diff --git a/.gitignore b/.gitignore
index c3121bab..194fed01 100644
--- a/.gitignore
+++ b/.gitignore
@@ -2,6 +2,7 @@ tmp
 node_modules
 nvim-test
 deps
-busted/fixtures/basic/bin
-busted/fixtures/basic/data
+spec/fixtures/basic/bin
+spec/fixtures/basic/cache
+spec/fixtures/basic/data
 
diff --git a/lua/elixir/nextls/init.lua b/lua/elixir/nextls/init.lua
index d048f614..053a475c 100644
--- a/lua/elixir/nextls/init.lua
+++ b/lua/elixir/nextls/init.lua
@@ -5,8 +5,8 @@ if not vim.uv then
   vim.uv = vim.loop
 end
 
-M.default_bin = vim.g.next_ls_default_bin or (vim.env.HOME .. "/.cache/elixir-tools/nextls/bin/nextls")
-M.default_data = vim.g.next_ls_data_dir or (vim.env.HOME .. "/.data/elixir-tools/nextls")
+M.default_bin = vim.g.next_ls_default_bin or (utils.cache_dir() .. "/elixir-tools/nextls/bin/nextls")
+M.default_data = vim.g.next_ls_data_dir or (utils.data_dir() .. "/elixir-tools/nextls")
 
 local function bufname_valid(bufname)
   if
diff --git a/lua/elixir/utils.lua b/lua/elixir/utils.lua
index 5338a547..9fddc4fa 100644
--- a/lua/elixir/utils.lua
+++ b/lua/elixir/utils.lua
@@ -1,6 +1,14 @@
 local Path = require("plenary.path")
 local M = {}
 
+function M.cache_dir()
+  return vim.env.XDG_CACHE_HOME or vim.env.HOME .. "/.cache"
+end
+
+function M.data_dir()
+  return vim.env.XDG_DATA_HOME or vim.env.HOME .. "/.data"
+end
+
 ---@param path string
 function M.safe_path(path)
   return string.gsub(path, "/", "_")
@@ -37,7 +45,7 @@ local arch = {
 
 function M.download_nextls(opts)
   vim.notify("[elixir-tools] Downloading latest version of Next LS")
-  local default_cache_dir = vim.g.next_ls_cache_dir or vim.env.HOME .. "/.cache/elixir-tools/nextls/bin"
+  local default_cache_dir = vim.g.next_ls_cache_dir or M.cache_dir() .. "/elixir-tools/nextls/bin"
   opts = opts or {}
   local cache_dir = opts.cache_dir or default_cache_dir
   local os_name = string.lower(vim.uv.os_uname().sysname)
@@ -77,7 +85,7 @@ end
 function M.latest_release(owner, repo, opts)
   opts = opts or {}
   local github_host = opts.github_host or "api.github.com"
-  local cache_dir = opts.cache_dir or "~/.cache/nvim/elixir-tools.nvim/"
+  local cache_dir = opts.cache_dir or M.cache_dir() .. "/nvim/elixir-tools.nvim/"
   local curl_response = vim.fn.system {
     "curl",
     "--fail",
diff --git a/spec/nextls/install_spec.lua b/spec/nextls/install_spec.lua
index 51a27914..c23ed6c0 100644
--- a/spec/nextls/install_spec.lua
+++ b/spec/nextls/install_spec.lua
@@ -4,6 +4,8 @@ local exec_lua = helpers.exec_lua
 local luv = vim.loop
 local eq = assert.equal
 
+helpers.options = { verbose = true }
+
 describe("install", function()
   before_each(function()
     helpers.clear()
@@ -11,6 +13,11 @@ describe("install", function()
     helpers.fn.delete("./spec/fixtures/basic/data", "rf")
     helpers.fn.mkdir("./spec/fixtures/basic/data", "p")
     helpers.fn.mkdir("./spec/fixtures/basic/bin", "p")
+    exec_lua([[
+    vim.g.next_ls_cache_dir = nil
+    vim.g.next_ls_data_dir = nil
+    vim.g.next_ls_default_bin = nil
+    ]])
     -- Make plugin available
     exec_lua([[vim.opt.rtp:append'.']])
     exec_lua([[vim.opt.rtp:append'./deps/plenary.nvim/']])
@@ -29,6 +36,20 @@ describe("install", function()
     eq(luv.fs_stat("./spec/fixtures/basic/bin/nextls").mode, 33523)
   end)
 
+  it("installs nextls into the xdg dirs when set", function()
+    helpers.fn.writefile({ "" }, "./spec/fixtures/basic/data/.next-ls-force-update-v1")
+    exec_lua([[
+    vim.env.XDG_CACHE_HOME = "./spec/fixtures/basic/cache"
+    vim.env.XDG_DATA_HOME = "./spec/fixtures/basic/data"
+    require("elixir.nextls").setup({auto_update = true, cmd = "./spec/fixtures/basic/cache/elixir-tools/nextls/bin/nextls" })
+    vim.cmd.edit("./spec/fixtures/basic/lib/basic.ex")
+    ]])
+
+    local file = luv.fs_stat("./spec/fixtures/basic/cache/elixir-tools/nextls/bin/nextls")
+    assert.Table(file)
+    eq(file.mode, 33523)
+  end)
+
   it("forces an install if the flag is not set", function()
     helpers.fn.mkdir("./spec/fixtures/basic/bin", "p")
     helpers.fn.writefile({ "foobar" }, "./spec/fixtures/basic/bin/nextls")