Dealing with debt or feeling stuck in a cycle of debt can be a daunting prospect. It’s natural to feel confused or unsure where to start in order to reduce spending and take back control of your finances.
Your main focus when dealing with debt should always be to repay outstanding amounts as fast as possible, in the most affordable and low-cost way attainable for you.
Effective Debt Relief understands that your financial situation is unique to your circumstances and can be affected by many factors such as job loss or illness. Our team offers practical solutions to allow you to restructure your debt, manage affordable payments, and pay less than you currently do.
There are also small steps you can take to curtail your expenses which will help you to feel more in control of your financial situation. Here are five ways to reduce your spending to help make small savings that all add up to a better financial future.
Create a smart budget plan using a free app
Do you know where all of your cash ends up? Many of us don’t and are shocked when we take the time to understand our expenses and compare them to our income.
Creating a budget is fast and easy when you use one of the many free budgeting apps available. Budgeting apps bring your spending together in one place and offer practical suggestions based on your spending habits.
Plugging in the figures to a budget app means you always have access to your income and expenses. Your bank statement is a great place to start, as this will detail expenses such as mortgage or rent, any regular payments such as medical insurance, utility costs, and food bills, which can be added to the app.
Your pay stub will give you details of your income. If you are not working, gather together details of your welfare payments. Remember to include any child maintenance or other sources of income you have and record them for a full picture of your expenses.
Some apps such as PocketGuard give you the ability to connect directly to your bank to track expenses and deposits in a given period, for a smarter approach to keeping a budget.
Put a hold on the non-essentials
The average price of a coffee-to-go in the US is $2.75. It might not seem much at a glance, but that daily coffee could cost you over $1000 in the course of a year.
Even more shockingly, if you put your daily hot drink onto your credit card and only make the minimum monthly payments, that $2.75 coffee could end up costing you $8.86.***
Cutting out that coffee is an effective way to reduce your spending, and you need not miss out on your caffeine fix as you can make a coffee at home and take it with you when you go.
It’s also important not to deny yourself all the little treats. But by gaining an understanding of what those treats are and the true cost of them over time, you can cut out the ones that bring you the least joy while still enjoying those that make you happiest.
Shop around for the best deals
Service providers will rarely offer you a discount if you don’t ask! Call up your cell phone, cable, and utility providers and find out if they have any better deals they can offer. In a competitive world, many service providers will be willing to discuss a discount with you to hold onto your business.
If they can’t offer a discount, look for a better deal, or cut the ties altogether and switch to a streaming service with a solid line-up of channels. Sling TV, YouTube, Hulu and DirecTV Now all offer a streaming service that could save cash.
The average cable subscription is $85 per month; but by switching to Sling TV’s Orange plan at $20 per month**, you’ll slash your expenses and still get popular channels such as ESPN, Disney, and CNN.
Switch to own brands for more savings
If grocery shopping accounts for a large chunk of your family’s expenditure, then consider the switch from branded products to the store-brand version.
Many stores offer bargain brands that will help to cut your grocery bill by 20% or more. Stores know their brands need to compete with the branded alternative, so they are often just as good as the more expensive version, but at a more affordable price.
Don’t fall victim to digital subscriptions
We live in a modern world with access to technology at our fingertips and it’s all too easy to lose track of the digital subscriptions you have, especially when many offer a free trial period, which must be canceled to avoid payments after the trial ends.
The New York Times recently reported that the average American spent $640 on digital subscriptions in 2019*. By stripping back the services used, you could potentially save $53 a month.
Check which music services, cloud storage providers, dating apps, or magazines and newspapers you are subscribed to, and see if you haven’t used some of them for a long time. You’ll often find you are paying a monthly fee for a service you rarely or never use, and can easily cancel.
Contact Effective Debt Relief for a pathway to financial freedom
Our practical tips on ways to reduce your spending are the first self-help steps of your journey to take back control of your finances.
If you have debt and are feeling overwhelmed, then Effective Debt Relief can work with you and your creditors to restructure and reduce the amount you owe. No one asks to be in debt and our friendly advisors will create a plan that allows you to repay your debts in a realistic timeframe and at a repayment rate you can afford.
If you need help to restructure your debts or want to find a pathway to financial freedom, then call Effective Debt Relief at 800-940-5449.
***Source: Based on cost of minimum payments on average US credit card debt: https://www.fool.com/the-ascent/credit-cards/articles/real-cost-of-only-making-your-credit-cards-minimum-payment/