Inflation continues to rock the economy, leaving your pocketbook and savings accounts something more to be desired. We get it. Rising costs make it harder to save money. Still, there are plenty of ways to reduce costs while tucking money into a savings account.
We dug our heels in for this one and gathered some tips to help you save money, even during challenging times, beginning with what to do about your current debt.
Pay Down Debt
Paying down debt might seem like a no-brainer, but there’s more to it than you might realize.
You’re probably already aware that staying on top of your credit history is an excellent place to start. After all, what’s on your credit report impacts your overall credit score, including outstanding debt, but current debt can also drag down your ability to save money.
Pay down any current monthly debt that you might have fallen behind on. Electric bills and other utilities add up fast. Credit card payments or loans quickly escalate, especially those bills with compounding interest. Rather than paying extra interest, aim to bring these bills current as soon as possible. Once everything is current, use your credit report as a guide for paying down old debt.
Consolidate Debt
Regarding loans, now might be the time to re-evaluate your current terms. Determine whether you might qualify for a better loan rate through debt consolidation for personal or student loans. Sometimes you can snag a better rate, a lower monthly payment, or both, saving you hundreds of dollars in interest over the term.
You can consolidate credit card debt, too. Do you have multiple credit cards with high-interest rates? If so, debt consolidation will work in your favor if you qualify for a lower rate. Credit cards have compounding interest rates calculated by your current balance plus any additional interest. Consolidating credit card debt may reduce the interest you pay for the credit card account. Contact us to learn about your options.
Consider a Mortgage Refinance
Lower rates don’t only apply to credit cards and personal loans. If you own your home and have had your current mortgage for a few years, then now might be a good time to refinance your mortgage.
People refinance their mortgages for different reasons. Sometimes they want a lower interest rate, which makes sense since this is a long-term loan. A lower interest rate can save you tens of thousands of dollars over the loan term. Some homeowners want a more affordable monthly mortgage payment. If you can lower your monthly payment, your new mortgage might give you more wiggle room in your budget for other things like savings. Other homeowners want a different loan term. Maybe you’ve had a 30-year fixed mortgage for several years, and now you want to bump it down to a 15- or 20-year term to own your home sooner.
Complete an Energy Audit
Home energy prices are still high and may rise more as we enter the following season. Now is a great time to complete a home energy audit. You can do this yourself with the help of the Home Energy Saver tool on the U.S. Department of Energy website.
However, sometimes it makes sense to hire a professional. A certified professional will assess your home for any energy leaks or areas of concern and provide you with an analysis of what changes you need for a more efficient home.
Shop Around for Lower Car Insurance
Car insurance is one area we often neglect when looking for ways to save money, but it can save between 10% and 20%, depending on your situation and the insurer. The result might save you up to a couple of hundred bucks a year in the right situation, so it’s worth researching to see what rates you might qualify for with other insurers. HawaiiUSA members may qualify for discounts on Farmers Insurance.
Don’t Neglect Your Savings
With the different savings methods, don’t forget to stuff some extra money into your savings account. An emergency savings account is essential for our financial health. Think about it. If your car needs repairs or you face another significant expense, could you pay for it without a credit card or personal loan?
If you answered “No,” we recommend building your emergency savings account. Even a couple of thousands of dollars can go far to get out of a pinch. However, don’t stop there. Keep saving. Aim to build your emergency funds to equal at least 3-6 months of your living expenses in case something arises, such as a significant expense, a job loss, a chronic illness, or something else. Having extra money in the bank before you need it will lessen your financial burden and stress.
Conclusion
There’s no telling how long we’ll continue to see rising costs, so it’s better to meet inflation head-on with the proper preparation. The more prepared you are, the better you can withstand higher prices on groceries, gas, rent, and more. Your and your family’s financial health depends on it. Get creative, find little and big ways to save each month, and don’t forget to tuck some of your money into a savings account.
