How to Live Debt Free! 10 Simple Mindset Shifts

Debt is a heavy weight and it seems to be crushing everyone. The average American has between $85,169 and $103,702 in debt hanging over them and most people don’t think that getting out of debt is even possible. In one survey 48% of people reported losing sleep because of the stress caused by their debt. 

On the other hand, there are people who are living debt free. There are others who only have debt in the form or some unavoidable home loans, car loans, and student loans. For this article we will focus on debt outside of those three common “necessities”. 

My husband and I are 100% debt free and have been since my husband’s car was paid off in 2020. We will most likely continue to live debt free until we have to buy another car or we decide to buy a home. Why can I say that so confidently?

Simply put it’s because we have some very solid debt free living habits and that’s what I am going to share with you today! 

Why Should You Live Debt Free? 

First of all, why should we live debt free? To some this question may seem odd. Of course we would all like to live without debt but still, in our consumer society it seems so inescapable and normal that it may seem like an unachievable goal that we shouldn’t even bother trying. 

It is that very mentality that can get us in really big trouble though. You may think; “I already have a mountain of student debt and a mortgage so why worry about other forms of debt?”

A lot of people today live with the financial mindset that they can afford whatever they can make the minimum monthly payments on. That means they run up their credit card, buy really fancy new cars, always have the latest iPhone and so forth. 

The scary thing about living on a payment budget is that those payments are debts. You have to make those payments come rain or shine. I think we all learned about how fast the rain can come during the Pandemic. If you suddenly lost your job tomorrow what would you do with all those payments?

On the other hand, when you try to avoid debt as much as possible you not only give yourself fewer payments to worry about, you also put yourself if the financial position to start paying off those bigger debts a little faster. You will even find chances to save money for big important things and even bigger funner adventures! 

#1: Treat Credit Like Cash

The first tip that has helped my husband and I stay out of debt is to treat credit like cash. 

That means that you don’t look at a credit card, see how high the limit is and try your best to hit it every month. When you do that you will accrue a massive amount of credit card debt which leads to paying high interest rates and digging yourself into a deeper and deeper hole each month. 

Instead, when you treat your credit like cash you don’t spend more than you know you can pay off each month. My husband and I buy almost everything on our credit card because we collect points but we never spend more than we know we can pay off at the end of the month. 

On those odd months we take a big trip or an unexpected expense that makes us spend more than usual on our credit card that is still payed off by money from our savings. 

If you want to live debt free you have to stop credit card debt in it’s tracks by making sure you can pay it off every single month and never ever pay interest. 

#2 Know Your Expenses 

Speaking of credit cards, do you have any recurring charges set up? Do you know exactly what they are and how much they are? 

One of the sneakiest ways we spend money these days is through subscriptions. Make sure you take the time to know exactly what subscriptions you are paying for each month and occasionally drop services you aren’t using. Also, when considering a new streaming service or other subscription think about whether or not it will really be worth it. 

Pro tip: Black Friday is a great time to find all sorts of subscription services on sale! Just make sure you cancel before the price shoots back up. 

Subscriptions aren’t the only thing you should watch though. You need to know all your expenses all the time. 

Keep an eye on your utilities, the amount of gas you put in your car every month and even your grocery bill. Be aware that every vehicle you buy requires monthly insurance and you have to pay property taxes on your home. All these things add up and not being acutely aware of every single expense is how debt takes us over. 

#3: Treat Yourself but Do It Less Often

When you want to live debt free you can’t always get what you want. That shouldn’t a surprise. But what does it really mean? 

Well, while it’s great to treat yourself once in awhile it is important to keep those treats special. If you treat yourself every single day is it even a treat anymore?

Think about it this way. Treating yourself to a Starbucks coffee every day at $5 a day (a modest estimate) will add up to $150 a month. Going out to lunch every work day at $10 each time will add up to $200 a month. Going out to dinner with your other half at $40 twice a week will end up costing you $320 a month. Getting your nails done for $40 twice a month will cost $80. Getting a cute top or another little goodie for $15 every time you make a Target run…well you get the point. 

Our lives are super duper stressful and we have all wanted to buy something pretty or get something tasty to make ourselves feel better but when we treat ourselves all the time we take the special away and we end up spending tons of money we really don’t need to be spending. 

#4 Be a Careful Shopper

Speaking of treating yourself, how do you shop? Do you make Target runs, late night Amazon or Temu orders and other impulsive purchases on a regular basis?

When I look back at all the money I could have saved instead of buying junk I didn’t need it makes me seeth with anger and twist with regret. Why did I steal from myself like that?

We all need to shop but if you want to live debt free you are going to need to become a more careful shopper. Ask questions before you buy anything, do your research, wait for the right thing instead of settling for less and save money by not spending it. 

Don’t fall for sales and all the other retail tricks stores use to get you to buy more than you need. Instead try slow shopping where you only buy things that will actually contribute to your life. 

#5 Avoid Trends and Competition 

Something that people who stay out of debt all have in common is that they do not fall for trends or competition. In short they aren’t worried about keeping up with the Joneses or looking cool all the time. 

When you find yourself wanting a fancy new car or the latest iPhone ask yourself if the car or phone you have is actually done working for you. Is looking cool and having the latest really worth the payment and the extra work and stress that payment brings with it?

You might just find that you would rather stay out of debt.

I can personally attest to the fact that nobody has ever made fun of my used car or my phone. Those status symbols that commercials and society make us feel we need really don’t make that much of an impact on how people view us. 

#6 Try No Spend Days

All of this talk about shopping more carefully and avoiding trendy status symbols may be a major mental shift for you. 

Do you have a shopping addiction? Do you go shopping for fun? How can you reset your spending habits? 

I recommend trying to have 10 no spend days a month. Unlike a no spend month or a low spend month where you only buy the absolute necessities, on your no spend days you won’t spend ANY money on ANYTHING but the rest of the month you can do as your please. 

On your 10 no spend days you will not buy coffee or lunch or groceries or even gas. This teaches you to plan ahead. Make coffee at home, pack a lunch and make dinner with the ingredients you already have at home. 

When you do 10 no spend days every single month you not only save money you also train yourself to be more self sufficient and resilient while reshaping your relationship with spending. 

#7 Live Debt Free by Making Saving a Priority 

Another key to debt free living is having a saving mentality. Instead of thinking about how much you can buy and how much you can afford you should make saving money and putting money in savings account one of your top priorities. 

You might try putting a set amount of money in savings as soon as you get paid. That helps many build their savings.

Whenever you have extra money, say from your tax return or a work bonus, put it in savings instead of looking to splurge.

When you do have to buy something like a car that will require a payment try to get as low a payment as possible instead of the biggest one you can afford.

If you can pay off a debt do it and keep paying the same monthly amount into savings.

If possible save up for big purchases instead of having a payment at all. 

Making saving a priority is important for everyone. Why? Because we don’t just want to have a debt free life now. We want to stay out of debt and that means being ready for the unexpected. Having some savings can help you feel more secure.

A perk of saving is that it will also allow you to take fun trips and enjoy other special opportunities when they come up!

#8 Know When to Go for the Payment  

In general, my husband and I avoid payments like the plague. After all, debt free living means having no debt, no payments. 

That being said, some debt is going to happen once in a while and sometimes it is actually wise to go for the payment. I would say this is true in three specific circumstances. 

First of all, when you are facing a large medical bill not covered by insurance you should always set up the lowest monthly payment plan they will allow. During our marriage we have had a few different hospital bills with no insurance and setting up the slowest payment plan allowed us to avoid a lot of unnecessary stress. Also, our bills were drastically reduced when the hospital wanted to close out open accounts. 

The last thing you should do when paying for medical bills is put them on your credit card or get a loan. Do not do it. Work with the hospital or doctor’s office for the slowest and lowest payment plan possible, interest free!

Another situation under which you should take on a payment is when outright purchase would wipe out your savings. It is better to have a little savings that to have no payments. It can also be good for your credit to have at least one car loan under your belt. It’s absolutely crazy but to have good credit you have to have been in debt at some point in your life. 

Last but not least, you should accept payments for important life investments. This may include student loans although that should still be carefully considered and it can also include home loans because home ownership can be a good investment as well as a necessity. 

#9 Live Under Your Means

You might have noticed by now that the key to a debt free life is to not buy stuff when you don’t have money. Also, it is to not buy stuff just because you have money. Seems pretty simple right?

Still, it is completely countercultural. In our consumer society we are always supposed to show our “success” with stuff and whenever we have more money we have to get “bigger and better” stuff to show others. And usually we spend all the money we have and then a little bit more to do that. 

But what if you lived not just within your means but under your means? What if you got a raise at work but you didn’t move to a bigger apartment or buy a new car? Could you wear “last year’s” clothes? Would it be ok to skip the phone upgrade once in awhile?

Whenever you are living under your means you are saving money and saving money is how you get out of debt and stay out of debt.

My husband and I have consistently lived under our means and that is the reason we have a debt free life. Is it always easy? Not necessarily. Sometimes I want a different home or a different car. But, on the other hand, is debt easy? No! Living in debt is never going to be easier than living under your means. 

Think about how much you make and try to spend less than that. Start cultivating contentment and living under your means. It will not only help you have a debt free life, it will also alleviate a lot of stress! 

#10 Try the Minimalist Lifestyle! 

How can you live with less? Won’t you be unhappy? 

Absolutely not! Millions of people are living the minimalist lifestyle and finding that a happy simple life is just right for them. I have readers from every corner of the globe, in first world countries like the U.S. and in more depressed nations too. All of those people are finding the minimalist lifestyle is a relief from the pressure of the consumer society. 

When you adopt the minimalist lifestyle you define what is important to you and you let go of everything that distracts you from it. You learn that having stuff and spending money doesn’t equal success or even happiness.

The minimalist lifestyle helps you enjoy debt free living because it encourages you to stop spending your money on junk you don’t need. When you don’t have all that junk you don’t need a giant house to store it. And when you don’t need a giant house to store all your junk you don’t have to work all the time. Instead you actually get to live your life and achieve some of the goals you have relegated to dreams. 

Do You Want to Enjoy Simple Debt Free Living? 

I hope this article has helped you to consider some changes you can make to live debt free. As I said at the outset, some debt may be unavoidable but a lot of it is totally avoidable. Why should we stress ourselves out with extra debt?

If you want to enjoy a simple debt free life you should definitely look into the minimalist lifestyle. I would compare it to a holistic approach you might take with your health. Minimalism doesn’t just adress the symptoms of being in debt. It adresses the causes, the reasons you spend too much money on too much stuff. The minimalist lifestyle also dignifies a simple life so you can stop comparing yourself with the Joneses and running the rat race. 

If you would like to simplify your life with minimalism but you don’t know where to start grab my e-book Doable Simplicity! In Doable Simplicity (minimalism for normal people) I share practical action steps to simplify your home, your chores and your schedule so you can re-focus your life on what really matters to you!