I graduated college with $35,000 of student loan debt and a monthly payment of around $400.
That was significant percentage of my monthly salary of $5,000 before taxes.
If you’ve been a beneficiary of the student loan payment pause and are now scrambling to try to figure out where you’ll find the funds to service your loans when repayment resumes, I have some ideas.
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Most of us have “leaks” in our budget – expenses we pay for unnecessarily and sometimes even unknowingly. Plugging those proverbial leaks offers a quick and painless way to save more money and redirect them to areas that are more important such as your student loans.
Here are six money-saving opportunities that should help you cut your expenses without noticing.
1. Reduce Food Waste
According to CNBC, an average four-person family in the US throws out approximately $1,500 worth of food every year.
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To reduce your food waste and associated expenditure, try the following:
- Plan meals in advance and shop for them accordingly (create a list!)
- Try freezing whatever you don’t eat instead of throwing it away
- Measure portion sizes beforehand and cook only what you’ll eat
- Keep a calendar and cross out leftovers
This last tip was very helpful when I started living on my own. We would write our meals on a “meal calendar” and cross off meals whenever we finished the leftovers. This meant we never forgot a container in the back of the fridge, which is itself a good enough reason to keep a calendar.
Waste isn’t the only food-related money leak, consider reducing how often you visit restaurants or fast food places. Home-cooked meals are always cheaper, and healthier, but require a bit more time and preparation.
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And if you really love a restaurant, get takeout instead of dining in. At the very least, you can save by not having to give a full tip or pay the exorbitant markup on beverages, especially alcoholic ones!
2. Cancel Unused Subscription Services
A recent study found that people spend almost $53 per month on paid subscriptions. The scary part is almost 50% of it goes to unused subscriptions. Likewise, many consumers lose track of everything they’ve signed up for, meaning they pay for things they don’t use without even realizing it.
You can do a quick audit your subscriptions. Just get a notepad and write down all of your subscriptions and how often you use them. You may find that it’s not nearly as often as you think.
This is how I knew it was time to cancel our cable subscription – we only used it to watch live sports a handful of times a year.
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Whether it’s Netflix
NFLX
AMZN
3. Avoid Unnecessary Bank Fees
Not all fees are mandatory. Mutual funds will always take their management fees but if you’re paying ATM fees, that’s something you can easily avoid (use a bank that refunds ATM fees!).
A few other examples include overdraft and late fees. If you are hit with those fees, it’s always worth asking whether fees can be waived. If it’s your first time, banks will usually waive them. It won’t work every time, yet there’s no harm in asking.
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When fees are required, you may discover an alternative approach that delivers the outcome you want without incurring them – like setting up automatic bill pay to avoid late payment fees.
4. Avoid Impulse Purchases
In 2022, American consumers spent an average of over $300 each month on impulse purchases. That’s $3,600 per year!
Over the course of a lifetime, you’re looking at hundreds of thousands of dollars that could pay off your mortgage or put your kids through college.
The lesson is simple: unplanned purchases stack up rapidly! A few ways to avoid impulse buying and reduce the financial fallout include the following:
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- Creating a budget to establish a plan for your spending
- Incorporate “impulse” buying into the budget by allowing yourself a set monthly dollar amount to spend guilt free
- Stick to your budget!
- Hit the mental pause button before the “buy” button – even short delays can give you a cooler head and thus prevent reactive spending
5. Improve Your Credit Score
Your credit score has a direct impact on how much you pay for things in life. We understand this when it comes to loans, but it also influences whether we are approved for a new cell phone or even an apartment. It’s an invisible hand but one that we can have on our side.
Researchers found that individuals with a subprime credit score pay almost $3,000 more than someone with good credit when buying a $10,000 used car.
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Fortunately, improving your score is not difficult. You just need to be diligent and patient. If you start with the following, you’ll be well on your way to a higher score:
- Check your credit report on a regular basis for errors
- Keep your credit utilization low
- Make sure you pay your debts on time, perhaps by setting up automatic payments
- Don’t open new lines of credit unless absolutely necessary
If you have those under control, here are other ways to increase your credit score.
6. Buy High Quality Products Once
When making a purchasing decision, consider a counterintuitive idea – how can I spend more money to get better value?
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In the 1993 novel Men at Arms, the late author Terry Pratchett summed this up perfectly with the example of a pair of boots.
He wrote:
“A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”
Keep this idea in mind when shopping. Whenever you must buy something, the pricier option may actually be cheaper in the long run.
Start Saving with Less Sacrifice Today
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Spending less and saving more money doesn’t have to be difficult or a massive sacrifice. In fact, there might be numerous ways to do it without you even noticing.
By identifying and addressing the “money leaks” in your budget, you can free up cash you can redirect towards more important expenses such as student loan payments.
Read the full article here
