6 Quick Ways to Save Money, Even When You’re Deep in Debt
There are ways to save money, even as you pay down your debt. Here are a few budgeting tips to help you along the way.
You know you have to save money. But it can be a daunting task, especially if you’re struggling with debt. There are quick ways to save money, despite being cash-strapped. Whatever amount you save, it’ll be a huge help in the long run. To help you get started, you first need a budget:
What Should a Budget Look Like?
When creating a budget, you’ll have to start with a proper self-assessment of your financial condition, cut corners on expenses, and lead a frugal life.
Add Technology to Your Financial Planning
If you’re in debt due to undisciplined spending behavior, then you can add technology to your money-saving strategy to help you save better. Money-saving apps can help you automate your budget, savings plan, and spending habits. Some of the prominent money-saving apps you can use are Mint, You Need a Budget (YNAB), BillTracker, Ibotta, GoodRx, and so on.
Once you’ve laid the groundwork to save more money, here’s what you can do:
1. Shop at the Cheapest Grocery Stores
Groceries aren’t cheap. And retail food prices are skyrocketing. Another easy way to save money quickly is by cutting down on the amount you spend on your weekly shop. There are stores that may save you more on groceries than your nearest Walmart. Here are some of the places that have the most affordable deals:
- Sprouts and Fresh Thyme
- Salvage grocery outlets
- Trader Joe’s
2. Reduce Your Bills
You can increase your savings by cutting down your various outstanding monthly bills. You can cut out items that take up a large share of your paycheck – like cable TV, Netflix, gym membership, phone service, and so on. “Ask yourself, “Do I need these services at all?” If you answer no, then stop wasting your money on them.”
Next, identify ways to reduce the charges of services that you need to keep and pay for. For instance, if you use credit cards, you can contact your card issuer to check out whether or not the company would be willing to slash the rate of interest charged on your balances.
3. Increase Your Insurance Deductibles
This is another smart way to create an additional space in your budget and catapult your savings. Many people buy insurance, and it’s your choice whether or not you’d like to keep it. But if you’re paying for insurance, why not raise the deductible? Hiking the deductible will dramatically reduce your insurance premium.
For instance, the Insurance Information Institute says that if you raise your car insurance deductible, then you can reduce your premium amount by 15 to 40 percent, depending on how much you raise it by.
And apart from that, you can invest your money in a high-deductible health insurance plan to enjoy more affordable premium. To offset the higher deductible, you might want to contribute a certain amount of your payroll deductions (a pre-tax money) towards a health savings account (HSA) and use it to pay for your out-of-pocket healthcare costs.
4. Wipe Out Your Debts
Never ignore the telltale signs of your debts. A small amount of debt can quickly balloon into a large, overwhelming amount through over-limit charges, late fines, and high interest rates. Paying off debt should be your top priority when setting your budget. Consolidating your debt can help you to pay it off easily, provided that you have a steady source of income. But make sure that you always make the monthly payments on-time.
You can also use any one of two debt repayment strategies:
The ‘Debt Avalanche’ Method
You’ll have to pay back the highest-interest-rate debts first. It’ll help you save hundreds – maybe even thousands – of dollars in the long run.
The ‘Debt Snowball’ Method
Using this method, you repay the smallest debt first. It’ll come easier to take care of that small amount, and it’ll provide encouragement to continue making repayments.
You can choose any debt repayment method you want, but make sure to create a realistic plan to achieve your goals.
Allot separate funds for each category – groceries, monthly payments, medicines, leisure, etc. – to keep yourself from burning out.
5. Keep More From Your Paycheck
If you’re living from paycheck to paycheck, then a tax refund can be a lucrative windfall. Your tax refund is basically an interest-free loan to the government. You’re allowing the Internal Revenue Service to withhold a large portion of your paycheck for way too long. In that case, you can ask your employer to provide you with a fresh W-4 form to claim more allowances. It’ll reduce your taxes while increasing your savings.
6. Curb Your Impulses
The most important action to take? If you’re serious about saving money, change your impulsive “need it now” attitude towards your desires. Choose financially rewarding ways to unwind or to feel better instead of trying to live someone else’s life. Put in extra effort to curb your lifestyle inflation when you get a bonus or raise; adopt some frugal habits; and avoid trying to keep up with the Joneses.