Ever wonder how some individuals manage to stay away from debt? Look around at your friends and colleagues who are debt free and you will notice certain similarities in their character that sets them apart from others and helps them make financially sound decisions.
Attention to Detail
Most people who are strapped for time rarely review their credit card statements. If they had taken just an extra moment, they may have noticed that recurring fee from the gym they have stopped using or that annual fee for a service they completely forgot about.
Paying attention to detail is an important aspect of remaining debt free because it helps reduce unnecessary expenses and frees up funds to pay back ‘real’ debt.
Living on Less Than You Make
This concept may seem foreign to some, but it is the way that most debt-free people live. The idea is to only spend a certain amount and save the rest for a house or retirement. This allows flexibility in the future to invest that money wisely to generate more wealth.
Setting long-term goals will help you make smarter financial decisions. It would be really nice to buy the latest gadget on the market but if you adhere to your long-term goals, chances are you can not afford to spend on unplanned items. Of course, it doesn’t mean you can never have it, it just means you need to save up longer to be able to afford luxury items. This also gives you time to analyze the potential purchase and determine if you really need it.
Ability to Say No
Understanding that saying no can save you money is important. Eating out with colleagues daily, or going out for evening dinners can really eat into your budget quickly. There are always alternatives to expensive outings with friends, such as a trip to the park for a barbecue instead of dinner at the new restaurant in town.
Value Experiences Instead of Objects
Most debt-free people do not really focus their efforts on purchasing the latest, best thing. They value experiences much more. Being able to make choices between how time and money are spent is something that comes with experience. Focusing on the tradeoff between time and money means making decisions such as choosing to work late to save for an expensive family dinner, or coming home early to enjoy family dinnertime. Being able to identify these instances and working to make the right choices will help you become debt-free and a happier person. For more help, click here to read our article on strategies for getting out of debt.