7 Ways to Save Money This Year
The holidays are long past, but many of us are still struggling with the “gift” they left behind — extra debt So without further ado, here are seven suggestions to get on sturdier financial footing in 2016.
1. Consolidate your debt. Are you making payments on multiple credit cards, medical bills or store layaways? Debt consolidation through a personal loan can address a number of problems in one fell swoop. It is particularly advantageous if you can wrangle a lower interest rate than you’re currently paying. Consolidation also eliminates numerous due dates, thus reducing the chance you’ll miss a payment and hurt your credit score.
2. Credit-card balance transfer. If you have one credit card with a particularly steep interest rate, you may wish to investigate opening a new credit card with a financial institution such as Winnebago Community Credit Union that will let you transfer the balance to a lower rate. In some cases, you can find promotional deals that charge no transfer fee.
3. Prioritize debt. Another strategy to pay off debt on multiple credit cards is to knock them off one at a time. From a psychological perspective, you may prefer to first pay off the card with lowest balance, pay the minimum on the others and work your way up the ladder. But from a mathematical perspective, it makes sense to first attack the card charging the highest interest rate, and pay the minimum on the others. You’ll save in the end.
4. Cut back on discretionary spending. Think movies, eating out, concerts. Can you get by with a cheaper cable TV lineup — or without cable at all? Is there flexibility on your cell phone plan? Can you put off that trip abroad for now?
5. Get a roommate. If you have a spare room in your home, it could bring in some extra cash, at least temporarily. Before you advertise, though, check local ordinances regarding restrictions on short-term rentals.
6. Limit yourself to cash and debit cards. One way to avoid piling up additional debt is to put your plastic away and restrict yourself to spending only money you have at hand. With the spread of online banking and banking apps on mobile devices, it’s easier than ever to know where you stand and track spending.
7. Increase income. If you have a regular job, volunteer to work extra shifts or overtime. If that’s not an option, what about a part-time gig on the side? Can you walk a dog? How about becoming a driver for Uber or Lyft? Or delivering items through a service like Postmates? More than ever before, there are opportunities to make extra cash whenever you have the time.
Bonus tip: Set up a holiday savings account with your bank or credit union. If you’re already enrolled in direct deposit, ask about having a small amount set aside from each paycheck. You might not notice a $25-per-week deduction. And you’ll thank yourself next holiday season!
Peter Lewis, NerdWallet