As adults, we are sometimes forced to borrow money to get the things we need and want. This mountain of debt can feel overwhelming at times. The end of your debt repayment days can seem so far away.
You probably wish that you could pay off your loans faster but money is already tight so how would you even begin? Don’t throw your hands in the air just yet. Here are some tips that can help you increase savings. You can then take this extra money and use it to reduce your debt quickly.
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10 Ways To Increase Savings and Reduce Debt Quickly
Cut back on utilities
If you have a house, then you have utility bills. There’s no way around them unless you live completely off-grid. Every month, like clockwork, you’re charged for services that you used—electricity, water, cable, phone, internet etc.
One great way to find some extra cash to throw at your loans is to cut back your utility usage. Sit down and look at all the services you pay for. Consider getting rid of cable and your landline altogether. You can watch movies or TV shows on cheaper cable alternatives like Netflix or Amazon Video and use your cell phone for calls.
Of course, there are utilities that you can’t just get rid of so easily but there are ways to reduce your usage. Make sure to switch off lights and fans when you’re not in the room and install low-flow shower heads and toilets to conserve water.
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Reduce Grocery Bills
Buying groceries is another huge expense you pay each month. I mean, you have to eat right? There are ways to cut down on your grocery bills so that you can increase your savings, though.
Start by meal planning every week. This technique has saved me so much money. I was spending way too much buying groceries I never used and eating out. Now, I know exactly what I’ll be cooking during the week and I buy only what I need. And because I have home-cooked food, I eat out a lot less.
Another way to save on groceries is to buy in bulk. Make sure you only buy items you use frequently to avoid stuff spoiling before you can use it all. Items like canned goods and bottled water are great things to stock up on.
When you go shopping, be sure to take a list along with you and stick to it. This helps to keep you on track and prevents you from buying things you didn’t intend to.
Pay Bills On Time
Sometimes, you may forget to pay a bill on time or you just don’t have the money. Either way, when you don’t pay bills on time, you are charged a late fee. If the service is cut off, you may even be charged a connection fee.
Make a note of when all bills are due. Add a reminder to your phone if you have to. Put aside money as soon as you are paid so it’s ready and waiting. Set up recurring payments online for bills that cost the same amount every month. Just be sure to check that nothing went wrong (technology is not infallible) and that the bill was actually paid. Also, check that the amount owed hasn’t changed for any reason (maybe you made some overseas calls on your cell).
Create A Budget
The best way to increase savings is to create a budget. This financial planning tool forces you to assess all of your income and expenses. You’ll have a clear idea of where you stand and if you are living within your means. You will also have the opportunity to see areas where you can cut back.
I always recommend tracking your spending for at least one month before you create a budget. This gives you a better idea of how much you really do spend and on what. Sometimes, we grossly underestimate how much money we spend on stuff every month.Click here to download the free Monthly Budget Workbook printable and get started on your financial planning!
Once you have created your budget, be sure to stick to it! This is sometimes the hardest part as you may feel as though you are being deprived. Remember your goals and why you created your budget in the first place. Every time you waiver, think about being mortgage-free or not having to pay any other loans you have.
Eliminate Convenience Items
Everyone loves convenience. Who doesn’t want to make their life easier?
Retailers know this and take full advantage. Don’t want to chop your own vegetables or marinate your own meat? No problem! The grocery store will be happy to provide them for you. You can pop over to coffee shops and get a “full-fat, no-fat, hold the cream, extra cream” latte any time of the day. The problem is that these convenience items come at a cost.
I’m sure when you take a look at your spending habits, you’ll find you pay for plenty convenience items. Cut back on these to increase savings.
Be Mindful of What You Buy
Retail marketing can play a number on our minds. I’m sure you’ve gone into a store and walked out with something you never intended to purchase. You saw the item and all of a sudden, you just had to have it! At the time, it seemed useful or it might just have been pretty. Either way you bought it, felt momentarily fulfilled and took it home.
But did you really need that item? Will you actually use it? Maybe not and then it will just sit there constantly reminding you of money you wasted. That money could have been spent on reducing your debt quicker.
Before you make a purchase, think about the item and consider the following:
- Is it something you really need right now?
- Do you already have something at home that has a similar function?
- Can you afford it? If you have to use a credit card to buy it, then leave it alone!
Mull over these factors and then make a decision. If there’s any uncertainty at all, wait at least 24 hours. I find doing this always helps me to know if the item is something I really want or not. Often, I completely forget about it and don’t end up buying it.
Use Cash Only
When shopping, use cash only and avoid cards. Cash gives you a tangible reminder of how much money you’ve spent that you just don’t get with cards. In addition to that, you avoid incurring those high interest fees from paying the credit card balance past the due date.
If you have two cars in your family, consider selling one and becoming a one-car household. Doing this means you’ll only have to worry about repairs, maintenance, insurance and taxes for one vehicle. This can drastically increase savings and reduce your debt especially if you were still making payments for that vehicle.
There may be circumstances where you really do need two vehicles but maybe one of them is a gas guzzler or constantly requires repairs. If this is the case, check to see if you can trade that vehicle in for one that’s more efficient or in better condition. Obviously, you need to weigh the cost of this carefully as you are trying to increase savings and not put yourself deeper in debt.
You can also consider downsizing your home. Some people live in houses that are way bigger than they really need. A huge mortgage, higher taxes and insurance premiums usually come along with a bigger home. Being house-poor is not fun. If you find your budget strained because of your house, a smaller one just might do the trick.
Do It Yourself
Instead of buying something or paying other people to do a service for you, do it yourself. From simple projects like painting a room to more complex ones e.g. making furniture can be D.I.Y projects. Of course, what you decide to do depends on your skill level and how comfortable you are taking on a particular task.
Use your local hardware store for additional help, if needed. The employees there are usually trained and can offer a lot of information. You may even be able to take a class on the project you’re looking to tackle or get wood cut down to size.
Then, there’s also the internet where you can find instructions for pretty much anything and even detailed furniture plans.
Increase Savings With A Side Hustle
The final way to increase savings is to get a side hustle. Find a part-time job or work from home using your hobbies and skills. Create items and sell them from home, if allowed or use online facilities like Etsy and Shopify. Pass on your knowledge to others and teach classes or tutor students if you’re good at academic subjects. The sky’s the limit when it comes to making money from knowledge and skills you have.
Don’t resign yourself to the fact that debt is just a part of your life. Use these methods to increase savings. Then, take this money and put it towards loans. You’ll reduce your debt quickly and accomplish financial freedom much sooner than you ever dreamed.
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