How would you feel when you will be debt-free? Imagine, the positive feeling and the sense of being free from the burden of debt. I feel so good and relaxed with this feeling. Being debt-free gives you positivity and happiness in life because you no longer have to worry about paying any instalments.

We only have the mortgage to pay as we bought our house just three years ago. We came to Australia in 2013. I can understand that it will take some time to pay off the mortgage but the good thing is that we have paid our car and any credit card (bad debt ) that we used. This happened only when we changed our mindset about debt.

15 habits of debt free people to grow wealth

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Change your mindset about debt

The most important thing you can do is, change your mindset about debt. Instead of thinking about being in debt and feeling bad about it, start visualising yourself debt-free. I know how hard it is to think that way but it helps. Give yourself some days and practice it for a few days.

“Successful people have a Success Mindset. Same way Debt-free people create a Debt-free mindset.”

When you stop feeling the thoughts of having debt and start feeling that your debt is gone, your mind will be free to take further steps to dig you out of the situation. Ultimately you will be on your way to acquire the habits that will help you stay out of any debt.

Few things which will help in shifting your mindset are 

Make a commitment to yourself to pay off debt

Make a commitment not to get into more debt

When you commit to your own self, you are answerable to none other than your self. You will be accountable for the actions and it works because nobody else knows about the situation you are in, better than you.

Develop these habits of debt-free people and stay out of debt


After creating a debt-free mindset, budgeting is the most important habit, that debt-free people have. Creating an actionable budget and sticking to it do wonders for your debt paying goals. This can take you a long way in paying off any debt and keeping you debt-free.

Budget can easily find leaks where the money is going. There are many ways to budget and it depends on your own financial goals and financial condition to see which one is good for you. you can read here why budgeting is important.

Budget the easy way and save money

There is no right or wrong way to budget, whatever system you chose,  just do it consistently, in other words, MAKE IT YOUR HABIT. Normally as with exercise and weight loss programs, we start everything with enthusiasm and then stop after some time. While done consistently and deliberately, it makes you save a good amount of money in the long run.

The main goal of budgeting is to save money as well as have enough for your basic needs. It is not difficult but you need to have a plan as well as be patient and determined. There are a lovely quote and my all-time favourite 

 “ Money grows on the tree of persistence ”

2. Tracking the spending

Debt-free people always track their spending and are always aware of their money routes. If you will not track your spending, your budgeting will not be as efficient as it should be. Before budgeting for your next month, when you track your last month’s spending, it becomes easy to create a budget and make any changes you need for your next month.

You might agree with me that every purchase we make seems to be very important to us. We are living in a materialistic culture, where much of the attention is given to owning things, even if we don’t need it. I think you will agree with me on this one that If you want to be debt-free, you have to track your spending and figure out the unnecessary purchases.

It will be easy to figure out your budget when you know, exactly where your money is coming and where it is going. There are a lot of apps to track your expenses but you can do it old school way also. Take your pen and paper, and start writing down your expenses. This is the best habit you can develop to stay debt-free.

3. Track their Progress

Debt-free people love to track their progress because it helps in keeping an eye on your goals. Most of the time, as we progress, we lose sight of our goals. Same is with money goals. To stick to their financial goals, debt-free people always track their progress.

4. Set SMART financial  goals

As with anything else in life, you need SMART financial goals for paying off your debt.  As you know SMART goals are Specific, Measurable, Achievable, Relevant and Timely. Debt-free people understand this and set SMART financial goals to always manage money wisely. You can too set SMART goals.

Specific: Make your goals specific instead of giving a general statement. ” I will get out of debt ” is a very general statement, be specific about that. “Want to get out of credit card debt ” and be more specific if you have more than one type of debt.  I will pay off  ( name the particular credit card ) first is more specific. This is a specific goal to pay off a particular credit card. Debt-free people make very specific money goals.

Measurable: ” What gets measured, gets managed”. Write down the particular amount you want to pay from the above credit card. That will be your measurable goal.

Achievable: Say you have a debt of 5000 dollars and you want to pay it but you have remained at only $100 each month. You cannot pay that amount in 2 or 3 months. Keep your goal achievable by making a certain amount of repayments each month or better, each week.

Relevant: Relevancy of goals is important and if you feel like paying off debt is not possible, generating more income could be a goal for you at this time, And then you may find that paying the debt is easy for you with increased income.

Timely: You would agree with me on this one that goals should be time-bound. Time-bound goals keep you determined because you have to accomplish the given goal in the given time. 

⭐Pro tip: Make goals and stick to them with a determined action plan

5. Negotiate better interest rates

This one is really important if you want to be debt-free as interest takes up a good chunk of money out of our wallets. Debt-free people have this habit to always negotiate rates with financial institutions they are a customer with, for any reduction in interest rates as this could save you some money. For this, do your homework, give them a call and tell them that you think that the interest rate you are paying is a lot higher than you should pay. Ask for a lower interest rate, if they refuse, talk to their managers or if nothing happens, ask for the reason.

If they tell you that your credit score is not good enough, you should try to improve that and then try again. Or try after your situation improves after some time.

6. Create an emergency fund

I know what you ‘d be thinking, how on the earth can I have an emergency fund when I am already broke? If you are in a situation of high debt, you need a cushion to save yourself from getting into more debt. I learned this from one of my friend who hates debt. An emergency fund helps in the situations which can urge you to take more loans.

For building an emergency fund, start saving a little bit each week which will help you in true emergencies. This will help you in staying debt-free as you don’t have to rely on loans and more debt in those situations.

Start with $10/week in your emergency fund. It will add up at the end of the year. In the meantime, if you see that your condition improves, you can start adding more to your emergency fund.

How to create an emergency fund on very low income

Start earning more to get out of debt when you are broke

With your present income, you can save to a certain point. After that, it becomes difficult to cut your spending. Here comes the need for earning some extra money on top of your full-time income.

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7. Cut their  spending wherever possible

Yes, my friend, debt-free people cut their spending if they are on a tight budget and live below their means. This was my first step when we were struggling with debt and on top of that, we wanted to save for our home loan ( a mammoth goal). Cutting your spending on unnecessary things can teach you how you can meet your basic needs without overspending.

  • Cut your grocery spending
  • Reduce outings and eating out instead start eating home-cooked food
  • Eliminate paid entertainment ( there are so many free choices)
  • Get rid of any unused subscriptions( believe me, it will save you a lot )
  • Cancel any travel for this year ( You may plan a beautiful travel next year)

Or you can try some simple and actionable tips to cut your spending here

These are the things that debt-free people love to do to stay debt-free.

8. Assess their financial condition

The very first thing to do while coming out of debt is to assess where you are now. Debt-free people love to assess their financial condition from time to time.

  • How much money do they need for any purchase?
  • How much they are paying in utility bills
  • What type of investments they have
  • whether it is increasing or decreasing
  • Do they need some money for big purchases

Assessing their financial situation and knowing if they have any debt left helps them in staying debt-free or paying off any debt left.

9. Use Cash instead of cards

Moreover, debt-free people use cash wherever possible instead of using cards. When we have debit or credit cards with us, we love to pay with a touch of card and don’t think much about the amount we have to pay. But when we shop with cash, we have limited money and we arrange our purchases according to the available money at that moment.

I have noticed it myself that when I go with a credit card, I don’t give that much attention to what I am buying but when I shop with cash, I pay more attention to what I buying and don’t buy unnecessary things.

10. Live below their means

Debt-free people always live below their means. As we always hear about the stories f people who become healthy and lost their wealth soon. The reason here is lifestyle inflation. If you are a person who increases their spending with the raise, then it will be difficult to come out of debt.

But debt-free people love to live below their means and save and invest any extra money they get.

11. Think about their Future Self

When you think about your future self you will be more inclined to save for your retirement and become financially free. One of the aspects of this is being debt-free. It is in your best interest to save and invest money for the time when you will be not able to work or invest. Having money in your savings can let you have a free life to enjoy what you want to do.

12. Plan their meals ahead

Oh, this one is so important but it gets overlooked every time because food is a big part of your expenses. When you have a meal plan in place, you can save on groceries because you will buy only those ingredients required for preparing those meals.

13. Automate their savings

Debt-free people pay themselves first and automate their savings so that they don’t have to think about saving rather they focus on how to budget the available funds so that they live within their means.

14. Start a Side Hustle

Those people who are debt-free know that living on a single income and paying your debt in the shortest possible time is difficult. They start some side hustle to pay off their debt and be debt free to stay on the top of their finances. They don’t waste their free time just lying on the couch and watching TV.

15. Pay gratitude and be grateful for what they have

Creating an abundant mindset and paying gratitude for whatever you have is important because it can make you feel happy and free your mind to think about being debt-free because being debt-free is the most important part of life and an amazing feeling.

15 habits of debt free people to grow wealth and stay on top of your money saving goals

15 habits of debt free people who are always debt free and enjoy financial freedom


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