Saving With Limited Funds
Five Basic Steps Toward Financial Independence
not offered this plan at work, contribute to an IRA (Individual Retirement Account) or some other tax-free or tax-deferred vehicle.
Refinance your home. If you had an adjustable rate mortgage, the Federal Reserve’s recent cut in a key interest rate makes it an opportune time to refinance at a fixed rate. It may also be a way to lower your monthly mortgage payment and have access to more cash to invest or pay down debt. Consider all costs associated with going down a percentage point or two in your interest rate to ensure that refinancing balances out with the amount you save on interest. For those who rent and have an extra room, consider bringing in a trusted friend to share the expenses. This is an economical alternative for those who live in big cities where they are paying premiums for rent.
Eliminate credit card debt. The convenience of buying with plastic instead of cash has created an epidemic of excessive credit card debt. A smart solution begins with making cash-only purchases. Call your credit card company and requesting a lower interest rate. If you own more than one credit card, first make additional payments on the card that carries the highest rate and then work your way down to the card that has the lowest rate until all debt is satisfied. Once you pay off that debt, use that monthly amount you would have paid for those bills toward your savings.
Be diligent when paying off balances. Do your homework if you decide to close your accounts because it can have an adverse affect on your credit history and credit score. Credit is beneficial if you spend wisely and pay off the entire balance at the end of the month. Living without debt will help you to save more.