Many of us probably struggle with the budget during this pandemic, check out Jurg Widmer Probst with 9 ways to save money and eliminate debt.
Most of us want or need to save money, and the pandemic has made this even more important. But it can be difficult to get started, particularly if you’re facing a pile of debts that seem insurmountable. Here we will discuss 8 ways to eliminate debt.
The first step is acknowledging that you need to make changes to your spending habits. When you’ve done that, you can try different methods of saving money to find out what’s best for you. Whether it’s by switching to packed lunches and saving the £6 daily sandwich spend, or postponing a big expense like a new car, there are lots of ways to save money and get out of debt. Try these tips to get your savings back on track.
8 ways to eliminate debt and save money
- Pay down your debt first
There is little point in living with a tight budget if it’s all going on paying off the interest on your loans. If you have a large debt burden, this is where you should start. Look at your accounts and find out how much you spend keeping the debt rolling every month. You’ll most likely discover you’re paying a lot in interest. If you focus on paying off the debt first, then all of that extra cash goes into your savings. Consider consolidating any debts you have to find the fastest and least painful way to clear them.
- Set yourself savings targets
Just like when you’re trying to lose weight, you’re more successful if you start by visualising your end goal. Think about what you’re saving for and always keep that at the forefront of your mind as you make changes to your lifestyle and spending habits. For added motivation, set smaller targets along the way to achieving the main goal, whether that’s clearing your debts, booking a holiday or buying a car.
- Transfer money to your savings account when you get paid
Set up an automatic payment from your debit account into a savings account on payday every month (or week). Make this amount as much as you can realistically afford, whether that’s £50 or £500. When you get into a regular habit of doing this you won’t even miss it, and all the while it’s building up your savings nicely.
- Swap your holiday for a staycation
Perhaps this is an unnecessary tip for the year of COVID-19, but some people are still holidaying where and when they can. My advice would be to forget about holidays overseas for a year or two and take a holiday closer to home. This will cut costs, but also help you and your family stay safe this year. You could even have a true ‘staycation’ and hang out at home.
- Spend now to save later
Utility costs will not go down over time, so it’s time to take charge of yours. Carry out an energy audit with your providers to find out whether you’re paying too much. Swap providers if you can find a better deal on your electricity and gas supplies. But it’s also worth carrying out other energy efficiency measures, such as improving insulation, sealing windows and doors or replacing windows completely. While these will cost in the short-term, thejy will save you thousands in utility costs over time.
- Save heating costs
As we head into winter consider whether you can save money by changing the way you use your heating and hot water. Lowering your thermostat for both can save in energy costs, and you may find you can get away with less of both.
- Don’t eat out
OK, so most of us have saved on eating out for at least a few months during lockdown this year. But even then the temptation for takeaways was strong. Now that people are heading back into workplaces, it’s time to consider whether you really need that daily sandwich from the shop. If you pack your own food and take your own coffee on your commute, then you will be saving around £10 per day. That’s £50 per week, adding up to a whopping £2,400 per year even allowing for holiday time.
- Open a separate interest-bearing savings account
If you’re not in the habit of saving every month, you may rely mostly on your current account for managing your finances. But it’s much easier to set up a separate account away from your daily debit account. Keep your savings in there and in time you can consider a higher interest ISA. Interest rates are not great right now, so you’re unlikely to make much when you start out saving money. However, just having it in a separate account means your far less likely to be tempted to spend it.
- Annualise all of your regular spends
In the same way as I worked out what cost savings on lunch could be, you can do the same for your usual spending habits. For example, do you habitually spend £10 on a vending machine at work? Or do you have a gym membership you’re just not using? Take some time to work out how much these kinds of spending habits are costing you over a year and cut back where you can.