If your goal is to save for a large purchase or to just have a sizeable amount of money squirreled away for a rainy day, then you may want to become a financial minimalist. By learning to spend less while still making the same income (or even increasing it), you may be able to completely erase your debt. Here are a few tips on how to do just this.
Skip the Sales
Just because you see a sale doesn’t mean you have to buy from one. Unless you truly need an item, buying something just because the price is reduced is a terrible idea. Not to mention the fact that many companies raise their prices just to mark them down a little, you may not be saving any money on the item, to begin with.
Saving for Large Purchases
Instead of going the usual route and making a large purchase on a credit card, save up for it. This way you will not have monthly payments with potentially sky-high interest rates. While it may seem like you could never save up for something like a car, by cutting corners elsewhere, it can easily be done.
Refinance When Possible
By refinancing your existing loans, you can lower your monthly payments and even save money on interest rates. Student loans are an excellent choice for refinancing as it is typically very easy to get approved for this type of loan if you have been making your previous payments. This way you can free up extra cash and avoid spending too much on interest.
Of course, you already know that preowned clothing is available from virtually any thrift store, but there are preowned options for virtually anything. Check out auction sites for deals on things that you may need, but are perfectly acceptable to not buy brand-new.
Get Rid of High-Interest Debt
While being depicted as normal, having high-interest debt is not a financially healthy way to live. Take as much of your extra money as possible and before making any more purchases, pay that debt off. If, for instance, you have multiple high-interest cards, make the minimum payment on all, but pay as much extra as you can on the card with the lowest amount of debt, this will pay it off very quickly. Repeat the process until all cards are paid in full. After this is complete, it may be a good idea to destroy the cards to avoid overspending.
Pay Yourself First
This is a process in which you come up with an amount you can realistically save and then put this into your savings account before any other bills are paid. This ensures that you are sticking to your stated savings plan. After your savings are deposited and your bills are paid, your allowance is what is left over.
Try A No-Buy
You may be wondering what a no buy is. This refers to the practice of buying almost nothing for a pre-determined amount of time that you set yourself. It might be a month, it might be several months, it is entirely up to you. The key is to not spend money on anything except for food and bills during the entire time.