HOW TO PAY BILLS AND SAVE MONEY
Being in debt can make it feel impossible to save money.
Is it better to pay off debt or save money?
Some people say paying off debt should be the priority while others say saving and investing should be, as if it’s only one or the other. My personal opinion, do both.
Six months ago my husband and I paid off all of our credit card debt.
We are lucky enough to both have “well-paying” jobs now, but I remember the days we were living paycheck to paycheck, which is why I want to give you tips to pay off your debt even on a low income.
We had to do a credit card balance transfer just to keep our heads above water, we lived in a 400 square foot one bedroom studio with a failing homeowner’s association, oh and that time we had a bed bug infestation and slept on our faux leather couch for over 3 weeks was an experience!
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Even while we were struggling to pay off our debts we continued to save money.
Here are the tips and tricks I came up with that will help you save money while you’re working to pay off your own debt.
#1 CUT EXPENSES
The very first thing I would do to save money while in debt is cut as many expenses as possible. This means dining out, household expenses, cutting your cell phone bill, getting rid of cable, reducing your grocery bill, etc.
This is probably one of the hardest things for people to do, but I firmly believe that if you sacrifice now the rewards you get later are so worth it.
We stopped eating out and buying expensive gifts for quite some time. Fast-forward to today and we went on an Alaskan cruise in September and are going on a cruise to Mexico next year without going into any debt. However, we’re currently reworking our budget for next year to include a vacation fund. It wasn’t something I ever thought of, but having separate savings accounts is super important.
Just remind yourself these changes are only temporary until you save some money and pay off your debt.
#2 BUDGET
My husband hated the idea of budgeting. Not having a partner that is fully on board with your decision to lead a frugal life makes things harder, but not impossible.
Start by creating a spreadsheet of your expenses and income. Seeing how much money you owe on paper is a huge eye-opener.
As a compromise, my husband and I would sit together every week or every other week and go over our finances to make sure we had enough money in our accounts to pay the bills, put extra money towards our debt, and maybe a little extra for something fun.
Budgeting makes getting out of debt easier and you can see exactly how much money you can afford to save. While in debt save enough for your emergency fund (I recommend $2000, but see what is best for your situation) and everything else should go to your bills.
As you cut expenses and pay off bills, take that “extra” money and put it towards your other bills.
If you pay off your debt faster, then you can save more faster.
#3 NEGOTIATE BILLS
After you’ve created your expense sheet go through every single line item and see what can be cut or negotiated.
Call up your service providers and explain to them that you are looking to save money and that you are shopping around. See if they can do anything. Often time they can offer you a special promotion because they don’t want to lose you to another company.
We were able to bundle our home owner’s insurance and car insurance for some extra savings.
#4 AUTOMATE
Paying down your debt fast is important because you are probably paying interest on it. After you build up an emergency fund, stash away a minimal amount of money each week. Maybe it’s only $10. Have it go straight into a separate account and don’t look at it.
As we paid off our debt I increased our weekly amount more and more. What started at $25 has become $300.
When your savings is automated it makes it easier to forget about it and really save money while in debt.
#5 MULTIPLE BANK ACCOUNTS
What do you spend most of your money on? Vacations, gifts, kids, shoes.
Control your money and tell it what you want it to do. In this post I go over how you can save money fast without having to strictly budget just by having multiple bank accounts.
Giving your money purpose means you will be less likely to waste it on things you need to stop buying anyways.
#6 SAVE CHANGE
Every bit of money counts. Take your spare change and hoard it for let’s say 5 months. After you cash in that change dedicate it to either saving or paying off a bill.
Make saving fun by making your own money jar and doing a money saving challenge with your friends. Having that support can make saving money while in debt a friendly competition too.
#7 MAKE FOOD AT HOME
Stop eating out.
Our food bill was one of our biggest monthly expenses. To cut back we created a grocery list each week and made meals that used simple ingredients. Meal prepping is a must.
Related post: 11 Kitchen items that will save you money
#8 HUSTLE HUSTLE HUSTLE
Sometimes the debt that you’ve accumulated is so much that you can only afford to pay the minimum balance each month. At this rate you’ll be in debt for FOREVER.
Okay maybe not forever, but it certainly felt that way to me.
My husband is a spender. Thankfully he is also a hustler. He grew up selling candy at the flea market out of his little red wagon. As an adult this turned into a junk flipping, eBay/Amazon side hustle with a van instead of a wagon 😉
Don’t know where to start? Here are some of the places we sold our stuff to make extra cash to save and get out of debt.
If selling is not your thing, try a different side hustle to bring in some extra income. Babysitting services, blogging, selling crafts, or some other service you can provide.
#9 USE MONEY SAVING APPS
When I go grocery shopping I don’t use many coupons because I’m lazy or end up buying things I don’t really need just because I think it’s a good deal. I now use iBotta which is an app that lets you take photos of your receipts and select coupons afterwards. I love their “any item” coupons too. Read my Ebates tutorial to find out how to join and save more money.
When you’re trying to save money while in debt you shouldn’t be buying much. If you do have to buy things always compare prices.
If you buy items online always use eBates to earn cash back and extra savings from promo codes. My link gives you a >>$10 welcome bonus<<. Once you sign up, you can earn $25 for every referral you make, which adds up fast.
You can stack your savings using Groupon. I once used eBates, Groupon, AND a Walgreens promo code to get my contact lens yearly supply cheaper than anywhere else!
#10 PAY MORE THAN THE MINIMUM
Your main goal is saving money while in debt. In order to do that successfully you need to pay off more and more of your existing debt without creating new debt.
If we all spent less than we made none of us would be in debt. Realistically I know emergencies happen, impulses take over, and stuff just happens.
Focus on paying off the debt you deem a priority. It can be the one with the highest interest rate or the one with the smallest balance, that’s up to you. Every bit of extra cash should go to that debt until it is paid off. You want to pay more than the minimum balance so that you can free up some cash and work your way up from there.
#11 DO NOT OVER SAVE
Yes, you read that correctly. If you have a lot of debt with high interest rates, saving money with record low interest rates is not going to help you in the long run.
I hated the idea of draining our savings to pay off our debt. In retrospect, the money we were saving wasn’t earning interest and we were actually losing money because of the interest we were paying on our debt.
I’m not saying to drain your accounts. Leave enough money in your accounts for emergencies and/or any upcoming expenditures and use the rest to put towards your debt.
As you pay off more debt, your saving rate will increase, just be patient.
#12 NO SPEND DAYS
Being debt-free is not boring. Imagine all the money you can save to use on vacations, gifts, and investing once your debt is paid off.
To save money while in debt stay home more often. Instead of dining out with friends have a pot luck and everyone can bring over a bottle of alcohol.
Stay at home movie nights, picnics, strolls in the park, meal prep Sundays, etc. For each of the days you stay home set aside $10. At the end of the month put that money into your emergency fund or put it towards a bill.
#13 SET GOALS
Give yourself a timeframe of when you want to pay off some or all of your debt. This is when your budget and expense sheet comes in handy.
How much can you afford to save or spend each month? How much are you willing to sacrifice now to get there sooner?
When you hit a milestone celebrate with dinner or chocolate cake 😉
Related post: 11 Tips to successfully achieve your goals
SHOULD I PAY OFF MY DEBT OR INVEST IN SAVINGS?
Paying off your credit card debt or saving can still be a tough decision.
Your decision depends on things such as interest rates, balances you owe, and income you make.
MyFico offers a free calculator where you can plug in your own personal numbers to compare the numbers.
IS IT BETTER TO PAY OFF DEBT OR SAVE MONEY?
It is very possible to save money while in debt. Save money for emergencies, must-have expenses, and the rest use to pay off your debt as fast as possible. Don’t pay interest on bills if you don’t have to.
By cutting out unnecessary expenditures, eating at home, and indulging less (temporarily) you can save AND pay off your debt.
If you enjoyed this post pin for later to keep yourself on track. Have any other money saving tips, share in the comments below.
Happy saving and don’t forget to pin for later!
We have luckily never been in debt, but we do a lot of these exercises to save money and stay on top of our finances! They all make such a difference!
That’s great. I wish I had done a lot of these sooner, but live and learn.
Great post and ALL relevant tips. At different points of time in my life I have used all of these. Even now I try to cut expenses if I feel they are too high and negotiate bills.
This is a great post and reminder about living within our means!! Thank you for all the great tips and advice!
I love your tips. My husband and I are actually over saving because we’re moving overseas, something I wish we didnt need to do.
Great about the over saving, not the moving. Though depending where it could be cheaper there and maybe people are friendlier. I know I want to move, just not that far..
Thanks for the tips. It feels great when you’re in control and you can see the light at the end of the tunnel. But it also feels great to see that emergency fund. That kind of Peace of mind is priceless.
This is one of the most helpful blog posts I’ve read in quite some time. Thank you so much for this!
Thank you 🙂 I worked extra hard on this piece and submitted it to another site accepting guest posts and never heard back so that means a lot.
Love money saving ideas! Thank you.
Great tips! My husband just finished graduate school, so we are now working on paying off the student loan debt. This tips will come in handy for us!
That’s great. I made automatic payments on one of my student loans and they gave me a lower interest rate. I also used tax money and any extra cash to pay them off faster too.
Great tips! Eating food at home is a great way to save money.
Thanks for all of the great tips, on budgeting and saving! Really helpful information 🙂
You’re welcome!
We are pretty much debt free. These are all great tips and I have done most of them. The best quote I have ever heard on this matter? People give up what they want later for what they want now. Becoming debt free takes a discipline I never knew I had but I did. It is a choice!
Yes yes yes! Lots of people just accept it and say it’s too late, but it’s that mindset that makes things worse. I have always been a saver, my husband a spender, yet here we are saving more and more. It’s not perfect, but we’re getting there.
Great advice. Thank you! There are some ideas here that I will put into action.
What great guidance on getting out of debt!
I already use several of your ideas. Paid off my line of credit last month. I only have 1 small credit card that will be paid off next month. So excited!
That’s great!! I’m working on reconfiguring our financial breakdown so we can save more by category instead of just 1 big emergency fund.
Great tips! Food is the category we struggle with the most.
Yes it’s getting harder with our youngest eating more and more and the older one being picky.
Awesome suggestions!!! We cut cable and just got my cell phone bill cut in half by bothering to call and see what the current plans were. Since it’s been years since I changed my cell phone plan I was able to save $50 a month!
Wow that’s great and can add up very quickly.
Good tips! Dosh is awesome, too!
Thank you for sharing so much information! I clicked on you ‘selling stuff’ post and it amazes me that you have used all of those sites! I used to do Ebay when it first came available and it was all very time consuming.
Yes we tried it all lol. My husband has used eBay from before I met him and only just this year really got a handle on it. I don’t have the patience to deal with the people who complain about everything.
Having a budget, cutting expenses, paying off debt, and setting goals are all very important for everyone. It is also great to have an emergency fund, for the unexpected.
Thanks for sharing!
All great tips! I love cooking at home. It definitely saves a lot in the long run!
You have a lot of great suggestions here! Very realistic, too! Thanks for the inspiration!
Thanks!
So important to realize that there is hope and a way out of debt! Love this post.
It’s easy to get into debt and not so easy to get out! Great ideas!
Truth!
I do a lot of these things already, but lately have it trying to cut expenses and save up as much as I can, so it’s really nice to have more ideas!
Great money saving ideas!!! Always looking for good tips!