I just filed my income taxes and finding out how much I spent on student loan interest was a rude awakening. I am more determined than ever to clear up my debt, and a lot of that will come from saving money that I would otherwise spend. Here are the ways I am going to focus on saving this year:
1. The 52-week saving plan. Basically each week you save a dollar more than you did the last week and end up with over $1300 at the end of the year. I am tailoring this to my own needs by transferring the money directly from my checking to my savings each week so that it’s nice and tucked away. I have debated whether I would change it more, since I don’t like the idea of putting away $200 in December, but I think I’m going to suck it up and make it work.
2. I’m putting my entire tax refund toward loans. I need to determine whether I want to make a big payment now to get the principle down or wait until the end of the year so it’s an even bigger payment. I might do it now, just to save on the interest even more. This year I will keep track of all charitable donations so that I can get a deduction next year (though it won’t be huge, every bit helps).
3. I’m going to save on groceries by using tactics like growing vegetables from scraps. I’m also going to make my own vegetable stock from scraps, like potato skins, leftover herbs, and vegetable ends.
4. Any time I get extra money (specifically cash) it’s going into savings. I’m even going a step further and treating money people pay me back (like if I bought them drinks, or mailed a package for my mom) as extra money. This is a small way to put money into savings that I wouldn’t otherwise.
5. I already have $25 a month automatically going to savings. That is continuing in addition to all my other saving tactics.
6. Every time I make an extraneous purchase (eating out, going bowling or to the movies, other entertainment), I’m going to put the equivalent to what I spend in savings. I saw this tactic in an article I read recently, and wasn’t sure if I wanted to adopt it because it seems a bit extreme and will take a lot of discipline. But I know it will make me look at my expenses closely and keep me from living beyond my means.
At the end of the year, all the extra I’ve saved will be directly applied to my student loans. This week I am also going to look into raising the monthly payments on the loans with the highest interest so that I’m paying down the amount faster. I will then work that higher payment into my monthly budget so that I can still pay my other bills.
Writing this up, it looks a bit over-the-top, like my life is going to be focused on money. But I see it more like my life is going to be focused on not spending money needlessly. I will find other ways to entertain myself- reading, crafting, and other things I enjoy. This will give me the leeway to spend money on things I really want to when they come around like traveling to visit friends, and the occasional concert.
What are your strategies to save money/get out of debt? Share in the comments!