Please enjoy this guest post from Tina Roth of ProFinance Blog.
I recently hosted a party at my new residence. All of my childhood friends were present at the get-together. I asked all of them a common question – what could be an effective trick with money? Some are in favor of saving, some stress on investment while for the rest, debt clearance is a top priority. The interesting tips I collected from their answers could make a lengthy blog post but many will not like going through a lengthy write-up.
Here are my top picks from what they said:
Tips on Money Saving
- To control my habit of dining out, I started charging myself $10 on eating out every time.
- We don’t spend much on the weekend and instead save the money for annual travel vacation.
- What we save on a daily basis goes to a piggy bank. At the tail end of the year, we take the money out to decide where to spend our savings – mortgage payment, debt clearance, fund for travel or anything else.
- I decided to give myself a $20 gift every time I manage to wash all of my clothes at home. Laundry used to eat up a good part of my monthly income and I just planned a way to cut the cost and direct the saving towards another purpose. At the end of the last year, I bought a new refrigerator.
- I have a good job and my wife works from home. A part of my income is spent on household expenses while the other part inflates saving. Mutual adjustment is very important if you want to follow our example.
- It is very common for us to get a discount on a power bill (internet, cell-phone, insurance or whatever it is). In my case, I channeled my saving via an automated savings transfer.
- Saving on time is my priority. If I fail to do it – though it happens once in a blue moon – I pay interest on my account. That adds credibility to my habit of regular saving.
However, my favorite piece of advice is when you save money, you must put it in your account instead of spending it frivolously. If savings disappears, you are not building up a nest egg for your future.
Tips on Debt Repayment
- I have a part-time job apart from a regular one. What I earn from my part-time income goes to a special account. After the month ends, my monthly transfer from that account goes towards clearing my mortgage dues.
- I set up an automated transfer to my fund for making timely payment of mortgage dues.
- I have found ‘Pay Off Debt App’ extremely useful. To put it in simple math, obsession + automation = Debt Payment! Over obsession is very bad but if you are not obsessed with how to pay off your debts as early as possible, you will never be able to be a debt-free man.
- As long as I had debts to my name, any income outside my salary from a 9-hour job goes towards debt payment.
- I disburse my monthly earnings over 4 weeks to meet my student loan. By doing so, I don’t feel heartache of paying off a larger chunk, as the transfer of smaller amounts can be easily tolerated.
- A few years ago I switched from a 20-year mortgage to a 10-year mortgage option. Our interest rate dropped during our debt payment period and so we are making the same level of payment even after a switch-over. Only a couple of years are left for us to break free of debt prison.
- Every month I take a hard look at my mortgage payment to check my balance and convert the odd number to an even one through an online transfer. It gives me encouragement to clear debts as fast as possible.
- If you own a credit card and want to pay it down, make the payment immediately after receiving the bill instead of waiting until the deadline.
- My cashback bonuses are used to pay down balances.
Other Money Tips
- I have made my wife and college-going son as the commanders to execute my money-saving plans successfully. I have engaged my wife in checking my financial details. The underlying objective is to keep her motivated and check on frivolous spending.
- My son manages a piggy bank. I dump my loose change there in hope that tinkling sound of money will teach him a good lesson of saving at an early point in his life.
- For annual bills on property taxes, life insurance policies etc., I deposit to a savings account to make money easily available when they fall due.
What is your personal take on these tips? What tips would you offer to others?
Tina Roth is a freelance personal finance blogger who is an expert in the areas of personal finance and money management tips.