5 Characteristics of People Who Get Out of Debt
November 14, 2012
This article was written by Benjamin Feldman, a personal finance expert at ReadyForZero.com. ReadyForZero is a site dedicated to helping Americans manage and pay off their debt – for free. You can find more of his writing at the ReadyForZero blog.
There’s no denying that it’s hard to pay off debt. So what makes some people successful when others are not? At ReadyForZero, we’ve been studying this question for the last two years as we try to learn how to best help people when they want to get out of debt.
As it turns out, we’ve noticed a few characteristics of those who are successful in paying off their debt. Below we’ll describe these characteristics – and how they can help you too:
1. Have a support network.
Humans are social creatures. We live and die (sometimes literally) based upon our interactions with other people. And that means having a support network is absolutely critical – to everyone, but especially to those who are tackling a difficult goal like getting out of debt. When we talk to people who are making progress paying off credit cards, student loans, etc., they often tell us about the people in their lives who give them encouragement and advice: their mothers, husbands, friends, or girlfriends who celebrate with them when they get the first credit card paid off and who give them advice when they’re struggling.
Your support network takes on a whole other level of importance if you live together with your significant other. In this case, it’s extremely important that you share the goal with your loved one, since your household and finances are also shared. In the cases where we’ve had ReadyForZero users get out of debt as a couple, we always find that both people got on the same page and agreed that the goal was worthwhile – even if they didn’t necessarily agree right from the beginning.
2. Check up frequently.
It stands to reason that people who check up on their progress more often are more likely to be successful in getting out of debt, and that’s what we’ve seen among our users. Almost every time we talk to someone who has paid off all their debt, they tell us how they checked their progress on a monthly (or even weekly) basis. And when we looked at the data several months ago, we found that people who updated or checked their plan in ReadyForZero were paying off debt twice as fast as the rest.
Bottom line: you have to be a little obsessed, or at least care a lot, in order to make this goal happen.
3. Be willing to change your lifestyle.
People who get out of debt usually have to make some sacrifices in order to get there. Either that, or they identify behaviors they must change in order to improve their financial picture. For example, if someone has an expensive car payment and they want to pay off their credit card debt, the first task might be selling the car. On the other hand, if you find that you’re always going over budget because you spend too much money on clothes, you’ll need to find ways to prevent yourself from going to the mall (or department stores).
When we’ve talked with those who successfully paid down their debt, many of them had to make these kinds of behavior changes. And you can too! For starters, read through our Credit Card Debt and Student Loan Debt resource centers.
4. Focus on positive progress (don’t let setbacks stop you).
Even though it’s listed fourth, this may be the most important characteristic of all. The people we talk to about getting out of debt have all said that staying positive was critical to their progress. In fact, no matter what your goal is, you will run into some hurdles along the way. When you’re trying to get out of debt, there will be days – maybe even months – when things don’t go as planned and you will feel like your progress is stalled. These are the times when many people quit. However, if you resolve to stay positive no matter what hurdles you come across, then you will keep your motivation burning inside and you won’t quit.
5. Get rid of your credit cards if they tempt you.
How well do you know yourself? If you are the kind of person who doesn’t have willpower when it comes to credit card spending, you’re not alone. Many of the people we’ve talked to have had the same problem. However, they were able to overcome it by getting rid of the credit cards. While it’s not always a good idea to close a credit card account (because of the impact to your credit score), sometimes you just have to bite the bullet and close it. Or at the very least, use some of these tips to prevent yourself from using the card.
If you are someone who wants to get out of debt but hasn’t been able to, there’s a good chance that these characteristics can help you achieve your goal. The first step is to train yourself to think differently and begin to adopt the attitudes and behaviors discussed above. The truth is, anyone can make progress as long as they commit wholeheartedly to the task at hand. Good luck, and let us know how it goes!
Do you know of any more characteristics of those who are able to get out of debt? Leave a comment!
These are great tips. I think it helps to celebrate when you reach a milestone along the way. Hanging out with friends who will do inexpensive/free activities with you helps a lot too.