For
much of the last decade or so, the average American has had trouble saving up
any of their income for future purposes. In fact, in 2006 the government
reported that Americans had a negative savings rate for a short time. That
meant that they were spending more than they were making. After the Great
Recession, this number improved, but it's still a good idea to look at ways to
lower your monthly expenses. Here are some expenses that might be worth cutting
and reasons why cutting them makes sense.
Expenses to Cut
There
are many different vendors that are looking for your hard-earned money. Some of
these expenses add very little benefit to your life. The biggest expenses are
usually housing and transportation. Taking a smaller apartment or downsizing
from a large house can be great ways to save a few hundred dollars each month.
If you're leasing a vehicle, getting out of the lease and purchasing an older
reliable car that's fuel efficient can be a good way to save on payments,
insurance, and gas. You can also always find cheaper car insurance at acceptanceinsurance.com.
Finally, cutting the cord and getting rid of cable could save a cool $100 at
least on a monthly basis.
Pay Off Debt
If you have debt, you are actually paying money to the bank for the privilege. This means that you have fewer dollars available to you each month. If you can use the savings from cutting your expenses to pay off debt, you'll only see a better balance sheet each month. When paying off your debt in an accelerated manner, it's a good idea to pay extra for your most expensive debts. Paying off a credit card with an 18 percent interest rate would lead to an automatic 18 percent return on the amount that you pay off early. From credit card debt, it's a good idea to start on debts with lower interest rates like car loans or mortgages.
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| photo from pixabay |
Build an Emergency Fund
Few people actually know when a job loss might occur. When job losses do come, many folks will be out of work for a few weeks or even months. This is why it's good to have some emergency cash on hand. Additionally, things around the house can break, and when it comes time to repair or replace them, having an emergency fund can cut down on the stress that you'll experience.
Save For Fun
Have you had a lifelong dream to visit Disneyland? What about the Eiffel Tower in Paris or the Taj Mahal in India? If you have, your dream vacation could be closer than you think. All you have to do is cut out some of the other expenses that are unnecessary to have a good quality of life. Studies have shown that people get more life satisfaction out of experiences than stuff, so saving toward a nice vacation can be a great way to improve your quality of life.
It's
a good idea to be strategic in your savings. You might want to look at your
estimated budget and then divide that amount by the number of months that you
think will be necessary to build up your savings to that budgeted amount. Then
you can save for vacation and pay for it without worrying about going into
debt.
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| photo from pixabay |
Cutting
expenses is almost always a good step to take. More stuff does not
automatically mean more happiness. However, a lack of funds can frequently lead
to less happiness and more stress. It can also keep you from going on your
dream vacation. Cutting down on these negative impacts can go a long way toward
achieving long-term stability, both emotional and financial.
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