The past 18 months have been a financial struggle like no other, and families are finding that typical money-saving tactics used in tough times aren’t enough.
Cooking at home, canceling your Netflix subscription, spending your vacation days on the couch – for many people, that kind of move isn’t enough to balance their budget anymore.
So let 2021 be the year you go beyond the basics. Here are five ways to save big bucks that you’ve probably never tried before.
1. Take out a loan to beat your debt
It sounds counterintuitive, but taking out a loan could be a crucial first step in getting out of debt.
When the pandemic struck, many families relied on credit cards to get through the tough first months.
It’s a good short-term survival strategy, but brutal credit card interest rates – often exceeding 20% of the APR – can bury you in the long run. Payday loans are even worse.
To consolidate your debt, you apply for a new low-interest loan and use the money to pay off all of your high-interest bills.
You’ll still owe the same amount, but your new rate will help you save money on interest and potentially free you from debt years earlier.
2. Ditch your traditional bank account
If you have money to spend, you probably put it in a standard savings account at one of the big banks.
It may sound like a safe strategy, but with each passing day that money is losing its value.
Traditional bank accounts earn almost no interest; in september, the average interest rate on a savings account is 0.06% APY. Any meager income you see will be wiped out by inflation.
To give your money a chance to grow and maintain its purchasing power, look for a high yield savings account.
Some banks – especially digital banks that don’t have to pay for physical branches full of employees – offer interest rates as high as 0.55% APY. It is more than nine times more interest like a normal account.
3. Trading houses – or at least mortgages
Moving may seem like a drastic step, but some of your neighbors are probably thinking about it. A LendingTree study late last year found that just under half of Americans were considering cutting their living expenses.
Living a little further from an urban center can make an extraordinary difference. Depending on where you live, a $ 500,000 home could be a gorgeous mansion or multi-family investment property – or a one-bedroom condo.
But if moving is out of the question, you can still save a ton by taking advantage of today’s insanely low mortgage rates.
Many homeowners have already refinanced in the past year, but about 13.9 million Americans who haven’t can still act quickly and save an average of $ 293 per month, according to the technology and data provider. Black Knight Mortgage.
4. Trade in your overpriced insurance policies
When it comes to insurance, people are eager to “define it and forget it”. It’s easy to stick with the same companies year after year, and a recent ValuePenguin poll showed that a quarter of Americans never bother to compare quotes.
To make sure you don’t get ripped off, experts recommend looking for better prices every six months.
It might sound a bit tedious, but it’s worth making sure you’re not overpaying for your policies of $ 2,000 a year or more.
Start by using a handy quote comparison site to check the best rate on your home insurance, then use the same strategy to save on your auto insurance.
5. Invest your “spare currency”
When your budget is tight, investing for the future is probably the last thing on your mind. But with enough time, even pocket change can become a source of wealth.
Take willpower out of the equation by using an app to automatically invest the change in your daily purchases. Suppose you buy a donut for $ 2.30 – the app will round the cost to $ 3.00 and invest the difference of 70 cents in a predefined wallet.
Saving a few pennies at a time might not seem like much, but $ 2.50 in daily roundups becomes $ 900 in a year – and that’s before you count the extra gains you might make in the market.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.