Living a debt-free life is something we all dream about. But for many of us, it can feel like it’s just not in the cards.

Debt is this constant, looming presence that seems like it will always be there stressing out.

But there are people in this world who are completely debt free. And they didn’t just get lucky.

They simply adopted the right habits to help them achieve financial stability and avoid falling into the trap of never-ending debt.

Here are 5 common characteristics of debt-free people that you can apply to your own life!

1. They Make Budgets

This might be the most important characteristic of debt free people. They make budgets and they stick with them. It’s not they are forcing themselves to avoid spending money. They do it because they realize that a budget is not a cage but a way of taking control of your life.

It’s what allows you to spend your money on what you really want instead of just wasting it on little things here and there they don’t really care about. With a budget, you can make sure that you are putting your money toward what you really care about and not letting it get drained by the things you could easily live without.

Here is how debt-free people make and use budgets:

  • They make a budget for the month in advance.
  • They give every last dollar a purpose. That is, they decide exactly where they are going to put every dollar of their income.
  • They check on their money at least once a week to make sure they are on track and catch any problems as soon as possible.
  • They set goals and targets for the long term and short term.
  • They save for emergencies instead of relying on credit cards to get them through.

Once you start making and using a budget in your own life, you’ll realize how much freedom it actually gives you because it is actually empowering you to achieve your goals.

See: Our Complete Guide to Budgeting

2. They Save Instead of Charge

People with debt, especially credit card debt, follow a dangerous logic. If you don’t have the money for it now, just buy it with credit and pay it off in installments. But when you follow this pattern, you end up paying more than what it cost since you now have to pay interest. You are spending more than you can afford now and, as a consequence, paying more for it in the end.

And you are trapping yourself in a cycle of debt. So what is that debt-free people do differently? It’s simple. If they can’t afford to buy it now, they don’t buy it. Instead, they make regular contributions to a savings account and once they’ve saved up the amount they need, they buy it then, with cash.

This habit creates an upward cycle of growth. That’s because you not only avoid taking on debt but you are earning a modest amount of interest while you let that money grow in your savings account! So not only do you come out of it with the cash to buy what you wanted in the first place but a little bit extra leftover!

See: Our Complete Guide to Saving Money

3. They Set Goals & Dream

One of the main reasons people struggle to save money is because they don’t really have an idea of why they’re doing it. They just know it’s a good idea. Debt-free people set clear goals. When they save money, it’s for a purpose. Whether that purpose is an emergency fund, retirement, a vacation, or a shopping spree, they know what it is and they know how to get there.

Setting clear goals for your money is the best way to stay motivated. Even when you are still working your way out of debt, don’t just make “getting out of debt” your goal. Envision exactly what a debt-free life will mean for you. What goals does it make possible for you? What kind of lifestyle could you lead if you were debt free? Know what you want and why you want it. Then, make the budget that will enable you to get there!

See: Our Complete Guide to Productivity

4. They Make Debt a Priority

Debt free people don’t necessarily avoid taking on debt. But when they do take on debt, they make it a priority to get out of it again as soon as possible. Often, we get trapped in debt simply because we treat debt like it’s an unavoidable fact of life.

But when you live with this mentality, you won’t have the motivation to ever really get out from under it. Debt-free people treat every single dollar of debt they take on like a parasite they need to get rid of as fast as possible. For them, it’s not about debt management, it’s about debt elimination.

See: Our Complete Guide to Pay Off Your Debt

5. They Appreciate Delayed Gratification

Debt-free people are patient. They realize that the instant gratification of splurging on something you didn’t plan to buy only feels good in that moment. Instead, they appreciate the bigger reward of planning and working toward a goal. Then, once that goal is achieved, they get to enjoy it thoroughly and without the slightest bit of guilt because they know they aren’t messing up any of their plans by doing it.

All that is to say that debt-free people aren’t just people who never spend or enjoy their money. They definitely do spend their money. They just do it consciously and purposefully. And when they want something, they know it’s better to save up for it and buy it later than it is to buy it immediately.

Because when you impulse buy, the debt you take on drains the fun out of it. Instead of enjoying what you bought, you just stress out about the money you owe. It’s much more enjoyable to practice the art of delayed gratification.

About the Author:
Kostas Chiotis is an economist and an avid blogger. You can check his articles out at his blog, or you can follow him on Twitter and Facebook.