Credit Debt Finances & Money Frugality

Our secret to success: Part One: Spending less than we earn

This article is part of my “Secret to Success” series. Check my index article to see where it all started and for the other four parts!

In my recent article “Everything you ever really needed to know about Personal Finance on One Page“, I highlighted Trent Hamm’s 5 basic fundamental practices in Personal Finance that lead to financial independence. I also told you I would explain how, in our own lives, we’ve practiced these same principals to reach our current level of success. I’ll also add how we plan to continue utilizing these methods to further advance our financial independence and wealth.

The first principal is definitely the most important to financial success:

Spend Less than You Earn!

Doesn’t this idea sound so simple it’s actually pretty lame? However, while you think “spending less than you earn” makes perfect financial sense, you’d be wrong thinking everyone understands the concept.

For example, back in college, I was making about $6,000 per year (my last 2 years) working part-time. While that sounds like a small amount to me now, also consider my parents were paying (via loans) for my housing, and I was paying (via loans) for my tuition. That $6,000 could all towards my living expenses.

Our current grocery budget is $2500 per year for 2 people, but back in college I would dine on Ramen Noodles for a dollar per week. Where was all the money going?

It was going to food, alcohol, musical instruments, electronics, a new car and totally random things I can’t even recall purchasing. And in the end, I left college with about $15,000 in credit card debt and a $20,000 car loan. Tack on $20,000 in student loans, and I was $55,000 in debt right from the starting gate. I spent much more than I was earning. MUCH MORE!

Changing our spending patterns

I attribute most of the change in my spending to Stacie, as she’s the frugal spendthrift, while I’m the impulsive spender. However, I will take credit for stopping the use of credit cards for at least a year after college. Granted, it took me about 6 years to pay off that credit card debt, but it’s gone now.

It was insanely difficult to bring our spending under control; Stacie even came close to leaving me (justifiably) because I almost traded in my Acura on yet another expensive car. I think that may have been the turning point in my own head (although I still battle my impulsive nature).

From then on, we battled our debt more than we battled each other. Since starting this blog, we’ve rid ourselves of over $100,000 in credit card, auto and student loan debt. Wow.

Speaking of, the accountability this site has created definitely played a major role, and having readers like all of you kept us motivated to prove we could do it.

A budget, duh

The last thing I’ll say about spending less than you earn is that you can’t do it without knowing both how much you earn and how much you spend. And the only way to find out both is to create a budget. There’s tons of resources out there to learn about budgeting, but basically you follow these steps:

  1. Add up how much income you get each month (after taxes)
  2. Add up all your bills, including utilities, debt, groceries, dining, entertainment, gym, taxes, insurance, mortgage, etc.
  3. Document all your bill categories and amounts in an easy-to-manage format
  4. Try to reduce the amount spent in each category

That almost over-simplifying the process, but the main point of a budget isn’t to restrain you, but to guide you and to educate you. By being honest and truthful, you’ll understand where all your money is going, and whether you’re spending more than you earn. You can then modify your spending and continually update your budget to see the long-term effects of those changes.

Are you ready to take the first step to becoming a master of your money, rather than being a financial slave? Try reigning in your spending first.

Next up: Living a frugal life

About the author

Clever Dude


  • I struggled with this concept for many years as well. Off the cuff, you think this is easy. But living it is a whole other ballgame. What I discovered of myself and had to change was slightly different though.

    For a period of time, I was working a full-time job and had two or three small side gigs, all of which was bringing in quite a bit of income. I was living within my means, but I’d expanded my budget a little to take in account the income I was bringing in, which I believe to be a mistake. First of all, the side gigs were freelance writing – which comes and goes and is never really guaranteed. Secondly, I was running myself ragged. So, my expenses were now more because I’d allowed myself to go beyond the full-time job income, but there was the potential to also lose that side income (either from the client’s end or my own). So, I had to re-evaluate my spending patterns and get back to the level I was with just the full-time job. The extra income is nice and it can fund my emergency fund and travel fund, but I don’t think it’s always a good idea to expand your budget on side jobs. Some may disagree, but that was just my take on it.

  • It’s always cool to hear actual stories from people’s lives. It’s one thing to talk about spending more than you make in a theoretical fashion, its another to actually live it.

    It’s encouraging to hear that you were able to pay off $55k of your debt “out of the starting gate”. I am in a similar position, but I am at the beginning of my journey. Thanks for the motivation to keep on keeping on!

  • @Kristy, you have a point about side income. In fact, I don’t count the income from my websites in our budget as a line-item, but I do add it into the running total so I know how much extra I have for debt paydown. It’s like a surprise each month!

  • A budget for planned expenditures will be very useful in terms of supporting us in cash crunch situation. Budgeting help us to find out unnecessary expenses and help us to minimize it!

  • You remind me of my husband. When we were married, he had about 25,000 in debt. (credit card mostly and student loan). It was tough since Im more frugal and I like to prevent for the future. We were about to break up too because an impulsive purchase (an i pod in 2004). But we are ok now!. It was hard though 🙂

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