It’s a new year, and every new year represents a fresh start. Many Americans use this fresh start to make resolutions or set goals for things that they want to accomplish in the new year, and it probably comes as no surprise that one of the most popular goals or resolutions is to become more financially sustainable. A big part of becoming more financially sustainable, fittingly, is becoming debt free.
If it comes between building a savings account or paying down revolving debt (i.e., credit card debt), we strongly advise you to pay down the debt first. That’s because you’ll be paying much more in interest long-term if you put off paying down such debt, not to mention your credit utilization ratio can also play a factor in your overall financial health, as the higher this goes, the lower your credit score does.
Bottom line: Paying off debt has a lot of benefits, both short and long-term. But what are you willing to give up to make it happen? Probably not your phone or your car, as these are things that you need to get to work and to communicate. But there are some more practical things you can eliminate from your life if you truly want to make good on a commitment to become debt free in 2020.
Here’s a look at some of the things the experts advise eliminating from your lifestyle if you’re serious about getting out of debt:
How often do you dine out, regardless of the meal? Coffee and a muffin on the way to work in the morning? Grabbing lunch with colleagues once or twice a week? Date night with your significant other a few times a month? It all adds up, and over the course of a year, it can add up to the tune of several thousands of dollars depending on your dining out frequency. Even halving how much you dine out can potentially present a significant savings. If you’re unwilling to completely eliminate dining out from your lifestyle, even just cutting back can help.
We all love Netflix, Hulu, Prime Video, HBO Now, Disney+, magazine and news subscriptions, premium sports packages, etc. — but have you really thought about how much all of these can add up over the course of a month or year? When you consider that a standard Netflix subscription is $12.99, you can do the math on what you’re paying annually. We’re not telling you to completely eliminate streaming entertainment or the news sources you pay for, but think about this: It’s easier than ever to manage what you’re spending money on thanks to no-hassle canceling these days. So, instead of paying for everything each month, think about jumping around. Maybe subscribe to Netflix one month, HBO Now the next and Disney+ the month after.
According to Mic, buying generic brands could save you up to $1,500 per year. Think about that the next time you go to the store and are deciding between a 30 cents savings between the name brand and the off-brand. Thirty cents may not seem like a big savings, but it all adds up over the course of a week, month or year.
Cruising Instagram and see a nice pair of boots that you just have to buy now? Dying to click on the ad that just came over on your Facebook page? Jealous of the things an influencer is showing off on your social channels? Impulse buying, especially via social media, can be a huge budget killer. Make sure you know your real goals — both personal and financial — and not the goals that social media tries to push on you.
We all love shopping at Costco, largely due to the belief that we believe we’re saving a lot of money. And if you play your cards the right way, you can save a lot of money. Yes, it comes with more of an upfront cost than if you were to pay for a smaller quantity item, but it can pay off big time in the long run.