I have been living debt free for years. Cultivating a debt-free lifestyle allowed me to buy my tiny house for cash ($40,000) and my vehicles for cash. It may seem daunting, but if a single mother, making a moderate income can do it, so can you! If you are serious about getting out of debt, consider the following tips to help you immediately find and save some serious cash in the next 96 hours.
We live in a society where we learned to spend all the money we make. We make $2000 a month, and we spend it all. We get a better paying job and start making $3000 a month, and guess what, we spend $3000 a month. The U.S. savings rate is at an all-time low, as more people are in debt than ever before. We are a consumer based society.
Times are tough for most people, and we know that our lives would be much better with an extra $300, $500 or more per month. I can’t help you get a better job, but I can help you identify areas where you can start saving money starting today. In some areas, you’ll notice that your savings will be small and in others will be significant. In any case, it’s more money in your pocket that you can save or pay off debt.
Action gains traction. The sooner you start, the more money you will have by the end of this month!
Easy tips to put into action this week!
- Cable/TV. Saving money on your monthly television expenses is an easy way to cut costs. Are you still paying for cable or satellite television? Switching to a lower priced plan with fewer channels (i.e. Sling), can save you between $30 and $100, or you can disconnect it all together and get Hulu or Netflix for movies. I disconnected my cable TV service about two years ago, and I do not miss it a bit. My daughter didn’t even miss it, which was a concern I had when I was considering canceling the service. I used to pay $110 a month; now I am saving $110 x12: $1320 a year. Hulu and Netflix are both under $15 a month (Hulu is free with Sprint cell plans and Netflix is free from T-Mobile). If you want to save hardcore, you can now buy a thin HD antenna and watch whatever channels you can pick up over the local airwaves.
- Coffee Kiosks. Do you drink coffee at Starbucks or one of those coffee drive-thru kiosks? If you do, how much do you spend a week? Multiply that amount times 52, that’s how much you spend a year on coffee. If you have to get your coffee out, McDonald’s currently has a medium size, regular coffee for around $1.50. 7-11 has larger, fancier coffees for just under $2. However, the most cost-saving method is to make it at home. If you have a Keurig, you have to use the refillable pods. I used to pay $2.10 for a regular grande coffee at Starbucks. Starbucks, 3x/week x 52 weeks = $327.60/year, whereas the McDonalds coffee only costs me $234 per year, a 29% savings. It might not seem much on a daily basis, but it adds up. It’s one extra payment on your credit card.
- Light Bulbs. Are you still using regular incandescent light bulbs? Switch to LED light bulbs that will last longer and save money on the electric bill (20 light bulbs can save up to $166 a year). Hence the reason I only have LED lights in my tiny house. For example, a single 60-watt equivalent LED light only burns 9 watts of power, providing over an 80% savings. Now here where the big kicker comes in; times that by ALL of the lights and lamps in your house, and you can see the dollar signs add up quickly and substantially!
- Cell Phones/Plans. Tip #1: Drop your regular cell phone plan and switch to a prepaid plan. These days, all big companies offer a prepaid option, with savings of up to $30 a month ($360 a year!) for the same or very similar service. The smaller companies (MetroPCS, Cricket, etc.) all offer considerable savings compared to Verizon, AT&T, and Sprint). Unless you are still under contract and you would pay a hefty early termination fee, it doesn’t make any sense to get a new plan every two years just to get a new phone. You are wasting a lot of money that could be better used elsewhere (like paying off debt!).
Tip #2: Have reliable family or friends? Consider consolidating all the individual plans into one large family plan, bringing down the price per phone. Unlimited plans work the best here so no one person is hogging all the data. I have done this with my grown daughter and parents.
Tip #3: You can buy a smartphone through Craigslist (verified at your local cell phone service provider-protect yourself) and get on the $50 unlimited everything plan. Some family plans are even better priced, such as T-Mobile, who also includes free Netflix. Here you can save some good money, especially if there are two or three phones in your household. Retrain your brain. Use your phone until it dies, don’t get caught up in the “I have to have the latest phone” hype.
- Meds. Do you need to buy medications? Choose generic medications when you can and save a lot of money! Just because they are made from a well-known pharmaceutical company doesn’t mean it’s better than the one made by Walmart, Walgreens, Costco, CVS or Rite Aid. You’ll be amazed at the price difference, so don’t overlook this savings opportunity next time you need to buy medications. GoodRx is a useful resource for comparing medication prices.
- Movies. Do you go to the movies? It’s expensive, isn’t it? I mean, two people can easily spend $40 to 50 dollars in a couple of hours with the tickets, popcorn, and soda! How about watching a movie at home? Just prepare some popcorn (or buy ice cream) and still have a good time, while saving a lot of money. You can get a 24 packet box of popcorn at Walmart for $5 and watch your free Netflix (compliments of T-Mobile). It may not be the latest movie, but I’m sure you didn’t watch all movies that came out in the last few years, so you can easily find a good one you haven’t watched yet. If you do go to the movies, go on a discounted night or matinee. Heck, Redbox rents movies for $1.50, compare that to $24 for two movie tickets!
- Internet. Do you have internet cable or DSL at home? Call your internet service provider and ask for a cheaper option. When I called, they switched me to a slightly slower plan that saves me $7 a month, and I didn’t notice the difference in speed. That’s $84 a year! I also know family members who don’t have regular internet but paid an extra $20/month to have their cell phone become a hotspot with unlimited data.
- Credit Cards. Do you carry a balance on your credit cards? No matter what your balance is or what your interest rate is, call ALL your credit card companies and ask them to reduce the rate. Be very polite when you call, and if they decline to lower your rate, call again in a few days. Many times (and I do mean many times) they will reduce the rate for you unless you are delinquent or have not been sending the payments on time. Even if you haven’t been consistent with your payments, call anyway. You may be surprised. The savings here can be substantial, depending on the rate you get and how much you owe. Do not overlook this option, as I have heard of many people getting their rates reduced with just a simple phone call. That translates into more money in your pocket! Below is a simple script to start.
“Hi, my name is [Your Name]. I am a loyal customer, but I have recently received several offers in the mail from other credit card companies with lower interest rates. I would like to see if you could lower the rate on my card, as it is a little high”. If they say no, then say something like “I would hate to have to switch to another company after being with you for ___ years… could you please check again, or could I please talk to a supervisor?” Is it possible to roll over ALL of your credit card debts into a single credit card? If so, consider consolidating into a credit card that has a 0% interest rate. However, it may have a transfer fee (up to 3%), so do the math to see if it makes sense. Even paying the 3% transfer fee can be considerably less expensive than the 15% or higher interest rate you are paying now. Then freeze your credit card spending.
- Shop Insurance. Another easy way to lower your monthly payments: call other insurance companies (car and/or house insurance if you own your home) and compare their prices with what you are paying right now, and switch to the one that offers you the best option for the same coverage you currently have. I saved over $700 a year by switching car insurance companies a few years ago, and then after two years, I switched again just to save another $180 a year. Checking is worth doing. If you or your parents are or were in the military, check out USAA.
- Telephone (landline). If you must have a landline here are some cost-saving tips. You can cancel add-ons like caller ID and other services and save $5-8 a month. Another option is to switch to a company like Ooma for about $100 for the telephone device and get free monthly service with unlimited long distance (within the US) and many freebies like caller ID (just pay a couple of dollars in taxes). This home phone service is currently less than $5 a month for the taxes, with unlimited calling. The only caveat to this is that you will need a high-speed internet connection for Ooma to work for you. Another option is MagicJack, for about $35 a year for service. I know someone who sent a MagicJack device to their sister who lives overseas, and they talk almost every day for as long as they want. Their savings? About $50 a month in international long distance calling, or $600 a year. Plus their sister saves because she doesn’t pay to call them anymore. Don’t forget that if you have Apple devices you can use Facetime for free and if you use Android devices, use Google Hangouts.
- Auto Financing. Did you finance your car? If so, think about refinancing it? Shop around for rates to see if you can lower your monthly payments without extending the life of your loan by getting a cheaper rate. You have to consider the refinancing costs involved to see it makes financial sense to go through the process. Typically better savings can be found at your local credit union than through a regular bank. These savings are usually better than the ones you got at the car dealer when you purchased your vehicle. Remember that the dealership gets a cut on the loan they offer you, which could be your savings by choosing to go with a credit union.
- Home Mortgages. Are you a homeowner? You can check out whether refinancing your home would make sense in your particular situation. Mortgage rates are at historically low levels (around 4% on a 30 year fixed loan, depending on credit rating and other factors). You have to calculate what your closing costs would be to see if you will save money. If you can get a rate that is two points (or more) lower than your current rate, you can save a lot of money over the life of your loan. If your savings are not at least two percentage points, then it is not typically worth refinancing. For example, if your current home mortgage is 6.5% and you can refinance at 4.25% it’s usually worth doing. Be careful though: to compare apples to apples, calculate the new loan over the same number of months you have left over on your current loan; I mean if you still have 25 years to pay off your current loan, make the new loan for 25 years and not for 30.
- Books/Magazines. Skip the book purchases and magazine subscriptions. Save money by borrowing books from the public library where you can also read Consumer Reports, People, Men’s Health and other favorite magazines for free. Download your favorite books and magazines to your electronic devices. If you are in the military, you can have access to free books and magazines as well, check at your base family support office for more information.
- Banking Fees. Do you bank with one of the more prominent banks, like Chase, Bank of America and Wells Fargo? You may want to look into local credit unions, as their fees are substantially lower and their rates are almost always better. Banks make most of their money by charging hefty fees (withdraw $20 from another bank’s ATM, and you will pay between $4 and $6 in fees – just to withdraw your OWN money! Remember that you pay a fee to the bank that owns the ATM and to your bank.) If you have an account at USAA, they refund those other bank fees. Switching to a local credit union almost ALWAYS makes financial sense. Look at a bank statement and add up all charges by your bank in any given month. You might be surprised.
- Utilities. Tip #1: If you own your home, you may want to invest in a programmable thermostat. It will allow you to save a considerable amount of money on your monthly utility bills. You will have better control of the heating and cooling of your home. Program your thermostat at a lower temperature when you are sleeping and away. Generally, in the summer your air conditioner should not be set lower than 68 degrees. Conversely, in the winter, you should not set your heat higher than 70. You can have the programmable thermostat adjust your home to a comfortable level before waking or returning home. Before moving into my tiny house, I saved 20%, which means over the year I saved around $400. Don’t underestimate the power (and warmth) of a comfortable sweatshirt or sweater in winter.
Tip #2: Forgo the Hollywood showers and adopt the five minute Navy shower. For the record (small children aside) baths use approximately five times the amount of water a five-minute shower uses! Honestly, how long does it really take to wash your body? If you must, make that long shower/bath splurge once a week.
- Eating Out. The leading budget buster. The amount you spend on taking or eating out could literally finance a vacation or pay off your car. In 2015 average Americans spent more money eating out than buying groceries. Do some easy math: if you spend, let’s say $10 a day buying lunch. Just five days a week, that equals $2600 a year. Now add all the times you went out for dinner or drinks to that. If you spend $25 once a week for dinner and drinks, that equals another $1300 on top of the $2600 you have already spent for lunches, a whopping $3900 a year. But seriously who can only spend $25 on dinner and drinks? If you are married and/or have kids, the cost is ridiculous! (Think the price of a used car, no joke!) In a month, your family could save over $500!
It’s not always easy but getting out of debt can free us up to enjoy other luxuries. Even if you implement half of these suggestions you might save a significant amount of money. Maybe it will give you the luxury to work fewer hours or take your family on that dream vacation. Perhaps it will give you the freedom to pay off your house. Whatever your goal is, remember that the sacrifices you make today will pay off later. Speaking from experience, there is nothing more liberating than being debt free! If I can do it, so can you!
Share with me some of your money saving ideas. I’d love to hear from you and am always looking for extra ways to save!
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