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Saving money is at the top of the New Year’s Resolution list for many of us, but we often give up just a few months in. This year we are going to help you stick to your resolution. We are going to give you 9 painless ways for saving money in the New Year.
1. Lower Your Interest Rates
Do you have credit card or student loan debt that you just can’t seem to pay off? It’s the interest. It’s hard to make any progress on those balances when the interest just keeps piling up. If you want to kill those debts off for good, you need to lower those interest rates.
If you have credit card debt, you can apply for a balance transfer credit card. A balance transfer card has a 0% APR (the interest rate) for a set introductory period. You transfer the balance from your old credit card or cards to the new card.
For the length of the 0% APR (it varies from card to card, some offer 15 months, and occasionally you’ll see one offering 24 months) period, you aren’t accruing any interest on that balance.
Every payment you make is going toward the principle. This is a huge savings, the average APR on credit cards is 15%, but some of them have rates well into the 20’s.
There is a catch; you must buckle down and get that balance paid off before the introductory period ends. If you don’t, what remains is subject to the card’s regular APR, and it might be higher than you were paying on the old card.
If your credit isn’t good enough to get a balance transfer card, call up your credit card companies and ask them to lower your interest rate. You will have the most luck with the card you’ve had the longest and cards you’ve never had a late payment on.
Do a little research on competing cards with interest rates lower than your current card.
Call your credit card company and let them know how long you’ve been a customer, that you’ve never missed a payment and you’d like to know if they can lower the interest rate because you’ve gotten an offer from a competitor with a better rate.
You might be told no. If you are, call back a few times and see if you can get a yes. Those companies have thousands of customer reps so it’s not as though you’ll talk to the same one who told you no if you call back.
Be polite, some reps are empowered to make these kinds of changes, but no one is going to do you a favor if you’re rude.
If you have student loans, how much is your interest rate? If it’s above 4% or so, you can probably get it lowered by refinancing. Refinancing means transferring the loan from one company to another.
The benefit of doing so is that the new company may be able to offer you a lower interest rate.
LendKey can help you refinance your student loans. You can go to their site, enter your details and see what kind of offers you are eligible for. Doing so does not impact your credit score.
Do be sure to understand the terms of refinancing. Borrowers lose some of the protections federal student loans come with if they refinance, but LendKey does offer some similar protections like deferment and the option to pay only the interest on the loan for up to four years if you’re having difficulty making your monthly payments.
Interest is one of the most costly things in life, and even a 1% reduction in an interest rate can save hundreds, even thousands of dollars over the life of a loan which is why lowering your interest rates when you can is one of the best ways to save money.
2. Automate Saving
All of us want to save money, but if we don’t make it a priority, it just doesn’t happen. Rather than relying on our willpower to save, (because willpower is a fleeting thing) make saving happen automatically.
There are a few ways you can make saving easy, and you should do all of them. Does your employer offer a 401k? If so, join immediately. The money is taken out of your check and invested before it hits your bank account.
You are never tempted to spend it because it isn’t there to spend! Even better if your employer offers 401k matching. That is free money, and we never turn down free money.
A 401k shouldn’t be your only means of saving and investing. Open an account with a robo-advisor like Betterment. It’s easy to do, and there is no minimum.
You can set up auto deductions for any amount you choose ever how often you choose, into your Betterment account. The money is invested for you, and you don’t have to do a thing.
If you don’t have an emergency fund, start one. Having one is probably the most important thing you can do to improve your financial well being. We’ll cover the particulars of emergency funds in a future article.
If you tend to blow through any money left in your checking account, open a savings account.
Every time you get paid, as soon as that money hits your checking account, transfer a portion of it to your savings account. Either request not to be given a debit card for the savings account or cut it up if it’s given to you automatically.
You want to make this money a little hard to access. If there is a genuine emergency and you need that money, you can transfer it back into your checking account.
3. Use the Envelope System
Have you tried every budgeting tool under the sun and you still can’t find one that you stick to? Part of the reason is that when we use a debit or credit card, it doesn’t feel like spending money. We don’t know how much we have left to spend total never mind in a particular category.
The envelope system can solve this problem. Every week, two weeks, or month, however you break down your budget, you take out the allotted amount of cash you have budgeted for certain categories.
Obviously, you aren’t going to pay your rent or mortgage in cash, but those fixed expenses aren’t the categories that you overspend on.
It’s things like food, entertainment, and clothes. Let’s say you budget $60 a week for food. On Monday, you take $60 out of the ATM and put it in the envelope marked “Food.” Once the envelope is empty, your food spending for the week is over.
The envelope method makes us more mindful of our spending. It’s a bit of a hassle so you don’t have to do it forever. Once you have your spending under control, you can go back to spending on your debit or credit card. But while you need it, the envelope method works.
4. Buy Quality
Whatever you need to buy, spend enough to get a quality item. It might seem strange that in an article about saving money we would tell you to spend more money than you have to buying something but stay with us, there is a good reason.
You need to buy a new dresser. You go to Walmart or Ikea and get one at a good price. Job done, you have a place for your clothes and didn’t spend a lot of money. But after a few months, the drawers start to bow. Why is that happening? All you have in there are clothes, not dumbells.
You move house, and while the dresser is being carried into the new place, the back falls off. Well, no one will see it you reason. But every time you put something in there, something else falls out the back and onto the dusty floor.
Within a year, the drawers have bowed so much that they no longer close. So you sigh, have to pay extra for the garbage company to take the dresser away and buy a new one.
A good dresser or knife or laptop or cast iron skillet should last for years, not months. Any time you spend your hard earned money; it should be a good quality item that will last. Quality doesn’t always mean the most expensive version of the item you need, but it seldom means the cheapest.
If you need to make a fairly substantial purchase, do some research. There are tons of places online to do so; we like Buy it for Life on Reddit. You can search almost anything in there and get a handful of good choices at a variety of prices.
What if you can’t afford a good quality version of what you need? Then you save up until you can afford it. Buying cheap, poorly made things cost more money over time because you have to keep replacing them.
Not to mention the cost of aggravation. Something doesn’t work when you need it, and you have to spend time going out and buying another one.
If you had done some research on dressers, you could have found one that would last for many years and probably didn’t cost that much more than the crummy one you bought from Walmart that fell apart almost immediately.
5. Stop Paying Full Price
There is almost nothing you have to pay full price for. We’re not talking about clipping coupons from the Sunday paper to save .25 on laundry detergent. That’s not worth your time and effort. We want to save some real money.
If you need a relatively high dollar item like a new mattress or washing machine, learn the best time of year to buy it. Certain things go on sale at certain times of the year. Consumer reports has a month to month list.
Whenever you head out to a chain store like Target or Kohl’s, google the name of the store followed by the word “coupon.” I just did that for Target and found several coupons including a $20 gift card when making eligible purchases, 20% off on certain Christmas decorations, and an additional 60% off clearance items.
Don’t buy everything brand new. If you need things like clothes, small appliances, furniture, and dishes, don’t go to the nearest big box store, head to the local thrift store.
You will be amazed at what people donate, especially in ritzy neighborhoods. Clothes often unworn with the tags still attached, small appliances still in their unopened boxes, complete sets of dishes.
People get rid of things for a variety of reasons, and their reasons are your gain. I once bought a brand new Zac Posen dress with the $1595 price tag still attached for the princely sum of $12. Even if I had no interest in wearing it, I could have sold it on eBay for a lot more than $12.
6. Get a Library Card
Even if all libraries offered was free to borrow books, that would make them the greatest places in the world! But many libraries offer a huge array of free services we should all be taking advantage of. Not all locations offer these services so check your local library.
Do you prefer your books to be portable? Many libraries offer e-books and audio books. You can check out DVDs and video games. Libraries offer free classes and lectures, reading and language programs.
Some libraries have passes to local attractions like zoos and museums that members can borrow for the day. That alone can save a fortune; my local zoo charges $20 per adult.
If you don’t have to hire an expensive tutor if your library offers online homework help for kids. If the kids are home and bored over the summer or holidays, libraries often have activities to keep them busy and learning like arts and crafts or story time.
Need to brush up on your computer skills? Many libraries offer computer training courses. Some libraries offer career guidance like resume and interview help. There are even some programs that let people borrow things like sewing machines, fishing poles and tackle, and power tools.
7. Cancel Subscriptions
Did you join a gym last January as part of your resolution to get healthier and then stopped going a few months later? Did you sign up for a free 30 day trial of Spotify or Audible and even though you didn’t use either very much, you forgot to cancel before the free trial ended?
Unless you go to your bank and credit card statements regularly, these things are easy to overlook, but they can add up. Even if we do remember we have these subscriptions we rarely use, we just can’t be bothered to go to the trouble of canceling them.
Now you don’t have to; Trim can do it for you. Trim will find those recurring transactions and ask if you want to cancel them. If you do, Trim will do the dirty work for you. Not only does Trim save you money, but the service is also free!
8. Stop Paying Bank Fees
Is your bank charging you a maintenance fee, a hard copy statement fee, a low balance fee, or a bounced check fee all the while paying you a miserly 0.01% interest?
No one should pay bank fees; there are too many banks competing for your business. Chime is an online bank. Because they don’t have physical locations, their operating costs are low, and they pass the savings onto you.
Chime offers both checking and savings accounts. They only charge two fees; a $2.50 fee when you use an ATM outside of the MoneyPass network of ATM’s (there are more than 24,000 locations nationwide though so you should never be far from one) and a 3% charge when you load your Chime card through a debit instead of a direct transfer.
The Chime debit card even acts as a cash back rewards card! You get instant cash back when you make purchases in revolving categories like restaurants, groceries, and entertainment. Stop paying bank fees and get cash back!
9. Learn to Cook
Some people don’t like to cook, but there is no question that cooking at home saves money and is better for your health. You don’t have to rival Michelin starred chefs; you just need a handful of go-to recipes.
Find half a dozen recipes that use inexpensive ingredients, can be made quickly and in big batches. You might struggle to come up with six such recipes, but there is a cheat code; a slow cooker. You can toss almost anything in a slow cooker, and it will come out tasty.
A few good slow cooker recipes are chili, pulled chicken, pulled pork, bean soup, vegetable curry, and beef stew. You can batch cook on weekends or throw the ingredients in the cooker before you leave for work and let them cook all day (cooking times vary from cooker to cooker, and some come with timers).
When you get home, you can quickly make a salad or steam some vegetables in the microwave. Boom! Dinner is sorted, and you have enough left over for a few more meals.
There are tons of great cooking resources online for every skill level and budget. Cooking is not as hard as some people make it out to be; if you can read, you can cook.
Not convinced? Go through your bank and credit card statements and total up how much money you spend every month eating out. That should give you some motivation.
Oh, and don’t go out and buy a brand new slow cooker. Go to the thrift store and buy one there!
A Resolution, Not a Tradition
If you make the same resolution every January 1st and never follow through, it’s not a resolution; it’s a tradition. Let this year be the year that you make some changes that will put more money in your wallet.
Do you have any other painless ways for saving money in the new year? Let us know in the comments below. Thanks for reading and happy frugaling.