Yahoo Finance Nearly 40% Will Not Be in Debt in 2024: Which Frugal Habits Do They Swear By?
Nearly four in 10 people will be debt free heading into 2024, according to results of a recent survey by GOBankingRates.
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The survey of 1,039 American adults asked whether they’ll be in debt in 2024. Around 52% said they’re already in debt or will be in debt sometime next year, but 39% of respondents will be heading into the new year debt free.
While debt isn’t inherently bad, it could hurt your finances when you fail to manage it correctly. If you’re ready for more financial stability, consider adopting the frugal habits of those who have managed to pay off debt and stay free of it.
Create a Budget
To get out of debt, you need a plan for your money.
“While getting out of debt, my wife and I were strict on our budget,” said Jay Zigmont, Ph.D., CFP and founder of Childfree Wealth. “Now that we’re debt free, we still have budget categories and watch our spending every month. The key is to pick a budget or app that works for you and make incremental improvements each month.”
What your monthly budget should be depends on how fast you want to achieve a debt-free lifestyle. If you’re aiming for an aggressive debt repayment timeline, you may want to allocate the majority of your discretionary income toward paying down debt. Use a debt repayment calculator to help you estimate the amount you need to pay monthly to get rid of debt by a selected payoff date.
Once you know what your monthly budget looks like, use a budget tracker app such as Mint, PocketGuard or Honeydue to make sure you stick to it.
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Think Bigger
James Beckett, financial coach and owner of MoneyStocker, has been debt free ever since he paid off his car in 2016 and is committed to remaining debt-free in the foreseeable future. One key frugal habit that helped him pay off his debt quickly is thinking bigger.
“Often, when we look for ways to ‘be frugal,’ we look at the small ways we can cut our expenses,” Beckett said. “For example, skipping that extra coffee purchase or cutting out one of those streaming services. While there’s value in doing so, these actions only make a small dent when you look at the bigger picture.”
Instead, he believes making a change to one big-ticket item is enough to outweigh all of your other frugal initiatives.
Let’s say your kids have flown the nest and your house is feeling too spacious. Instead of pinching pennies each month trying to save on every tiny expense, it would make more financial sense to downsize to a space that better suits your needs — and then use the freed cash to pay off debt.
Wait a Month Before Making a Big-Ticket Purchase
Another habit that Beckett swore by to help him reach a debt-free lifestyle was avoiding impulse purchases.
“For any large purchase, wait one month before you pull the trigger,” he suggested.
If, after that time, you’re still lusting after that pricey gadget or whatever it may be, then it’s a green light.
While a month may seem like a long time to wait before making a purchase, it gives you time to think about whether you genuinely want the item and whether it brings value to your life.
“Doing so will save you a lot of money,” Beckett said, “and save you from a lot of buyer’s remorse, too.”
Put ‘Fun Money’ in Your Budget
Beckett believes many fail to get rid of their debt because they focus too much on the negative and overly restrict their spending.
“Constantly pinching pennies prevents immediate gratification and creates negative associations about money in your mind,” he said, “and it’s difficult to sustain this mentality long term.”
Instead, Beckett recommends reframing your relationship to money by focusing on the amount you can and should spend each month.
“Yes, you need to fill your savings pot each month in order to pay down debt,” he said. “But, by having some money that’s purely for your enjoyment, you’re no longer stressing about being frugal and can confidently spend the money you have set aside to enjoy.”
So, while giving yourself some wiggle room for guilt-free spending may seem counterintuitive when you’re on a mission to pay off debt, it could amp up your motivation to hit your financial goals.
Learn Basic Home Maintenance Skills
According to HomeAdvisor, home renovation and repair costs can range from $3,958 to $23,474, with the national average sitting at $13,706.
“Since hiring contractors is expensive for things like painting, basic plumbing and electrical work, I have learned how to perform minor fixes myself. Last month alone, I saved over $300 by installing a new garbage disposal myself instead of hiring a handyman,” said Mike Yon, a U.S.-based entrepreneur with a background in digital publishing, startup marketing and sales.
Yon estimates that over the past year he has been able to save close to $2,000 just by learning basic home maintenance skills through YouTube and tackling projects himself.
Note that while you can save a good chunk of change performing DIY home repair projects like putting weatherstripping around your door frame or repainting a room, more challenging tasks such as those that involve electrical work or roofing expertise should still be left to the experts.
Renegotiate Recurring Bills
“Almost every service provider is willing to offer existing customers incentives or rate reductions if you call and ask politely,” Yon said, adding that he was able to lower his internet and cell phone bills by $40 per month — $480 annually — just by proactively asking.
Before calling customer service, though, make sure to look into the rates and promotions offered by competitors. This way, you know what’s a fair ask when negotiating. If you need help renegotiating your recurring bills, check out these actionable negotiation tips to help you slash those expenses and free up your budget.
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This article originally appeared on GOBankingRates.com: Nearly 40% Will Not Be in Debt in 2024: Which Frugal Habits Do They Swear By?
