Always Broke? 10 Things Debt-Free People Never Do

Are your bills piling up in a corner on your desk? Is the rubber band you wrapped around your bill statements ready to break? Then you could use a few lessons from people who are living with little to no debt. If you want to get on the road to financial freedom, we can tell you how to get there. Here are 10 things debt-free people never do.

1. Pay bills late

woman ripping up sign with the words "debt" on it.

Remember to pay your bills on time |

Those who enjoy little to no debt understand that paying bills after the due date will only result in late-payment fees and a less-than-perfect credit score. If you think paying a few days late is no big deal, you’re wrong. Did you know that credit payment history makes up 35% of your FICO score? If you want to achieve financial health, remember to pay your bills on time.

If you have trouble remembering to pay your bills, set up automatic withdrawals from your bank account so you won’t have to worry about missing a payment. Glenn Craig, founder of personal finance blog Free from Broke, says another useful tool is Google calendar. Craig says he uses it as a bill payment calendar to remind him when to make certain payments.

2. Ignore savings

Man calculates money on calculator along with piggy bank

Learn how to save your money |

If you want to steer clear of debt, it’s important to have a healthy emergency savings fund. Rainy days will come, so do yourself a favor and prepare now. If you don’t take the time to build your emergency savings fund, when you do have an emergency, you’ll have no other choice but to borrow from friends and family or pay with a credit card. Before you know it, you will have dug yourself into a debt hole that’s hard to get out of. Financial planners recommend saving at least three to six months’ worth of expenses.

According to a Bankrate survey, roughly 63% of Americans say they don’t have enough money in savings to cover an emergency such as a $500 car repair or a $1,000 emergency room visit. Just 37% of survey respondents say they would be able to withdraw money from their savings account if they have an unexpected expense. In addition, another Bankrate survey finds that one in four Americans has more credit card debt than emergency savings.

3. Lend money indiscriminately

Men exchanging money

Be careful who you lend your money to |

People living the debt-free life are careful with their money. They don’t lend money to anyone who asks. If you decide to lend money to friends and family, first make sure you can afford to do so. Lending money when you don’t really have the means can put you in a tight spot if you ever have a financial emergency of your own. Also be aware that you may not get your money back; just think of it as a gift.

4. Rely on credit

Credit cards

Don’t rely on your credit cards for your purchases |

Do you use your credit card often, even for small expenses? If you want to get closer to kicking the debt habit, you’ll need to get used to using cash and keeping the plastic at arm’s length. People who are debt free (or close to it) know that credit should be used sparingly. They avoid a big bill later on by paying off the balance as soon as possible and keeping a close eye on due dates. Credit cards come in handy when you need to book a hotel or make an online purchase. However, credit can be dangerous when overused.

5. Buy too much house

 couple standing outside their house

You don’t need a mansion if you’re living by yourself |

If you have a family of four, you don’t need six bedrooms, a home theatre, and a sitting room. Be responsible with your living expenses and lay off the luxury living (and stop watching all those celebrity housewives shows while you’re at it). People who have minimal debt know how to buy just enough house so they and their loved ones can be comfortable. If you don’t spend responsibly, you’ll just risk carrying a large debt for years to come. And if you fall on hard times, before you know it, you’ll be asking your lender for help making payments. Just don’t do it. Besides, if you get a bigger house, your annoying family members will want to stay over more.

6. Subscribe to several store newsletters

man sits at a computer while he works

Newsletters seem like a good way to get a deal, but steer clear |

If you sign up for email reminders for sales taking place at all your favorite stores, it will be next to impossible to resist the urge to shop. Don’t think you’re just going to click on the website and browse. Browsing soon turns to shopping. Then shopping turns into maxed-out credit cards. When it comes to those deal newsletters, stop at three. Any more than that, and you’re playing with fire. Also make sure you are avoiding store credit cards too.

7. Compare themselves to others

Woman trying clothing looking in mirror adjusting dress

Don’t be envious of your richer friends |

People with little or no debt understand the grass is not always greener on the other side. They know it takes a lot of work and money to keep that grass green. Instead of becoming envious of others who seem better off than them, they take care of what they already have and learn to live within their means. Besides, if your friends or neighbors seem wildly successful and constantly brag about their latest high-end purchase, chances are they’re stretching the truth a bit — or living a borrowed lifestyle with credit cards.

8. Take the first offer

Young man with glasses working on his notebook

Learn to negotiate when it comes to your salary and big purchases |

Debt-free people are skilled negotiators. They don’t take the first offer when it comes to salary or major purchases like a home or car. So brush up on your negotiation skills so that you can keep more of your hard-earned cash where it belongs — in your bank account.

9. Fail to devise a budget

Pile of money

Make a budget you can stick to |

Staying free of crushing debt requires a budget. People who handle their money well know exactly how much money is coming into and going out of their household. Just 32% of Americans say they have a detailed household budget, according to a Gallup poll. If you’re not one of them and you hope to achieve financial freedom, you’ll need to start working on a spending plan as soon as possible. This is the best way for you to make sure you don’t overspend.

10. Spend time with financially irresponsible people

Man holding money

If you’re around people who are financially irresponsible, it may rub off on you |

Financially healthy people tend to spend time with those who are serious about proper money management. They know how easy it can be to pick up a bad money habit, so they steer clear of people who could be potential financial drains or bad examples. Follow their lead and take time to think twice about the people you spend time with.

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