Concentrate on the Big Three Expenses of Your Budget

Have you ever gotten through the month and breathed a sigh of relief because there was still a little bit of money left in your bank account? It’s a great feeling but sometimes it almost feels like a mystery. How did I do that? Why was this month such a good one compared to most others? Most of us are used to feeling stressed out because most of the time our money is tight.

When you're trying to get free from debt, little things matter, but concentrating on the big three expenses of your budget is the way to go. Here are the steps to take to eliminate debt from your life.

As ridiculous as this might sound, when I look at my monthly scorecard of what I spend and what my income was compared to my budget, I think about it like it is my NFL season record. You know, when I come in under my expense budget I feel like that’s a win and when I don’t it’s like a loss. I’d really love to have a 12-0 season, but frankly that hasn’t happened…yet.

My guess of what it’s like when you’re no longer fighting to get through to the end of another month with extra dollars is that it’s like breathing a breath of fresh air again. You probably feel like a kid, and you start dreaming some dreams that you haven’t thought of in years. That’s all because you were more focused, goal oriented, and paid careful attention to the details of your finances. You had a plan and stuck to it. Face it, you usually don’t and when Mr. Crisis comes around then you can’t think about anything else.

Debt! (boo-hiss)

I really hate debt. I can’t stand walking around with a feeling that I can’t get control of my own finances. I can’t eliminate worry and so I stress about it. Sometimes dwelling on all the posts I read and write that deal with cutting out things like your cable and skipping those expensive lattes are being just too heavy on sweating all the small stuff. That’s why today, in this post, we’re going to tackle the big financial stuff and stop sweating the small stuff!

What’s Important for You

We are all wired a little differently. Some people experience claustrophobia if they live in a house that’s less than 2,000 square feet while others are perfectly happy if they have just 150 square feet. With all the options before us in life, our list of what’s important is almost always different. It’s different than the personal finance bloggers’ list, our neighbors’ list, or even our close friends’ list. In order to live on less or even as some do on practically nothing, you first need to decide what it is you truly need and truly want.

If you want only the finer things in life and dream only of living in total luxury, then this post today probably isn’t for you. However, if you enjoy living more simply, peacefully, and having more disposable income than ever in your life, then get comfy and read on here for just a bit longer.

The Three Keys to Live on Less

Fact: The largest three expenses for almost everyone is your house, your transportation, and your food. The average U.S. citizen spends approximately 34% of their income on their home, 18% on transportation, and 12% on food.

Healthcare can also be a huge expense (it has been for my wife and me for years now, running about 30% of our personal budget). But because that topic has been one of my regular posting subjects, for today I will talk about the top three only.

After paying the bills for just the big three expenses, the average person only has about 36% of their money left. Almost two thirds of their hard-earned income went toward their mortgage payment (or rent), their car expenses (the car payment, insurance, gas, and maintenance), dining at home, restaurants, and take-out (and healthcare—gulp—looming in the shadows).

But isn’t this is just the way life is in America today? Isn’t this what everybody has to do? No. It actually doesn’t have to be that way and there are literally hundreds of thousands out there who can testify to that fact!

Save Yourself

Do you know what one of the best ways to get wealthy is? It is preached by personal finance bloggers and financial advisors all the time as they try to ingrain investing into your head. The best way to get wealthy is to start investing early. Why? Because of the interest and appreciation and the expanded timeframe that starting early provides.

I am sure that you have read dozens of examples like this one:

If Emily begins investing $200 a month when she is 25 years old, her total amount contributed by age 65 will be $96,000. Thanks to the power of interest, compounding and time though, her account will likely be valued at an amount closer to $400,000!

Do you realize what you’re doing when you borrow money to buy your car and your home? You are essentially reversing this effect. Instead of earning hundreds of thousands of dollars by investing your money, you are paying hundreds of thousands of dollars by taking on that debt. The beneficiary of all of that is of course, you guessed it, the bank.

If you truly want to start to live more simply and peacefully on less (or maybe even close to nothing), you need to ditch those kinds of payments.

How You Can Make It Happen

I realize that you probably think it’s impossible to see yourself eliminating that kind of debt—that your money simply can’t stretch far enough to dig your way out of debt, but it is absolutely possible for almost everyone. You just have to prioritize.

Honestly, it is never going to be a walk in the park no matter what anyone writes or tells you. There are lots of struggles along the way, but when you really focus, you can pay off all of your consumer debt and/or completely eliminate your mortgage (I borrowed as little as I could originally). The car I own is literally just a couple months away from being fully mine and I don’t plan to ever have another car loan after 50 years of car payments! The 2013 Honda Civic that my wife and I share is all the car I need and want, and I plan on keeping it for at least another 10 years.

Your priorities should have nothing to do with impressing others or appearing cool by buying a round of drinks for your friends. Instead, I came up with a plan that worked for me, stuck to the budget, and now I’m accomplishing my goal of car debt-freedom (a little later than expected, but hey, better late than never). The anticipation of killing that car payment has me giddy!

If you have high-interest credit card debt, you’ll want to eliminate that first. But once you’ve gotten beyond that point like I have, you can really focus on those three key expenses.

Start With Your Car

If you want to make this happen, start with your car expenses. Are you making payments on a car that’s worth more than 10% of what you make in a year? Then I suggest saving up enough money (through garage sales, working a side job, or selling some stuff online) so that you can sell it, pay it off, and buy a $2,500 car that might not look as pretty, but that has an amazing motor and will get you anywhere you want to go. If you live near public transportation, then just get rid of your car for now. You don’t need it.

Pay Off Your House

Next, tackle your home mortgage. Since you no longer have a car payment, you can start attacking your mortgage payment with that money. In addition to this, think of creative ways to earn additional money here and there.

Some people work the flea markets like I did and make literally hundreds of bucks every weekend. Imagine being able to take that cash and use it to pay down the principal on your mortgage every month!

Make sure that you’re paying the lowest mortgage interest rate you can qualify for and consider refinancing before the rates start to climb (use a refinancing calculator to make sure it makes sense in your particular situation).

You can mow some yards, find some part time gig for even just 8 hours a week, or believe it or not, even write articles for personal finance sites to make some money and pump up your cash intake. It’s not always easy, but it is an effective way to watch your mortgage balance drop like a rock. If you follow this model, then you could get rid of your mortgage a whole lot faster than that “30 year sentence”.

Downsizing: It Actually Works

If your house is much larger than your needs, then perhaps you could sell it and find a smaller, cheaper place that will allow you to live on less or practically nothing in a much shorter time-frame! If you can ditch that big payment and downsize it then you’ll certainly be living on less! If you can’t or don’t want to sell your house, you could always rent out a room to make some money and put that income towards your mortgage payment or other debt.

The Food Budget: Is it Eating Your Money?

The third piece of the puzzle (which you can tackle any time during your journey) is in your food budget. You should try getting your groceries from one of those small discount food markets (like Aldi, Lidl, or Sav-a-lot) instead of just always going to the big, well-known, and even more expensive chain markets. Even shopping for groceries at a place like Dollar General can save on many basics that you can easily overspend on elsewhere. The selection is more limited, but the prices and the quality of products are amazing! And, I discovered that they’re often 10-15% or even 20% cheaper than a Walmart!

I’d firmly suggest you understand the sale cycles at every store you choose, explore their loyalty card discounts and coupon policies, and you will find that you can easily cut your food budget dramatically and have extra cash to pay down your debt!

Dining Out? Slow It Down Please

Look, I get that we all love to have a nice meal out occasionally. I do it and so do most of us even if it means we have to jack up the credit card bill to make that happen. But here’s the thing. You can do it on occasion. You just can’t logically do it all of the time. You must try and avoid those really fancy restaurants and save them only for a really rare special event.

Just like groceries, there is a strategy that works to save on dining out. Loyalty programs and loyalty cards for points towards meals and free items (like a dessert or beverage), dining early or later like after 10 pm for specials, and avoiding weekends for “special low cost” evenings can all help you save. Even finding a BYOB restaurant (bring your own booze) or skipping the alcohol all together can dent the expense.

Final Thoughts

It’s simple…

Every dollar you avoid spending and/or save should go to reducing your total debt.

Soon enough, you’ll be completely debt free! With these three big expenses and the steps to take, you could drop the 64% of your expenses down to 33% or even less, leaving 67% for reducing debt and whatever else you please. Now that’s what I call living simply and peacefully on less or on practically nothing!

Would you like to live on practically nothing? Are you up for the challenge? What things are you doing regularly to eliminate debt and live simply and more peacefully?


  1. Many people seem to see their car as an extension of themselves and feel it has to reek of success. Viewing it as a status symbol is where they go wrong, IMO. When you can view it as a hunk of metal you use to get from point A to point B, it’s easier to conclude that an older and/or relatively inexpensive car will serve that purpose. You don’t need a car payment to get from point A to Point B.

    Congrats on almost being car-loan free!

    1. Thanks, Mrs. Groovy. I’ve never thought of my car as being a status symbol (probably because I’ve never had one that was) and always thought of it as being transportation. Since retirement, we haven’t put a whole lot of miles on this one we own now, so I’m anticipating keeping it for a long, long time (and taking care of it really well).

  2. Caroline

    My first car was the only one I ever bought new and on credit! Wish I knew then what I know now:)
    I no longer have a mortgage or car payments so tackling the grocery bill now! It feels so liberating not to have those monthly payments.

  3. I know someone who spends a lot treating others with drinks and some other sort of snacks which often costs him a lot. Seeing him so that almost every day makes me wonder what will happen to him in time of need in a time when he gets sick, given his age of 60+. Seeing him inspired me to make the most of what I have by taking actions to have a better future. So that when I retire, I will be able to maximize my options and be able to use them to my advantage. When it comes to healthcare, to which I dreaded the most, Medicare, Medigap, ltci and even Medicaid are all part of my plan so that whatever happens I already developed a plan b or even a c.
    I agree with all your points and think that you explained each very well and clearly. I am a big fan of downsizing because, in my experience, it really created ample space for me to save more. Good luck to you and your wife, good luck to accomplishing your car very soon!

    1. Thank you, Leandro. You’ve given a lot of thought to your plan and even having a back-up, which you must be commended for. Some people will just go through their lives wishing and hoping without a plan and that is not advised for anyone. Taking care of yourself and your family first has to be a priority and that’s how I’ve done my planning. I’m glad to see that you’ve given that the same importance.

  4. Our food budget was out of control for many years. Specifically, our grocery budget. I always rationalized it as being okay since we rarely went out to eat. Plus, I love to cook, and so I splurge on a lot of “specialty” ingredients. It’s just me and my husband (no kids), and sometimes I’d be spending $500 or more every month for groceries! What helped get that under control was every few months to force myself to do no grocery shopping, with the exception of maybe just some milk, and to make meals using things we already have in our pantry or freezer. It has really helped get that part of our budget under control!

    1. Glad to see, Melissa, that you have addressed your grocery spending. One of my posts talked about shopping your own pantry and that works very well and keeps the spending in line. It also has the result of not buying things that you didn’t realize you already had, which used to happen to us before we changed our ways. Thanks so much for your comments.

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