3 Steps to Save Money Faster
You know you want to get out of debt and save more money, faster. Here’s a little game called “find the money” that will help you accelerate your financial goals by $30 to $100 per month – without affecting your quality of life.
Step 1: Fund Your Discretionary Categories with Nice, Round “Budgeted Numbers”
Fun Money: $40
Step 2: Shave a Small Percentage Off the Budgeted Amount
Fun Money $37
Big impact on any individual category? Nope. Freed up cash? $35.
Step 3: Allocate Freed Cash to a Big Goal
Add it to your monthly mortgage, credit card, or retirement savings category. Then give yourself a big pat on the back.
Will Category Shavings Make a Difference to Your Goals?
A win is a win. Check it out:
- On a $300,000 mortgage at 4% interest, and extra $35 payment each month saves over $11,000 in interest over the life of the loan – not to mention cutting 16 months off the life of the loan.
- On a $10,000 credit card balance at 18% interest, an extra $35 per month saves $1,000 in interest and gets rid of the debt eleven months earlier.
- Adding $35 to your monthly retirement account at 8% interest for 20 years adds an extra $20,600 to your nest egg.
Life-changing amounts? Probably not, but a win is a win. You’re adding efficiency to your budget, employing a small percentage of your dollars in higher paying positions.
If your income is stable-to-growing (cost of living raises, bonsues, etc), go through this exercise every six months, gradually increasing your “get ahead” number. Be constantly on the lookout for ways to sneak your dollars into more productive categories.
(If your income isn’t “stable-to-growing”, I’m sure you’re used to this game – minus the fun part where you allocate freed-up cash to a big goal. I feel for you – hang in there.)