Debt Free Living: How to Save Money while Paying off Debt
Making the choice to reduce your debt and live a debt-free lifestyle requires dedication and planning. When you decide to pay off your debt, you probably anticipate putting every spare cent toward that goal. For the most part, you should!
Dedicating all of your funds (beyond fixed expenses like insurance or mortgage payments) to paying off your debt can help you to reduce your debt faster. Reducing debt means paying less in interest and eventually becoming debt-free, which is your goal.
The most counterintuitive part of achieving a debt free lifestyle: saving some money while paying down your debt.
Believe it or not, saving money while paying down your debt is a smart move, and one that is recommended by many financial planners. Having the emergency funds to use on a day that they are immediately necessary will give you an overall sense of well-being and help to reduce your stress related to finances.
Here are a few ways that you can save money while paying down debt:
Set up a savings account.
Create either an automatic monthly transfer, or a keep the change type of program, where extra funds from your purchases roll over into the savings account. Many banks and credit unions offer this feature, which will help you to save cents that can turn into dollars. You won’t even realizing that they are not in your account! Another option: schedule an automatic transfer, and stick to it. No exceptions.
Put extra income into savings.
Using additional funds that are considered bonus funds, like those that you might get for a birthday or holiday, as well as tax return funds, can be a wonderful way to pay off your debt while still saving a little money. Since that money was never part of your regular budget, it shouldn’t have been allocated toward any particular use! s Use it for saving and developing a small nest egg, while still paying off that the same amount that you are used to.
Cut corners and cut costs.
Another great way to save money while you are trying to pay off debt is to reevaluate what you’re spending money on. If you can cut corners by cutting out lattes, or reducing the amount of times that you go out and spend on entertainment each month, you will be able to save money faster than if you continue to spend at the same pace you’re already spending at.
With these money-saving tips, you should be able to move toward a debt free lifestyle by paying off debt and still maintaining a little bit of savings at the same time!
