23 July 2019

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.


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.

  • 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.    💡 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.

  • 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.
  • 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.
  • 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.
  • 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. 
  • 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. 
  • 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.
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