Small Budget -to get out of debt

Getting out of debt requires living on a small budget.

We have been paying off debt for more than 2 years now – and we are half way there 🙂

I would like to share the budget we have been living on with you. I often find people to be very private about finances, and don’t like to share. I believe openness helps more than it hurts, so I hope it can help you in your budgeting.

Our income varies, so this is an average of the budget

Average budget of 2012 - to get out of debt

We have a low rent, in a good area. But as an extra help, we have chosen to share our apartment with a friend. This means we only have 35o square feet to ourselves, but sharing makes our rent extremely low and is well worth the sacrifice in privacy.

Is it possible for you to rent out a room or in other ways cut back a big monthly expense?

Set a realistic budget and prioritise

When you set your budget it’s important to be realistic. Set the budget and then test it for a few months, find out if anything needs adjusting, fix it and then try again.

Prioritise what’s important to you. Some might choose to buy organic produce and spend less on going out with friends. It’s up to you.

We choose early on to prioritize a weekly date night. We set aside an amount in our monthly budget, to make sure we can afford it. If you set aside money for it in your small budget, you can go out, with a good consciousness! If we don’t spend it all, it is usually because we havn’t seen each other enough, and that’s not a good thing either… so a “not spend” date budget is not a good thing:)


If you are a couple, it is important to set the budget together. Living on a small budget isn’t always fun. So having both of you on board is absolutely crucial if you want success.

TIP: The biggest challenge for us, is that we spend our money differently. Morten loves going downtown sharing a beer with friends, and I like quality stuff (fewer more expensive items). We were always wickering about this; I felt he spent all of our money on beer and working out, and he would get frustrated if I came home with an expensive jacket.

Small budget for couples
Small budget for couples

After 2 years we decided to give each of us a monthly “allowance”. We get the same amount and can do with that money exactly what we want. The other person has absolutely no say and cannot complain:) I highly recommend this to couples!

Check your account every week

When living on a small budget, it is very important that you check your account often. You have to stay on top of the numbers, so you have time to pull the brakes, so you don’t run out of money for the last part of the month.

I recommend doing it once every week for the first 6 months.

This will really get you in touch with your finances, and you will learn how you tend to spend money. After 6 months you can cut back a bit if you want but do it at least twice.

I have been living on a small budget for more than 2 years now and checking our accounts once a week or every 10 days, works best for me.

If I do it less the budget starts slipping too easily. If I do it every week it doesn’t take long and it’s easier to remember what you bought in a certain store.

small budget - check your accounts
Small budget – check your accounts

Save up

When you live on a small budget you are more vulnerable to unforeseen expenses that come up. It is a good idea to have savings account for this. This will also provide some peace of mind, knowing that you have a backup. You may not think you can afford it, but a small amount every month is better than nothing.

If travelling, home renovations or a new sofa is important to you, set money aside for it every month. A vacation payed with “real money” feels so much better than a “credit-vacation”:)

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