Wouldn’t it be nice to learn how to easily save enough money to pay off debt and/or retire early?

Weekly features of people paying off huge debts or retiring early with huge savings highlight the growing appetite for these feel good stories.

Hoping to learn the secret sauce, I get suckered into reading them every time. Perhaps the story could tell me how to make my early retirement dream a guarantee. Maybe it could provide information beyond what I already know.

However, without fail, these articles would inevitably disappoint me. Each new story merely reveals the same conclusion and how-to steps. It also ends with some minor “mindset shift” that tries to wrap everything up. A recent article, for example, ends with the writer professing to take 1 item off her grocery shopping cart at the checkout – as though doing this one thing will help you achieve your financial goals.

Bullshit. You go grocery shopping maybe once or twice a week, and taking off 1 item is your secret to success? Give me a break.

What I wanted to understand is how someone of modest means could accomplish these feats. If a person making $40,000/year could pay off $80,000 of debt in 3 years, then he must be doing something extraordinarily different. I long for this secret.

Unfortunately, the formula for this success can be summarized by 3 truths. I will explore these 3 truths below so we can all stop wasting time reading these stories as they crop up.

1. Make more money.

If you are not already making a lot of money, the chances of paying off debt quickly diminish greatly. Wages vary depending on location. Even if you live in a place with lower standard of living, that will not help unless you already have capital saved up.

So how do you go about making more money?

  • Move. Go to a market with more opportunities and better growth outlook.
  • Pick up a second job. Typically, you can find opportunities online to use your other skills to make more money. Places like fiverr provide a marketplace for freelance jobs. You can simply search for “freelance” jobs.
  • Get more education. In a down market, go back to school to improve your credentials. Jobs will be scarce in a downturn anyway so this is an opportunity to improve your chances of landing a better paying job when the economy does pick up. If you have a job already, you can leverage your education to advance your career.

2. Spend a lot less money than you make.

This goes hand in hand with the previous point. I would argue that this is more important. If you are spending more than you make, it will not matter how much you make. While skipping on smaller “luxury” purchases can add up, big-ticket items can take chunks of your paycheck away.

  • Minimize the big expenses. Even short trips can add up in a hurry. People are more willing to spend when on vacation. If paying off debt sits at the top of your priorities, you cannot afford to take these vacations. If you are planning for early retirement, you can skip vacations now because you will soon have all the time in the world to vacation.
  • Buy used and buy generic. If the difference between two products rests solely on the logo, opt for the cheaper option. This is true for most things; however, if the decision revolves around health, choose the path that will keep you the healthiest. For early retirees, medical costs might force you back to the workforce. The best course of attack is to prevent this from happening.
  • Save the difference. Unless you are willing to commit to researching companies, their products, and financials, avoid picking stocks yourself. Put the majority of your hard-earned money in low cost indexed funds. You may allocate a small portion to make riskier investments, but you must first be willing to lose all of it and not lose sleep over it.

3. Get lucky.

There you have it. The 3 points above will cover most, if not all, articles related to this subject, with some variations here and there.

Once again, there are no shortcuts. Life is difficult that way; otherwise, no one would care to get up and grind all day.