No matter your age, gender, or occupation, chances are you are probably in debt. A report has found that around 80% of Americans owe money one way or another. Perhaps it’s due to student loans, credit card bills, or car loans. Whatever the case, people are understandably struggling to build up their savings accounts. According to a 2019 survey, the majority of Americans have less than $1,000 saved for emergencies. This is a major issue considering that the U.S. has the most expensive health care system in the world. In fact, it’s estimated that the average household spends around $5,000 per year on health care alone. If you consider the possibility of other unexpected expense, a grand is not enough.
On the bright side, there are ways that you can stash away some cash while paying off your loans. Here are a few things to do to get a better handle on your finances:
1. Understand the Terms of Your Bills
Not all expenses are created equal. Some are serious fees that you have to pay or you run the risk of going to jail. But others are not as serious. But they still do have some legal consequences.
Before you take out a mortgage, for instance, make sure to set the record straight with your mortgage lender. Ask about the terms and conditions. Maybe there’s a better option for you rather than the specific loan that you’re looking at. You can also ask their opinions about payment assistance. There are state-sponsored programs for first-time home buyers that you may be qualified for.
The same goes for big purchases on your credit card. Make sure to read the fine print so you won’t get charged avoidable fees.
Don’t rush into making a big financial decision. Take your time and ensure that you understand the conditions and possible repercussions in case you can’t pay on time.
2. Narrow Down Your Unnecessary Expenses
Everyone deserves to treat themselves to something nice once in a while. But when you want to save money while sorting out your bills, there has to be some sacrifices. You’ll have to make changes to your lifestyle and the best way to do that is by looking at your unnecessary expenses.
To do so, you can start by listing your transactions. There are plenty of apps that are absolutely free which can help you sort out your financial matters. Money managing apps can show you graphs, categorize, and even alert you if go over the budget. If you prefer the traditional route, you can always write it on a piece of paper. The most important part is that you’ve made an accurate record.
Once you’ve finalized your list, you can see which cost the most and which can be avoided. You don’t even have to cut something completely off your lifestyle. For example, a report has shown that the average American spends a whopping $1,100 every year on coffee alone. If you cut down on your caffeine consumption by at least half, you can already add more than $500 to your savings.
Decluttering has many great benefits. It’s not just to clean around the house. You can also turn it into a secondary source of income. You may not think that your old books or clothes for cheap will get you a lot of money. But it’ll all add up in the end. In fact, a business-minded individual even earned $2,400 in four months just by selling her used stuff online.
The good part about this is that you have options thanks to technology. Before, you can only set up a garage sale and hope that your neighbors like the same things that you do. Now, there are several apps and websites like eBay, Mercari, and even Facebook. They’re convenient because you can post photos and reach people from different parts of the country. The downside is that you’ll have to deal with shipping and online transactions. But, it’s definitely better than leaving your things cluttered around the house.
If most of your paycheck is already going towards your debt, it might feel impossible to save money. But it’s definitely possible depending on your lifestyle choices. Although it’s likely you might not contribute to your savings account every month. But, the point is that you are setting money aside as much as you can. Experts recommend that you should have enough savings for around six months worth of necessary expenses. Savings are not just for vacations or big payments. They’re crucial for emergencies, for your health, and for your future.