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The anatomy of a debt-free-person

The anatomy of a debt-free-person (Thinkstock)
Debt free people seem to be in the minority in our society. They're seen as lucky, rich, or even weird, by their peers.

I know it annoys readers when I say this: but some debt free people have got there through sensible decisions and hard work. Or they didn't make stupid money mistakes in the first place.

In short: debt free people are generally smarter than those around them. They use the six inches of real estate between their ears to manage their money, however low their income.

For every indebted person, there will be someone with exactly the same income who is debt free thanks to their own hard work.

A debt free person has qualities that the average person doesn't. They:

  • Make a conscious decision to be debt free. Being debt free doesn't "just happen". People choose to budget and spend their money wisely.

  • Prioritise. They decide if it's more important to pay the water bill or go out on a spending bender.

  • Stick to their budgets. There is no excuse to buy something if it's not budgeted for.

  • Cope with the unexpected. They budget for maintenance and other unexpected costs.

  • Don't suffer from excusitis. Of course you have an excuse don't you. That's balderdash. Excuses are excuses. You're only fooling yourself.

  • Take responsibility. They don't blame the government, their employer or their family for their financial situation. They just do something about it.

  • Don't need to upgrade their car or house to boost their egos. They are satisfied with what they have achieved. People who are forever extending the mortgage to get a better house or car to match their egos will never set aside other long term savings. Sure they're increasing their equity. They'd be better off building up passive cashflow instead, which is all the better for retiring on.

  • Never borrow against the house for cars and consumer goods. You're paying interest on these goods for the entire life of the mortgage if you do. It's also fooling yourself into thinking you can afford these things by borrowing against your equity.

  • Buy cars for cash. That's a radical concept isn't it? Only buying the car you can actually afford.

  • Pay their bills on time. They get discounts for early payment and also more headspace to think rather than worrying about bills.

  • Have a half full cup. They say: 'I can', 'I will' and set goals. They don't think: 'I don't have a hope', or 'I don't have a chance', 'it's unfair' and so on.

  • Look for ways to top up their income. If they need cash they hold the mother of all garage sales, they get a foreign student or boarder to share the house, they moonlight, or even do network marketing — although I don't personally approve of that. They rent out the garage or sell the feijoas or other fruit from their trees at a roadside stall. Someone near my house has even erected a car-wash sign and comes out of the house to wash cars whenever one pulls up.

  • Look for innovative ways to save money. They downsize their car or their rented house. Or they get rid of the car and buy a motor scooter or take public transport. What's more, you can grow an awful lot of food in your own garden if you put the effort in. Going vegetarian saves a huge amount of money as well. And so does drinking tap water.

Before you flame me for writing middle class rubbish, think about the people you know who are debt free. How did they get there? Even good solid salt of the earth workers claw their way to debt freedom.

Have your say: What could you change about your lifestyle to make you debt free?

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User comments
This article annoyed me a bit. Although a debt free utopia seems like a dream many aspire to, it is not the best way to go about things. This is akin to someone winning Lotto and just sitting on the money being lazy or just "passively investing"...what's passive investing anyway? a low interest savings account? It's hardly a good use of resources! So your own needs are met, what about all of the need in the world? We own a house fully but we leveraged our money to purchase more houses, because it means we can achieve more in the future...so we actively re-engaged into optional debt. Why not make your money go out and work for you, instead of biding your time being a hedge trimmer (not being an agent for change) and merely making a bit more than what you spend each week and sitting on an idle asset? Surely we can make a world of difference if we achieve more. If we merely keep pace with inflation, or are debt free until fate strikes us a cruel ***, what credit is that to us?
Great article and very to the point which is what people need to hear. Only point i can make that may be in disagreeance is "You're paying interest on these goods for the entire life of the mortgage if you do"...... not if the amount for that specific purchase is structured over, say a 5 year term. I understand a lot of people feel they have to take out new lending on the same terms as their existing ie 20 years, but they dont. Huge savings on interest of currently 5-6% compared to 15%+ for personal loans.
My mum and dad never smoked never drank and never gambled. Over a lifetime that added up to not only a freehold house that they lived in but an extra freehold house with all the money they saved. This was accomplished on mainly one average wage. Dad showed me the secret was to spend less than you earn not more. So thats it in a nutshell folks, live within your means and dont waste money on unnecessary ***.Also remember studies have shown that many wealthy people admit they were happier when they had less money. Dont forget plenty of millionares commit suicide. One well known one just did recently
Yes I know where your coming from with debt free, its an awwwwsome feeling, throw away credit cards, buy good second hand vehicle , depending on size of family, grow ya own garden, itsssss awsome not to owe thousands and thousands of dollars yeayhhhhhhhhhhhhhhhhhhh
At last a piece of writing telling it how it is. If you want something its upto you to achieve it. We live in a society that blames everyone else for their situation and you can vote your self a pay rise without thinking someone else has to pay for it.
Yeah this is pretty much all general common sense information that I'm already am aware of, these thrifty ways to save cash are good however capitalism has subconciously hooked me on the great lie of living beyond my income & buying anything I want . I've reached a stage where I just dont Gaf anymore.It would be easier to go bankrupt & start over.
This is a very sensible article.Thank you. I believe that advertising 'creates' want and desire in us - we believe we need what the adverts offer. in order to thrive we actually 'need' very little of the huge wealth that society generates. the businesses and corporations that provide goods and services do so for their benefit, to make profit, not for our benefit. they need us to believe that we are acting of our own free will and buying products, rather than being brainwashed by psychological trickery (see the work of Bernaise, Freud's nephew (?) for example, in manipulating women into smoking to increase tobacco sales, and people into believing that we all need to dress differently to express our 'individuality' - to increase the sale of garments - as though there are no other ways of expressing it). Don't be taken in!
How true. Perhaps if our leaders in the Beehive actually took note AND acted upon this simple advice we would all be better off with less taxes required to pay for the past excesses. It does require discipline and hard work but it does work.
So glad that I am one of them. Having enough money was always my mission in life. I started working part time jobs when I was 14 and did all sorts of jobs waitressing, mushroom picking, working in a bag factory etc etc. And when I was at teachers' college I had part time jobs when everyone was out partying. In the 70's jobs were aplenty so it was easy. But when my husband died young I had two children to raise by myself, I decided to finish my degree and teach but it was hard to manage taking care of my kids which was my first priority, and having a full time teaching job but I kept working. I consider myself fortunate that I had a home with a subdivisable section so I did that and invested that money in a coastal property but that investment is at a stalemate. I've never worried about the clothes I wear but I do like to look good. Or worried about the car I drove or had expensive overseas holidays. I do wish I had a Prince charming doting on me and spoil me but then I am debt free
With the coming financial collapse caused by amerikas PRIVATELY OWNED central bank's printing presses flooding the street (thus fuelling inflation and perhaps even hyperinflation - god forbid!!) banks and institutions down the food chain, etc will be calling in loans and those that aren't in a position to become debt free will suffer badly. Look what is happening to the middle class in the states . . negative equity slash underwater loans and the govt there, beholden to Wall St. is keeping them going and stuff the man-in-the-street !!

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