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Family #1 manages to pay off $40,000 in debt in two years on a $35,000 annual income. Family #2 makes $100,000 a year but can’t seem to make the slightest dent in the same amount of debt.
One of these families is on their way to becoming debt-free. The other is making the same mistakes they have been for years.
Why is that?
While many factors could be in play here, one of the most likely reasons is the second family has created a habit of overspending. They earn a great income, but they probably spend beyond their budget, which leaves them with less money and causes a lot of tension around the house. That’s a difficult and stressful way to live.
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The people who overcome that stress realize they have to handle money differently and make some lifestyle changes. When they make those adjustments, they begin to establish certain characteristics that are super important when it comes to becoming debt-free and staying that way. As Dave always says, personal finance is 80 percent behavior and 20 percent head knowledge.
So, what are some of the behaviors of people who are becoming debt-free?
Traits of People Who Experience Debt-Free Living
1. They Are Countercultural
Despite normal convention, these people realize debt isn’t a tool. Society tells us “you have to have a credit card to survive,” “you can’t go to college without student loans,” and “you’ll always have a car payment.” But those who are experiencing debt-free living don’t buy into these norms. Credit cards aren’t necessary for their everyday lives. Car payments don’t take a chunk of money from their budgets. They treat debt like leftovers they find at the back of their fridge. Whether it’s debt or week-old meatloaf, they get rid of it! Debt is normal. So be weird!
2. They Use Self-Control
According to Dave, adults make a plan and follow it. Children do what feels good. Someone who really wants to get out of debt has the willpower to walk right past the shoe section or the flat-screen TV aisle without making an impulse purchase. They aren’t swayed to buy something simply because it’s on sale that day. They are wise enough to know purchasing something isn’t going to erase all their problems and make them feel better. Why? Because they know not to buy those things unless they can pay cash. They are willing to wait, work and save.
3. They Are Confident
A person who believes in their money plan doesn’t care what others think of them. They’re fine with driving an older car, because it doesn’t have a payment. They don’t need to take expensive vacations just to post a glamorous photo on social media. They actually look at price tags and not only at brand names. Why? Because they have given up on trying to keep up with the Joneses.
And guess what? This kind of steadfast discipline frees up more money to attack their debts. With each debt they pay off, their confidence grows by leaps and bounds.
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4. They Are Goal-Driven
No-brainer, right? Debt-free living is a goal, so people who want to accomplish it keep that objective in front of them. They set goals that are specific, measurable, achievable, relevant, and have an expiration date. They determine what they want to do and map out their strategy to make it happen.
5. They Are Gazelle Intense
If you’ve taken Financial Peace University, you probably remember Dave talking about gazelle intensity. That’s when you are so fed up with debt you run as fast as you can (like a gazelle) in the opposite direction. This means they are looking to squeeze every single dollar they can from their budget. They are couponing, looking for sales at every turn, and even working a side hustle. They are all in.
6. They Are Not Materialistic
Someone who is materialistic places too much emphasis on “stuff.” They borrow up to their eyeballs to pay for their vacation, car and oversized house. The person who is determined to get out of debt knows money doesn’t buy happiness, so they don’t fall into the trap of wanting as much stuff as they can get. They have become content with what they have and aren’t seeking to buy their happiness.
7. They Are Willing to Make Sacrifices
Eating out, going to movies every week, and getting the premium cable package—these are the types of things a person might have to avoid while becoming debt-free. But keep in mind: Budget cuts are just temporary. Once the debt is gone, there is more room in the budget for those dinner-and-a-movie dates.
Want to Be Debt-Free? You Can Do This!
When you take a closer look at debt, you start to see it for what it is—something that holds you back. Once you see that, it’s easier to be patient, make sacrifices, and feel confident in your ability to pay it off. Before you know it, you’ll be enjoying debt-free living too!
Are you ready to start your journey to becoming debt-free? Learn how to get out of debt and make a plan for your money by signing up for Dave Ramsey’s Financial Peace University. Plus, your membership comes with 16 weeks of online access that allows you to view each lesson anytime, anywhere! Find a class in your area today!