Last week on Finance Friday I shared some tips on saving money on regular, recurring expenses. We all have bills- our car payment, phone bill, you name it- and those bills add up. But they don’t have to be as much of a drain on your finances as they tend to be.
Most of us are saving towards something: a new car, a cross-country trip, a tattoo. For me and Seth, we want every extra penny to go toward our next trip, so we utilize some of the tips in the last post and in this one to save a couple bucks a month to put toward our trip fund.
Check out below for a “Part 2” of our tips on saving money when you have to spend it:
Paying Bills: Get Rewarded for It
Of course, we all have to spend money, so find a bank account or credit card that rewards you for it. I’m going to tell you which bank I use that I absolutely love, but there are a lot of products that give similar rewards, so I encourage you to research them. You can start here and here.
I have had a credit card with Discover for years, their Discover It card, and I have loved their customer service and rewards system. Therefore, when I was growing unhappy with my old bank, I looked into Discover’s checking and savings accounts. And now I make money back every time I spend!
With my credit card, I make 1% back on all purchases plus 5% back on rotating categories. For me, depending on how much I use the card that month, it’s anywhere from $2 – $15 per month in rewards, which could yield as much as $180/year. I try to use this card when I have really large purchases, like when I recently had to pay to get some damage on my car fixed, or when I’m spending in one of the 5% categories. On top of those rewards, my checking account with Discover also pays me back $0.10 for every debit purchase, check, or online bill payment. This is another couple bucks per month. So no matter how I spend, through credit, debit, or online, I get rewarded in one way or another.
Like I said, a lot of cards and accounts offer rewards like this. Research them and pick the right one for you- some offer miles, others will match rewards after the first year, and other perks. If you have to spend money, might as well get rewarded for it, and there are a lot of options on how to do that. My only warning: don’t overspend in an effort to gain more rewards.
Your Car: Do You Really Need It?
Okay, this is one of the more drastic ones, but it also has potentially the highest return. Even if you’re no longer paying off your car, it probably still guzzles a lot of money each month. Between gas, insurance, parking, and maintenance, it could be a hefty portion of your paycheck. Take a critical look at your day-to-day life and ask yourself if you really need your vehicle. Do you live in a city with ample public transportation? Do you live on a college campus where everything is in walking distance? Does your significant other/parent/roommate have a car? Do you realistically only use your car once a week? If you answered yes to any or multiple of those questions, you just might be able to consider this as an option.
For my friends that are still in college and really only need a car to get out off campus or drive home- could you take the train home instead or convince your parents to pick you up? Are you making that journey infrequently enough that these changes wouldn’t be that much of an inconvenience? And if you need to get off campus, could it be cheaper to just pay for an Uber or ask a friend to drive you instead of all the monthly expenses of owning a car?
For the city-dwellers- could you realistically get to work with public transportation every day instead of driving? On the rare occasions when you need a car for a few days or for a trip, could you just rent one? Could you schedule your regular grocery trips with your friend who has a car?
Speaking personally, while I lived in Philly, I had a car for the last 2 years I lived there. I wouldn’t say it was absolutely crucial, but it was a huge reason why I was able to work a job a good hike outside of the city and fill in on random shows whenever needed. Now that I’m living in DC, though, I live across the street from the Metro that takes me to work everyday and can take me just about anywhere else I need to go. Plus, Seth has a car as well. So, I’m currently paying my car payment, insurance, and a whopping $75/month for parking only to use my car less than once a week. I am acting on this tip by “selling” my car for a few months of the year. I am very fortunate to have a family member that drives a very nice car during the spring/summer months and could use my car during the winter months. Therefore, this person has agreed to take over the expenses, and thus eliminating my parking fee, for use of my car for a few months. That’s a plane ticket in 2-3 months worth of savings for me.
Obviously I’m very fortunate to have this opportunity. Especially because I expect us to be moving across the country in the next couple years to a place where I will need my car, so this is a way to eliminate my expenses for part of the year without having to completely sell my car. But, if you expect your living and transportation situation to remain stagnant, could you potentially sell your car outright? Or maybe you have someone like I do, who is willing to buy it from you for a period of time. If it isn’t a viable option to outright sell your car, even if only for a period of time, find other ways to recuperate costs. If your roommate is looking to buy a car, maybe you could instead convince them to split use of your car with you for half of the car payment. Or maybe charge a friend or neighbor $10 to borrow each time they need to run an errand. Brainstorm other ways to make some money back with your car (of course, driving for Uber or Lyft is always an option, too).
Save Less by Spending More: Over-Pay on Your Debts
Okay, this is one of those do-it-now-to-save-yourself-in-the-long-run type things. If you are working to pay off any kind of debt, do what you can to overpay on it. By paying now, you’re saving yourself interest in the long run.
On a $10,000 debt at a 6% APR, paying $100/month would result in almost $3,900 in interest. Conversely, paying just $50 more per month would mean only $2,200 in interest. Stretch your paycheck to contribute $300/month, and you’ll pay it off in almost a quarter the amount of time of $100 payments and with less than $1,000 in interest. Sure, it may suck to pay $300 a month, but if it means finishing paying your debt in a portion of the time and saving thousands in interest, I’d say it’s worth it.
Well that’s it for now! Let me know if you try any of these tips or, even better, if you have your own ways to save on your bills!