their plan to make it happen. They carefully plot their way for getting out of debt. They’re motivated and know how long it will take them at the rate they’re paying off their debt rather than just paying the minimums.

They don’t stay out of debt just living day to day and hoping for the best, either. They use budgets as a financial planning tool for both the present and the future and track their spending so they know where their money goes.

4. They never consider the worst deals with credit

Running a balance on a credit card? Using cash advances?  Paying for other high-interest loans? The debt-free might laugh at you if you even suggest such things. Sure, maybe they fell into these traps earlier in life, but they know better now and would never suggest you do the same. They’ve escaped these problems of their past and will never look back.

5. They save first, spend second

The debt-free know that it’s more important to get out of debt than anything else. Savings is always the priority and everything else in their budget is second. They transfer money to their investment and savings accounts before they spend a dime on anything else.

That’s why they do all they can to reach their debt-free goal quickly rather than buying things they don’t need, which will only delay the process.

6. They ignore others

The debt-free don’t care what others think about what they spend their money on and how they look doing it. Simply put, they know others are doing it wrong and they’re doing it right. They pick the path they know is right and stick to it no matter what friends and family say or think about it.

7. They don’t buy crap

The debt-free carefully plan all of their purchases. They don’t just buy things on impulse. Instead, they know what they can afford and what they really need. They realize that they’ll feel better later knowing they saved their money rather than spent it on something unnecessary.

8. They save instead of buying on credit

The debt-free don’t go out and buy things on impulse. They don’t use credit to purchase something now that they’ll have to pay back with interest later. If it’s a car, they’re going to save up for it first. For a house, they’re going to make a significant down payment, too. They know doing these things save money and the only cost is just a little patience.

9. They make sacrifices

The debt-free do whatever it takes when life throws curve balls at them. When they were in debt, they gave up or spent less on vacations or other luxuries while they didn’t have the money.

No matter what their financial goals now, they’re willing to skip eating at restaurants or buying new technology if it means staying on track.

10. They look for value

The debt-free don’t buy fancy things just to impress others. Why buy a top-of-the-line TV, car, or computer when an average model on sale will work just as well? Buying things based on value means that they get the functionality they need without any excess.