Here's a list of 9 Painless ways to save money or to find money in your budget for paying off debt. They just require a little bit of mental energy. I promise, you'll be surprised at how much you can save or pay off quickly! You can see results as soon as your next paycheck. 1. Say you set a budget for X amount of dollars and then you come in under budget for the month, what happens to the difference? Usually, you just absorb it into your budget. Now what would happen if you were to transfer the difference to savings (or the debt you're shaking down). You were already planning to spend that X amount of dollars. You already had planned for that amount to be gone from your life*. Why not put it toward your goals? Let's see this in action: Say I have a townhouse on the market for sale and no one is living there. I have budgeted $100.00 per month for the utility bill, which includes, water, sewer, electric, gas, recycling, you name it. Then, since no one is living there and I'm running the A/C only to keep the house at a balmy 80 degrees, my utility bill comes due at $78.22. Budget ($100.00) - Bill ($78.22) = $21.78 additional money toward debt. Now say we have a credit card with a balance of $2500.00 at 18% interest and say we put that $21.78 to work every month. Do you know what would happen? Instead of paying it off in 204 months (That is seventeen years, y'all), you would pay it off in 40 months (3.5 years). You would pay $832.55 in interest, rather than a whopping $3,173.22 in interest. I hear what you're saying, though. “But Erica, I could use that $21.78 a month to buy a candy bar at the movie theater!” Well, I know how much you liked my last math solution, so let me illustrate why my idea is better with some more math: An extra payment of $21.78 each month for forty months totals $871.20 = extra amount paid. $3,173.22 (total interest paid without the extra payment) - $832.55 (total interest paid with the extra payment) = $2,340.67. Stay with me. It's going to be worth it. Just one more step. $2,340.67 (total interest you didn't have to pay) - $871.20 (total extra payments you made) = $1,469.47 money that stayed in your pockets. Wait. I hear boys in the yard. How many milkshakes did we just buy? 2. Unexpected Refunds or Settlements
So there was a class action settlement made for being overcharged for something you don't even remember consuming, but here it is—your share is $18.41. Sweet! 3. Gifts Does Grandma still send you two $5.00 bills in the mail every year? You know what to do. 4. Bonus at Work It could happen. And I am pretty sure these are unexpected. And not in your budget. Close your eyes and grit your teeth and put those dollars where they can work hard for you. Buying those new kicks won't get you out of debt. Unless you have holes in your shoes. Then, by all means, buy a new (reasonably priced) pair of shoes and put the rest to work for you. I can't have you losing your job because you have holes in your shoes. 5. Overtime This one is one of my favorites, and it has a lot to do with attitude. Now, I always did my budget based on my base pay. Overtime was just extra money that needed to be put to work. You had to work the overtime, like it or not, so it's not that you're making extra effort to get more money (that's why I can call it painless). But boy, did I hate working overtime. That is, until I decided to put my overtime money toward something I could look forward to, instead of dread. My mother and I had talked for years about going to Italy, but one of us was never in a position to go. New job, college, new house, marriage, divorce, or what have you was always in my way. Or was it? I didn't set out to work more days and I certainly didn't volunteer to come in on my days off, but in less than two years, I was pricing different trip deals online** and ran upon a deal I could not pass up. I booked our trip the next day. Three months later, we were spooning hot chocolate pudding in our mouths at a little bistro in Venice. That was a week before the 2008 flood. 6. Travel Reimbursements Say you drove 100 miles for business, and were reimbursed at $0.55 per mile, so $55.00 is paid to you for the convenience of not having to provide you a vehicle. Even if you only get ten miles to the gallon, that's ten gallons. At $2.08 per gallon, you repay your fuel budget the $20.80 and put the remaining $29.20 to work for you ($55.00- $20.80 = $29.20). If you're really feeling tough, absorb the $20.80 and put the whole reimbursement toward your debt. You're out of control, debt destroyer. 7. Found Money So you forgot to clean out your pockets before you put your daisy dukes up in the attic last summer? That $20.00 bill belongs to your MasterCard now. And lucky you. The most I ever find is three or four crumpled washed and dried one dollar bills. But you know I'm putting every one of those dollars to work! 8. Little Bits Here & There Do you have Ebates, Ibotta, Checkout 51 accounts? Have you been saving little bits of money here and there? What about the money in your Paypal account from selling those old schoolbooks at outrageously steep discounts? Transfer them to your checking account and put them to work for you. 9. Round Up When you write a check, round up in the checking account. Round up to the nearest dollar. Or move an extra whole dollar for every check or debit charge. You can charge yourself your own $5.00 service charge. Sure, they have savings programs like Digit*** and Acorn*** that round up by a specified amount and deposit into savings or investment accounts, but I like moving that money myself. Do you have any painless savings ideas to share? I'd love to hear how you put every dollar to work. ~ Erica * Except for your grocery budget. Every dollar you're under in that budget, I want you to roll it to the next month, where you can use it to take advantage of bulk purchases for pantry and freezer items that are at stock-up prices. Are you keeping a price book? ** I can't stand it! I have to tell you what a great deal it was! $3,200.00 for a week in Venice for two, flights and hotels included, with extras that included a wine tour, a boat tour, and excursions to Murano (known for blown glass), Burano (handmade lace), & Torcello (historic Byzantine cathedrals). I just knew it was a typo! ***Check out J. Money's exuberant Budgets Are Sexy reviews of Digit HERE and Acorn HERE.
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