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How Spencer Pratt and Heidi Montag Lost Their Millions: 'We Had Nothing to Show for What We'd Done'

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Seven years ago, Heidi and Spencer Pratt were living the high life.

The pair were raking in six figure paychecks for their roles on The Hills, plus countless other staged paparazzi shoots and paid appearances, more than $2 million dollars a year.

“We were keeping up with the Joneses, but we were going against Tom Cruise and Katie Holmes,” Spencer tells PEOPLE exclusively. “We should have stayed in our reality TV lane.”

Sure enough, just as quickly as the money came in, it was being spent.

“I was kind of playing house,” says Heidi, 29, of her splurges. “I felt like I was someone I wasn’t. We had business managers who told us to stop spending but we acted like we knew what we were doing.”

Heidi and Spencer Pratt
Andrew Southam
Within a few years, the Pratts, who wed in 2009, had squandered nearly their entire fortune: $1 million on Heidi’s luxury designer wardrobe, a full staff (bodyguards could command up to $15,000 for a night out), pricey dinners with $3,000 bottles of wine and Spencer’s crystal collection on which he estimates he spent up to $1 million.

“I was feeling so alone and defeated,” Heidi admits of the time. “Everyone else on our cast had houses and we had nothing to show for what we’d done. I was like, the haters were right! It was sad.”

RELATED: Heidi and Spencer Pratt: How They Spent Their Millions
For exclusive photos and much more from Heidi and Spencer Pratt, pick up the new issue of PEOPLE, on newsstands Friday

Still, Heidi and Spencer worked steadily in the arena they know best.

“We make most of our income from reality shows,” says Heidi now of appearing on programs like the U.K.’s Celebrity Big Brother and Marriage Boot Camp: Reality Stars. “We’re doing fine. Each show is like an audition for the next.”

RELATED VIDEO: When Was the Last Time Heidi Montag Watched The Hills?


The pair has also made significant cutbacks to their once extravagant lifestyle, including moving into Spencer’s parents Santa Barbara vacation home, where they live rent-free.

“We haven’t been out to a fancy dinner since our anniversary,” says Spencer, 32. “If Heidi’s not cooking, we’re eating tacos.” Heidi admits that bookkeeping can be “tedious” but “I would love to crack down on our budget even more.”

Ultimately though, Spencer and Heidi say they’ve learned valuable lessons through past financial mistakes.

“Life is so short,” she says. “And what matters is being happy with family and marriage and with personal progress. We’re in a really good place.”