Whether you want to stop living paycheck to paycheck, save up money to buy a home, or simply want to have a little bit more “fun money,” paying off debt is an essential step in securing your financial future. I am by no means a financial planner or coach, but I do have a very good handle on our home finances, and we have managed to pay off quite a bit of debt while living on a very modest income. These are some steps to implement to save money monthly and get yourself out of debt in order to reach your financial goals.
- Sit down with your spouse or by yourself and write a monthly budget – You will likely need to take a look at your bank statements to get a true monetary value in various categories, as most of us spend more than we think we do on things like eating out. You need to include all of your monthly bills along with other things like gas, entertainment, savings, and miscellaneous spending. This is the budget form I use. You likely will not use this budget, or write down all expenses, on a monthly basis, but you need to have a written starting point to know where you stand with your finances. If your “necessities” outweigh your monthly income, then you clearly need to start cutting some things down or out.
- Use a budget app to track daily expenses in your budget categories – We personally use the Every Dollar app to track our expenses, as it allows you to add as many sub categories as you want and it makes you budget every single dollar of your monthly income into one category or another. The real challenge here is that you must actually stick to the budget that you have set, so when the money in a category is gone, you stop spending in that category. The Every Dollar app also allows you to see your budget on more than one device, so you and your spouse can be on the same page. Literally.
- Shop around for insurance rates – We actually just recently started saving ourselves $60 per month by changing carriers for our home/auto insurance. We often don’t want to spend the time looking around and comparing prices; however, you can save yourself some serious money by doing so. Also, check with your insurance agent to make sure you are getting all of the possible discounts on your rate offered by the company such as multi-car, multi-policy, good driver, good student, and employer discounts.
- Choose a lower priced TV/Internet option – TV, especially sports, is something that many people say that they “cannot live without.” If you really want to lower your monthly costs, you may be able to skip out on your high priced cable and opt for a Netflix- or Hulu-only TV option. Other low priced TV options include Sling TV, which allows you to pay month to month and cancel at any time; it is also much cheaper than most large companies, and many of the sports are included.
- Decrease your eating out costs – Many people get a morning coffee multiple times a week or go out for lunch/dinner because it seems faster or more convenient than making it at home. There are multiple Pinterest copycat recipes for your favorite coffee drinks that can be made at a fraction of the cost, and taking lunch to work will save you a boatload of money throughout the year. In terms of dinners, meal planning can save you money and time! Please check out my monthly meal planning post here.
- Buy used, even on the small things – While buying used may not sound like the most glamorous option, it really can be a money saver. This can be especially true with things like children’s clothing; kids are going to grow out of and dirty clothes so quickly that buying new is often a waste. Shopping around at consignment stores, Craigslist, and garage sales for things like furniture and exercise equipment can be a big money saver. Also, if you are looking to make a big purchase, such as a car, look into the option of buying used and see if you can avoid making monthly payments.
- Think before you buy – This goes for every purchase — from a new blouse to a new car. When buying small things, walk around the store with them for a little while and think about whether or not you really need them. I guarantee you will end up putting half of your things back on the shelf before making a purchase and leaving the store. If you are making a big purchase, make sure that you sit down with your spouse, put the estimated cost into the monthly budget, and assess all other options before buying. Avoid the impulse buy!
- Use the snowball method to pay off debt – After implementing all of the above strategies, it is time to get that debt paid down. Continue to make the minimum monthly payments on all of your debts, but start applying every extra monthly dollar (this is where the Every Dollar app comes in handy) to your smallest debt in addition to the monthly payment. Paying extra each month on one debt will get that debt paid off faster. Once that smallest debt has been paid off, you then put the amount that you were paying monthly on that debt toward your next smallest debt, in addition to the minimum payment that you were already paying. This is a proven method to debt re-payment, and any small amount that you can pay as extra towards your debts is a step in the right direction.
Good luck, and leave a comment if you’ve found other tried-and-true ways to get your family’s spending back on track!
Download my free printable monthly budget here.
I’m Phoenix. I am a full-time nurse, wife, and mother to a beautiful 1-year-old little boy. We are expecting baby number two very soon, and we are excited for the challenge that two under 2 will bring. I am passionate about helping moms create a more frugal lifestyle while still enjoying life and motherhood to the fullest. Please check out more stories at www.crazythingcalledmom.com.