Debt is all around us. The average credit card debt, for those with debt, is just shy of $16,000, as of June 2015. The average student loan debt for the graduating class of 2013 was nearly $30,000. That doesn’t even begin to touch on other forms of consumer debt like car payments.
Regardless of the source of non-mortgage debt, it can take years to pay off. This not only increases the possibility of running into debt fatigue but also increases the amount of interest you’ll pay over the life of the debt. It doesn’t have to be that way.
There are many simple ways to cut costs that can free up more money for debt repayment. Making extra money is also an option, though in the beginning cutting costs will likely be simpler. Below are some of the first areas to look at for cuts.
Money Saving Opportunities That Can Be Applied to Debt
- Negotiate monthly bills. How much are you paying for your car insurance? How much do you pay for your Internet service? Do some comparison shopping or call your current provider asking about their current promotions. My wife and I do this regularly, and it’s nothing to get offered at least 10 percent off.
- Change cell phone providers. If you’re with one of the major cell phone carriers, you’re likely paying at least $140, or more, per month. You don’t have to pay that much! There are many cheap cell phone plans available today that can get you the same coverage for half of that cost or less. Take the extra savings and throw it right at your debt.
- Round up. There are several banks that round up purchases and put that change in your savings account. You don’t need a bank to do this – do it yourself. Instead of just rounding up to the next dollar go to the nearest $5 increment. That extra money can be thrown at your debt each month.
- Move to a 0% interest card. This won’t get you extra money, but it will make the money you’re throwing at your debt work harder for you. If that’s not an option, you can consider a consolidation loan to significantly lower your interest rate.
- Ditch the gym membership. According to Statistic Brain, the average amount wasted on a monthly gym membership is $40. That comes from lack of use. If you’re paying off debt, axe the gym membership, throw the money at debt and work out at home.
- Get rid of your junk. How many things do you have lying around your house collecting dust? Sell those items and throw the money at your debt. My wife and I do this several times a year and usually pocket several hundred dollars.
- Cut the cable. The average cable bill is nearly $125 per month. Ask yourself if that expense is worth keeping your debt for longer. There are many options today that can shave that cost by a significant amount.
- Skip the lunch out. Americans spend $20 per week eating out for lunch. Imagine what that could do against your debt each month. Instead, brown bag it to work. Even if you only cut it by half, you instantly have an additional $40 per month to throw at your debt.
- Use less energy. How much is your monthly energy bill? My wife and I receive a mailing each year from ours offering us at least a 10 percent discount by lowering our energy usage during the summer. It means the temperature in our house is three degrees higher but it saves us big money.
There are many ways to cut expenses that will enable you to throw more money at debt; this list only scratches the surface. The challenge is to be mindful of where you can cut back and apply those savings to debt. Some, if not many, of these cuts will require sacrifice, though in many instances there are great alternatives for significantly less and that’s not to mention the value of being free of debt that much sooner.