Trying to get out of debt can be frustrating, especially if you’re struggling to get your personal finances in order. The situation is even worse for those who are forced to allocate more than 30% of their monthly income for debt repayment. A lot of people who are trying to get out of debt end up in more problems, simply because they give in to the frustration.
Worry not, because there are ways you can save more money and repay your debts faster. In fact, there are easy, mundane savings you can make today. Let’s find out, shall we?
The Latte Effect
Some call it the latte effect; others think of it as lifestyle expenses. We all have it. That £3.55 spent on Skinny Vanilla Spice Latte every day on your way to work is actually a whopping £78.10 waiting to be saved every month. For some, the amount is even bigger; if you’re used to buying two cups of coffee every day, for instance, you can easily save £150 or more each month.
There are many of these small, seemingly harmless expenses that actually reduce your ability to repay debts. One of the challenges of saving these small expenses is the small amount; we tend to take them as harmless expenses because they are too small to matter. They are, aren’t they?
Well, not exactly. Start listing small expenses you make on a regular basis and see how much you are actually spending every month. Even better, calculate the annual amounts of those expenses and imagine allocating them towards debt repayment. The small daily expenses often translate to big chunks of your income without you even realising.
Services such as Uber and Lyft are making it easy for everyone to enjoy comfortable rides. They’re great for short trips in the city and for making quick runs to the grocery store. It is true that ride sharing can help you save money on your travels.
However, there are times when driving is actually cheaper. When you need to commute to work, for instance, it is often more affordable to drive than to take the train. The amount of money you can save is even more substantial if you’re driving a hybrid or one of the newer electric cars since you also don’t need to worry about road tax and other expenses.
If you have a full driving license and an economical car start researching and comparing the costs of driving and taking public transport. Those who don’t have a driving license can practice for their driving theory test with the help of online resources and practice theory tests on sites such as TopTests.
There is one last tip I would like to give you: stop spending money on luxuries. For those who are struggling to repay their debts, things such as another new pair of shoes or a replacement iPhone are actually luxury items, no matter how affordable they may seem. These big purchases are seriously hampering your ability to repay your debts.
Be meticulous about your expenses and you will soon find more money to allocate towards debt repayment. The seemingly small savings will cut your debt repayment time substantially and save you more money in the long run.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.