Living on less than you earn

No matter what stage of life you're at, you'll benefit by reducing your expenses and living on less than you earn. Generally your rent or mortgage will stay the same but by reducing your electricity, water, phone, internet, insurance, transport and food costs, you can do a number of things such as paying off credit card debt, paying off your mortgage, saving for a house deposit or saving for something important to you and your family.


Back in my spending days, credit card debt and a mortgage were big parts of my life. I didn’t take much notice of it at the time, because shopping gave me other priorities, but while we worked to pay off what we owed, we were building even more debt. I thought it was normal to have everything I wanted and that debt was a part of every life. We are encouraged to think that way. The average Western lifestyle always gives you new things to crave; it keeps encouraging you to spend beyond your means. That will never change. You have to change instead.

We simplified. We cleared our debt and changed how we lived by only buying essentials. We stopped using our credit cards and paid them off, then kept only one for emergencies. When the cards were paid off, we put all our spare money in to our mortgage and paid it off in eight years, rather than the twenty years we signed up for. Instead of making monthly payments, we paid fortnightly. That alone knocked several thousand dollars off our interest payments. It wasn’t easy, but starting was the hardest part, and it got easier as we realised how much we were saving in interest. Now, looking back as a retired couple, that decision to pay off debt was probably the most important. We set ourselves up and to live in a house we own, with no debt, and our future looks secure and stable.

Our other small steps were to stockpile groceries, grow vegetables, cook from scratch, stop buying convenience foods, and to stop eating out except on special occasions. We cut our grocery bill in half, then in half again when the boys left home. We monitored our electricity and water meters, we checked bills and bank statements as they came in. Yes, we found mistakes. Always check. We sold our second car, got rid of pay TV and stopped buying all those little things – like magazines, cups of coffee and bottles of water – that cost a lot of money over the course of a year. All those small steps allowed us to pay off our debts and reclaim our lives. You can do the same thing.

Changing requires a period of readjustment, in both attitude and behaviour. If you are like I used to be, and have been spending on whatever your heart desires, this period could be difficult and stressful. You might fail a few times, and that’s okay. Just start again and don’t let this beat you because if you're successful, you'll put yourself in a good position to live life without the ever-present pressure of debt and never-ending acquisition.

CONSERVING YOUR RESOURCES

Now that you’re trying to save you should be mindful of everything you do that will save money. Try to cut back on the amount you will have to pay in utility bills and for transport. That money is much better in your pocket than profits for Energex, Telstra or Shell. So let’s go through a few things you can do to keep money in your pocket.

ELECTRICITY
  • Use your electrical appliances like washing machines, vacuum cleaners, dishwashers in off peak times. Phone your electricity provider and ask when your peak times are.
  • Wash your clothes in cold water and dry them outside in the sun. I always wash in cold water using homemade laundry liquid and our clothes look fine. Over the years, this has saved us hundreds of dollars.
  • Use compact fluorescent light bulbs. Fluorescent bulbs are more efficient than traditional bulbs. A 60-watt fluorescent bulb has the same lighting capability as a standard 75-watt bulb and it will last for years.    πŸ’‘ Light bulb buyers guide
  • Turn off the lights when you leave a room.
  • Turn off the TV when no one is watching it.
  • Turn off appliances at the power point, not just at the appliance on/off button.
  • Fill the kettle with just enough water for your tea or coffee. Boiling water you won’t use, is an expensive waste. If there is hot water left over, pour it into a thermos flask and use that for your tea or coffee during the day.
  • Buy a power board and plug in all the appliances you have close together into that one power board. When they aren’t being used, and especially at night, turn off the power board. That will stop all those appliances using stand-by power. It is estimated that 10 percent of the power used in Australia is for appliances on stand-by.
  • When you boil food, either on a gas or electric cooktop, put the lid on your saucepans because it retains heat. Your food will come to the boil faster, and then you can turn the power down to cook on a simmer.


WATER
  • Fill a bowl with water to wash vegetables. Letting the tap run while you wash wastes litres of water.
  • While you’re waiting for the shower water to warm up, fill a bucket with the cold water and use it on your garden or in the washing machine (top loader only).
  • Have shorter showers.
  • Turn the tap off when brushing teeth.
  • Flush the toilet only when necessary.
  • When washing your hands, wet your hands, turn the tap off, apply soap and lather, turn the tap on again to rinse.
  • Install water tanks if you have a vegetable garden, or at least set up some water barrels at the down pipes to catch what rainwater you can.
COOKING
  • Cook larger portions of food and freeze the leftovers for use on other days. This will enable you to cook meals for more than one day and use only the electricity to warm the food again.
  • When you boil something on the stove, bring it up to the boil, then turn it down to a fast simmer.
  • When boiling on the stove, always keep the lid on the saucepan. This reduces the time it takes to come to the boil. 
  • If you’re using your oven, cook more than one thing.
  • If you’re baking bread, do more than one loaf and freeze a couple of loaves for later.
PHONE
  • If you're not on the cheapest plan right now, do some research to find out what you can do to reduce your phone costs.  
  • If you're on a contract, never let your contract go from one year to the next without negotiating a better deal with your phone company.
  • While you’re saving, use the phone only when absolutely necessary. Stay in touch with your friends online instead.
  • Use Skype or KakaoTalk for your long distance calls. I use KakaoTalk when Sunny is in Korea. It's like Skype, so you can video chat, message and send photos etc. and it's all free. It's not all in Korean, there is an English version. Make sure you download the right version for your equipment - there are versions for Apple phones, ipads and computers as well as for Android smartphones and computers.
TRANSPORT
  • Plan your trips so you're not using the car to go to one place. Work out what you have to do and plan your trip going to multiple places to use the least amount of petrol.
  • If you have to take the children to school – share that with other parents in your neighbourhood. Even if you share with your next door neighbour so that you take them and she picks them up, it will halve your school trips.
  • Start a walking bus. Parents take it in turns to take a group of children to school by walking with them.
  • Download the motormouth app to find the cheapest petrol in your area.
  • If you run a business, make sure you keep a diary of your business and private car expenses so you can claim what you're entitled to at tax time. 
REGULAR BILLS
  • At least once a year, look at the details of all your regular bills. Bills such as phone, internet, electricity, phone and insurance should all be checked. Ring up the opposition and ask what they would charge you for the same service. When you have a good idea, phone the company you deal with and tell them you could get a better deal with a rival – and tell them the company name. Say you’re ringing to ask if they can equal or better that because you’d rather stay, but as you’re on a tight budget you must go with the best deal. Often this pays off and it should become part of your financial practice each year to test these boundaries. 
GENERALLY THERE ARE A FEW WAYS TO CUT BACK.
  • Separate your wants from your needs and be firm with this. 
  • Ask yourself if you really need it. 
  • 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 are keen to barter, do you have a local LETSIf not, see if your neighbours or work colleagues are interested in batering.
  • If you can’t do without it and 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. Maybe you could learn to make what you want.
By cutting back on what you’re spending you'll have money to reduce your debt which will create more choices for you and your family. Starting might be difficult but once you get into it, it's fairly easy to do but you have to work at it consistently. You should look at it as a change of your spending habits rather than a short period of saving. If you can change how you spend and begin to live on less than you earn, it will give you the opportunity and freedom to live the life you want.  Good luck.

Please share what works for you. It may be just the thing that someone is looking for to help get them on the right path.

I'll follow this up next week with tips on how to save money in the kitchen, laundry and general cleaning.

46 comments

  1. Great advice that I have been following for a number of years. It's always hood to have spare cash for emergencies. I'm currently paying off my very last credit card, there is no interest on it until 2021 but it will be sorted by Christmas.

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  2. As always, great post and all good info.!

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  3. These are great tips, Rhonda. I also cut down expenses by buying things from thrift stores. It takes time, so I keep a list of things I need, and eventually I can find them at very reasonable prices.

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  4. Such a comprehensive back to basics post Rhonda . Thank you. I was excited to see such a wonderful lengthy read for me this morning while I enjoyed a cuppa.

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  5. If you are using an electric stove, I find that by cutting potatoes and carrots small, when you get them to the boil, put the lid on tight and turn the burner off. They still cook in about 20 minutes from the residual heat.

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    1. That's a great tip, Marie. Thanks for sharing it. xx

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    2. And pasta but maybe a few less minutes depending on what type.

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  6. Your post today took me back to when I first came across your blog. I was in my late 50's and fearful of never being able to retire. A mortgage and a superfund that wouldn't be able to support me. I believed the mass of information telling me I was in for an uncertain perilous old age. Then I found your forum and blog. I found other likeminded individuals out there who showed what was possible. I did and do all of the above hints. In 5 years I just retired with the mortgage paid off and a confidence that I have enough(less than half what the experts tell me).Thank you Rhonda for giving me the tools to change and a mindset that has made my life so much fuller and rewarding.

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    1. Well done, Bernie! I think many people are fearful of what will happen when they retire. By far, the most important thing to do is what you did - pay off the mortgage by saving money with tips such as these and then use those skills to live. It's really empowering.

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  7. Hi Rhonda, Great post. Thanks for the reminders. I have found that it also helps to use public transportation and to go places by bicycle. I just replaced my last bike, which I bought second hand at the Salvation Army. It lasted me for seven years. I found another used one at our local bike shop. It's light, excellent quality, and I got it for half of what it would have cost me brand new. I also joined a bike share in Santa Monica. For $99.00, I can use their bikes by the beach for one and a half hours each day. Using the bus and train helps me to keep my car much longer. The less I drive, the lower my cost of insurance is. The car I currently have is twenty years old, and it should last me the rest of my life.

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  8. Once again, a Stiller post! Great tips to practice! Thank you! Your blog has given me so much confidence in living a simple quality life

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  9. Not sure if my first attempt came through. . . I highly recommend mechanical timers (available on Amazon US for $8-30, in both 220v (lamps and things) and 240v (older, standalone air conditioners)) for those without central air either in apartments or homes. You can set the timer to turn the air conditioner (or a lamp, or basically anything that plugs in) on and off at specific times, saving you tons if you set it to be off when you leave for work, and to turn back on an hour or two before you get home so the house is cool but you're not cooling for the full 24/hr day. The mechanical timers use a minuscule portion of electricity, and can save you lots of $.

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    1. I've only received this comment. Thanks for sharing that tip, I'm sure it will help some readers.

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  10. Such a great post Rhonda. We really do live conservatively in comparison to our peers. This is definitely due to your blog posts & encouragement. I always call our insurance providers each time we get our annual renewal - I always check competitors (who are generally more expensive) & then call our insurer & ask for their best deal. I used to be a bit embarrassed about this but now it's just my default position. Last call I made the lady on the phone actually said that it's always best to call & ask as they can almost always give you a better price. On our two cars & home/contents cover I would say we save a few hundred dollars each year by doing this.
    I had to laugh at the hand washing tip. I work in a big office building & I always wet my hands quickly, turn off the tap, lather up & give my hands a quick rinse. The amount of odd looks I've got over the years makes me smile.

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    1. It doesn't take much to change, does it, Cal, and how life changes when we stop spending. I know some people who won't use soap. They say it harbours disease. πŸ™„

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  11. Great tips Rhonda. I have been really cutting back in the last year. I became a single parent but paid off half my debt! I got rid of my microwave a few weeks ago and haven't missed it, I started turning the heater off at night (its often below zero) because i moved to a cheaper, smaller home but it had better insulation. I only spend $100 a fortnight on myself and my son on groceries by meal planning and thinking about what we need vs want. I also blog about my journey which has really helped others too.

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    1. You're doing really well, Jacinta. Keep up the good work.

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  12. Hello Rhonda,

    I always enjoy this topic, it is so central to everything we are trying to achieve. Aside from increasing our weekly mortgage repayment, we put in EVERY extra dollar that comes our way. This includes tax returns, a very small inheritance, an insurance refund ($27!!) and a small holiday bonus. Lots of little amounts, but they really do add up. As well, none of us have had an increase in our 'pocket money' for years (shhh, don't tell the family, they haven't noticed yet!)

    Sometimes it feels like we are on a starvation diet, even though we live really well. But come 2020 when we are no longer debt slaves I have no doubt every sacrifice big and small will be worth it. I am currently only working part time, and am finishing some studies to enable me to do more meaningful and enriching work. Kaz will be able to go to part time work down the track too. This is the freedom that comes with not having debts. We are blessed indeed.

    Madeleine

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    1. You two are doing so well. I always love reading your updates.

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  13. That post should be compulsory reading for all, especially those who are in debt. Great post.

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  14. truly wonderful advice here, it is certainly a learning curve when one slows down.
    i'm not good with money myself & so i have several accounts to put all my bill payments into, except for the few which go out automatically & those with Centrepay, then i just put the money away every fortnight into their own accounts; i always have rates money at the end of the 6mth period, etc. NAB who i bank with gives me a fee-less account as i have my home-loan with them & i'm also a pensioner. i get very confused easily so i don't go off looking for bargains (esp not on my own)
    congratulations on having 30 million viewers too Rhonda, wow what a buzz that would be
    thanx for sharing

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  15. I have recently become a part of a fruit n veg co op in my area. There are 14 of us and for $25 everyone gets a huge box of fruit n veg. This feeds my family of 5, only needing to spend about another $10 on a fruit top up. Every 14 weeks I have to go to the market, get everything in bulk, take it home and divide it up amongst the 14 boxes. When I’m ready, everyone comes to collect their box that day. Great community initiative, saving money and one less thing to shop for each week! Jade

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  16. the warmfireplaceJuly 23, 2019 10:54 pm

    Brilliant advice as always, just reading your book 'The simple Home' as not many years and we will be retired, I have been using your advice for years and it has made such a difference. Thank you Sue

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  17. I second all your advices. I find that being in the right mindset helps a lot, and reading your blog entry today definitely helps.
    We use hot water bottles in winter to save in heating costs, and reuse the water in the garden. Also, I've learned to make pizza, hamburgers, stir fry, etc. from scratch, which save a lot on take away. I can whip up a take away menu in less time than it takes to order and being delivered ! Having friends over for potluck evenings instead of going to restaurant (and the kids can watch a movie all cuddled up together for free !).
    I also found this website/app called HelpX. If you have a spare bedroom, having travellers over for a week or two, and they help for bigger chores around the house, like garden clean up/maintenance, etc., in exchange for food and shelter. Bonus: meeting interesting people from all around the world, keep young at heart and a house that is well maintained for free. I'm just saying goodbye to a wonderful international student that stayed here for 6 months and repainted the whole living area in my home and did so much maintenance around that I feel like in a brand new house.
    Thanks Rhonda for helping me to keep the thrifty and creative spirit up !
    Corinne in the BM

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    1. A great comment, Corrine, thanks for sharing what is working for you and for the HelpX tip.

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  18. Thanks for a great post Rhonda - reminding us to keep on conserving our resources and those of the planet. A big one for me has been to stop thinking that I need to 'treat' myself when out shopping or doing errands. I dont need to go to a cafe for coffee and cake - now I take a thermos flask or reusable water bottle with me and an apple or cereal bar. This has really saved money over a period of time.

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  19. What a great post! We've been debt-free since 2002, which has enabled both of us to work only part-time since our late 40's (we're both 61). Our car is a 2003 model with only 130,000 miles on it. To preserve it, we leave it home when we travel, and rent a car through Costco. We've driven almost brand-new vehicles for $25-$50 a day, and don't have to worry about our elderly car breaking down out of town. It's fun to drive different new cars, and even more fun not having a car payment :)

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  20. Here in the United States we have freecycle.org where you can offer items you no longer have use of and request items you would like. Thank you for sharing all of your insights. You have been such an inspiration to me. ~ Michelle

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    1. Thanks Michelle. We have freecycle here too. Now that you've reminded me of it, I'll check it out today.

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  21. Reading this post just reminded me of all the things I did to pay off our home loan and now we are debt free we are still doing it all as it’s just become a habit.
    Which is great as we are getting older it’s nice to know we have savings for a rainy day, which happened a few weeks ago, but also. When work is gone we know we can live on less and still be happy and not feel like we are missing out as it’s just how we have always lived

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  22. You mention light bulbs that use 60W. The latest ones (also mentioned in your link) are LEDΕ› which use only 10W (and sometimes even less). That's really a big save if you gradually replace all your lightbulbs.

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    1. CFL bulbs have recently disappeared from the she;ves in the USA. Now all we can find are LED bulbs.

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  23. Thank you Rhonda for the excellent reminders.
    Years ago we started dating our lightbulbs with an indelible marker. As I would sometimes think, "Haven't we just changed that bulb?" We have gradually replaced our incandescent bulbs with LEDs, but have had a couple bulbs not live up to the box claims. The manufacturers have been very good about replacing these. Have a copy of receipt filed. Bee

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  24. Always good to share tips and have reminders of how much more we can do. Thank you.

    We use timers on our lights as well as for our hot water heater which is off most of the day. It comes on in the morning and at night for bathing. If I need it for a specific wash,like towels, I can turn it on via Alexa. It has been a huge money saver.
    We started using Ebates. If we do need to buy something, might as well get cash back for making the purchase.
    Also, in the summer our library does a Summer Reading Club for kids and adults. There is a chart that you cross off every time you read. You bring it in weekly to be signed off on by a librarian and get a prize, like free ice cream coupon or a book, and then you are given a raffle ticket for 1 of 10 grand prizes. For the kids they are mostly STEM based toys. For adults there are gift cards to local businesses. Totally pays off if you are a reader or trying to encourage a child to read. My son has been loving the challenge and I am definitely going to do it next summer!

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  25. Great article Rhonda. Something for everyone in your information . Love your new profile pic - your glasses are lovely.

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  26. I’m in Australia and currently use a $99 mobile plan from Aldi which is for a year. You can add on extra data if needed. My husband has a phone plan through Boost which is also a similar price. This has been a huge saving for us.it pays to shop around!

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    1. Thanks for the tip, Jenny. It's always better to hear from the horses mouth that products work well.

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  27. At age 58, today is my 1st day of retirement! We started following the above behaviors at age 26. Yes, 1987.

    Are you at there thinking: "I can never get here". Ah, but you CAN! Start with 1 small step. I started by using cloth shopping bags and they each got me $0.05 refund on groceries. I had 7 bags so that's $.35 every trip. Let's call it 4 bags per week. X 34 years: that's $353.6 in my pocket. Doesn't sound like much does it? But change 10 small behaviors and it is $3536. Change 30 small behaviors: $10590.

    And that's just penny changes. Blow that up into biweekly mortgage payments: and you cut 10 years off your 30 year mortgage.

    This is the best advice received back in 1999: when you pay off this car, keeping making that payment into savings. When you're ready to replace our car, write a check. I did just that in 2016.

    We have not paid a penny in interest since 2010 when we terminated our mortgages-yes 2. We have a small mountain cabin retreat. We paid what we could afford each month and paid it off in 52 months. Meanwhile, we restored it with cash only and will just finish this year, the 16th year of owning it.

    If you're considering this life changing journey Rhonda describes, set your stretch goal (ours was debt free by 50 and cash thereafter). Then take that first small step.

    YOU CAN DO IT!!!!! If this 1980s rabid consumer can do it, YOU can do it :-)

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    1. Congratulations Elle! It is always so inspirational to hear about others reaching their goals.

      Madeleine

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  28. We have been living frugal for a while now and it is so much more rewarding. We make everything we can. Each year when utilities are up for annual review we do the negotiating. Last year one phone plan was up so we negotiated a cheaper plan then put that little bit we saved into extra payments off a personal loan which ends next week then all that money moves on to the next debt and it will be paid out in two months. The snowball effect continues and gives you such a feeling of achievement

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