How to Spend Less Money: My Tips from Paying off $80,000 in Debt

I struggled to spend less money than I made from my teens right into my early 30s.

And, not surprisingly, I was always in debt. I thought it was simply because I didn’t make enough money. Sure, that was part of it when I was a student. But I also never learned how to simply spend less money.

For most of my 20’s I spent what I wanted to spend and it had little to do with what I earned. The gap between my earnings and spending was never huge but it was enough to have credit card debt and stay on the minimum payment plan for my student loans. It also kept me in a perpetual state of consumer guilt. The short high I got from buying myself something nice was immediately followed by dread that I couldn’t afford it.

From an early age I brainwashed myself into believing I was destined to have debt. My mother never had enough money and was always in debt. This was simply how life worked, right? The answer at home was never how to spend less but rather a complaint that there just wasn’t enough money. Sure, money was really tight. But frugality and smart choices or even thinking creatively about making more money, were never broached as solutions.

Learning how to spend less money only came to me when I got into minimalism.

When I got into minimalism in 2010 while on maternity leave, I realized my husband and I were making enough money to pay off debt. It was a huge turning point. If we just spent less, stopped shopping, skipped fancy dinners and ate at home, we could actually pay off our debt mountain. At the time we had $40,000 in debt we assumed from my husband’s business, $20,000 in my student loans and another $20,000 in credit card debt (a lot of it was from our wedding).

Soon after embracing minimalism I realized I was wasting money on baby stuff. I had loads of new items that we never even used. And too much of everything. I sold and donated and a lot of it. And when I actually needed something I bought it second hand. It was a complete 180 from how I approached spending while I was pregnant and in the first few months after my son was born.

Suddenly skipping that sushi lunch out, or bringing my own coffee on a walk with a girlfriend, felt like important victories. Slowly I learned how to spend less money. I started tracking what we spent on an Excel spreadsheet. We were able to start making extra payments on our debt. The feeling was amazing!

One of my best tips for spending less money: know what you spend.

Another piece of help for spending less money: track your spending. Most people really have no idea how much their life costs. They have a vague notion of what they spend on groceries, what the utility bills usually are and what a month of living might cost them. But they really have no idea what they are actually spending.

If you are often thinking ‘where does all of my money go?’ it’s time to start tracking your finances. You could use an app or budgeting software but, if you’re new to budgeting and tracking your finances, I recommend going manual at first. That’s right: write everything down. Keep receipts and write everything down at the end of the day in a notebook. Do it for at least one month to get a real picture of what you are spending.

Seeing just how much you spent on lunches in a month (when you think you brown bag it most days) will kick your butt into gear. If your mortgage, home insurance, utilities and other home related bills are actually 40% more than you think, you’re going to be motivated to make some changes. Be real with yourself. Write everything down from the ‘just stopped in for milk and bread but spent $37’ grocery shop to the hair cut and colour that was 15% of that month’s take home pay.

Learning how to spend less is a great skill to develop.

It’s not natural for a lot of us to spend less than we make. We want all the things and we vaguely think we can afford them. But if you’re chronically in debt, you really can’t afford them. Also, big secret, you probably don’t really want all of those things.

When you take the time to see where your money goes, it suddenly makes a lot of those frivolities and extras feel wasteful. Why have an appetizer, main and dessert at the restaurant when I can never finish it all anyway and it more than doubles my bill? I’d rather skip those new jeans because a) I have plenty to wear already and b) I want to pay my credit card bill off each month. Or even, I’m paying a lot of rent for a home that is really too big for me. Wouldn’t it be more enjoyable to rent something smaller and a lot cheaper and not go into debt every month?

Strategies for spending less so you can pay off debt.

These are practical ones if you’re still learning how to say no and not break out the credit card.

Leave your credit cards and bank cards at home. Bring just the cash you really need for the day. If you really want that thing you can sleep on it and come back tomorrow for it. Notes: you probably won’t want it tomorrow.

Book cheap or fun activities into your schedule. Potlucks with friends, movie nights in and hiking or a simple walk are great for spending less.

Learn to say no. When those concert tickets go on sale and your friends ask if you want in, say no. It will be hard at first. But it really does get easier.

Be candid about our financial goals with friends and family. When you tell them you’re working on paying off debt and learning how to spend less, they’ll support you. That means finding activities that don’t cost money and not asking you to shop as a hobby.

Learning how to spend less has also been great for my marriage.

For my family, spending less than we make means my husband and I no longer have arguments about purchases. It’s easier to have a non-judgmental conversation about our ‘wants’ and ‘nice to-haves’ and leave emotions out of it.

This strategy also helps when you have unexpected bills.

Life happens.

The best laid budget can be shredded by car repair bills or a cracked tooth. It’s not a matter of if you’ll have a large unexpected bill but a matter of when.

If you’re living below your means those out of the blue bills sting but you pay them and move on. If you’re living pay cheque to pay cheque those unexpected bills just push you further into debt and make it harder to see a way out.

If you’re in debt or struggling to pay your bills spending less than you earn will be challenging to implement. Start with small changes like cutting a few nice to have bills like cell phones with data plans, premium cable television and curb your eating out. Then look for ways to increase your income to pay off debt (check out this post and the comments section for ideas on creating side income).

It took us a few months to cut our bills and spending and then almost two years to pay off all of our consumer debt. In September of 2011 we were finally able to start spending less than we made and start saving.

Now when we have an unexpected bill we pay it with cash, dipping into our savings if need be, and then get back to our regular savings the next month. The peace we feel now was worth all the hard work of getting out of debt.

Has anyone else had a shift in their financial life from spending more than they made to spending less?

  • My wife and I are in our early 30s and were always fairly frugal, but were blessed with good incomes, so we could get away with some dumb decisions. But, about 5 years ago, I discovered Dave Ramsey and our whole outlook changed. You said it perfectly with, “spend less than you make”. I absolutely love his books and his radio show (which I listen to in podcast form). He’s so inspirational and his advice is second to none. Are you very familiar with him?

    • I am. Haven’t done his course but I brows his website a lot. Good stuff and, like you, I just wish I had put this all together years ago. A simple equation that makes life exponentially easier.

  • We spend way less than we make (and last year we were made combined well under $50,000). People are always surprised that we can “manage” but if you hardly ever eat out, don’t buy clothes, cut your own hair, etc., it’s really not that hard. BTW, does anyone on here cut his/her own hair? Mine never looks good. Curious how others handle this.

  • I’ve always made WAY less money than the people around me, but since I’ve also spent less than I made, it was never a huge deal when those inevitable expenses would arise. In fact, I’m such a compulsive saver that I was even able to quit my job a few years ago and “retire” at the age of 39. At my “retirement party” I found out – to my utter shock – that everybody at the place I worked had assumed for years that I was some sort of trust fund baby because I never stressed about money! It still makes me chuckle.

  • First of all, I love your blog! I read it regularly.

    My husband and I got married young (at 19). We are now 22 year old college students both working full time as well. Our budget is pretty tight so it’s been hard to try to save. It’s also hard to see most of our friends doing stuff or going places we can’t afford. It helps to remember that most of them are still living off of their parents or going into debt with student loans and credit cards. We share a car, but we paid for it with cash. We may not be studying abroad, but we will graduate debt free, and also with a decent amount in savings. We don’t own a house, but when we do we plan on paying cash. I just have to remind myself of these things anytime I get discouraged or start comparing our lifestyle with others.

    • HI Laurie, I was there with my husband (although we were a bit older). We lived frugal lifestyles in our 20’s and saved lots when my single friends were ‘living it up’. Now that we are older these friends look at us and wonder how we afford the things we have.
      We were lucky, but we never had any debt that was not housing. It was not easy, but I am thankful every day that we were able to save then, to afford things now.
      Hang in there and just remember that good things come to those who wait!!

  • “It’s not a matter of if you’ll have a large unexpected bill but a matter of when.” ~ great reminder!

    We talk money with our kids and they get to practice with they’re learning with their allowance. We were explaining the cushion in our chequing account (lets us avoid bank service fees!) to someone the other day and our 9 year old son must have been listening more than we thought…. funny how they do that!
    A few days later he was carefully deciding if he wanted to take some money out of his spend tin (he really hates to part with his cash) to do a book order at school, and in all honesty he declared that his feel good cushion was $15. Because he had a little over $26 in his tin, he could afford to buy the book. Wow – an early start to living below his means. So proud of him!

  • Yes, I made that connection in my early 30’s (I’m now 49) after reading “Your Money or Your Life” by Joe Dominguez and Vicki Robin. They equated the spending of money with the life energy one had to use up to both buy and maintain each item purchased. It shifted my whole perspective and helped me understand pleasure was not tied to spending, rather, pleasure was separate from spending. And, surprise, life could be enjoyable without spending money. Wow, what a paradigm shift!

  • *If you’re living below your means those out of the blue bills sting but you pay them and move on. If you’re living pay cheque to pay cheque those unexpected bills just push you further into debt and make it harder to see a way out.*

    So true.

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