You might think that saving while trying to pay off any debt is a pointless task but, as a matter of fact, it can bring some real benefits. Not only will you be reducing your debt, but saving some cash every month will help you build up a safety net ready for when you are back in the black. Plus, some people prepare to save and pay off their debt in one go rather than hack away at it in little chunks each month.
Ready to start saving and reducing your debt at the same time? Here’s how it’s done.
Track Your Spending
Tracking your spending each month is the best way to keep your cash flow under control. You might want to do this by setting up a concise budget, but it will suffice to simply allocate yourself an amount to spend each month. It is also worth making a note of all your purchases. You should review this list at the end of the month and see whether you can cut down on it in the coming months. By reducing your monthly spending, no matter by how little, you will be freeing up some more cash that you can put towards saving and debt.
Rethink Monthly Payments
You will no doubt have a few monthly bills coming out of your account on a regular basis. These will be for important amenities such energy, electricity, and the Internet. However, can you remember when the last time you switched your contract was? If you have no idea, it’s a good idea to take a look at sites like http://selectra.co.uk/ that have lots of information about different tariffs. You might find that you can get a cheaper deal by switching supplier!
Boost Your Savings
Once you do start to save something, you need to make sure that you boost your savings so that it can grow as much as possible. One of the first things to do is move the money into a high-interest bank account. The extra interest you earn will be added to your account each month. Eventually, when you have a substantial amount saved up, you may like the idea of investing it. There are various options to invest in, each of which will have a better interest rate than a bank account.
Dump The Credit Cards
One of the quickest ways to rack up debt is by using credit cards. Once you do start paying off your debt, this should be the first one you tackle. It’s worth sorting out your different cards so that you pay off the ones with the highest interest rates first as this could be causing the debt to grow at an alarming rate. Not too clued up on interest? No worries; there is some great information here: http://bbc.co.uk/news/business-31137261.
Saving money and paying off debt don’t have to be incompatible. Hopefully, this blog post has shown you how you can manage them at the same time!