Frugality isn’t just about giving up your morning coffee to save a few dollars each week. It’s using the money you have wisely and can mean the difference between working longer or retiring earlier.
Small budget cutbacks can add up over the years, but if you’re serious about saving money, living better for less and making noticeable savings, slashing bigger expenses is the ideal route. Think trimming down mortgage debt, utility bills, car repayments and credit card interest.
Make multiple plastic repayments
Many people know the interest rate they are paying on credit card debt, but not how that interest is actually charged and applied to the card. Interest is calculated based on your card type, the transactions you make and, most importantly, when you make payments. So don’t wait until the end of the month to make a single payment. Be pennywise and pay every fortnight to squash your balance and reduce accruing interest.
If the time is right, downsizing the family home to a more modest abode can offer multiple perks. A smaller residence often attracts lower utility bills, less cleaning, fewer furniture pieces and reduced mortgage repayments. It also pays to not move at all. Billionaire Warren Buffett has lived in the same modest, small-town home in Nebraska for more than 50 years and won’t graduate to a lavish mansion.
Minimise buyer’s remorse
Go through your receipts every quarter to track your spending habits. If you discover items that you don’t really need, audit yourself. Make an effort to stop buying similar impulse items in the future, especially on credit.
Don’t automatically renew your home and contents insurance, car insurance or travel insurance policies with the same provider, particularly if your annual travel insurance is about to expire and you don’t have any upcoming holidays booked. Instead, shop around, switch and ditch providers for cheaper alternatives. The same rule applies for life insurance.
Pay less interest to creditors each month by transferring outstanding balances with high interest rates onto a new zero or low interest balance transfer credit card. This is only worth doing if you can aggressively pay off your plastic debt in a short time frame ideally during the promotional period when the card interest rate is low or zero per cent to avoid additional costs.