Step 4 - The Plan

31 May 2007
So how do we achieve this highly esteemed state of being financially sound and debt-free? Stop spending. That is the most important first step. When you’ve done that, when you have really decided that now is the time that you’ll grab hold of your life and direct it towards the path you want to take, then it is time to make a plan.

You need to plan for the best future you can imagine for yourself, but prepare for the worst. Your priorities now are to:
  • stop spending on non-essentials. The only thing you should continue to do is to make your loan repayments and pay for food and transport costs;
  • establish an honest record of your spending habits;
  • calculate how much debt you have and how much that debt is costing you each year;
  • work out how much you really earn. That means work out how much money you actually get in your hand each week, minus your work-related expenses. This is the real amount of money you have to live on and to pay bills;
  • save for an emergency fund to act as a buffer between you and hard times;
  • prepare a budget. If you already have a budget, prepare a new one with your frugal life in mind;
  • pay your debts as quickly as you can.
  • shop in a thoughtful and sustainable way;
  • stockpile food and provisions;
  • start to produce some of your own food;
  • work out a plan to conserve water, electricity, petrol and gas. Stop making unnecessary phone calls.

So how do you do it?
Generally there are a few ways to cut back.
  • Ask yourself if you really need it.
  • Ask yourself how your life will be better with this product in it.
  • Separate your wants from your needs and be firm with this.
  • If you do need it, can you barter something for it instead of spending money. Bartering used to be quite a common way of obtaining goods in small communities. Ask around, you’ll probably find people who are keen to barter.
  • If you can’t do without it, can’t barter for it, can you make it yourself? One of the skills you’ll develop in your simple life will be to hand-make many things from food to clothes.
  • Above all else you need to cut back on what you’re spending. This will give you the money to create more choices for yourself by reducing your debt, and in the end it gives you freedom to live the life you want.

If you're on a low income or trying to get out of debt, it's a good idea to try to create a buffer between you and an emergency. For instance, our dogs were sick last year and the vet bill was $800, we paid it from our emergency fund.

Get yourself an old jar or tin and empty your purse or pockets when you come home. If you have change left over from groceries etc. that change goes back into your marked ziplocks, Whatever spare change you have, put it in the jar. NEVER TAKE FROM THE CHANGE JAR. Don't think of it as extra money, it's money that has a purpose in your life and you need to keep it for your emergency fund. Put every spare cent you have in your change jar.When the jar is full, deposit it into your bank account. Try to build your emergency fund to at least $500. It will help you when something unexpected happens and having it will help you feel less stressed about living on less. You will know you have that emergency money, just in case.


  1. I am 21 and just starting a budget, mostly to help me finance a trip I am planning to South and North America. I love reading your posts about living simply. I already incorporate some things but there is so much room for improvement and many tips I am discovering along the way. Thanks for being so helpful and such an inspiration!

  2. I realize I am commenting on this quite a few years later. I enjoy your blog so much that I started at the beginning and am working my way forward. Our family is in debt, we need to save money, however my husband is very against being thrifty. Do you have any advice about this situation? He does not like the debt but he also thinks being thrifty means living substandard. He does not want me to learn to make clothing because he's afraid that they will look bad. He does not like me to make my own household cleaning products because he says they are inferior to store bought. I am doing what I can to save money but it is hard keeping a good attitude in this situation.

    1. Hi Naomi, welcome. If you're in debt, you're living beyond your means. I think that is worse than being thrifty. But you can't change anyone else's opinion so I wouldn't even try. If you believe that being thrifty, sewing, mending and making household cleaners will save you money that you could use to pay off debt - and I certainly think that's a good move - then you should do it. You don't need anyone's permission to spend your grocery budget and get value for money. Make some laundry liquid and don't tell your husband. Just use it, see how good it is and record what you save. Start sewing by mending your clothes by hand - there are a lot of YouTube videos that can help you do that. Do whatever you can, without telling anyone you're doing it, and see if it suits you and saves money. Then you'll need to have a discussion with your husband and work out a way forward. If he's scared homemade clothing will look bad, show him it doesn't. Show him how well the household cleaners work, then show him how much you've saved. If you can convince him that thrift can be a valuable and workable part of normal life, you'll be able to clear your debt and move ahead. Good luck, love.

  3. Thanks so much for your response and advice. You are truly inspiring. Thanks for sharing your life on the internet.



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