15 everyday habits of debt-free people

Getting into debt can be incredibly stressful. Constantly worrying about paying your debt while still having enough money to stay afloat can make you feel lost like you’re running in a never-ending maze. There are ways to stay out of debt, though. You can avoid these 15 money mistakes that are costing you thousands, learn 5 steps to avoid the credit card trap and even learn what rich people never ever buy to help you save a couple of bucks. You can also pick up these smart habits to help you live debt-free.

Having a plan means having a purpose. “[People] that lead healthy financial lives more often than not have clear financial goals and are actively working towards them,” says Yoni Dayan, chief editor of Money Under 30; he adds that “if you have a good ‘why’ to save, the ‘how’ will come much more naturally.”

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“If you have trouble with impulse spending, waiting a few days is a great habit,” Joe Udo of blog Retire By 40 explains. “You may find a lower price or simply realise that you don’t need it after all.” While this is particularly helpful when it comes to big-ticket items, like a new TV or even a new car, it can also apply to everyday buys that can add up over time.

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Financial planner, Shannah Compton Game, recommends removing all auto-pay or auto-fill options on sites where you shop frequently. This forces you to “think about how much money you’re spending before you hit the ‘buy now’ button,” she says.

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Surprise parties are great. Surprise bills are not. To avoid owing at the end of the month, Erica Gellerman, creator of The Worth Project, suggests treating your credit card like a debit card. “For example, if I swipe on lunch for $10 and gas for $40 I’ll use the credit card app on my phone that night to transfer $50 from my checking account,” she explains. “That way I’m not spending money that I don’t have.”

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This tip from Compton Game is pure genius: “Pre-pay your credit card for however much you’ve budgeted for the week for your expenses,” she advises. It will help keep your bank balance in check and stop you from spending money you don’t have.

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There’s a two-word reason: interest payments. Udo says that when he uses credit cards, “I always make sure to pay the bill in full every month. I get all the convenience without having to pay interest to the bank.” If you can’t pay it all, a good rule of thumb is to never carry more than 30 per cent of your credit limit to the next month. Bonus: paying off your balance every month is a good way to boost your credit rating.

Another thing to consider if you find yourself holding a hefty credit card bill when the 31st rolls around, is to start paying with cash. Udo explains that not only does this make sure you’re living within your means but “the physical action of handing over cash to someone else is a lot more difficult than swiping a card.”

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Remembering to set aside money each month is tough. Fortunately, financial planner, Sophia Bera, has a sneaky solution. “Automate your savings and retirement contributions so you don’t have to think about it yet you’re consistently making progress on your goals.”

More free time often involves spending more money, from brunch to happy hour to window shopping (which turns into actual shopping). “Nothing is wrong with these activities, but when I was doing them out of habit, I realised that so much of my spending was on things that I didn’t really care that much about,” Gellerman says. Now she keeps a list of budget-friendly activities to swap out for her pricier pastimes, like inviting friends over or going on a walk.

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