Let’s face it: we’re all trying to save a buck.
It’s also more of a necessity than ever, as more families are living paycheck-to-paycheck than ever before in the U.S., with an average of only about $500 in savings but $16,000 in debt per household.
That’s right – we’re STILL not saving enough money, as 55% of U.S. households spend more than they bring in every month!
But looking at the typical household budget and expenditures, financial analysts recognize that the average family can save at least $5,000 dollars this year just by better money management and simple savings strategies.
If you’re keeping score at home, that breaks down to about $416 in savings each and every month!
What could you do with $400 extra every month over the course of just one year? How about building an emergency fund, padding your savings, starting to pay off debt, buying a home instead of renting, improving your credit score, and putting your family on a MUCH better financial path, for starters?
In part one of this blog, we shared our first 5 ways to save $5,000 this coming year, and here are cash-saving hacks 6-10, as promised!
6. Pay attention to your auto loan
Speaking of auto loans, we’ve been buying brand new cars at exorbitant prices like never before, and financing the lion’s share of them with debt. Needless to say, auto financing can’t be considered “good debt” like a mortgage, and the terms and interest rates are often less favorable for consumers in the long run than credit cards since new cars depreciate so fast.
In fact, the average car payment is now well over $600 on balances of $28,524 and up with average interest rates hovering at 16-28%, taking us 7 years to pay off typically. By then, most people have already rolled their auto loan balance into the next new car purchase.
With an average of 3.4 cars for every household in America, the typical U.S. family may be paying more for their cars than their housing!
So, this year I urge you to research other options for your auto loan, whether buying a new car and you go to a bank or credit union to shop around, you purchase a used car for far less, or keep your existing car but refinance your auto loan into something that saves you a lot of money.
7. Impulse, vanity, and “lazy” purchases
Does it always feel like you have more month than money? For many people who try to live financially responsible, it may not be the big-ticket items that are eating up their cash, but “death by 1,000 small and impulse purchases” as I like to call it.
Consider that we eat out at restaurants WAY too much, which costs us big money over the course of the year. In fact, the average American household now spends $6,759 on food every year but $2,787 of that total is for meals in restaurants or outside of the home. We also spend an average of $1,200 on fast food every year – or $117 billion!
We also spend $65 billion on soft drinks and $11 billion on bottled water every year, we dump countless billions gambling, and this one will blow you away: the average cigarette smoker puffs away 14% of their total income on cigs every year, which adds up to about $80 billion, or 1/7 of our total discretionary income budget!
Americans also spend $443 billion every year in wasted energy bills, with most people overpaying by a whole one-third!
The designer jeans, handbags, shoes, and other clothing items that we buy at full price and won’t even use after a year or two? Don’t even get me started on those!
Track ALL of your expenditures for a month – no matter how big or small – and you may be shocked to find how much these seemingly small, impulse, lazy, and vanity purchases stack up to some serious coin!
8. Consult with your CPA, insurance agent, and financial advisor
Clipping coupons and canceling your cable TV are great ways to save a few dollars here and there every month, but if you want to REALLY set yourself up in a far better financial situation going forward, set an appointment with the money professionals. Those include your CPA or tax planner, your financial advisor, and your insurance agent.
Each one specializing in their field of expertise, they can in-total thoroughly review your investments, stocks and mutual funds, retirement planning, whole or universal insurance, annuities, wills and estate planning (so important!), life, property, and casualty insurance, and much more. Of course, strategizing how to minimize your tax burden is vital for everyone who wants to keep more of their income in their pockets, but especially anyone who is paid via commissions, dividends, owns a business, pays employees, or has recently come into a windfall such as through a home sale.
Trust the professionals and they’ll take care of you – and save you big money!
9. Review online subscriptions and memberships
Remember when, back in the day, your coffee table was covered with magazines every month that you received in the mail? Back then, it was easy to account for how many subscriptions you had and paid for (including all of those Columbia House CD, tape and record offers!).
These days, it’s been modernized and moved online (of course), but you may be paying for Netflix, Hulu, Spotify, Microsoft Office, anti-virus software, hosting, domains, emails, etc. every single month.
In fact, the average person spends $857 on monthly subscriptions – most of them online these days.
Furthermore, almost every one of us is paying a whole lot every month in online subscriptions without even knowing it! Whether it’s you, your spouse, or your kids, you may find these charges on your bank (or PayPal) statements.
The smartphone app market alone is worth $58.6 billion dollars last year (That’s billion with a B!), which was also an astounding 35% increase in just one year.
In fact, subscription websites that deliver monthly goods and services like Ipsy, Blue Apron, Dollar Shave Club, and more, have seen their membership rolls jump 800% since 2004.
Moreover, many of them are charged quarterly, semi-annually, or annually, which means you don’t even realize that you’re in line to pay until the big charge shows up and it’s too late.
So, sit down with your billing records, bank or credit card statements, and do a thorough search for each and every service, app, or membership you’ve signed up for, confirming that you’ve canceled your accounts (if you wish) or at least knowing exactly how much you’re paying and for what.
10. Improve your credit!
Do you really want to start saving money in 2019 – and beyond? With rising interest rates, market uncertainty, and an economic slowdown all but certain to hit soon, it’s common knowledge that the #1 BEST way to protect yourself and save money is by improving your credit score. In fact, your credit score is tied to your credit card interest rates, determines the rate you qualify for when it comes to home loans, auto financing, and student loans, and can even make or break your chances at getting that dream job.
But if you think that your credit score is surely “fine” or “ok” because you haven’t missed payments recently, think again. An alarming 25% of credit reports contain errors, inaccurate or duplicate information that can sink your score – and cost you more money. Likewise, about 1 in 5 people in the U.S. will be affected by some data breach, financial hack, or identity theft this coming year alone!
Why not contact Blue Water Credit just to be sure, since making sure that you’re credit score is rock solid is guaranteed to save you big bucks.