When it comes down to it, household debt is a major concern for many families across the country. In the first quarter of 2021, household debt hit a record of $14.6 trillion in the United States, showing just how real of a challenge debt is for families especially right now. Paying off debt often means making some adjustments in your lifestyle so that you can pay off your balances, however, this process doesn’t have to be an incredibly painful one. With the advent of personal budgeting software and other tools to support your financial literacy, creating a plan and making the right spending choices will help you pay down your debt in no time. Check out some of these tips for cutting your expenses so that you save money and can put it towards paying off your debts.
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Keep Track of Your Spending Habits
If you’re looking to save money, the first and best place to start is to make sure you have a thorough understanding of your spending habits. In order to do this, gather all of your credit card statements, debit transactions, bill payments, cash withdrawal receipts, and any other record of your spending. When going through your expenses make sure you’re considering sub-categories as well. Don’t just look at how much money you’re spending on coffee every day, but how much you’re spending on food outside of what you cook. This will help you get a realistic depiction of your spending habits so you know where to make some cuts.
Sadly, most people don’t have the luxury to just spend with abandon and buy whatever they want. When your paycheck rolls in, it’s so important to have a pre-existing plan of where that money will go so that you’re not tempted to overspend when the cash influx happens. In order to make a proper monthly budget, there are tons of amazing budgeting software tools that you can use. Check online for personal budgeting software, budgeting templates, and useful budgeting apps. Some of these even include incentive plans for when you stick by your budget and achieve long-term goals, so make sure you do some brainstorming to find the right motivations for your needs.
Reduce Home Expenses
When you’re looking to save on bills, it’s important to not only evaluate your spending habits but also your living situation. For example, what are your common practices when it comes to electricity? Are you leaving the lights on? Running the AC all night? Keeping unnecessary electronics plugged in and operating? Cutting down on electricity bills can be a huge help in saving money to pay off debts.
It’s also important to make sure you’re properly evaluating the amount of your income going towards housing. The recommended amount by financial advisors is that 30% of pre-tax income should be geared towards housing. If you’re finding that number is grossly below your monthly housing bills, then maybe it’s time to re-evaluate some of those larger home expenses.
When you’re reviewing your monthly budget plan and group everything into sub-categories, make sure to pay close attention to the amount of money you’re spending on subscription services. Things like media streaming such as Netflix, Amazon Prime, Patreon memberships, food box subscriptions, and anything that you pay on a monthly basis that isn’t a necessity. When you’re looking to make cuts, take a hard look at these subscription services and maybe even do some ranking in terms of most useful to least useful. We often sign up for subscription services and then forget about them until the bills roll around, so it’s important to be thoughtful of what you’re paying for on a regular basis.
Cut the Take-Out
One of the largest expenses that many people incur when it comes to monthly budgeting is eating out and take-out meals. For those who live busy and active lives, finding the time to cook multiple meals a day can be challenging, and grabbing something from a café or restaurant just seems like the easiest option. If you’re looking to save money, however, then these expenses will definitely be a huge obstacle to saving. Instead of just resigning yourself to spending hours a day working in the kitchen to cut costs, try looking for some alternative solutions. For many people, meal prepping is a great option to make sure you have quick and affordable meals on hand throughout the week. Also, depending on how much money you’re regularly spending, a meal kit delivery service might actually save you money in the long run as well.
Pay With Cash
These days, it’s so easy to just tap and walk out of the store. Most people barely even look at their total expenditures anymore! Unfortunately, this mindset is not very conducive to conscious spending and can make it that much more difficult to track where your money is going. Instead of using your debit and visa card for everything, try using cash for your daily spending. This will allow you to tangibly see how much money you’re spending, and easily count how much of your budgeted amount is left.