It may seem counter-intuitive for a debt coach to tell you how to save and pay off debt. If you asked me is it better to pay off debt or save? Pay off your debt first then save. Of course, you won’t be saving for college, and retirement yet. However, when you are in debt, you still need to save money. Some banks will allow you to keep multiple small savings accounts open to create your $1000 emergency fund, save money for a vacation, and other large purchases like insurance. There are even some online banks that will give you a little better interest than local banks can. Don’t expect these interest earnings to pay off your debt. They will just keep you from losing value over the course of a year or two when you need to save.
You will also need to save for some debt management strategies. For instance, if you have a large credit card that you have not been paying on. You may be able to save up a portion of the balance and offer a lump sum payment to close out the debt. Make sure you get anything they promise in writing!
It can seem impossible to save and pay off debt debts. However, by using common savings and debt management strategies, you can be on your way to saving while paying off those debts. The important thing to remember is that saving is a process that takes patience. When you start saving, you are in it for the long run. Tiny sums of money here and there will actually add up to significant sums before you know it. So let’s begin!
Here are 3 tips on “how to save and pay off debt.”
Tip #1: Spare Change
Now, this is one of my personal favorites. With consistency, you can quickly save up a few hundred dollars to provide some extra financial help with debt. Everyday when you return home, you will have spare change in your pockets or purse. Spare change just accumulates during the process of a normal day. Take a large receptacle of sorts and deposit your spare change in it every night. When your feeling happy, toss in a few dollars every now and then. Before you know it, it will be overflowing with coins and small bills. My dad would do this, and he used the money for when we would go on vacation. Literally, he had a large plastic coke bottle, and we would help him sort and count the money on the table before vacationing.
Tip #2 Register for Cashback Apps
There are many cashback websites and apps that provide access to incredible cashback deals when making regular purchases. With these apps, you could be routinely accumulating cash back everyday. This is one of the best tips that a debt coach or financial advisor can give you for free. The money will simply accumulate in your account on the application. When your ready, you can cash out by transferring it to your savings account.
Tip #3 Transfer Odd Amounts
This is also one of my favorite ways to maximize savings. Whenever you log into your online banking account, check the balance of your checking account. Always remember to transfer the odd cents over to your savings account. For example. If you have $1,532.56, transfer the .56 cents into your savings account. Do this every time you log on and you will quickly notice the difference in your savings account.
Now that you have an idea how to save and pay off debt. Go get a pencil and paper, and do some calculations.
Remember, Is it better to pay off debt or save? Always pay debt when you can. But never neglect saving money for large expenses like insurance and taxes.
These three debt-free tips combined can easily increase your savings by 50%. This will effectively double the amount of money you are able to save over a period of time. Happy Saving!