10 Common Characteristics of Those Who Successfully Pay off Debt Fast
I have coached many friends and clients in their quest to pay off debt, and witnessed the journeys of hundreds who have paid off all their debt via Instagram’s #debtfreecommunity. Their enthusiasm and commitment can be contagious, let me tell ya. One thing is for sure, if you pay close enough attention, you can see that those who have successfully paid off their debt all share some pretty common characteristics. I’m going to break them down for you in this article. If you are serious about getting out of debt once and for all, take a look at this list, and implement some of these strategies in your own debt pay-off plan!
But before we get to it, did you know I have a free guide that talks about the 9 different things my husband and I have done to help us in our quest to pay off $105K in student loan debt? In the first 5 months of 2019, we have paid off $29K in debt using the principles in my free guide. You can sign up for it below.
Now, on to what you’ve been waiting for.
10 Common Characteristics of Those Who Successfully Pay off Debt
1. They live below their means. This is a fairly obvious one. If your budget is stretched so thin that there’s no extra money to send to debt, you’ll be in debt forever. Getting out of debt (before you hit the grave) requires sending in extra money each month, above minimums. The more you send, the faster you’ll pay off your debt. So, it stands to reason that you can’t max out your income each and every month by living at, or, heaven forbid, above your means. Take a good hard look at your income and your spending habits. Pull your bank statements if you need to. Cut expenses where ever you can. Reduce your lifestyle so you can live beneath your means. (Or, increase your income, if needed). Those who pay off debt quickly are able to do so because they’ve mastered the art of living beneath their means, freeing up extra money to send to debt.
2. They live off a written budget. A budget is the number one tool you need to implement to get out of debt. If you’ve ever listened to those giving their debt-free screams on the Dave Ramsey Show, you’ll notice Dave ask them to give advice to those trying to get out of debt. Almost every single debt free screamer says “Get on a budget.” A budget is essential to managing your money and to identifying how much extra you’ll actually be able to send to debt each month. I recommend this budgeting method that literally changed my life.
3. They spend with intention. These three words—spend with intention—basically sum up my entire money philosophy. So many of us are guilty of mindless consumption—buying any number of things we think will bring happiness to our lives or make us a better/prettier/more valuable/more likeable human being. We fall prey to the advertising ploys of companies whose sole purpose is to convince us to spend, spend, spend—often against our best interest. No one sets out to go thousands of dollars in debt. No one says “I think I’ll purposefully spend $600 more than I earned this month.” Those who are successful at getting out of debt monitor their spending. And, they spend intentionally, with a purpose—not mindlessly. If you want to be successful at paying off debt, be intentional with every dollar you have. Every single one. Try this No-Spend Challenge to help you spend with purpose!
4. They sacrifice. When it comes to getting out of debt, sacrifice is the name of the game. The more you sacrifice, the faster you get out of debt. Think about sacrificing material objects: shopping for new clothes, the latest iPhone, financing that new model car. Or, it can be services: getting your nails done, paying a housekeeper to clean your house for you, paying someone to wash your car, paying a salon for expensive regular highlights, paying for that gym membership, cable TV, or dinners out. Or you can even sacrifice your time: How about giving up every Saturday to take on a part time job? Or sacrificing your evenings to deliver pizza for a while? Remember, your sacrifice doesn’t have to be FOREVER. You aren’t sacrificing for the rest of your life—just long enough to pay off the debt. What are YOU willing to give up to get out of debt as fast as possible? For a big list of ideas on how to cut expenses, check out this post.
5. They are self-disciplined. There is no doubt, that at some point during your debt free journey, you will feel discouraged. Unmotivated. You’ll want to quit. Splurge on an item. Spend outside the budget. Give up completely. These times will come, trust me. The difference between those who get out of debt fast and those who don’t, isn’t that those who succeed are more motivated. Motivation has literally nothing to do with it. Forget motivation. Regardless of your motivation level, there is one thing that will always drive your behavior, and that’s your level of self-discipline.
Self-discipline is defined as the ability to pursue what one thinks is right, despite temptations to abandon it.
Did you catch that? Despite temptations to abandon it.
There is no doubt you will be tempted, during your debt free journey, to completely abandon how you know you should be behaving with money.
When the temptation to give up strikes, remember that all of your hard work and sacrifice is FOR something.
Why did you start this debt free journey in the first place? Did you want to stop stressing over money, give your kids a better future? Be in a position to quit your job and do something less stressful for a living? Remember why you started and remember just how damned disciplined you are. And if you can’t remember, let me remind you: You are the most disciplined son of a b*tch on this planet. And at the cost of virtually everything else, YOU are getting out of debt.
6. They’ve mastered the concept of delayed gratification. Delayed gratification—the ability to delay something fun or pleasurable now, in order to obtain something that is more fun, rewarding, or pleasurable later—is one of the major keys to not only getting out of debt, but also financial success, in general. In terms of financial success, delayed gratification translates to the ability to delay purchasing something until you’ve saved up enough money to pay cash for it—as opposed to immediately charging the item on a credit card so you can get it NOW, guaranteeing you propel yourself further and further into debt.
To be successful at paying off debt, you must be willing to trade what you want most—debt freedom—for what you want right NOW (a new laptop, a vacation, fancy dinners out). Those who can successfully identify what they want most (debt freedom) and can delay purchases of other things until they get there—have mastered delayed gratification. Learn to master this concept of delayed gratification, and debt freedom will come even faster.
7. They have an emergency fund. Emergencies are going to come up during your debt free journey. Your washing machine will need repaired, your son will fall while roller skating and fracture his wrist, your hot water heater will break, the car will need repairs, and the list goes on and on. This is life. Those who are successful at paying off debt have an emergency fund in place. That way, when disaster strikes, they don’t turn to a credit card for help. Rather, they simply withdraw the money from their emergency fund, pay for the unexpected expense, and go about their lives. As the saying goes, “An emergency fund turns a crisis into an inconvenience.”
At a minimum, during your debt free journey, you should have $1,000 saved as a starter emergency fund. (I would even advocate you save as much as a month’s living expenses before you begin to aggressively tackle debt). If you don’t have $1,000 saved up, STOP EVERYTHING, and put together that $1,000 as fast as you can. Once that mini emergency fund is in place, you can continue on your debt free journey.
Don’t forget to protect your emergency fund by having sinking funds in place. See the 5 sinking funds I recommend every budget have in this post.
8. They set goals and constantly monitor their progress toward achieving them. Goals are so essential on this debt free journey. Not only setting them, but monitoring your progress toward them, and readjusting your plan to achieve them, if what you’re currently doing isn’t cutting it. Those who get out of debt fast set goals and work diligently toward achieving them.
During my debt free journey, I set yearly goals and monthly goals. (You can see all my monthly goals on my Instagram feed).
For example, this year, I want to pay off $48K in debt. To make that happen, I need to average $4,000/month in debt pay off. Each month, I set specific goals (i.e, no eating out, 15 no spend days, send at least $4,000 to debt, etc.). By the 15th of the month, I’m checking in on these goals to make sure I’m on track to hit them. If not, I readjust my plan. What do I need to change now to make sure I hit this goal by month-end?
I also do a quarterly review of my goals to make sure I’m on track. By the time the first quarter of the year is over, if I’m going to hit my yearly goals, I should be 25% of the way there. If not, I need to change my plans so I make sure I can get where I need to be, when I want to be there.
You can’t expect to magically end up in the land of debt freedom if you aren’t setting goals and constantly monitoring your progress toward them. Want to get out of debt faster? Set monthly and yearly goals. And then monitor your progress toward them. Readjust your plan if your current strategy isn’t working.
9. They track their spending. Tracking your spending provides an advantage when you are planning your budget and is a key to successfully paying off debt. So many of us have no idea how much money we spent last year on eating out, shopping, or costs associated with our automobiles. Those who are successful at getting out of debt track their spending. They can tell you exactly how much they spent in these categories, because they spend intentionally and monitor that spending. Importantly, tracking your spending helps you write a realistic budget that you can actually stick to. The question of “how much should I budget for electricity this month?” is easily answered when you can review your electricity costs for the entire preceding year. Tracking your spending also helps you reduce your spending in areas where you may not even realize you’re overspending. If you take some time to review your past bank statements to see how much you spent last year on eating out, for example, you may just be horrified. That’s ok. Let that information guide your budget planning going forward. If you want to start tracking your expenses, download a copy of my free Expense Tracker HERE.
10. They believe they can. I saved the best for last, but perhaps, this should have been first.
If you don’t believe you can improve your financial situation, you won’t.
There is so much to be said for hope. Think about it. How hard are you willing to work for a goal you think is literally impossible? Not very. But once you finally start to believe in yourself, once you know that the actions you’re taking are propelling you closer to financial freedom, once you think you can, and once you have hope, man, does your world begin to change.
I put off even STARTING to pay off debt because I honestly just didn’t think it was possible. I was so defeated by the mountain of debt standing before me, that I didn’t even want to TRY. Why? “It was impossible.” I’d NEVER be able to pay off $105K in debt, so why should I even try?
After having an inspiring heart-to-heart with a good friend who encouraged me, I sat down and made a plan. I started doing calculations and making plans. I figured I could send an additional $1,000/month to debt, but even that wouldn’t leave me debt free for another six years. Encouraged, but believing that was still too long, I decided I would somehow do it in half the time. And then? I just started. Fast forward two years later and 57% of the debt is paid, and I’m on track to kill this debt three years from when I finally made up my mind to try.
Believing you can is really the first step. And I’m here to tell you: If I can do it, you can too. I’ll leave you with this—
As one of my clients recently said:
“This is the hardest thing we’ve ever done. But it will be worth it when the debt is gone. We will be under 35, with all our debt paid off. Two new cars, paid. Student loans, paid. Anyone can do this."
Need More Help?
If you need more help paying off debt, my Financial Freedom Flexpack has you covered! It contains pages and pages of printables to get your finances organized, teach you how to budget, help you pick a debt pay off strategy, and implement it. It even includes a Quick Start Guide to help you get started using your Flexpack. Find out more about the Flexpack here.
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