10 Habits to Develop to Get Out of Debt (2024)

Getting out of debt is hard, and it’s even harder when you don’t have the right habits.

Unfortunately, if you’re in debt, chances are you still have the bad habits that landed you there in the first place: overspending, impulse buying, swiping your credit card, overdrafting your bank account, and the list goes on.

The solution is to replace these bad habits with good habits so your get-out-of-debt journey is more smooth than bumpy.

While these habits are mostly geared toward those with consumer debt, a few can be applied to other types such as student loan and medical debt.

Here are 10 habits to develop to get out of debt, and stay out of debt.

1) Avoid Your Shopping Triggers

One of the best habits you can get into when digging your way out of debt is to identify your shopping triggers and avoid them at all costs (literally).

What I mean by this is paying attention to your current habits and learning when you’re most likely to spend. Perhaps you enjoy shopping after a hard day, or blowing your paycheck at bars over the weekend after a long work week.

Maybe you spend more when you’re sad, when you’re with certain people, when you see a sale, or when you’re at a favorite store.

These triggers might not be obvious at first glance. Oftentimes, they’re subconscious. You need to make sure you analyze why you’re tempted to spend when the urge hits so you can stop it from happening in the first place.

You might have to start avoiding certain stores, say “no” to friends who love shopping trips, or find other ways to cheer yourself up.

Here’s a tip: if you can’t figure out your spending triggers, ask someone close to you to keep an eye out. They might already have some clues, and they can hold you accountable to avoiding temptations.

2) Try a Cash-Only Budget

If what got you into debt was overuse of a credit card, then you might want to replace your habit of swiping with a cash-only budget.

That means you can’t take your credit card with you. Period.

You might want to carry your debit card in case of an emergency, but you should only use it in extreme circ*mstances (like losing your cash).

A cash-only budget is great for people who are trying to get their spending in check because it forces them to be aware of how much money they’re spending.

When you only have a certain amount of cash to spend on groceries, gas, entertainment, or clothes, you consciously examine your spending choices, so your purchases are more thought out. This is because you’re seeing the amount of available funds go down in real-time.

For example, if you’re out with friends one night and have $50 left to spend on entertainment, but know you want to go out again during the month, you’ll be more inclined to leave money leftover for that extra outing.

You think twice instead of just swiping, and being a conscious consumer will help you have more money left to put toward debt.

If you don’t think a cash-budget will work for you (some people do spend more when they have cash), then try a variety of different budgets to find what works for you. A set of guidelines will help you get out of debt much quicker than not having a concrete plan.

3) Pay More Than the Minimum

If you have the financial means to do so, you should pay more than the minimum payment required each month, and send in frequent, smaller payments as well.

Why? First off, it’s an excellent habit to develop. Most people end up in debt because they only pay the minimum amount due. Unfortunately, interest keeps accruing, and if their balance is large enough, minimum payments won’t be enough to get them out of trouble.

The best way to use a credit card is to pay off the balance in full every month.

Assuming your balance is way too large for that to be possible, you should still make extra payments toward your balance. Send whatever money you have left when the week or month has ended, or any gift/unexpected money, toward your card.

Sending smaller, frequent payments gets you in the habit of focusing on paying off your debt as well. This will help build momentum, and you’ll feel good every time you send a payment in.

4) Say “No” to Debt Completely

I’m not saying to swear off debt forever (unless you want to), but while you’re paying your debt off, you shouldn’t be taking more debt on.

I know that might sound obvious, but it can be difficult in practice, especially if you’re so used to swiping your card.

However, not relying on your credit card (or loans) to live your life can be empowering. Instead, you’ll have to find creative solutions, whether that means finding new ways to save money or earn more money.

Getting into this habit now will pay off down the road as it will likely keep you out of debt for good.

5) Focus on Your Values

When you’re paying off any kind of debt, it can feel like you’re locking yourself away in a cage, never to see the light of day again. It can be a long journey, and it’s important not to view it as the worst time of your life.

Many people get into debt because they’re trying to keep up with the Joneses. Instead, focus on what you value – not what other people value, or what other people think you should value.

What makes you happy? What do you look forward to most? Spend on those things. If you’ve experienced buyer’s remorse lately, make note of why, and stop spending on those things.

Focus your spending on your values and stop spending on things that don’t bring you happiness. Life is too short to waste your money away on things that give you a temporary high. You want the best bang for your buck!

6) Track Your Spending

This is an excellent habit to get into regardless of your financial situation. A lot of people are in debt simply because they didn’t realize they were spending more than they earned. They lack awareness.

Awareness is one huge thing you want when paying off debt. Similar to a cash budget, tracking your spending gets you into the habit of evaluating your spending decisions – something that can be eye-opening for people.

This is the easiest way to figure out if you have any wiggle room in your budget. You might not even be aware that some expenses are being charged to your accounts because time has passed. It’s worth investigating.

Here’s our choice for an automated way to track your spending.

7) Track Your Progress

There are a variety of financial metrics you can measure, and they’re all important in their own right because, once again, they bring awareness to your situation.

Awareness is good, but in this case, tracking your progress can actually be motivating. Most of us are busy – we send our payments in, and we go about our lives. We look at our balances decreasing, but we don’t really stop and take it all in.

That’s a mistake (as you’ll see below). Tracking your progress month-by-month allows you to see just how far you’ve come. Over the course of a year or two, you’ll be amazed at how far you’ve come, and you’ll be itching to get further along!

Plus, some people do better with visual reminders, such as paper chains, with each chain being worth $X, and removing one when you make progress. Or a hand-drawn thermometer on a white board or chalk board that you get to fill in every time you make a payment.

Download our automated budget spreadsheet and Personal Capital to automatically track your net worth.

8) Celebrate Milestones

Another habit that’s crucial for financial success in general is to celebrate your wins – no matter how big or small.

I’m not talking about going crazy and throwing yourself a party each time you pay off $100 of your debt, but take a moment and recognize it. Buy yourself your favorite treat (make sure the cost is reasonable – it’s a good idea to budget for it!) and give yourself a pat on the back.

Share your success with others and review what you’ve done right recently so you can continue making progress.

9) Make Paying Off Debt a Concrete Goal

A great way to sort of string yourself along while paying off debt is to make it a clear, tangible goal to reach. Do this by asking yourself which is more important – a new purse, or being debt free? Upgrading your phone for $200, or sending that $200 toward your debt and getting ahead on payments?

This is a good technique for saving money as well, so it’s a habit worth getting into. Just compare what you think you want in the moment to what you really want – debt freedom – and the choice should be simple.

It might also help for you to visualize what debt freedom looks like for you. If debt is holding you back in a lot of ways, think about what life will be like once you’re debt free. Harness that vision to keep tackling your debt.

And of course, it’s worth saying that you should make debt a concrete goal by formulating a plan to pay it off, as you’ll be more likely to stick to the plan (and your new habits!).

10) Begin Saving Money

Last, but not least, I believe you should get into the habit of saving money – even while you’re in debt, because that’s what will help keep you out of debt for good.

You might protest – “But shouldn’t I send every last penny toward my debt?!”

You don’t have to save a lot. Even $5 will do, whether that’s every week or every month. The point, as you might have guessed, is to establish the habit of saving.

Once you get used to that $5 “going away,” you’ll find it easier to send $10 off, and $50 off, and $100 off.

Saving can take a bunch of different forms, too. Maybe you need to save for an emergency fund (so you don’t rely on your credit card as a backup plan), or maybe you want to contribute toward your 401(k).

Either way, make sure you save by actually transferring the money into your savings account. Automating this so that you don’t have to think about it might be a good idea.

The easiest way to make saving and debt payoff a habit is to factor both into your budget, this way you don’t have any excuse!

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Getting out of debt can feel like hiking up a steep mountain, but developing these 10 habits will have you reaching the peak sooner than later. You’ll have a much easier time descending, too!

What habits did you develop to get out of debt? Were there any different techniques you used?