Live Debt Free

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7 Characteristics of Debt-Free Living | Traits and Habits to Know

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It’s not often we come across someone who is truly debt-free. When it comes to things like mortgages, medical bills, student loans, credit cards, and car loans, Americans usually have at least one if not all four of these credit lines open.

Living debt-free is something that we all dream about. And, if you are in debt, know that it is possible to overcome and pull yourself out of it. How? Here are some characteristics and traits of people who live debt-free.

Set Goals

Another fantastic habit of people who live debt-free is they set goals. It is imperative to plan what you want your financial future to look like. If you don’t know what your goals are, you’ll never get to them.

Of course, an important goal for a debt-free person is to bring all your debt to zero.

It is also important to set clear goals after your debt is paid off. This could be setting up an emergency fund, saving for retirement or a vacation, or saving for a new home.

Goals will help you stay motivated and focused as new issues and problems arise in your life. This habit of setting goals goes hand-in-hand with a budget because creating clear goals and plans will help you work your budget correctly.

Make a Solid Budget

This is one of the most defining characteristics of people who live debt-free. Budgets are an incredibly important habit for knowing what bills you have to pay and knowing where your money goes each month. People with no debt set strict budgets and they follow them exactly. 

Making a budget doesn’t mean that they are forcing themselves not to spend any money, it just means that they like to be in complete control of their finances. A budget doesn’t just account for bills, it also considers other expenses like entertainment and new clothes.

Budgets also help you afford to buy what you want when you want. By allowing yourself this, you won’t feel like you need to get a credit card and splurge on wants because you only budgeted for your needs.

Self-Control Is Everything: 7 Traits Typically Seen in People Who Practice Debt-Free Living

In most cases, a budget that works will account for every last cent of your income. Every dollar will have a purpose, making you feel more confident with your spending.

Non-Materialistic

In today’s society, it is so easy to get wrapped up in stuff and things because they are popular, and everyone has them. Another defining trait of debt-free people is the fact that they don’t care about new stuff, and they don’t care what people think about this mindset.

Paying for things like a large house or a fancy car can take up a massive portion of your budget each month, and people who live debt-free choose to pass up on those large monthly payments. They also understand the fact that with interest charges, you will end up paying more for the items than what they are worth. 

Being materialistic means you are more interested in satisfying your wants at the moment than your monthly needs.

Non-materialistic people are the opposite, as they focus more on their needs than their wants. They know it is important to budget for things they want, but it is not their priority.

Not Afraid to Say “No”

It will be impossible to become debt-free if you are always saying “yes” to everybody and everything you come across. This could be a vacation, eating out at a restaurant, shopping, or spending irrational money without thinking it over first. 

One of the most crucial things that people with this characteristic do before making any decisions is they ask themselves a serious question.

They sit back and think: if what they want NOW is more important than what they want MOST. This allows them to put the situation into perspective to make the best decision.

Thinking about this question gives you the ability to see that spontaneous spending is one of the biggest things holding you back from financial freedom. If you always say “yes” and buy anything you want whenever you want, you won’t be able to propel yourself forward financially.

Patient

People who are currently living debt-free knew when they started that it wasn’t going to happen overnight. Paying off all of your debt takes a lot of hard work and a lot of determination. You need to be extremely patient during the process of becoming debt-free.

Patient people also know how great they will feel when they reach the goals they have been working so hard for.

They understand that what they are working towards for their future is more important than what they want right now, and patience is a big part of what works for them.

Save Instead

It is ridiculously easy to get into the mindset of just buying something on your credit card. It is quite simple to pay on a purchase over several months, but this can create a dangerous pattern. 

You have to pay interest on purchases you make on your credit card, so you will end up paying more money for your purchase than it is worth.

You are spending more money than you have AND you will pay more for it in the long run? There is an easier way to do things.

It can be hard to get yourself out of the cycle of constantly buying things on your credit cards, but with determination, you can do it. If you can’t afford to buy it with cash, then just don’t buy it. I know it’s easier said than done, but you can do it.

Focus on saving your money for things you want to buy instead of charging it to your credit card.

Before you know it, you will be able to buy that thing you want with cash and you won’t owe a single penny on it after you purchase it!

Make Sacrifices

Living sacrificially is an extremely common trait in completely debt-free people. They understand that reaching their financial goals will require sacrifices, and they are willing to make them.

They pass up on eating out, watch movies at home instead of going to the movie theater, and they stay in and skip the bar. 

They also cut out unnecessary expenses that they are paying for but they don’t exactly need, such as cable. It saves you money to cut your cable and use streaming services instead.

Debt-free people also understand that these cuts are only temporary, and they will be able to afford them again one day.

Once you are out of debt, you will have room in your budget for all of the luxuries you had to cut out for the time being. You can continue to go out to eat with your friends and go see movies at the movie theater.

It will feel even better knowing that you can do so without putting yourself in financial distress.

A review of our traits

Conclusion

If you want to become debt-free, consider following some of these habits and learning these traits. In the long run, you will be much happier, have more financial freedom, and be able to save properly for the things that you want.

 Living debt-free might seem incredibly hard, maybe even impossible, but it doesn’t have to be. You will be surprised at how easy it is!

Are There Any Countries in the World Not in Debt?

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Everybody knows that since the financial crash of 2008, the global economy has been fluctuating ever since.

Most of the countries in the western world have record levels of debt. The USA alone has a national debt in the hundreds of trillions.

Many people often wonder what countries have the lowest debts or even no debt at all! Well, there are a few with almost no debt at all.

1. Hong Kong

The Special Administrative Region of Hong Kong is the country with the lowest debt level in the world. Some sources claim that Hong Kong is completely debt-free, while other sources claim that it has a debt of around 0.1%-0.2%. No other country even comes close to this.

The reason for this minuscule debt is because Hong Kong is a lucrative financial hub for the whole world. Hong Kong has a heavily regulated banking sector, large reserves of foreign exchange currency, and efficient education and taxation systems.

For such a small administrative region, it brings in such a huge amount of money from all the big banks located within it, which ensures that Hong Kong has plenty of surplus cash to spend on public projects.

2. Brunei

As mentioned earlier, Brunei’s debt is around 3.1%. Although this isn’t as low as Hong Kong, it is still a substantially small debt considering how much Brunei spends on its public welfare programs.

The country’s large gas and oil reserves mean that these products can be exported for high prices to wealthy nations in the West such as countries in the EU and the USA. 

The reason Brunei has debt at all is that it has universal healthcare for all citizens, paid for by the state, as well as subsidies on food and housing for the people.

It is quite impressive that the country’s debt is so low, considering the amount of money that goes into their state-sponsored welfare programs.

3. Estonia

Estonia’s debt levels come in at 9.5%, a much higher rate than Brunei and Hong Kong but still incredibly low for a European country.

The reason for this low level of debt is due to the free-market, liberal policies Estonia pursued following the collapse of the Soviet Union in 1991.

Its neighboring nations, Latvia and Lithuania, didn’t go down this path and instead went ahead with Cold War economic policies. 

Estonia pursues aggressive free trade, has a flat income tax rate, and a carefully balanced public spending plan. 

4. Saudi Arabia

Everybody knows Saudi Arabia is a nation full of oil that can be exported for high prices. Due to this, Saudi Arabia’s debt sits at around 12.4%, still low by Middle Eastern and Western standards.

The Saudi Empire debt can be highly volatile due to the fact their economy relies almost solely on oil exports. So, when oil prices fall, Saudi Arabia often has to borrow money to fill the void of lost cash.

5. Botswana

Many people think of small African nations and associate them with less than satisfactory living conditions. However, Botswana is not like this at all. Botswana’s debt is 13.9%, almost unheard of for an African nation.

Even during the peak of the global economic crash in 2008, Botswana ended up borrowing very little money and continued a trend of healthy economic growth.

Obviously, this amount of debt is still much higher than that of countries mentioned lower on this list but is still impressive nonetheless if you consider the context around this issue.

6. Russia

Russia had done surprisingly well for itself ever since the collapse of the Soviet Union. Russia’s debt to GDP ratio is incredibly healthy at 17% for a country of its size.

This is thanks to Russia having the world’s largest natural gas reserves which are incredibly lucrative exports due to the reliance of this natural gas in power plants all over Europe and beyond. 

7. Kuwait

Kuwait’s economy is very similar to Saudi Arabia. Despite this Kuwait’s debt is higher coming in at 18.6%. Kuwait is much smaller than Saudi Arabia and therefore has smaller oil reserves.

Kuwait suffers from the same problems as Saudi Arabia when it comes to volatile oil prices which then drives borrowing up. Kuwait does have a large sovereign wealth fund but doesn’t like to use it unless necessary.

Due to this, since 2016, Kuwait has increased its domestic debt to £8.9 billion and its foreign debt to £5.9 Billion. Despite this increase in debt, Kuwait is still financially stable and on track to remain a healthy Middle Eastern economy.

Five Ways to Relieve Medical Debt

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The average American will actively do everything they can to avoid a trip to the hospital or the emergency room. The funny thing is that they are not hesitant to receive medical care…just the bill afterward.

Most Americans are so desperate to steer clear of medical debt that many people who need to go to the hospital are calling for Ubers instead of ambulances, opting to pay approximately ten dollars for a ride as opposed to spending one thousand dollars minimum (in addition to their actual hospital visit).

Such practices are not new, and these methods for reducing medical debt are often necessary to keep most Americans financially afloat.

Hospital bills for even relatively minor injuries, such as cuts that are barely deep enough to require stitches, tend to cost thousands of dollars, even if the injured person has decent health insurance. 

Fortunately, there are a few different ways to find relief for medical debt.

Keep reading to discover these methods for yourself. 

Relieving Medical Debt: Five Useful Options 

If you are struggling with medical debt, the situation may feel dire, but it is not entirely hopeless. The debt can seem staggering, but it does not necessarily have to be. Here are five helpful methods for reducing the excess expenses that come with medical bills. 

Establish a Payment Plan 

One of the simplest ways to resolve a bill that cannot be paid in a single installment is to establish a payment plan. Most medical providers can work out a scheduled payment plan that breaks down the debt over several months until the total has been covered.

If you are uncertain if the medical provider would be willing to create a payment plan, there is no harm in asking. Be sure to inquire about billing fees or any additional charges associated with establishing a payment plan, as well. This will allow you to avoid being ambushed by extra costs. 

Establish an Income-Driven Hardship Plan 

You may qualify for an income-driven hardship plan if you have both a low income and a large amount of medical debt. Like payment plans, income-driven hardship plans break medical bills into smaller payments.

Unlike regular payment plans, an income-driven hardship plan can also potentially reduce the amount you owe. You may want to ask your medical provider about both types of plans. Please note that you may have to have or apply for Medicaid to qualify for an income-driven hardship plan. 

Use a Medical Credit Card 

Your medical provider may take medical credit cards if they are not willing to accept a payment plan. Some healthcare providers will carry applications for these cards in their offices. See more information here:

https://www.aarp.org/money/credit-loans-debt/info-2019/paying-medical-debt.html

A medical credit card is designed specifically to cover medical expenses, and in some instances, they are used to pay for specific procedures, such as dental care or eye surgeries. Most of these cards have an interest-free period ranging from six to twelve months. 

However, be wary of deferred interest. If you are unable to pay off your debt within the six to twelve month “interest-free” period, all of the interest that builds up during that time will accumulate and significantly inflate the amount you owe. Most credit cards, medical or otherwise, charge an average interest rate of 20%. 

Hire a Medical Bill Advocate 

If you are feeling especially overwhelmed by your medical debt, particularly if you were in the hospital for a lengthy amount of time and are facing a mountain of bills, you may want to hire a medical bill advocate.

These advocates negotiate on your behalf, and they are experts in reducing medical debt. Medical bill advocates know how to identify overcharges or errors. Do the math to determine whether hiring a medical bill advocate will ultimately save you money before hiring anyone.

Negotiate Costs Yourself 

Lastly, if your medical debt has already gone to a collection and you feel capable of doing so, you might be able to negotiate your medical debt on your own.

Debt collectors have probably bought your debt for a ridiculously cheap amount, and this knowledge will give you leverage when you discuss reducing your bills with them. 

You may also wish to do the work of a medical bill advocate and speak directly with your provider about lowering costs.

Examine your bills closely—even if the thought of looking at them again makes you anxious—to find any charges that appear to be too high or even incorrect. Consider combining this option with a payment plan to reduce your medical debt most effectively. 

Conclusion 

While medical debt is a nightmarish concept for most Americans, for some, it is an unpleasant reality. Excessive medical bills have the potential to rob many people of their finances before even taking overcharges or errors into account (despite insurance coverage, too, in many instances). 

Thankfully, many tactics for avoiding or relieving medical debt are readily available via the internet and word of mouth these days. These methods make it so that getting strapped with medical bills for both planned and unplanned visits to medical providers does not have to be so overwhelming and financially destructive.

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