How to Erase $70K in Debt and Save $1 Million

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You can accomplish both through the same simple formula.

And what’s that formula? Make good money, and spend a lot less than you earn.

The April issue of Kiplinger features an interview with a couple from Maine who paid off $70,000 in debt (student loans, home equity loan, car loan) in less than a year. Here’s part of how they did it:

We traded in the new Honda Civic that we had bought two months before for a used Jeep Cherokee, and we sold our other car. We canceled our cable and got a cheaper cell-phone plan, and we budgeted only for necessities and $25 a month each for spending money. We found better deals on homeowners and auto insurance.

In another Q&A, a radiologist from San Diego explains how he put over $1 million in savings in just a few years. How did he do it? For the four years he was a resident, he lived on $26K a year. Once he started making good money, he continued to pretty much live as if he was still earning $26K a year:

My first job paid $220,000 a year, so I had all this money coming in, but I didn’t feel like I needed that much. I live in a small bungalow and drive a Chrysler PT Cruiser. I decided to live on what I was making before and just pay myself a little bit more each year. It would seem like a pay raise but still allow me to put a lot away for retirement.

Now if only Kiplinger (or any publication) could offer a simple, easy-to-follow formula for earning $220K a year …