For many of us, making money was so simple in our younger years. With very few expenses and debts, if any at all, we were able to work a few hours a week at minimum wage and have enough money to satisfy our small spending habits. However, as we’ve gotten older, spending and saving have gotten a little more challenging as many of us have taken on larger assets, more expensive investments, and more substantial debts. Additionally, our expenses have increased exponentially, making it seem as if that hard-earned income is never actually in our own pockets.
So what do you do when your income is just not enough to cover your debts and finance your future? Well, you just might have to get a little more creative with your money.
Assess Your Expenses & Debts
The first thing you should always do before creating an income or savings plan is fully assess what your money is already going towards. Most are spending in areas they don’t need to and are missing out on opportunities to save without even realizing it.
Subscription services are one of the most common expenses we take on and lose sight of how much we’re actually spending on them. Whether it be a forgotten streaming service or a gym membership you never fully took advantage of, you can find and cancel all unwanted subscriptions with online services and apps like TrueBill. Even if your plan isn’t to cancel, you can utilize the app to manage those that are existing and see exactly where your money is going.
While subscriptions are on the smaller end of expenses, you can save on some of your largest debts like a car or home purchase through various digital lending services. For your home specifically, you can explore your options for refinancing as it often offers tremendous opportunities for saving or receiving cash from your home’s equity. Many individuals found the pandemic to be a great time to refinance as interest rates lowered. However, even through other transitional stages of life outside of the pandemic, you can explore refinancing as an option for cash or savings.
Get A Side Hustle
A popular option in recent years has been taking on a side hustle and luckily, it’s proven itself to be very effective in debt management as well. Having multiple streams of income outside of your primary career often allows individuals to dedicate all side income to debt repayment. This also helps to alleviate the feeling that you are never actually keeping and spending what you earn. Depending on your earnings from your side hustle, you may be able to dedicate its income entirely to your debt repayment which allows you to use your main income for your own spending.
This strategy is what makes a side hustle so effective in paying off debt. Whether it be freelancing on Fiverr or trying out affiliate marketing, this is a relatively passive method that doesn’t require you cut back entirely from your current financial habits.
Try a High-Yield Savings Account
Though they are sometimes controversial, high-yield savings accounts can be a great low-management investment for those who are interested in earning money without as much work as a second job.
Essentially, high-yield savings accounts allow you to earn money for simply holding your funds in a savings account. Yup, that’s it. There’s no additional work on your part. But what sets this type of account apart is that its interest rates are historically higher than the market and therefore, offers you more earning potential. While interest rates are currently lower from the pandemic, this is actually the perfect time to open up an account because rates are much more likely to increase as the market returns to its original state.
Almost all high-yield savings accounts can be opened entirely online or through an app, making for a quick and simple user-experience.
Switch to Cash Back
For many of us, we are using credit or debit cards to spend without thinking too much about what we could be getting in return. However, a conscious switch to a cash back credit card or shopping service can similarly be impactful in its rewards and earnings.
There are a number of credit cards available; however, the most important thing to remember with credit card spending is that you must track your spending when working on debt repayment. Credit card spending can quickly get out of hand if it’s not handled correctly. So before you apply, make sure you have a plan. Only designate a certain type of spending or a particular expense to your credit card and make sure that your card earns rewards or cash back for that particular category of spending.
Shopping with cash back online services like Rakuten or Ibotta can be quick ways to compile savings on everyday expenses such as groceries.
Effectively Allocate Tax Returns
Tax returns are, naturally, a way to earn a large sum of money relatively easily every year. As of recently, Americans earned an average of $3,000 in returns which can go pretty far depending on your lifestyle. While it seems like an obvious method of earning additional money, it is very rarely used in debt-repayment strategies. Returns have typically been used as an opportunity to splurge and spend frivolously after a stressful financial year. However if you use the early part of the year to assess your expenses and establish a comfortable and realistic budget, you are much less likely to spend your tax return on simple desires. Similarly to a side hustle, you can dedicate all additional sources of income entirely to your debt repayment.
There are also a number of tax software systems available that allow you to file easily online based on your career and lifestyle. Specifically, TurboTax Deluxe has been a recent favorite for receiving your maximum refund each year.
Dealing with debt is no easy task; however, by being conscious of these small ways to earn and save can truly make an impact overtime. Whether you are meeting smaller savings goals with cancelled subscriptions and cash back services or bringing in additional income through side hustles, be patient and thoughtful in how you go about it and you will be debt-free in no time.
