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 account? Many of us have, and it’s certainly no picnic. When money is tight, life is stressful! So guess what it’s like when you’re no longer fighting to get through the end of another month? It’s like breathing a breath of fresh air again. You’ll feel like a kid, and you’ll start dreaming dreams that you haven’t thought of in years, all because you were in survival mode – not able to think about anything else.




I hate debt. I can’t stand owning something that’t not really mine, fearful that it might get taken away if I slip up. It still stresses me out just thinking about it, and I’ve been completely debt free (including my house) for about 5 months now. If you want to your expenses to be cheap, but are sick of all the posts that tell you to cut your cable and skip the lattes, then this article is right up your alley. In this post, we’re going to tackle the big stuff.

Learn What’s Important For You

Sign that says "What's Important To You?"We are all wired differently. Some people experience clostrophobia if they live in a house that’s less than 2,000 square feet in size. Others are perfectly happy if they have just 150 square feet. With all the options laid out before us in life, our list of what’s important is almost always different than the personal finance bloggers, our neighbors, or even our close friends. In order to live on practically nothing, you first need to decide if it’s what you truly want.

If you like the finer things in life and dream of living in luxury, then this article simply isn’t for you. However, if you enjoy living simply and are interested in having the largest disposable income of your life, then put on your reading glasses and enjoy.

The 3 Keys to Live on Practically Nothing

The largest three expenses of almost every individual on this earth are:

  1. Your house
  2. Your transportation
  3. Your food

As Trent Hamm points out from The Simple Dollar, the average U.S. citizen spends approximately 34% of their income on their home, 18% on transportation, and another 12% on food. After paying the bills for just these three categories, the average person only has 36% of their money left. Almost 2/3 of their hard-earned income went toward their mortgage payment, their car expenses (the car payment, insurance, gas, and maintenance), and into their bellies! But this is just the way life is, right? Isn’t this what everybody has to do? No. I don’t think so. In fact, I am a proven case for why I know it isn’t.

Save Yourself the Interest

Do you know what one of the best ways to get wealthy is? It is preached by 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 interest and appreciation.

As Andy Kiersz points out in his post on Business Insider, 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 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 in hundreds of thousands of dollars by taking on debt. The beneficiary? The bank.

If you truly want to live on practically nothing, you need to ditch all those payments.

How to Make It Happen

I realize that you might think it’s impossible – 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.

Make it happen written on a whiteboardWhen I started paying off my debts four years ago, I honestly thought it was going to be a walk in the park (I’m ignorant like that sometimes). Of course it wasn’t and there were struggles along the way, but during those four years I was able to pay off about $40,000 in consumer debt and completely eliminated my $75,000 mortgage (I borrowed as little as possible). The car I owned during that payoff was a 2001 Honda Civic that I paid for with $2,500 cash. It has been amazingly dependable and I still drive it today for that reason.

My priorities throughout that stretch had nothing to do with impressing others or appearing cool by buying a round of drinks for my friends. Instead, I came up with a plan that worked for me, stuck to the budget, and accomplished my goal of debt-freedom (a little later than expected, but hey, it still happened!). At this moment, I have no car payment and no house payment. Oh, and my food bill is typically less than $200 a month. My total expenses for a year? About $10,000.

Start With The 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 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 The 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. During my mortgage payoff, I bought and sold a couple of cars for a profit, mowed some yards, and wrote countless articles for other personal finance sites. It wasn’t always easy, but it was effective and I was able to watch my mortgage total drop like a rock. If you follow this model, then you could soon get rid of your mortgage as well.

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 practically nothing in a much shorter time-frame! If you can ditch that payment, then and you’ll certainly be living on less!

Save on Food

The final piece of the puzzle (which you can tackle any time during your journey) is in your food budget. Instead of getting your groceries from the typical supermarket, try one of those small discount food markets (in my area, we have Aldi and Save-A-Lot). The selection is pretty terrible, but the prices and the quality of products are amazing! And, I discovered that they’re often 10-15% cheaper than Walmart! Avoid the fancy restaurants and switch your grocer and you could cut your food bill immensely.

With these three steps, you could drop the 64% of expenses down to 20% or less, leaving 44% for whatever you please. Now that’s what I call living on practically nothing!

Would you like to live on practically nothing? Are you up for the challenge?

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Derek Sall

Derek has been writing about personal finance for five years at LifeAndMyFinances.com. He absolutely hates debt, which is why he owns his car and his house free and clear and suggests that everyone else do the same. His equation is simple: get out of debt, save money, and be rich!
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