7 Key Traits of People Who Are Debt-Free

People Without Debt Develop These Characteristics

Close up of a young woman sitting in kitchen and going through her financials

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People with no debt tend to be the exception rather than the rule. Between mortgage loans, credit cards, student loans, and car loans, it's not uncommon for the typical American to have one or more types of debt.

The ones who are living debt-free may seem like a rarity, but they aren't special or superhuman, nor are they necessarily wealthy. What distinguishes them from people who still have debt is their willingness to utilize the resources they have, financial or otherwise, to pay off debt or avoid it altogether.

While some people may be taught as children to avoid debt, others come to the debt-free lifestyle after years of being in debt, with money-related stress. In doing so, they develop certain characteristics that set them apart and allow them to enjoy a way of living that isn't driven by debt.

If that's something you're interested in, here are seven traits you can cultivate in pursuing debt freedom.

1. Goal-Driven 

People who live without debt 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. If you lack financial goals, it's time to create some.

According to Sarah Newcomb, a behavioral economist at Morningstar, one major factor that drives high debt-to-income ratios is impatience, which can lead to paying interest on your purchases. What she’s found is that when she asks people how far into the future they tend to think or plan, there’s a statistically significant correlation: Those who are more future-oriented are better at managing their money.


When shaping money goals, make them SMART—specific, measurable, achievable, realistic, and time-bound. As you cross a financial goal off your list, create a new one to replace it.

2. Shrewd

Debt-free people don’t fall for marketing hype that tells them they “deserve” a new luxury car, even when they feel they can get a good deal. It’s easy to feel like you’re saving money when you buy something on sale, especially when the original price or percentage off is constantly trumpeted at you. But if you weren’t already planning to buy that item, you’re not saving anything.

People who live debt-free don’t believe debt is a powerful tool to help create the life they want. They know that carrying debt can limit their financial options, both today and tomorrow.

If you have debt now, ask yourself what behaviors or attitudes contributed to it. For example, if you took out a large car loan, was the motivation to purchase a reliable vehicle or to keep up with the Joneses? Looking at debt from a motivational perspective can help in making wiser decisions about when to borrow and when not to.

3. Disciplined 

The act of getting and staying debt-free means being consistent, day-in, day-out. People without debt follow their budget. They do without niceties until they can truly afford them. They understand that not eating out, or skipping the new family movie (until it’s on Netflix) is a temporary sacrifice.

If you struggle with discipline, try waiting until you need something specific to go shopping for it. Better yet, don’t buy anything that isn’t on a premade list. 

And if you find it hard to pay down debt, consider what type of system you have in place. Do you pay your bills on a set day of each month? Commit to paying a certain amount above the minimum? Creating some discipline and regularity in your debt payoff efforts can make it easier to stay the course.

4. Non-Materialistic 

When debt is incurred simply by purchasing "stuff," you can end up paying for more for it in interest charges. Rethinking how you spend and making purchases with a clear intent and purpose is one way to avoid taking on new debt. 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. Taking that same attitude can benefit your bottom line over time.


When shifting spending habits from "stuff" to experiences, watch out for FOMO—the fear of missing out. Create a budget for experiences to avoid overspending and potentially taking on new debt.

5. Patient

It’s so easy to spend money in the age of swiping, and mobile payment technology, like ApplePay and Google Pay, has only made it simpler. That’s a problem because it’s eliminated the gap between when you decide to buy something and when you pay for it.

People who live without debt can delay that instant gratification. They know the joy of paying cash for something they wanted and saved up to buy. They have a vision for retirement and other long-term goals and the ability to work toward them steadily.

If you struggle with impulse purchases, which lead to debt, consider imposing a 24-hour or 48-rule on new purchases. With this type of system, you commit to waiting 24 or 48 hours before buying something. This cooling-off period can help you decide if the purchase is truly worth it if it means taking on debt.

Don’t memorize credit card numbers or allow websites to save them for you, either. And when you do decide to buy something, focus on the pain of loss in addition to the joy of gain. Even better, when you make a purchase, get into the habit of converting the cost into the hours of work it takes you to earn the money. 

6. Responsible 

For a person who's debt-free, household needs always come 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. 

This trait goes back to learning how to live below your means, not at them or worse, above them. Reevaluate your household budget and ask yourself which expenses are truly necessary to maintain your standard of living. You may find that in cutting out expenses that aren't necessities, you can take on less debt and have more money to pay down what you already owe.

7. Confident

Debt-free people exhibit some unusual financial behaviors—everything from not carrying a credit card, to skipping the vacation this year, to buying cars for cash. 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.

How confident do you feel about your financial situation? If you don't feel in control of your finances, you may be more susceptible to giving into purchases that don't make sense for you or your family budget. If you feel less than confident about managing your finances solo, consider talking to a nonprofit credit counselor or a financial advisor who can help you create a clear money roadmap to follow.

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