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  • Writer's pictureRyan Jones

Control expenses for financial freedom, part 2.

Continuing from our blog on Monday, February 7th, 2022. If you haven’t read it yet, pause and read it first. Here is the link.


Hopefully, now, you understand that, regardless of your income, your path to financial freedom is based on your expenses.


If you are like most people, these next few questions will probably shape the largest percentage of your expenses; maybe think of the biggest bang for your buck when it comes to controlling your expenses.


  • What is your current expense for consumer debt?

  • Do you have a mortgage payment? If so, what is that amount?

  • What is your total of current car payments?

Let’s use some real numbers, using data from studentloanhero.com for 2020 (source).

  • Average Monthly spend on debt (excluding cars and mortgage): $792.

  • Average Monthly spend on mortgage payment: $1,255.

  • Average Monthly spend on car payments: $493.

  • Leaving off any student loans for now.

Due to debt, we have an average monthly expense of $2,540. Now, let’s round this up to a yearly number. That equates to a yearly debt payment of $30,480. I know mortgage debt is a good thing, but it’s still a monthly expense. Stay with me.


Assume you are like many people nearing retirement and still have a car payment, a mortgage, and possibly credit cards. To continue paying debts over the next 25 years as planned for our level seven retirement goal, you will need to have saved $762,000 in additional savings or investments just to keep your debt habits.


Maybe it's not clear where I'm going with this yet, but if you follow the steps to get out of debt, including car payments (buy your cars rather than borrow for them) and plan to pay off your mortgage on time, or better yet, early, you'll have drastically reduced your monthly expenses, lowering your yearly expenses and lowering the total amount of retirement funds required to reach level seven.


Let's be clear: getting out of debt, not borrowing for anything other than a property, and putting a strategy in place to ensure your mortgage is paid off is one of the greatest and most proven methods to control expenses. When you're completely debt-free, your monthly expenses are now limited to your lifestyle choices. If you start early, say in your 40s, you'll have plenty of time to save a lot of money. Don't take my word for it. Based on our hypothetical statistics, you just saved $30,000. The nerd in me calculates that at a 9.3% interest rate, you'd go from having nothing saved to $462K in ten years when you can invest this versus paying debt.

So don't worry, it's not too late. Begin today by tracking your expenses as you move towards a debt-free lifestyle and reach your goal of financial freedom faster.

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