Great Gatsby author F. Scott Fitzgerald famously observed, “The rich are different from you and me.” That may or may not be true. But the debt-free are indeed different from most of their fellow Americans.
People with no debt are a rarity in our affluent, easy-credit, instant gratification society. But they can be found at all income levels. Some are recovering debt addicts; others have never made a credit card payment. Here are some common traits of folks who live financially free and clear:
Goal-Driven. They understand that if you don’t know where you’re going, you’ll never get there. They set money goals, starting with getting out of debt, and organize their financial life around those objectives.
Disciplined. They have prioritized getting/staying debt-free, and they walk that walk. Debt-freers stick to their budget and keep their eyes on the prize. They do without the nice-to-haves until they can truly afford them. They understand that not eating out, or not seeing the latest blockbuster in the theatre is a temporary sacrifice in service to the real goal.
Non-Materialistic. Comedian George Carlin joked that most Americans use their house as a place to keep their stuff while they go out and buy more stuff. Funny, because it’s true. Debt-free people tend to have less interest in amassing “stuff.” They derive their happiness not from things, but from experiences and from knowing they are financially secure.
Responsible. They understand the difference between needs and wants, and put household needs first in allocating their resources. They do the hard work necessary every day to make sure true needs are met within budget, and they resist the temptation to take on debt for wants.
Secure. Debt-free people make decisions every day that others might (and do) question. Everything from not carrying a credit card, to not having cable TV, to brown bagging it every day. But debt-free people don’t care what others think. They are secure in the knowledge they are doing the right thing for their family’s future.
Patient. They are able to delay gratification. Debt-free people can walk through the Giant TVs section of Costco without taking one of those bad boys home that very day. Instead, they save up and buy it when they can pay cash. That’s a great feeling that many of us have not felt since we were kids saving our allowance for a baseball glove or doll.
Wise. They see things as they truly are. Debt-free people don’t accept the marketing and societal messages that say debt is a powerful tool to help create the life you want. They know most debt is a bad thing that can very easily hobble current options and future opportunities. As I noted in my book You Can Retire Sooner Than You Think, the happiest retirees understand this and work hard to eliminate debt, including their mortgage, before they stop working.
It’s important to understand that debt-free people aren’t always born with these traits. Some were fortunate enough to be raised by financially responsible parents who imparted many of these attitudes. But most people come to the debt-free lifestyle after years of indebtedness and money-related stress. They develop these traits as they begin the process of re-shaping their financial lives. It’s not easy to change habits and attitudes, but those rare debt-free Americans did it.
And so can you.