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It can oftentimes feel as if saving money is simply impossible when getting out of debt. From the routine necessary expenses to the various debt payments, it can seem as if there simply is not enough money to make ends meet, let alone to save any.
However, there is always a way to save money even while you get out of debt, although it may take some sacrifice or possibly adding some additional income opportunities.
The following are six very effective ways to save a significant amount of money each month while you get out of debt.
Create a Payment Plan
The first step to any successful budget, especially one that is designed towards reducing debt and saving money, is to properly plan everything and create a payment plan that works for you.
The first step in creating a payment plan is to make a list of all of your debts and how much you owe to each creditor. In order to do so, you may be required to get into contact with the person or place you owe money to and find out exactly how much you owe. However, be sure to double check their quote and compare it with your records and dispute any amount that you have already paid.
After establishing exactly who and how much you owe, it is time to create a payment plan with them. A good strategy for doing so is to pay the minimum amount to each creditor, except for the one who you owe the least amount of money to you. As you pay off creditors, continue to make your way down the list until all debt is paid.
By making minimum payments to each creditor, you should be able to have enough left over from your income to save money each month. If not, try the methods of saving money below.
Stop Acquiring New Debt
On many occasions acquiring debt can be a slippery slope and a very vicious cycle. When paying off debt, many are tempted to continue borrowing money from creditors in order to pay off other debts, ultimately making the problem much worse overall.
Instead, make a conscious decision to not accept any more money or services for anyone or any place that expects the money to be paid back, including credit cards, loan services, and even family members.
By making a conscious decision to stop acquiring new debt, you are one step closer to achieving financial freedom. While it may seem as if saving money is impossible without taking on new debt, it actually enables you to seek better, more genuine revenue streams that pay far more than simply borrowing money, allowing you to bring in more money and cut expenses, which in return allows you to save money while you get out of debt.
Find New Income Opportunities
The best way of saving money while getting out of debt is to simply bring in more money than you pay out, which allows you to set money aside in case of an emergency.
Therefore, an inability to save money usually either means you are spending too much on expenses, or you are not bringing in enough money monthly.
While finding new income opportunities may at first seem as though it is easier said than done, it is actually very possible to make additional money, while enjoying your life and not working all of the time. The key is to make more money doing what you love. If you love sports, try officiating sports games on weekends or during weeknights. If you like helping others and are skilled in a certain area, try consulting to those in need of expert advice. If you like books, try helping out at a library on a part-time basis.
Regardless of the method chosen, the fact is additional financial opportunities exist for those who are in need.
Cut Unnecessary Expenses
In some cases finding new income is enough for you to continue to live your normal lifestyle while still giving yourself the ability to pay off your debt and save money at the same time.
However, in some instances, it is necessary to cut unnecessary expenses. The best way to cut unnecessary expenses is to go through your routine week or month, documenting every expenditure you have. After which, you should be able to go through all of your expenses and determine what is essential and what can be taken out or reduced.
You may be able to save money if by changing your eating habits and making your own meals at home instead of dining out, or you may be able to cut down on your car payment by trading in or refinancing.
Regardless of the method utilized, there are usually areas where expenses can be cut, allowing you to save more money and pay off more debt each month.
Stay Disciplined as You Save
Creating the plan is only half the battle. The real work is in executing your plan to save more money while getting out of debt. Many individuals are able to work out the details and determine exactly how they should go about it, but all too many abandon the plan after several months.
In order to save money and get out of debt, it requires a certain level of financial discipline and consistency, resisting the urge to frivolously spend money. It can be helpful to have someone hold you accountable by reminding you of your goals to save money while getting out of debt in the event you deviate from the financial plan you put together beforehand.
By staying disciplined and constantly reminding yourself of the goals, you can achieve financial freedom and prosperity in no time, which is well worth the minor struggles and sacrifices that are sometimes necessary to get out of debt and set up a savings account for emergency situations.