March 12, 2020

4 Tested Tips to Save More, Spend Less and Become Debt Free

Have you ever dreamed of having plenty of cash and credit to access whenever you wanted it?

If you are already struggling with debt and the time between paychecks, you’ll need to commit to reaching this goal — but it is entirely doable. Learn ways to become debt free, relieve your budget, and achieve the financial future that you thought you could only dream about.

Start today with these savings tips that will help you pay off debt:

1. Learn to Budget

Budgeting is not just a finance buzzword, it is a process. To develop your own budgeting process, you will need both a savings and debt budget plan. In order to create these plans, you first need to understand where your money is going currently.

Perhaps, unsurprisingly, some people who chronically struggle with personal finances fail to track their spending. The good news is that there is an easy solution to help you start tracking your spending and more than likely the information is already available to you.  Start by downloading your checking and credit card statements for the past couple of months. Use this information to create a spreadsheet with different categories based on your spending.

Once you know what you are spending your money on then you can set spending targets in order to control your spending.  Reviewing past expenses will also allow you to identify expenses that you can reduce or eliminate in order to save more money.

2. Consider Simple Ways to Trim Debt

Now that you have examined your spending, you might have uncovered some ways to reduce your expenses. Having lots of credit card debt will always present a challenge when you want to improve your finances. For one thing, you have to pay interest to service any debt you have already accumulated. Second, you might feel the temptation to run your balance up even more on things that may not really provide you with long-term value.

According to the well-known financial advisor Dave Ramsey, it is best to organize and pay small debt first. Naturally, you will still need to make at least the minimum payments to your more significant creditors. However, as you eliminate your minor debt, you will have more money to attack bigger bills the next month. Since this approach builds from smaller to larger, Ramsey calls it his Debt Snowball Method.

3. Consider Large Ways to Get Out of Debt

At one time or another, almost everybody has stumbled into a financial snag so harsh that the simpler measures above won’t offer enough relief. It’s time to consider ways to pay off your debt that may require more time or effort. As you scan these suggestions, try to remember that you will eventually get rewarded for your investment by living that dream of higher savings and smaller debts.

  • Earn More Money: If you can’t trim your spending, you’ll need to earn additional income. You don’t necessarily need to replace your job; however, you might consider taking in a boarder, moonlighting on a day off, or even figuring out what’s holding you back from checking the job boards.
  • Refinance: If you still have decent credit scores, you might refinance your home or auto loan amount to get lower interest rates. According to Investopedia, you might even be able to transfer your credit card debt to a new card with a 0-interest grace period and lower prices. Sometimes, you can also get an extra month to make your first payment with refinancing deals.
  • Debt consolidation loans: You might also consider taking out a personal loan or a cash-out refinance deal to consolidate debt. With fair credit, you can use the money to pay your debt off faster and with cheaper payments. Once you’ve cleared those old credit cards, you need to keep from impulsively using them.
  • Student debt forgiveness: If you work in certain professions or have other specific circumstances, you may be able to apply for loan forgiveness for your student debt. You may also have the option to consolidate student debt into a new loan with a longer-term and lower payments.

The government might also work with you on a new income-based repayment program. You can also ask for debt settlement or forgiveness, including credit cards or private student loans. Just be aware that some of these options can impact your credit scores or even cost you more money over time.

4. Tips to Save More Money

Some people have no trouble managing their debt. Still, they mostly lead to spending their income and neglect savings. Dave Ramsey also mentioned that you should set the first goal of having at least $1,000 in emergency savings. That’s the money that can keep you from pulling out your high-interest credit card when you need to make an unplanned trip to the dentist or auto shop.

Look into having automatic withdrawals made from your checking to your savings account each month; good banks offer this service for free. You can also find some savings apps that will automatically round up purchases to fund an investment account. Those pennies can add up faster than you think they will.

How to get started? Review some money saving tips below:

  • Consider taking public transportation, walking or riding a bike vs. driving in order to save on gas and parking fees.
  • For non-essential spending, create a cash budget, switching to cash-only when possible, or even as a permanent lifestyle change, as Chime Bank states, or using a prepaid debit card to reduce impulse purchases.
  • You may not close your credit card accounts just yet, but you should try to put them aside for emergencies only.
  • Is downsizing your home an option?  This would help reduce your mortgage and overall home related expenses including your utility bills.
  • Like most people, you probably carry your phone with you all the time.  So, consider downloading and using a spending tracking app. You may find some of these apps useful, easy and fun to use.

Once you’ve supported your emergency account, learn about long-term investments. One great thing about investing is that you can let your money earn money, so you won’t have to work so hard next time you need to pay off debt.

Prioritize Your Savings and Debt Reduction

Once you understand how you’re spending money, you may uncover several ways to reduce expenses without sacrificing your quality of life. In fact, you can improve your life by enjoying a little more financial security each month as budget cuts lead to less debt and more savings.

After that, make a plan to pay off debt by staying current with all cards; attack the balance on each card at a time. Sometimes, you may have to work harder to increase your income, refinance some loans, or even ask to have debt settled or restructured. After a while, you can enjoy pride and relief because you’ve reined in your spending and taken control of your financial future.

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