Practical Money Saving Tips from Freedom Debt Relief
Regardless of your age, job, or financial status, there are practical things that you can do to save money. Saving money is not easy – if it was, there wouldn’t be nearly as much information on how to do it. But the reality, according to one study, about seven out of every 10 people have less than $1,000 in savings. However, even if you are one of those people living paycheck to paycheck, you can make changes that will impact your financial state now and well into the future. Here are some money saving tips from Freedom Debt Relief that anyone can do.
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Create an Emergency Fund (Yes – You’ve Heard This Before)
If you have read even a few articles on saving money, you’ve heard this before. But it is so important – and so neglected by many Americans. So, you will keep hearing about this over and over and over….
Believe it or not, even if you are barely making ends meet, you can ensure that there is money somewhere to draw from in case of an emergency. Granted, the idea of putting away three to six months’ worth of expenses is daunting, don’t let it scare you. Freedom Debt Relief suggests that you start small and gradually build it up.
As you are building up this fund, try to have a backup plan. Keep room on a credit card, use a home equity line of credit, or use money in your Roth IRA (which you can pull from without paying penalties or taxes) in the event of a true emergency.
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Don’t Buy a New Car (Buy Used and Drive it a LONG Time)
Every year new vehicles come out, and with all the new and modern technology that is in them, it is tempting to upgrade, especially if you don’t even have Bluetooth yet in your vehicle.
However, new cars are expensive and they depreciate quickly. Freedom Debt Relief recommends that you buy a vehicle that is at least two years old because they lose the most value in the first two years.
If you are concerned about issues and maintenance, buy a certified used vehicle and check the Carfax report before you buy.
Also, try to put a large down payment on your vehicle, ideally 20 percent. This protects you from being upside down on the vehicle as soon as you drive it off the car lot. If 20 percent is not possible, then don’t finance it for more than four years.
Can’t afford the payment on a four-year loan? Then you can’t afford that vehicle and should look for one that is in your budget. Your car loan payment should be no more than 10 percent of your gross monthly income.
In four years after you pay it off, you could easily continue to drive it for many more years, if you keep it well maintained. This could save you thousands of dollars that could go towards something else.
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Save for Retirement (Even if You Think You Can’t)
Now, the number one “something else” you should be saving for is your retirement. According to Freedom Debt Relief, this is not something that you should put off. You can never regain the lost years of savings, interest, or employee contributions. They’re gone – unless you take advantage of them while you can.
Your goal should be to put away 15 percent of your income each year for retirement (this includes company contributions). If you are not in a position financially to put this much away, Freedom Debt Relief recommends that you start somewhere.
Even if you can only contribute five percent in the beginning, you start building the habit of saving for retirement. As you grow more financially savvy and keep this as your number one priority, you can ramp up your savings.
Once you have begun to build up your retirement fund, leave it alone. Not only can you be penalized for withdrawing the money, every dollar you take out could end up costing you $10 to $20 of your future retirement income.
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Use Credit Cards to Your Advantage (Not the Other Way Around)
Credit card companies make a TON of money each year. According to an IBIS World Industry Research Study, credit card issuers generate $96 billion in revenue annually.
Freedom Debt Relief reports that the bulk of the credit card industries income comes from three things: interest, fees charged to cardholders, and transaction fees charged to companies that accept credit cards.
Many credit card companies offer some really enticing rewards to draw in more customers (that they can ultimately charge interest and fees to). That is how they make money. However, if you are savvy, you can make your cards work for you.
If you owe money on your credit card(s), look for a low rate card and transfer your balance so that you can pay it off quickly. Once you’ve eliminated this debt, focus on finding a card that offers rewards.
Find one that offers a reward of 1.5 percent of what you spend, and monitor rewards programs regularly to ensure that you are getting the most bang for your buck.
Now, if you owe way more than what you can afford to pay, it still isn’t too late to get back on track. Freedom Debt Relief could help you eliminate your credit card debt for significantly less than you currently owe. Contact us online for more information.
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Category: Saving Money
