Dear moms, with the pandemic still around and the economy trying to recover, money may be tight. Perhaps you’re wondering if there’s any way you can reduce some of your expenses, boost your savings, and probably have some cash for investments.
You’re on the right track. Here are four tips to cut back on expenses you hardly hear.
1. For Your Student Loans, Apply Extra Payments to Your Principal
A good number of college or university graduates still owe the government or a private lender some student loans. In fact, according to the Federal Reserve, the average debt is already over $30,000. Other students may even be paying as much as $50,000.
Unless you meet certain conditions that make your debt forgivable, you will have to repay it. Fortunately, there’s a way so you won’t have to settle it in forever.
Here are two strategies you can apply: (1) pay off more than the minimum amount and (2) never apply your extra payment to your next due date. Here’s why.
Like other loans, lenders earn money through interest from your remaining balance. The more money that remains unpaid, the higher the interest you pay later. By paying more than the minimum, you reduce the principal amount.
However, some “charge” the extra payment to their due on the next date. Experts believe this doesn’t do anything other than bring your following due date forward. Instead, as mentioned, apply it to the principal.
2. Check Your Driver’s License Status
In the United States, it pays to have auto insurance, but it comes with a cost that seems to be increasing over the years. Today, the average amount you may have to pay each year is almost $600.
But this also depends on several factors, such as the state you’re in. In New York, for instance, the average cost of car insurance is already over $1,500.
Then there’s your previous driving record. If your or some other family member’s license has been suspended or a family member has been issued a couple of speeding tickets, you can expect the insurance premium to increase.
That is only logical. Based on your data, you may be more of a liability to them because you’re likely to get involved in a collision in the future.
The good news is you can still change their mind. The American Safety Institute offers a lot of driving courses that not only help you get your license back but also bring you back to good graces with your insurer.
It even has courses that you can take online at your own time or pace and includes a discount. You can then request the insurance company to honor this so that you can reduce your premium.
3. Transfer Credit Card Balances
Unlike what most people think, credit cards are not bad debts immediately. For one, they’re some of the easiest ways to build credit history. The problem happens when the debt balloons.
According to Value Penguin, the average balance of most U.S. consumers is over $5,000. However, the average debt is at least $6,000. Overall, Americans owe issuers a whopping $800+ billion in credit card debt across 506 million accounts.
Credit cards can be difficult to pay because they work like student loans: the interest rate is based on the remaining balance. Worse, they can charge you every time you overspend and pay your debt late.
To speed up the repayment, you can consider some options. Besides paying more than the minimum, you can transfer the remaining card balance to another card with a much lower interest rate.
This way, you can get rid of one card, focus your repayment on only one credit card debt, and hopefully pay less because of the low interest rate.
4. Check Your Credit Card Report At Least Once a Year
Question: How often do you check your credit card report? Experts suggest doing it at least once a year. Not many know that the document may contain errors or discrepancies that can affect your credit score. For example, some lenders may have failed to record a number of your repayments.
While most loans have other requirements apart from credit scores, this rating is essential. If wrong information dragged your score down, you might miss on the chance of getting a favorable debt—one with a lower interest rate and better payment term.
When it comes to saving more cash, boosting your reserved funds, or investing money, you can do more besides looking for another side hustle. These ideas above are often underrated, but many vouch that they work. In other words, they’re worth a try.