Money

Couple who paid off $18,000 in loans in 54 days used Jay Leno's money saving trick

Jay Leno didn't always make millions. Before his career in entertainment took off, he earned more money working in a car dealership than he did doing comedy gigs — and, to stay afloat, he made sure to spend only the smaller source of income.

"When I was younger, I would always save the money I made working at the car dealership and I would spend the money I made as a comedian," Leno tells CNBC. "When I started to get a bit famous, the money I was making as a comedian was way more than the money I was making at the car dealership, so I would bank that and spend the car dealership money."

Even after he started hosting NBC's "The Tonight Show," Leno continued doing comedy gigs on the side "so I never had to touch the principal," he says. To this day, he's never touched a dime of his "Tonight Show" money.

Generating two incomes and living on the smaller one while banking the other is a popular money saving strategy among early retirees. It also worked for David and Meg Cahill, who managed to eliminate $18,000 worth of student loans in 54 days.

When the Chicago-based couple committed to fast-tracking their debt repayment, they decided to live off of Meg's $40,000 teaching salary and direct David's $62,000 school administrator salary exclusively towards paying down the student loans.

The Cahills live in the suburbs of Chicago
Courtesy of David and Meg Cahill
The Cahills live in the suburbs of Chicago

"The majority of Meg's earnings were the earnings that were keeping us afloat, while almost all of my paycheck was going towards the debt payoff," Cahill tells CNBC.

Of course, the couple's situation is different from Leno's in that their two sources of incomes come from two people, but the concept is the same.

Anyone looking to save big can employ this strategy. It all starts with creating at least two streams of income within your household, which could be real estate rentals, side businesses or a part-time job. Once you have multiple revenue streams, the formula is simple: Save the larger form of income and spend the other.

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