7 Habits Of Debt Free People

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This post sponsored by Lexington Law, thank you for supporting brands who support TCM. As always, all thoughts, opinions, experience, and advice are my own.

If you're anything like me, you probably find habits and behaviors of others fascinating. I mean, millennials have (fortunately or unfortunately) been dubbed the “reality tv generation.” So clearly, a lot of us must be a little curious about how others live on the daily. It got me thinking about finances too. We aren't really taught about them in school, yet I think we've all read an article or two on how someone lives for a week on X dollars, or what X dollars can get you for rent in a bunch of different cities. There's this secrecy about financial habits that needs to go. Previously, I shared the habits of people with 800+ credit scores here, and this month, I'm diving into the habits of debt free people!

7 Habits Of Debt Free People

Check their accounts regularly

Most people live in financial chaos. Meaning they have no idea where their money is or where it's going. This chaos alone can end up costing tons of money. Years ago I read a study that most people avoid checking their accounts regularly because it gave them anxiety. But you want to know what gives debt free folks anxiety? Not knowing what's happening with their finances! Seriously, if you check your account and it's negative, what's the worst that's going to happen? You'll still be you and it'll still be negative! But now you won't have to fear the unknown and can come up with a game plan to fix it.

Personally, I like to check my accounts each week for a few reasons. By simply checking your accounts each week you can start to understand your full financial picture and pull yourself out of debt. Weekly check-ins make it easier to comb through new information, versus monthly where it can feel a little overwhelming to see all the things. By checking weekly you'll also be more likely to catch any unwanted subscriptions you're still paying for or fees you didn't realize you were racking up.

Pay off their credit cards

Last year I polled you all on Insta-stories to see how many money myths you were falling for and shared why they were in fact money myths in this post. Most of you still believed it was a good idea to carry a balance on your credit cards each month to use “debt as a tool,” an outdated notion most of us grew up with.

Here's the thing: debt free people are just that: debt free. Even if you have the money in the bank, the moment you swipe your credit card, you now have “debt.” By choosing to not pay off your outstanding balance each money (even if you have the money to do so), still means you have debt. Plus, you can have an excellent credit score without ever carrying an outstanding balance.

Educate themselves

Whether it's staying educated about what's happening in their bank accounts, actually reading the emails banks send them to find out about current rates and offerings, or even just knowing the definitions of financial terms, there's one thing debt free people definitely have in common: they educate themselves.

Let’s be honest, schools didn't do the best job teaching us financial literacy and it's up to us to change that. I'm also not saying that every debt free people went to the library and read every book in the financial section. It just means they are paying attention and if they don't understand something, they aren't afraid to work with professionals like at Lexington Law to repair their credit, ask questions and then make educated financial choices.

Comparison shop

Educated financial choices obviously leads me to comparison shopping! Debt free people know where they can get the most bang for their buck on certain items. While it takes a little bit of upfront time and effort, it has long term gains to know what similar items are going for at your local grocery stores, or knowing what the different interest rates are with various online savings accounts. Comparison shopping can be a major difference in racking up debt and paying costly interest fees, or being debt free. Remember, knowledge is power when it comes to your finances! Knowing what items are going to cost you less and where is essential.

Use store policies to their advantage

This is huge! This can work in two ways; both of which I personally do.

1) Personally, I use some Google Chrome extensions that will send me an email if an item on my “watch” list has gone on sale. At certain stores, I'll put items I have my eye on AND every item I've already purchased on my watchlist. This is because a lot of stores will guarantee you a price match for 14 days after you purchase the item if they lower the price. This is huge! I bought some patio furniture a month ago for $1,300 and ended up getting back over $300 using this method!

2) Leave the tags on. I personally leave the tags on all my new items until the return window has closed (or as long as possible). The idea here is incase the simple price comparison window has passed, I can still return the item and repurchase it at the lower rate.

Learn from their mistakes & ask for help

Alright, this is a two-for-one since they go hand in hand.

I was reading recent credit card stats and wasn't surprised by the findings: Baby boomers and Gen X are the generations with the most credit card debt and credit card debt by income level increase. Meaning, those earning $115-160k annually had the second highest credit card debt at $8,200 and those with annual incomes over $160k have an average of $11,200 in credit card debt per year.

The reason I wasn't surprised: I can't tell you how many members of Gen X and older who have come into my life and look like they have it all together. Big house, sold multiple companies, fancy car and watch… only to find out they actually are deeply in debt, with nearly maxed out credit cards. Often times, they play this shuffling song and dance, borrowing money from people, moving things around, and it all looks exhausting. Personally, I think it's because they haven’t learned from their mistakes and are afraid to ask for help from professionals. They seem to lack humility and think because they've achieved a certain level of success financially at some point, they don't need to enlist help from professionals like Lexington Law. Which is a total disservice to themselves.

To me, the key to being debt free is to learn from your mistakes. Ask for help in figuring out where things went wrong and what you need to do to change. Ask for help to quickly repair your credit score and financial situation so you don't have to keep paying high interest rates. You can schedule your free credit repair consultation with the professionals at Lexington Law here.

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List of Habits Of Debt Free People

  1. Check their accounts regularly

  2. Pay off their credit cards

  3. Educate themselves

  4. Comparison shop

  5. Use store policies to their advantage

  6. Learn from their mistakes & ask for help