Here are 9 painless ways to save money or pay 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 and some of you can see results as soon as your next paycheck.
1. You set a budget for X amount of dollars…
When 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 save 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 (insert your seemingly insignificant habit)!” Well, I’m trying to save you $2,300.00 in interest charges, but 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 principal 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. Your eyes are glazing over. 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 pocket. Wait. I hear boys in the yard. How many milkshakes did you buy?
So there was a class action settlement made for being overcharged for something three years ago that you don’t even remember consuming, but here it is—your share is $18.41. This money should be easy to save.
3. Gifts
Does Grandma still send you two $5.00 bills in the mail every year? The Post Office does not recommend sending cash, but if she does, you know what to do with it.
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 save the rest. 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 check. Overtime was just extra money that needed to be put to work. Remember, if you don’t tell your money what to do, your money could walk away. You have 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 save 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. First job, college, first real job, new house, marriage, moving, divorce, another job, or what have you was always in my way. I promised my mother we would go to Italy before I made any more huge life decisions, but it seemed so far out of reach for both of us. 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 trips for two to Italy** and ran upon a deal I could not pass up. I booked our trip the next day.
Three months later, my mother and I were spooning hot chocolate pudding in our mouths at a little bistro in Venice, just as I had promised. That was a week before the 2008 flood. Did I ever tell you how awesome my timing is? That’s a story for another day…
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 save 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/ Forgotten 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? How about that 2 Liter you’ve been corralling your dimes in or that stack of $5 bills where you started the $5 savings plan but lost steam? 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. Check out J. Money’s exuberant Budgets Are Sexy reviews of Digit HERE and Acorn HERE.
Do you have any painless money saving ideas? 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 save 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). It was the trip of a lifetime!