Getting out of debt is one challenge. But recovering from an overwhelming debt load and paving a path to financial freedom? That’s another one entirely. According to a 2017 study, 50% of Americans spend all or more of their paychecks each month – with no funds left to save or invest. Inevitably, this means that when it comes to our budgets, most of us have some fat to trim.
Whether you’re working through your debt, building savings, or working hard to avoid whipping out your credit cards so readily, there are certain tricks that can help you save more money. It can take some effort in both the planning and execution, but you’ll see a return in the amount of funds you’re working with each month as you tackle your bills and payments.
#1: Track your spending
When it comes to your spending habits, don’t bury your head in the sand. When you track your expenses closely using either an app or a spreadsheet, you will likely encounter patterns that help you tackle some of your non-essential spending. By developing an awareness of your worst financial habits, you can then work toward correcting them.
Communication from retailers can be overwhelmingly tempting, especially when various sales and offers land straight into our inboxes. Keep in mind, though, that you don’t “save” any money when buying something on sale that you didn’t actually need. To resist the temptation, unsubscribe from all retailer emails and offers.
#3: Stick with pet sitting
If you’re tempted to get a pet, don’t. A breeder can charge upwards of $2,000 for a puppy, and even shelters charge adoption fees for their animals. Not to mention, ongoing veterinary bills pile up, you need to feed your pet, and of course, you simply can’t control those emergency vet trips when socks mysteriously go missing. Recent data shows that the average annual cost of owning a dog is close to $900, and a cat can cost more than $600. That said, put your pet plans on hold until you’re in a more stable financial situation.
#4: Negotiate your insurance premiums
Overpaying for insurance is a rampant financial problem in America. Many companies will upsell customers by convincing them to purchase whole life policies or even term policies with much more coverage than the buyers need. To assess whether you’re overspending on your insurance premiums, engage an independent, disinterested agent who can shop around and compare prices for you.
#5: Ditch your cable bill
A massive number of Americans overspend for television and entertainment services. Streaming services like Hulu and Netflix have risen in popularity, but many families still pay hundreds of dollars a month for traditional cable services. Why pay for 500 channels when you only watch a handful? Instead, purchase a digital antenna or use a service like Sling TV to access the channels you want, without the hundreds of others you don’t want (and shouldn’t pay for).
#6: Scrutinize your interest rates
If your credit card debt carries high interest rates, consider how much you need to pay each month to ensure you’re pouring enough of your hard-earned funds into the actual balance. If you can’t, call your credit card company to ask if your rate can be lowered. If you have a strong credit history, some companies may honor your request. You can also consider transferring your balance to a 0% interest credit card, but keep in mind that this carries risks.
#7: Plan your meals
Intentionally planning what you will eat, when, can save you from impulsive pizza orders and drive-thru stops. Studies show that almost 70% of purchases are impulse buys, so keep your home stocked with food to avoid the temptation to eat out and spend double on the same meal. You can learn about how to prepare healthy meals on a budget.
#8: Assess your fees
Why should you have to spend money to save money? Here are a few sneaky fees to avoid:
- Credit card fees – Annual credit card fees can range from $25 – $500. Be cautious about paying these if you aren’t utilizing the rewards or points you earn from the account.
- Account fees – Some banks charge monthly maintenance fees for your accounts. To avoid these, keep the minimum required payment in your account, and talk to your bank about waiving the fee if you agree to add a direct deposit to the account.
- ATM fees – Even if it’s convenient, avoid stopping by ATMs that charge use fees. These small fees add up, and it’s just as easy to find another bank’s ATM that won’t charge you.
#9: Refinance your home loan
Keep an eye on interest rates on home loans to see if you could benefit from refinancing. Even a small drop in your interest can save you hundreds of dollars a month. However, only do this if you plan to stay in your home for the foreseeable future. If you plan to move within the next year or two, it may not be the best decision.
#10: Check your cell phone plan
Do you really need an unlimited data plan? Would a cheaper plan serve you just as well? Consider whether you derive an actual, direct return on what you pay for your cell phone service and if you could do with less, reduce your plan. Not to mention, you should resist the urge to buy that latest model phone when your three-year-old model works perfectly fine.
Do Your Homework
How can you cut back on your monthly expenses? Are you overpaying on essentials? Buying unnecessary discretionary items? Most of us can create more room in our budgets if we scrutinize them carefully, so take the time to sit down and do the same. The impact on your finances will surprise you.
Tim has a finance degree from CSUF with 15 years of combined experience in CountryWide Debt Relief, a debt consolidation company. He has a great passion for writing, and he provides useful advice through his article on debt relief, debt consolidation loans and credit card consolidation.