Call Now! 866.931.9321

Archive

Strapped for Cash? 23 Simple Ways to Save Money

You’ve probably been told to “save money” at least 10 times throughout your life. It might have been a parent, a close friend, a teacher, or a banker who advised you to put money away to use later in life. In any case, you received sound advice. Saving money is one of the best financial decisions a person can make.

But if you’re like most people, you’ve probably wondered exactly how to save money. After all, the process is usually easier said than done.

We know how intimidating and stressful financial tasks can be, so we put together a list of 23 simple ways to save money. By using these tips in your daily life, you can make it simple to build a comfortable nest egg.

5 General Ways to Save Money

  1. Think about expensive items, like electronics, for at least 24 hours before purchasing them. This prevents you from wasting money on impulse buys.
  2. Track your spending. Record all purchases in a transaction register, then look at the register at the end of each month to determine where most of your money goes. This will help you cut excess spending.
  3. Pay credit card bills and other debt payments on time, no questions asked. Late fees accumulate over time—if you’re not careful, they can account for a large chunk of your income.
  4. Save loose change. If you save just 50 cents each day, you’ll have saved $182.50 by the end of a year.
  5. Set savings goals, both long-term and short-term. A good long-term savings goal would be to save $500 over the course of a year. A short-term goal to help you reach that goal might be to spend $10 less on groceries and $10 less on gas each week.

4 Ways to Save Money on Food

  1. Bring your own lunch to work, rather than eating out. A homemade meal costs around $3, whereas a meal at a restaurant could exceed $10. After just one year of making your own lunch, you could save upwards of $500.
  2. Make a grocery list and stick to it. You’ll spend less if you know what to buy before you get to the store.
  3. Brew your own coffee at home. Many people spend $5 each day on expensive coffee drinks, but you can cut that to about $2 per drink by making your coffee at home. Doing so will cut your annual coffee expenses by nearly two-thirds.
  4. Buy unprepared food as much as possible. Cut vegetables, sliced meat, and prepared meals can cost up to twice as much as their unprepared counterparts.

5 Ways to Save Money on Expenses Around the House

  1. Program your thermostat to save energy when you’re not home. During the winter, set it 8℉ cooler than you would when you’re home, and 7℉ warmer during the summer. Then, program the thermostat to power on one hour before you come home.
  2. Change your air filters regularly. Dirt and dust can clog your home’s HVAC system, causing it to use more energy to heat or cool your home. By replacing the filter once every month, you’ll save significant amounts of money.
  3. Use ceiling fans to circulate the air in your home at all times of year. Ceiling fans don’t just help keep your home cool during the summer—they also circulate warm air and reduce heating costs during the winter.
  4. Insulate your windows, doors, and attics. By neglecting your home’s insulation, you essentially let money float through any cracks and holes your insulation might have.
  5. Only pay for space you need. If you only need a two-bedroom apartment, don’t rent one with three bedrooms. By living in a smaller space, you’ll save money on your rent or mortgage payments and utility bills.

4 Ways to Save Money on Transportation

  1. Buy gas at the cheapest station in your area. Although this seems like a no-brainer, many people waste a lot of money on gas expenses by neglecting this tip.
  2. Avoid making quick stops and starts when you drive. Not only do these guzzle gas, they’re also harsh on your engine and brakes, and could lead to costly repairs down the road.
  3. Carpool. Splitting fuel costs with just one additional passenger can help you save hundreds of dollars each year. If you want to save even more money, bike to work several times a week.
  4. Wash your car at home, rather than taking it to a carwash. Car washes often cost around $20, most of which you can save by hand-washing your car in your driveway.

5 Ways to Save Money on Entertainment

  1. Opt for a streaming service, like Netflix or Hulu Plus, instead of cable. You probably only watch a few cable channels, which means you’re paying for more content than you need.
  2. Visit your local library. Your tax dollars support your city library, so you might as well use it. In addition to free book rentals, public libraries also offer audio books, DVDs, and magazines.
  3. Cancel your gym membership. Instead, go walking or running outside for free. You can also download free exercise apps like Nike Training Club, FitStar, and Nexercise.
  4. Buy movie tickets in bulk. Many movie theaters offer discounts when you buy 5-, 10-, or 15-packs of tickets.
  5. Attend amateur sporting events. While you probably love the glitz and glamour of professional sporting events, amateur sports are cheaper and just as entertaining.

Whether you have a steady job or you rely on structured settlement payments to keep you afloat, you can use these tips to save money. Be sure to take a look at our other blogs for additional ideas on making the most of your income.

Don’t Spend It All in One Place – Ways to Invest Your Lump Sum

Congratulations! That scratch ticket finally paid off. Or perhaps you won your personal injury claim. In either case, you now have a lump sum of cash that you’re ready to spend. You can’t wait to buy that new car you’ve always wanted, or maybe your wardrobe could use a refresher.

Stop!

Don’t spend your lump sum all in one place.

According to the National Endowment for Financial Education, approximately 70% of Americans who enjoy a sudden windfall will lose all of that money within a few years. And some estimate that 1% of lottery winners go bankrupt every year.

Although that hefty check may feel like it’s burning a hole in your pocket, you should take some time to weigh your options. Assess your current financial situation (excluding your lump sum) to determine what financial goals you want to pursue within the near future. If you live within your means, your lump sum can go a long way toward establishing a solid financial base.

Set Aside Money for Emergency Savings

Financial emergencies happen when you least expect them. A car accident could leave you injured for weeks or even months. A company merger could result in pay cuts or even job loss. And if you’re not prepared for the event, you may find yourself scrambling to make ends meet.

So make an emergency savings account your first priority. Start by aiming for $1,000 in personal savings to cover routine emergencies like home or car repair. Then gradually increase that amount to cover your rent, utilities, and grocery bills for 3 to 6 months should you happen to lose your job. Ideally, you’ll want at least 6 to 12 months of emergency savings in case you face long-term unemployment.  

Pay Off High Interest Debt

Now that you have a savings account, it’s time to take a look at those credit card bills. When you pay off your bills over a long time period, high-interest debt (more than 6% to 8% interest) can cost you a lot of money.

Paying your credit cards bill now will free up more funds for you to spend on yourself later. And the faster and more consistently you pay your bills, the better your credit score will be—which will come in handy should you decide to buy a house or car.

Invest in a Roth IRA

When you’re young, retirement can feel like it’s forever away. You think you have plenty of time to save for retirement, so you put your funds toward more immediate and pressing needs.

However, most money management experts will tell you that you should save for retirement as soon as you can, preferably in your early twenties. This is because investments compound over time, making your money work for you.

For example, at 25 years old, you set aside $3,000 a year in a tax-deferred Roth Ira for the next 10 years. By the time you turn 65, you could potentially earn more than $472,000.

But if you were to wait until you were 35, that same amount would only have the chance to grow to about $367,000. That’s more than a $105,000 difference!

Not sure where to invest your lump sum? Talk to a financial advisor who can guide you through the investing process.

Start a Health Savings Account

Since you already have a savings account for emergencies, you might wonder why you need a health savings account on top of that. However, if you have a high-deductible health insurance plan, you can contribute up to $3,250 for a single person or $6,450 for a family to your account pre-tax. And when you take it out again for qualified health care expenses, it will be completely tax free.

Additionally, once you turn 65, you can withdraw the money from your HSA for any reason without a penalty. This will work well alongside your Roth IRA to support you during retirement.  

Focus on Home Repairs

Next to your Roth IRA and your savings accounts, your home is likely your biggest investment. If you own a home, consider using your lump sum to cover home repairs. Small upgrades to appliances and fixtures can go a long way to increasing your home’s resale value.

For example, if you pay $1,218 for a half glass 20-gauge steel door, you might increase your home’s resale value by as much as $1,243. This generates a return of 102.1%.

But remember to keep these repairs within reason. While you may want to install an in-ground swimming pool, future buyers might not want to pay the extra expense of maintaining it. This could make it more difficult to sell in the future, hurting your investment.

Spend a Little on Yourself

Once you’ve set aside your funds to handle your more pressing financial issues, feel free to spend a little of that money on yourself. Just because you use money wisely doesn’t mean that you can’t have a little fun now and again.

Surefire Strategies for Paying Your Credit Card Debt

There’s no doubt about it: credit cards can be convenient.

You don’t have to waste time carefully writing out a check or counting quarters from your wallet. Simply swipe, sign the receipt, and take your latest purchase home with you.

Because of this convenience, the average American adult owns at least 2 credit cards, and as many as 18% of adults own 3 to 4 credits cards. Chances are likely that you have more credit cards than cash in your wallet right now.

Unfortunately, the more we rely on credit cards, the more likely we will fall into debt. The average household owes at least $15,611 in debt on their cards.

If you’ve accumulated a great deal of debt on your credit cards, you may feel frustrated as you try to manage all of your payments. Here are a few tips and strategies to make paying those bills a little easier.

Short-Term Lump Sum: How to Choose Which Card to Pay First

If you’re like many Americans and you own multiple cards, you may have difficulty deciding which card to pay off first. On those rare occasions that you receive a lump sum or sudden windfall, consider using the following strategies to tackle some of your debt.

Strategy 1: Smallest Balance First

Dave Ramsey, personal money-management expert and author, recommends building momentum by paying the card with the smallest balance first. This enables you to quickly see progress as you completely knock off your first few debts. As you see results, you can use that mental energy and enthusiasm to push you through larger, more difficult debts.

Strategy 2: Highest Interest Rate First

While Dave Ramsey’s technique works well for some individuals, it doesn’t make as much mathematical sense to others. Suze Orman, financial advisor and motivational speaker, recommends paying off the debt with the highest interest rate first. She suggest this because high interest rates indicate you’ll have to pay more money to the lender over time. Depending on how long it takes you to pull yourself out of debt, this technique could save you thousands of dollars in interest and credit card fees.  

Strategy 3: Highest Balance First

While the first two strategies represent the most popular techniques for eliminating debt, many financial experts also point out that you need to take your credit score into account. Your FICO score depends on how much you owe and your credit limit. Using more than 10% of your credit limit can adversely affect your score.

So if you have to choose to pay a maxed out $1,000 credit card with a low interest rate or pay that $1,000 you owe on a $10,000 credit card with a high interest rate, you should focus on the maxed out card first.

Strategy 4: Debt Consolidation

This technique blends all three of the above strategies. Debt consolidation enables you to put all your credit card debt in one place, so you only have to worry about one payment at a time. You can make steady payments for an extended time, which positively affects your credit score.

But keep in mind that debt consolidation isn’t a perfect cure-all solution. If you have a spotty credit history, you might not find great rates, so you may end up paying higher interest rates as a result.

Long-Term Gradual Payments: Tips and Techniques for Managing Your Cards

Even if you’ve paid off a large chunk of your debt with a lump sum, you may still have some debt left over. Use these strategies to manage your remaining credit card debt.

Pay More than the Minimum

Paying the minimum amount due will leave you in debt for a long time, and you can end up paying more in interest than you ever spent on the initial purchase. For example, let’s say you had a credit card balance of $1,500 at an APR of 18%. If you pay the minimum payment of $37 per month, you’ll still pay for that debt for the next 13 years. And you’ll also pay a total of $1,760 in interest.

Paying $10 more than the minimum payment each month in this scenario could save you $1,202.41 in interest payments. And you’ll get out of debt almost 10 years sooner.

Ask for Lower Interest Rates

Many credit card lenders are willing to work with their clients to ensure that they receive payments for their debts (rather than defaults on the loan). Because of this, many lenders may lower your interest rates by a few percentages to help you make consistent payments. Often times, you just to call the issuer and ask for a reduced rate.  

Seek Financial Help

If these techniques don’t work for you, don’t hesitate to seek help from a financial advisor. He or she can guide you on how to use your lump sums or budget your income so you can kick those credit cards to the curb.