Family of Four Taking Flight to Financial Independence

Can You Reduce Your Spending?

Reducing Spending?  Let the kids play for free in the backyard / park in the mud!

If you are considering FI (financial independence), “where do I start” may be the first (and sometimes overwhelming) question.  I asked myself this question in 2013, and the answer is reducing your debt and cutting spending.  This part is not the most exciting (and certainly isn’t easy), but it is absolutely necessary to reach your FI goals.  You can’t save for FI if you haven’t paid off your debt.  Let me say that again ... You can't save for FI if you haven't paid off your debt.

Where to begin?  

  • Get out a pen and paper, or open up a spreadsheet.  Do what works for you.
  • Write down your total take home monthly income at the top.
  • Below that subtract out all of your monthly expenses.  Not sure?  Look at your bank account, or completely track your spending this month (Need help?  Try using Personal Capital or Mint).

Reality check, right?  The number staring back at you may be a little depressing to look at, but we are going to work on that.  It will get better (if you want it to).

Let’s come up with a hypothetical situation to put this into perspective.  We will assume this is a dual income household with two kids.  Then we will take a look at how the numbers improve by making some key changes.  

The first budget is where many people are right now.  They are looking at a lot of debt.  But look - there is still close to $1,000 left over each month.  The best thing to do with the $1,000 is to start paying down debt as much as possible.  Start with the highest interest accounts first (probably credit cards).  If you start applying any extra money to paying down debt, you are well on your way to FI.  

But we aren’t done yet!  Let’s clean up this budget a little bit by making some lifestyle changes.  In this second budget, we have made some changes to help pay down debt as quickly as possible.  Decide what is important to you, and what you can adjust.  

In this example … 

Goodbye Cable! (We said goodbye to ours in 2013, and we don’t miss it.)  Goodbye Gym Membership! (Exercise is great, and you should do it.  But are there cheaper (or free) ways to exercise especially if you are paying down debt?).  Lower Grocery Spending.  Drive less.  Lower your Electric Bill (Either by researching for a better rate or turning up the temperature a few degrees.  It makes a difference.)  Lower Entertainment Spending.  Cheaper Cell Phone Plans (Republic Wireless anyone?)

Check it out!  You now have an extra $1,000 per month to allocate to paying down your debt.  Just by making some rather small changes we have gone from paying down $12,000 per year in debt to $24,000 per year.  

I used a two year time frame to pay down the debt as an example.  Everyone’s situation is a different, so just keep paying it down as quickly as possible until your debt is gone.  Now our third budget … 

In the third budget, after two years of aggressively paying down debt, it is all paid off in our example scenario.  Now we can start saving / investing for early retirement at $4,000 per month which is $48,000 per year!

All this being said, none of this is easy.  It’s always hard to make lifestyle changes, especially when there are multiple people involved.  But in our experience, every lifestyle change we made has led to improved quality of life and happiness.  And you are literally buying yourself an extra 20 - 25 years of freedom (depending on your age of course)!

So can you give up that extra Starbucks coffee?  What can you cut out or lower spending on?



  1. We gave up cable this year even though I reallllllly didn't want to. I was shocked at the number of channels we get for free over the air (even a game show channel!), and, even more, shocked at how little we actually watch TV now. It really is a lifestyle change - more family board games, more walks, more reading, and more family movie nights. We are having so much fun it took the kids 2 months to notice cable was gone...and I am thrilled we are saving an extra $700/year.

    1. Awesome! I also really didn't want to get rid of cable when we did back in 2013, but we get the regular TV channels (which we hardly use - mainly for some sports), Netflix, and Amazon Prime so we hardly miss it at all. I notice many are starting to kick cable to the curb so that is quickly becoming one of the easier expenses to drop. There are so many other options (not to mention other things to do like you said!).

  2. How did you get your cell phone bill down to $40 for 2 adults?

    1. Hi Natasha,

      Thanks for stopping by. We switched to Republic Wireless several years ago (