Having a large amount of debt to pay off can feel very overwhelming. The reality is that it affects many of us. According to an August 2013 report released by TransUnion credit bureau, the average Canadian is carrying $27,131 in debt. What many people don’t realize is that even if you’re paying debt you should try to put some money aside for a “rainy day”. Here are some TD ways to save money while paying off debts.
Budget Your Money
One of the biggest reasons why people fall into debt in the first place is because they simply don’t take the time to budget their finances. However, doing so can make a huge difference for those who are trying to save money while paying off looming debts at the same time. To make a budget, subtract your total monthly expenses from your monthly income. Be sure to include debt payments as a monthly expense.With the remaining money, set aside a certain percentage into savings. If this also sounds kind of boring and tedious, that’s because it can be – a little bit. No matter what budgeting tips or “financial hacks” you read about on Buzzfeed, taking a quick look at your monthly finances is never going to be riveting. That being said, it’s tough to dent that the juice is worth the squeeze. See our versatile and original budgeting tool for the quickest and most user-friendly way to make sure you don’t go broke by Christmas break.
Cut Unnecessary Spending
Of course, in situations where you actually owe more than you make per month, creating a budget that allows you to save money may be easier said than done. In these kinds of situations, it is imperative that you find a way to cut down on unnecessary spending. Print out a copy of your bank statements and sit down to analyze what you are spending your money on. This way, you can look for expenses to cut down on or to cut out altogether. Sometimes this means a big change. If making car payments on a brand new car is too much for you (as it is for pretty much every student), consider something inexpensive like a 10-year used Honda Civic, or even *gasp* investing in a bus pass.
Cheaper options for change can be smaller, like going with a less expensive cell phone plan (how much data and long distance do you really need – have you heard of Skype?) or eating out less. You may be surprised at just how much you can save this way. Many financial gurus have made way too much money explaining how for the cost of a cup of coffee a day you can retire years earlier. The math doesn’t lie when it comes to this stuff, it’s just that man Starbucks is good at the whole delicious elite-status-symbol thing.
Using coupons and taking advantage of other kinds of promotions that are out there can really be a great way to cut down on spending and to save more money, even while paying off debts. Of course, this does not mean that you need to dedicate all of your free time to clipping coupons; you might be surprised at just how much you can save by simply cutting a few out of your Sunday newspaper or finding some online.
My mom used to give this coupon book every year for Christmas and while 90% of it ended up in the garbage, I did occasionally find the odd one that saved me a few bucks (it came in handy when trying to make the stretch in the spring to when you start work again.
Simply Make Debt Payments
Many people do not think of it this way, but when you are making payments on your debts, you are–in a sense–already saving yourself a good chunk of money. After all, by paying down as much as you can on your principal balance, you save money on interest down the road. Therefore, even if you cannot actually put cash into your savings account while you are paying off your debts, you can still enjoy the peace of mind in knowing you are saving yourself money in the long run.
Forget the stigma that saving money while paying off debts is impossible; give some of these ideas a try and you will see just what a difference they can make.