Another year is right around the corner and now is the time to start thinking about the goals that you want to achieve. One of my top 5 goals is to become completely debt-free. Can it be done? Yes. Is it going to be easy? No. Will it be worth it? Yes!
CNBC says that the average American has $90,460 in debt and further reveals that Gen X has the highest amount of debt, but millennials have seen the largest increase in debt over the past 5 years by 58%. I fall into that Gen X category, and while my debt is not that high, having no debt to worry about is much easier! Follow these 8 steps to becoming debt-free this year.
1. Pay More Than the Minimum Balance
When you have a credit card or a loan, you have a set amount that you agree to pay each month. Did you know that if you pay more than the required amount each month, that extra goes directly towards the principal amount and not the interest? Your interest is what keeps you in debt longer. The faster you can pay down the principal, the less interest you will pay.
For example, if your monthly payment is $108, round up your payment to $125. That extra $17 a month goes directly to your principal and over the course of a year, you will have paid $200 more on your principal and lowered your interest rate.
2. Stop Spending on Unnecessary Items
There are so many ways that you can still have the comforts you want and pay much less for them. I’m going to share a few cost-cutting tips I have done myself below.
Cable Television and Internet Services
Over the years, we have tried a variety of services – DISH, Xfinity, and Verizon FIOS cable packages bundled with internet service and one premium channel. We were paying anywhere from $190 to $280 per month for these services. That’s insane. Several months ago, when the Verizon FIOS bill went over $600 for 2 months of service, I said enough is enough. I cut the cord on our cable services. My husband was literally freaking out because he thought he would not be able to watch his Monday Night Raw or Friday Night Smackdown wrestling shows. I didn’t have internet so I couldn’t work from home, and our Amazon Prime services (Prime Video and my beloved Alexa Echo) do not work without the internet. I refused to pay over $4,000 a year to watch television. So I found alternatives.
- Prepaid Internet from Xfinity – $45 per month
- Amazon Prime (Video and Shopping) – $5.99 per month (which I don’t pay and I’ll tell you how)
- Sling TV – $35 per month (which was $41 per month with the Lifestyle Extra package – but I found those channels are FREE on The Roku Channel app so that package was dropped)
- Peacock Premium – the only reason I have this is so hubby can watch his Pay-Per-View WWE matches. Literally. It is normally $4.99 per month but I was able to sign up during a promotional period and I only pay $4.99 every 3 months for the first 12 months.
Our total entertainment costs are only $1,052 per year now, roughly $87 a month – a savings of over $3,000 per year. For those of you that can’t live without your Sports packages – The Roku Channel and various other apps offer all the sports you could want – absolutely FREE.
Delivery Fees for Takeout
I refuse to pay the delivery fees for apps such as GrubHub and UberEats. I will be the first person to tell you takeout at least once a week is a necessity because this momma doesn’t want to (or sometimes cannot) cook every single day. I just won’t pay extra for delivery. I am lucky enough to live in an area where any restaurant we frequent often is within 10 minutes of where we live. I order ahead for pickup or curbside service and when I hit submit the order, I’m on my way. By the time I get there, my food is hot and ready to go. With delivery services, times can range from 35 to 55 minutes before you get your food. Who wants to pay extra for cold food?
I used to love going to Starbucks once a week as a treat. I don’t even miss it. I found that our local Wawa and Sheetz make hand-crafted, made-to-order beverages – and I can order almost anything I want at a fraction of the cost. Being a rewards member, I also get points for everything I purchase – which scores me free food, merchandise, and drinks at least once a month.
Music Streaming Services
I have Apple Music on my phone, and it is included in a monthly payment I make for bundled services such as extra cloud storage, my music, etc. At one time I was also paying for iHeartRadio, Spotify, and Amazon Music premium services. Why? You can only listen to one at a time so, pick one and do away with the rest.
Cut the Crazy High Mobile Phone Bills
Why are you spending $50 or more per line, per month – just for service? That doesn’t even take into account whether or not you are buying a phone – that’s an extra fee, and then there’s phone insurance. Our monthly Verizon phone bill for just our mobile phones was about $220 per month for four lines. I cut that bill in half by switching to Visible. We are still on the Verizon network (it offers the best coverage in our area), but we only pay $25 a month each for unlimited talk, text, data, mobile hotspot, AND damage insurance. We even have our own mobile hotspot so in case the home internet goes down, all I need to do is turn on my hotspot and keep on working.
Head over to Visible now and see if your phone is compatible with their service (yes you can bring your own phone and keep your number). Use my friend code – 3m7hWl – and get your first month of service for only $5. The price for service for one month is regularly $40 – but if you join my Party Pay group your monthly payment for unlimited talk, text, data, and hotspot is only $25. Forever.
3. Make Your Own Meals
To save even more, cook more meals at home. Use fresh ingredients, more fruits, and vegetables, and not only will you begin to feel healthier, but you’ll also be saving money by not buying prepackaged foods.
Take waffles for example. I adore waffles. A package of name-brand frozen waffles will cost you about $4 for 12 waffles or 43¢ per waffle. Homemade waffles using a made-from-scratch batter cost you about 6¢ per waffle. So for a family of 4 who eats waffles every Saturday and Sunday for breakfast, the frozen waffles cost you roughly $273 a year. Make them at home and you’ll only pay $38 a year, with no additives or chemicals in your waffles.
4. Get Cashback Rewards
I don’t pay for Amazon Prime. I joined the Amazon Shopper Panel and earn an easy $10 every month just by uploading 10 receipts each month. I also have the option to answer surveys to receive anywhere from 10 cents to 50 cents or more for each survey. This is paid out to me every month in the form of an Amazon gift card which is automatically added to my gift card balance. I use it to pay my Prime subscription and whatever is leftover I use to buy the things we need from Amazon. You can download Amazon Shopper Panel on the App Store or Google Play and start earning today.
Use more than one rebate service. I have Smarty+, Shopping with Microsoft Edge, and Sovrn//Commerce (all extensions) added to my web browser. When I’m searching for a particular product in any store – I get notified by the Shopping with Microsoft Edge of the best deal and where to find it. It will also provide a list of other retailers, coupons, etc. that you can check. It also lets you know about cashback offers. If I don’t like the deal using that extension, I’ll check the others for a better deal, and finally, I check Amazon. I’ve been able to score some great deals on Amazon lately that are less than those advertised, even after the cashback offer.
Be a Minimalist with Your Finances and Budget by Using the 50/30/20 Method
5. Set Aside a Percentage for Savings
My nana used to say, “Out of sight, out of mind.” Have your employer divide your paycheck each week – a percentage to go to your checking account to use for bills and such, and a smaller percentage to be deposited directly to your savings account. It’s automatically done for you so you won’t be tempted to not make that deposit to your savings account because of a high heating bill or the like. When you do have a true emergency – the money will be there in your savings account to help cover the unexpected cost.
6. Use Student Services
There are a variety of services you can receive from students going through training. We are fortunate enough to live in a college town, so there are a variety of services provided by VCU (Virginia Commonwealth University) at just a fraction of the cost.
The student practice at VCU Dental Care is home to graduate students earning their dentistry degrees, each supervised by an expert faculty member as they work with patients. You can make an appointment with the student practice for services including general dentistry, crowns, bridges or dentures, root canals, and periodontics.
I have utilized the student dental practice multiple times and there is always a teacher (a credentialed dentist/doctor) overseeing what the students do. The same applies to salon services – Empire Beauty Schools offer highly reduced rates for their salon services.
7. Find Free Things to Do
No matter where you live, there are always free events that you and your children can attend. If you are cutting back on the gym membership that you haven’t used except for one month (you know who you are), load the kids in the stroller and head to your nearest park. Most parks have a playground with jungle gym equipment, walking trails, biking, skateboarding, etc.
A great source to find free things to do is under your city or county’s recreation page on their website or your local newspaper. One of my favorite go-to places to find local events is on Facebook Events. You can follow local establishments that regularly host events, or search only local events, only events happening this week, events online, classes you can take, or events your friends are hosting/attending.
8. Consolidate Your Debt
The first step to becoming debt-free is to get it under control. If you have more than one credit card, it might be worth taking your credit cards along with any other debt you are carrying by setting up a debt consolidation loan. One payment and one interest rate make for less stress and much easier to manage and stay on top of. It can also help you to see other areas that you can trim throughout the month.
While it won’t get rid of your debt immediately, it does make it easier for you to manage. As always, review your options and find a debt consolidation loan that works for you with the lowest interest rate. Find out more about debt consolidation loans here.
We hope that these tips will assist you on your journey to become debt-free. If you would like some additional information you can find more great tips at 64 Ways to Save Money Around the House from Anna Newell Jones. Anna was able to get out of debt ($23,605.10 to be exact) in just 15 months on a $ 33,000 a year salary.
