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Finding additional money to pay bills or to save can be a difficult task for nearly all financial situations, but it is possible for anyone to use some simple cost cutting ideas to increase the amount of income they can keep in their own pocket.  Although cost cutting can be painful, it is the best way to reduce your expenses quickly and free up more money to go towards the payment of debt or emergency funds.

Eliminate Your Trivial Expenses

Small savings are much easier to find than larger savings and can be much less painful when cost cutting.  There are many different ways that can be used to eliminate these expenses, from brewing your own coffee at home instead of purchasing a specialty cappuccino on the way to work each morning to restricting your shopping to sales and clearance racks.  Many people also save money by doing the tasks that they previously paid someone else to do, like mowing the lawn or pressing their shirts.  These small savings can add up quickly if you continue to follow the plan that you have put into place.

Look For Large Expense Reductions

Large expense reductions can be harder to find and way more difficult to implement than smaller expense reductions, but the benefits and savings can be seen much more quickly.  If you are renting an apartment, you may want to see if you can find a smaller, cheaper apartment that is closer to your job to cut down on your rent and your daily commute.  If you have an expensive daily habit, like smoking, you can quit and save hundreds of dollars a year.  If your car is a gas guzzler, then you may want to consider trading it in for a used car that is more economical with gas consumption.  Reducing the cost of these larger expenses will allow you to put thousands of dollars more towards your savings or paying down debt.

Capitalize On Tax Deductions

Many people are unaware of all of the tax deductions they are legally able to claim or do not claim the deductions because they believe that claiming them would require too much paperwork.  In reality, claiming all of the tax deductions that you are eligible for can lower the amount of taxes that you pay by hundreds of dollars each year.  Some of the most common tax deductions that are overlooked include deductions for work expenses, investment losses, and real estate taxes.

These simple solutions for cost cutting can be used by anyone who is looking to reduce their expenses and increase their savings.  Although some of these saving methods can be implemented easier than the others, all will allow you to keep more of your money in your pocket to be used for the things that you decide are important to you.

There are many people that neglect to save for a rainy day because saving their money is not as exciting and doesn’t create the same euphoria that spending the money on new items creates.  In order to generate enthusiasm for saving money, you may want to try some creative saving methods that anyone can use to save money in a quick and painless way.  Here are some of the most commonly used creative saving methods.

Bundling Bills

This saving method brings to mind the old practice of saving all of your spare change in a jar, just on a grander scale.  With the bundling bills method, every time a certain unit of currency crosses your hand, such as a $5 or $10 bill, that bill is not spent and is placed into a jar or bank to be saved for a rainy day.  This helps accumulate savings much more quickly than the spare change method and the saved money can be deposited into your savings account once or twice per year.

Account Padding

Account padding is a great way to save without having to put much effort into it.  The account padding method works best when the person uses a checking ledger or personal finance software to keep track of their spending.  Once a month, “write” yourself a check for a particular amount of money in your ledger and deduct that money from the balance of the account without removing the money from the account.  This effectively hides the funds from you, reducing the chance that the money will be spent and adding a cushion to the account to prevent accidental overdrafts.

Personal Fun Tax

Another great way to save money on a regular basis is to charge yourself a personal fun tax whenever you spend money on non-essential purchases.  The easiest way to use this method is to charge yourself a 10% tax on the total price of the purchase, whether it is movie tickets, dining out, or purchasing concert tickets, and immediately pay that money into your savings account.  You will be amazed at the reduction in your spending when you have to think about effectively paying 10% more for the item and will be astounded to see how fast the balance of your savings account grows when you use this saving method.

There are many different ways for a person to save money on the routine things that they do each month, but many neglect to investigate the best way to save money each month.  Although many methods of saving are very effective, the best way to save money each month is to pay off your debts, especially high interest debt like credit cards.

What Are The Benefits?

There are a number of benefits that can be associated with paying off high interest debt.  The most frequently touted benefit is the fact that you will not have a monthly bill to pay to a creditor for the privilege of borrowing their money.  There are individuals that are paying a steep price for buying on credit and not paying off those debts as quickly as possible can lead to decades of making payments to the creditor.  In order to discharge those payments, the credit account must be paid off as soon as you are able.

A reduction in interest payments to creditors, which is a professional way of saying a fee for borrowing the creditor’s money, is another benefit to paying off high interest debt.  The money that you are paying in interest on your credit card accounts and other high level debt provides you with nothing – it doesn’t put a roof over your head, clothing on your back, or food in your mouth.  Wouldn’t you like the money you earn to be providing material items for you instead of paying for some banker’s second mansion?

An often overlooked benefit to paying off high interest debt is the increase in your credit score by lowering your credit-used-to-credit-available ratio.  The amount of credit that you are currently using in relation to the amount of credit that you have available to you accounts for nearly a third of your credit score and lowering this ratio can increase your credit score dramatically.

How Can I Eliminate These Debts?

The best way to eliminate these debts is to tackle them one at a time.  Focus on the debt with the highest interest rate and pay that account off first.  You may have to make some sacrifices to pay more than the minimum payment required, but paying the debt off faster means that you will be able to keep more of your money in your pocket much sooner.  It is important that you pay at least the minimum on all other accounts during this time and ensure that all of your bills are paid on time to avoid triggering a higher interest rate that will take longer for you to pay off.

Making financial goals is a good idea but creating a plan to achieve those goals is necessary if you want to make sure that you achieve these goals.  Getting started on creating a plan to reach your financial goals can be difficult and time consuming, but the benefits associated with having a financial plan to follow is well worth the time it takes to create the plan.  Here are some tips on how to achieve your financial goals.

Debt Elimination

If it is difficult for you to pay all of your bills each month and you are just barely getting by, it is past time for you to make a plan to eliminate your debt.  One of the best ways to eliminate high interest debt is to refinance it under a lower interest rate and then dedicate any additional money you earn to paying off the balance.  For example, the typical interest rate for a credit card is over 16% but the average interest rate for a home equity line of credit is around 8%.  If you were to use the home equity line of credit to pay off your high interest credit cards, you would be reducing the amount of interest you are paying on the balance by half.

College Saving

Saving for college for your children is one of the hardest financial goals to reach because you must begin while the child is still to young to know what they will be majoring in, whether they will be going for Master’s or Doctorate degree, whether they will using grants or financial aid, or whether they will be attending college in the state that they currently live in.  Saving for college must cover a number of unknown criteria and the costs of college continues to rise each year.  The 529 savings plans offered by many banks allow college savings to grow tax free each year until the money is needed for college expenses.

There are also Coverdell Education Savings Accounts that can be used to pay college tuition.  These accounts allow savers to place up to $2,000 into the account every year to earn interest until the money is withdrawn tax free to pay for tuition.  If an account was begun when the child was born with the annual maximum deposited and earning 8% interest, on the child’s 18th birthday the account would be worth more than $80,000.

Retirement Saving

Many people believe that when they retire, they will only need 70% of their previous income to live comfortably because they will no longer have the expenses associated with working a full time job outside of the home, such as transportation costs and work attire.  What these individuals forget is that the cost of other items, such as utilities, hobby expenses, and travel expenses, will increase when they are home for a majority of the time.  It is best to prepare for retirement as if you would need the same income that you are making today.

The traditional pension plans offered by many businesses will only cover a fraction of the salary that you were earning when you were working full time, so it is very important that you make a plan to save additional money to finance your retirement.  There are a number of different savings plans that can be used to save for retirement, including 401(k) plans, 457 plans, and 403(b).  The more that is contributed to the plans today, the faster your money will grow and the more you will be able to withdraw during retirement.

Most banking institutions offer a wide variety of different types of bank accounts in order to ensure that they have an account type for every type of customer that walks through their doors.  This selection can make it difficult for a person to know which type of bank account would be the best for their financial situation.  There are a few things that should be considered when looking for a bank account and following these guidelines will ensure that you sign up for the best type of bank account for your needs.

The Average Balance Of The Account

Knowing how much money you intend to keep in the bank account can help you select the right type of bank account for your situation.  If you intend to keep a high balance in the account, then you may be entitled to an account free of any usage fees.  The amount of money that is to be retained in the account can direct your decisions on everything from whether to choose an interest bearing or non-interest bearing account, whether you can meet the minimum balance requirements for certain types of accounts, and whether you will have to pay a monthly account charge for your account.

The Average Number Of Withdrawals Each Month

The number of withdrawals that you intend to make each month will also have an effect on the decision of which type of bank account to sign up for.  Some accounts limit the number of times that you are able to make teller withdrawals, ATM withdrawals, and write checks before the bank begins to charge a fee for each transaction over the limit.  If you know that you will not be going over the established transaction limits, then the associated fees will not be a concern for you.  If you know that you will be making many withdrawals from the account on a monthly basis, you will want to choose an account that does not have transaction limits or transaction fees.

How Many Financial Services You Need

You have a greater chance of getting breaks on the fees associated with bank accounts if you have multiple accounts with the same banking institution.  Having your checking account, savings account, mortgage loan, auto loan, and/or credit card account held by the same bank will increase your standing as a customer of the bank and may entitle you to discounts on the services that you have chosen.

Saving and investing are the only true methods of creating wealth and reducing the risk of financial devastation.  So why is it that many people do not have any savings in reserve for handling a financial emergency or planning for the future?  There are many reasons that may be given by a person to justify why they do not have any savings, but few are a legitimate reason for neglecting to plan for the future.  Here are some of the worst reasons for not saving money for a rainy day.

I Don’t Make Much Money

The most common excuse for not saving money in a savings account is that the person does not make enough money to pay their bills, pay for food, and save money too.  The people that generally use this excuse are people that pay all of their bills first, then they spend money on the things that they want, then they think about saving money as their last priority.  By simply changing the order of this list of priorities, you can begin saving a significant amount each month and increase the balance of your savings account quickly.

By paying your savings account first, you will ensure that you are saving some of your disposable income and you will be less likely to spend your additional money on frivolous items that are not really needed.  You can start small, by having 5% of your paycheck directly deposited into a savings account when you get paid.  If you can save this much each pay period without significantly reducing your quality of life, you can slowly increase the percentage over time to save more money quickly.

I Will Do It Later

Another terrible reason for putting off saving money is that you believe that you will be able to make more money later in life and will compensate by saving more money then.  In a perfect world, this scenario would work out every time, but unfortunately this is not how life typically works and chances are that you will need to have savings to handle a financial emergency much earlier than you would like to think.  Slowing increasing your savings at a reasonable pace over a long period of time is much more manageable than attempting to save large chunks of money at certain periods throughout your life.

I Like Buying Nice Things

Everyone likes to buy nice things with the money that they earn.  That is one of the reasons that so many people work so hard at their jobs day in and day out.  But the desire for nice things should never come at the expense of your financial security and spending money on luxuries before having money in reserve for handling financial emergencies is always going to end badly.

A better way to approach this spending is to make it a point to save as much as you spend.  If you have to have that $100 pair of boots, make sure you place $100 in your savings account first.  This may also decrease your overall spending as you take a second look at what you are spending your money on.

Every person with a checking account knows that the fees that banking institutions charge for these checking accounts can add up quickly, with many costing consumers around $200 per year.  Most people would avoid these fees if it were possible to without having to put forth a great deal of effort.  There are a number of different ways to reduce the cost of having a checking account and many of these actions take little to no effort to complete.

Don’t Buy Bank Checks

Purchasing checks to use with your checking account can be a major expense, especially if you are the type of person that writes many checks throughout the month.  The checks that are purchased at a bank will typically cost around $25 for a box of 200 checks, but you can save more than 50% by purchasing your checks from a reputable printing company.  These companies charge around $10 for a box of 200 checks and typically have a wider selection of check designs than the banking institutions.  These checks can be ordered by mail or online at the website of the printing company.

Avoid Overdrafts At All Costs

One of the most expensive mistakes that you can make with a checking account is to overdraft the account.  Each instance of overdrafting that occurs with your account can cost you a fee of around $35 plus an additional daily penalty fee for each day that your account remains overdrafted.  You may think that you are safe if you have your checking account linked to your savings account to automatically transfer money if there is not enough in your checking account, but the bank will still charge you a fee of between $5 and $15 for the automatic transfer.

Use No-Cost Cash Withdrawal Methods

ATM fees for using an ATM not branded for your bank is a huge source of fees for the banking institutions, totaling billions of dollars each year.  Instead of paying fees of $1.50 or more to two separate banks for each of these transactions, use the internet to find out where you can withdraw your cash free from bank fees, such as stand alone ATM locations in parking lots, gas stations, and grocery stores, which are on the way to your destination.  You also have the option of obtaining cash from your checking account fee free during the check out process at your grocery store by writing a check or using your debit card and asking for cash back.

One of the biggest mistakes that people make with their finances is putting spending first and saving last.  While it is important to make sure that all of your bills are paid on time, it is also important to save for your future as well.  Here are some tips to make saving for yourself a higher priority.

Pay Yourself First

Instead of paying for all of the things that you need and want up front and saving what is left over at the end of the month, change your spending priorities and spend on your savings account first.  By dedicating a certain percentage of your earnings, typically 10-20%, to your savings account as soon as you get paid, you ensure that you are saving for the future and reducing your spending on non-essential items that you probably do not need anyway.  It is much more important to save for yourself than to spend for immediate gratification.

Round Up Your Purchase Price

In addition to paying yourself first, you can also do other things to boost your savings.  One simple method is to round up the purchase price of the items that you buy with your checking account or debit card in your transaction ledger, erasing the difference from your total balance.  You will be surprised by how much you can save simply by rounding up each transaction to the nearest $5 in the course of a single year.

Start A Savings Trend

Another simple way to save for yourself is to dedicate a portion of your available money to your savings account every time you perform a specific action.  For example, if you would like to go shopping for a new purse or new shoes, you must put $20 into your savings account before you go.  Paying yourself for the privilege of purchasing non-essential items will have a dual effect on your finances – increasing the money in your savings account and causing you to think twice about making that non-essential purchase.

Save Unexpected Money

There are times when we come into some unexpected money, such as an unexpected work bonus or cash as a birthday present. Instead of imagining what that money could be spent on, that money should immediately be put into savings to help you prepare for a rainy day.  Although it is fun to spend the money, you will be much happier in the long run if you are able to handle the financial issues that occasionally spring up in everyone’s lives without accumulating large amounts of debt.

Saving money is not an impossible task for anyone, regardless of how much money they make.  The actual act of saving money is more mental than physical and it shows in the amount of money that individuals are able to save while thinking positive about the act of saving versus the smaller amount saved by people that view saving money as a chore to be endured.  By having the right attitude and following a few simple tips, you can dramatically increase the amount of money that you are able to save each year.

Eliminate Excuses 
The first task that you must complete is ridding yourself of all of the excuses that you have for not saving money.  There is no reason in the world why you should not be able to save some money in your saving account if you are paying for items not necessary for your survival, such as tickets to the movies, meals from fast food restaurants, or specialty coffees.  Keep in mind that the sooner you begin saving, the more you will be able to save.

Make A Plan
Even the best intentions can fail if you do not have a plan to accomplish what you are attempting.  In order to maximize your savings, you will need to plan a way to eliminate the amount that you would like to save from your every day expenses, especially if you tend to live paycheck to paycheck.  The easiest way to identify areas of your life where discretionary spending can be cut is to make a list of all of the things that you spend money on each month and examine your spending habits to find areas of wasteful spending that can be cut.

Set Some Goals
It is easier to stay on track with your spending plan if you identify some goals that you would like to shoot for.  Common saving goals include having a certain amount of money in your savings account by the end of the year or having a down payment for a home within a certain number of years.  Short term goals provide more motivation than long term goals and reduces the chance that you will become discouraged because you are not seeing results as fast as you would like.

Reduce Your Debt
High interest debt is one of the biggest barriers to saving for most people today.  Eliminating this high interest debt allows you to free up more of your income for other endeavors, such as increasing the amount in your saving account faster.  Any savings plan should include ways to pay down your debt levels and decrease the amount that you are spending in interest payments each month.

One of the most expensive bills that many people pay each month is their energy bills.  The energy used to power our everyday appliances is a necessary part of civilized life, but with energy costs continuously rising, it is important to limit our energy use as much as possible to avoid astronomical energy bills.  There are many different ways available to reduce your energy usage, resulting in a much lower energy bill.

Turn It Off!

One of the most common reasons for high energy bills is neglecting to turn off energy using items when you are done with them.  From leaving the lights on while you are not home to leaving the television on at night while you are sleeping to leaving the air conditioner running during the day while you are at work, many typical actions that people do not think about are costing them hundreds of dollars each year in additional energy costs.  It is important to get into the habit of turning off household items that are not being used to reduce the amount of energy you are using each month.

Unplug Vampire Appliances

Vampire appliances are appliances that continue to draw energy from wall sockets when they are not in use or even completely turned off using the available switch.  There are many different items that can be considered vampire appliances, including charging units for batteries, cell phones, or laptop computers.  Unplugging these items when they are not being used can reduce your energy bills by as much as 30%.

Wash At Cooler Temperatures

Although most people believe that their clothes need to be washed at high temperatures to get them clean, the truth is that for most items washing at cooler temperatures can be just as effective and will save you money on your energy bills as well.  Reducing the amount of work that your hot water heater is doing each day to heat large amounts of water can result in significant savings that can be used for other household expenses or saved for a rainy day.

Examine Ways To Make Your Home Energy Efficient 

Energy efficiency has become the name of the game for many manufacturers of household products, resulting in a wide variety of options for making your home more energy efficient.  You do not need an energy efficiency expert to know whether you have drafty windows and doorways or whether your home is not insulated correctly.  There are a number of government programs that can be used for making your home more energy efficient and using the options that apply to your circumstances can save you hundreds of dollars every year.