If you are extremely serious about getting out of debt, your debt reduction plan should include some extreme budget cuts. You have to maximize your funds available to throw at the debt problem.
This, of course is not for everyone, but if you find that you are sending extra money each month to help pay down your debt and the interest is still overpowering you, something must be done.
Debt Reduction by Small Savings - Table of Contents
Are Huge Savings Cuts Sustainable?
A lot of people want to reduce debt. They want to get out of the hole that they put themselves in through student loans, over-extending, not realizing how far they were down, or just plain mismanagement, but they continue to live as if they have no debt.
Maybe you know the type, or you are the type but do not see the issues. These are the people who are sending in extra money on their highest interest debt, wishing they could send even more, while at the same time, they light another cigarette. Or maybe they are sitting at their desk wondering what they could do to save more money without noticing that all of the lights are on in the house.
Small But Sustainable Savings: Case Study
Slow and steady wins the race. Huge spending cuts can be great, but ways to save money in small, but sustainable ways are the ticket.
I was talking to a man who has been struggling with his debt for three years now. He admitted that I was right, but said that he did not think that a smaller electric bill would help.
He thought that an extra few dollars each month would not really make that much of a difference. He did not smoke and drank rarely so could not eliminate those vices, but he was interested in my suggestions that he was not getting extreme enough with his search for ways to lower his spending.
Taking another look at his monthly budget, I saw that his natural gas bill was higher than mine even though he has an electric stove, and the weather is nice. Determining the cause of this higher than average bill ended up saving him on multiple bills.
See he likes to take long, hot showers in the morning to start his day, and another when he gets home from work because he has a job where he gets his hands dirty. So eliminating that morning shower and shortening the afternoon routine will save him on his gas bill, his water bill, and since he has city sewage and pays by the gallon, that bill as well. Now that he wakes up later since he does not need that much time to get ready, he is saving the electricity needed to light up his house before the sun comes up, too.
After getting him to see the light, so to speak, he came up with a few simple fixes of his own. He could walk to the park on the weekends to see his Nephews play baseball, and could take a sports bottle of water from home instead of buying 2 small bottles at the game.
Small Savings Turn Into Debt Reducing Habits & Frugal Lifestyle
This sparked him to look for other small changes that he could make to add to his new budget surpluses. He decided that he would go to sleep half an hour earlier at night, this meant thirty minutes less use of his television, the lights in the living room, and also the unexpected bonus of no longer craving the milk and cookies he had as a midnight snack.
He made a few small changes and says that he is still working on his debt, but he feels better knowing that he is trying harder and also has the added benefit of a more frugal lifestyle that he hopes to maintain after his debt is paid off. He is still not sure how to react when I tell him that there are more extreme measures that he can try, but I will talk to him about that another time.
Top 16 Ways to Save Big by Saving Small
Saving in small ways can add up significantly over time. Here are some great strategies to consider:
Small Savings Technique #1: Automate Savings
Set up automatic transfers from your checking to your savings account or IRA on payday. Even a small amount each time can accumulate. Robinhood is really helpful for this.
Small Savings Technique #2: Track Expenses
Use budgeting apps or simple spreadsheets to track your spending. Identifying unnecessary expenses helps cut down on them.
I love to track the downward trajectory of my debts and the upward trajectory of my savings. Also, you can forecast these chart lines out for years :)
Small Savings Technique #3: Cancel Subscriptions
Those streaming services can stack up over time. Maybe limit yourself to just 2-3 at any one time. The whole point of cutting cables was to save money on cable bills, right?
Evaluate subscriptions and memberships you don't use frequently. Cancel those that aren’t essential.
Small Savings Technique #4: DIY
Do simple tasks yourself. Making your own coffee at home, instead of going to Starbucks. Well ... that may be a lot more than "small savings".
You can also learn basic home repairs instead of hiring someone. With the help of YouTube, you can basically become Bob Vila.
Small Savings Technique #5: Pack Lunch
Bringing lunch to work or school instead of buying it can save a substantial amount over time.
Small Savings Technique #6: Energy Efficiency
Turn off lights when not in use, unplug electronics, use energy-efficient appliances, and consider installing a programmable thermostat to save on utility bills.
Small Savings Technique #7: Carpool or Use Public Transport
Want to halve your gasoline bill? Share rides or take public transportation to save on gas. Plus, you can reduce wear and tear on your car.
Small Savings Technique #8: Buy Generic Brands
Often, generic brands offer similar quality at a lower cost compared to name brands.
Small Savings Technique #9: Use Cashback and Rewards
Utilize cashback apps, rewards programs, and credit cards with rewards that align with your spending habits.
Small Savings Technique #10: Comparison Shop
Before making a purchase, compare prices online or in different stores to get the best deal.
Small Savings Technique #11: Meal Planning
Plan meals ahead to avoid unnecessary grocery purchases and reduce food waste.
Small Savings Technique #12: Sell Unused Items
Declutter your space and earn some extra money by selling items you no longer need or use.
Small Savings Technique #13: Wait Before Purchasing
Implement a 24-hour rule for non-essential purchases. If you still want it after a day, consider buying it.
Small Savings Technique #14: Library Use
Use public resources, especially the library! Borrow books, movies, and magazines from the library instead of buying them. My favorite is borrowing audiobooks on my free library app.
Small Savings Technique #15: Grow Your Own
If possible, consider growing your own herbs or vegetables. It saves money and provides fresh produce.
Small Savings Technique #16: Set Savings Goals
Have specific savings goals in mind. It helps motivate you to save and track progress.
Conclusion: Consistency is Key to a Frugal Lifestyle
Remember, consistency is key when it comes to saving in small ways. Even small changes in your daily habits can lead to significant savings over time.
Original Article by Wixx
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