How I Used the $1 Rule to Pay Off My Mortgage

Photo to accompany story about how to pay off your mortgage using the $1 rule.

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When I was drowning in mortgage debt, I knew I needed a plan — except I didn’t want to follow the traditional scrimp-and-save method.

Many experts offer the advice to cut out unnecessary expenses, adhere to a super-strict budget and work yourself to the bone until you pay off your debt. But constantly tracking every penny and slapping myself on the wrist didn’t make me want to spend less. It just made me feel worse about when I did spend money, even when it was on something that brought me joy.

Instead, my husband and I did the opposite: we became adamant about spending on the things we really love. We cut back on the things that were nice to have, impulse buys, convenient in the moment or simply unimportant.

We did this in part by implementing the $1 rule. With the help of this one tactic, I’ve managed to pay off debt and keep on track with ambitious financial goals—without going back to my old spending habits.

How to Apply the $1 Rule

The $1 rule is simple. If an item comes out to one dollar or less per use, I give myself the green light to buy it.

This rule works especially well when applied to my weak spots: clothing, accessories and home goods. 

For example, I recently purchased a pair of classic all-white sneakers on clearance for $18. Before buying them, I calculated that I would probably wear them once a week for a year, or at least 52 times.

The rule was right: In the last two months, I’ve already worn them far more than 18 times, making them less than $1 per wear. 

But during the same shopping trip, I found a beautiful winter jacket for 75% off, marked down from $300 to $75. While I was lured in by the big discount and brand name, I stopped to do the math. 

I considered the number of cold days and other jackets I already had in rotation, and I couldn’t see myself wearing that jacket 75 times — or every single day for two and a half months — and therefore, it wasn’t worth the money. I walked away and left it on the rack.

The $1 rule gives yourself permission to still buy things you use frequently, while preventing impulse purchases that might seem like a good deal. It also encourages spending more on high-quality, sustainable items that will last. I’ve moved almost entirely away from fast fashion, because even a $5 shirt that I might only wear once breaks the $1 rule.

How to Use the $1 Rule on Major Items

Traditional debt-free advice discourages buying anything, especially big-ticket items. 

Instead, I found the $1 rule useful when debating major expenses, like furniture or technology. Expensive items look different when you consider them from a “per use” perspective.

We recently bought a new home and it became clear that my old HGTV-obsessed self was making a comeback. It’s so easy to get swept up in the excitement of decorating a new home that you buy more than you really need

But what is actually worth the money?

With both my husband and I working from home for the foreseeable future, we decided we were willing to pay a little more for quality desks and office chairs, because that’s where we spend most of our time. We also learned from previous moves that cheaper desks tend to fall apart easily.

Instead of going to Target or getting a desk from Craigslist like we’ve done before, we went to a higher quality furniture outlet. We found a classic desk that retails for $699, marked down 40% to $419. That is much more than I’ve ever spent on a desk, but using the $1 rule, I realized I would sit in front of it five days a week for 50 weeks a year, which is 250 uses per year. The purchase would pass the $1 rule in less than two years. 

I felt much more confident in that purchase than I did in the days I used to scrimp every penny.

How the $1 Rule Helped Me on My Debt Journey

The original intent of my $1 rule was to curb spending on frivolous and unnecessary purchases and help me focus on my debt. It’s worked so well that my husband and I have been able to stop using a credit card during our debt-free journey. I used to think “How many credit card points will I earn on this purchase?” but now I ask “Does this purchase fit the $1 rule?”

Something unexpected happened, too. 

The $1 rule removed the shame that other personal finance advice often made me feel for spending on something, even if I really needed it. At the beginning of the pandemic, my 4-year-old phone started to fail. The thought of unexpectedly having to spend hundreds of dollars on a new phone nearly threw me into a panic attack. It felt like a huge setback in my quest to save money. 

I was complaining about how my phone wouldn’t even turn on anymore, and another member of my #DebtCrushers community said, “Stop it! If you need it, you need it. Don’t make it a thing!” She reminded me that the phone, while expensive, clearly got the green light under my $1 rule.

I’ve seen this mentality in myself and other people in the debt-free community. We get so focused on how much things cost that we become afraid to spend anything at all. 

The $1 rule has not only kept me from spending on things I don’t need, but removed guilt and debate when spending on things that I need.

What If Something Doesn’t Pass the $1 Rule?

Of course, I still have the occasional splurge or impulse purchase. 

While I was focused on paying off my student loans and mortgage, the Broadway show Hamilton came to our city. The former New Yorker and musical theater geek in me was conflicted with the voices of prominent debt experts saying that buying these very expensive tickets would be stupid. But while I almost always stick with the $1 rule, I make a few very personal exceptions.

And that’s where I think most people’s idea of living debt free is wrong. Who can give up all the fun spending and have nothing to look forward to? I sacrifice on other things and narrow down the few items that I absolutely love — musical theater, K-Pop and bubble tea — and spend unapologetically on them, even if other people don’t agree with my choices. These few exceptions kept me focused on the long and often monotonous journey of paying off debt, while removing the guilt of spending on things that are meaningful to me.

I did buy the Hamilton tickets, and had no regrets. I cut back on expenses like food and social gatherings to stay within my budget so I could pay for the tickets in full, without a credit card. 

Technically, the tickets broke the $1 rule since I only saw the show once, but the occasional “unnecessary” item isn’t going to completely derail a debt plan.

Bottom Line

For me, being debt free means having the ability to spend money without shame or guilt. The $1 rule provides clarity into the things that matter the most — and get the most use — in my life.