9 Tips to Live a Small, Debt-Free Life

Posted August 24th, 2009 by Tammy "RowdyKittens" and filed in Issue 12: Small Spaces and Finances

tiny1At the beginning of 2008, Logan and I sat down and made some big commitments and we followed through with our goals of living a smaller, debt free life. For us the key to staying on track was writing down our goals and checking back in every few months to measure our progress.

A number of blog readers and friends have asked me how the heck to live a smaller, debt-free life. So here are a few tips that might help you:

  1. Follow the program in Your Money or Your Life. If you want to understand more about finance and money management, pick up a copy of Your Money or Your Life. Why am I advocating that you read this book? Economic uncertainty, layoff’s and other world events have many people stressed out about money, how to spend it, save it and invest it. This book lays out simple steps that will help you gain a better understanding of money.
  2. Budgets? Budgets are like diets. They don’t work. To get around budgets we’ve developed a monthly tabulation sheet, that allows us to evaluate our spending and examine our true consumption patterns. Our general expenses like rent and food stay constant, but we’ve found that our monthly spending pattern is never the same. Usually there is some kind of weird expense that pops up. Even though we watch our spending, we know that it will fluctuate. Thus, it is better to be mindful of each purchase.
  3. Live within your means. Don’t buy stuff you can’t afford. This probably sounds like cliche advice, but how many people do you know that charge stuff on their credit cards all the time? Know the true expense of items by converting the price of stuff into your labor cost to earn it.
  4. Wear out your stuff. Before you buy something new (like shoes), wear them out first and get repair estimates before buying something new.
  5. Plan in advance. Planning drastically reduces the dreaded impulse buyer regret. For instance, make lists before you go grocery shopping and research the best deals for things like clothing and food.
  6. Evaluate your living situation. If you’re paying an excessive amount to “own” or rent, take some time to evaluate the value of your location and the space you use. Examples of living small in this journal demonstrate how very little we need to live.
  7. Buy local food. Healthy, organic, and fair trade foods can be very expensive in stores. To obtain this great food inexpensively look for a local farmer’s market to save money. Farmer’s markets allow you to purchase directly from the producer without the overhead cost of brick and mortar store fronts.
  8. Cut out the unnecessary shopping trips and stay out of the mall. If you don’t go shopping, you won’t purchase items on impulse and your wallet will stay fatter.
  9. Before you buy anything, ask yourself these 3 questions:

A. Did I receive fulfillment, satisfaction and value in proportion to life energy spent?

B. Is this expenditure of life energy in alignment with my values and life purpose?

C. How might this expenditure change if I didn’t have to work for a living. What expenses would increase, decrease or disappear if I didn’t go to work everyday?

Via Your Money or Your Life

Living a smaller lifestyle has changed my perception of consumerism and how so many of our spending choices negatively effect the economy, the work we do, and the planet. I wish I’d stumbled across the concept of small living earlier in my life.

Would you add anymore tips to this list?

6 Responses to “9 Tips to Live a Small, Debt-Free Life”

  1. [...] by Tammy on August 24, 2009 The 11th issue of the Small Living Journal (SLJ) is out and it focuses on small spaces and finances. Read my contribution to the journal, 9 Tips to Live a Small, Debt-Free Life. [...]

  2. WinnieNo Gravatar says:

    Of your whole list, number three is the most important. We don’t buy anything on credit. Well, I’m lieing – we had a mortgage on the house when we first bought it and we have had vehicle loans, too. With the mortgage, we realised without it we would be paying rent anyway, so paying for the house was no different. We did not buy a house that maxed out our mortgage capabilities (the bank said they would lend us X; we borrowed 2/3 X) With the vehicles, we always made sure we owed less than what the vehicle is worth, so we could, in a pinch, sell it and pay off the loan.

  3. betsy mccullenNo Gravatar says:

    great advice about vehicles winnie! unfortunately just when i almost had ALL my bills totally paid off, my car (paid off 8 months ago) puked in such a bad, expensive way that i ended up buying a brand new one to avoid someone else’s problems again!! so, now i have a car payment i didn’t want :( BUT, i bought a honda and they hold their value. they are the best investment in a car that money can buy. it should give me many years and miles of hassle-free transportation since i don’t drive it much anymore, but DO need a reliable car. btw tammy, i bought the honda fit that i wanted and i absolutely love it!! i guess if i have to have a car payment, it’s nice to love the car i am paying for ;)

  4. dkzodyNo Gravatar says:

    Because I want to downsize upon retiring, I have cut back my purchases, and when I do purchase a new item, an older item is purged. House and cars are all paid for, part of the retirement plan.

  5. HeatherNo Gravatar says:

    One of the biggest struggles when trying to live within your means is probably desire. The urge to consume is driven by a need/desire. Following this line of thought, companies spend significant money figuring out how to make you desire their stuff over yours. With this in mind, on top of what the author suggested (staying away from shopping/malls) I did one other simple thing. I stopped ALL catalogs from coming to my house. Not only did it save me time and trash but I didn’t have the specter of what I didn’t have and “needed” shoved in my face all the time. My desire decreased significantly when I did this.

  6. LaelaNo Gravatar says:

    I have finally had some success with this :) and I just want to share a couple of things:

    Simultaneously I started to participate in the 100 Things Challenge and keep track of all my purchases. I found that I stopped wanting to buy more stuff because it was counterproductive to both these endeavours.

    To stop impulse purchases (there was a really pretty dress on sale at the mall the other day…) I’ve started a list of things I want. Beside everything I put the date I decided I want them. If I still want this item in 30 days, and it’s within my means to buy, then it’s fair game.