If you celebrate a refund every year come tax time, you might be overpaying your taxes. While a refund is nice, putting more money back in your paycheck to pay off debt can be more helpful. Many of us aren’t good with lump sums of money, so consider adjusting your tax withholding instead.
Small change can make a big impact. Consider signing up for Spared or Qoins, which puts your spare change toward your student loans. You can also invest your spare change using Acorns.
Have you ever felt like you couldn’t afford to invest? Financial educator Buddy Broome says that you can find spare cash to invest with a little work. “One example is to look at any recurring bill that someone pays monthly. For example, if the customer typically pays $100 each month to the gym for membership, what if the customer paid the gym $1,000 upfront?” he says. Offering to pay a monthly charge upfront for a longer period of time could net you a discount — which could free up some money to invest with.
Right after the holidays, you should start saving for next year. If you struggled to afford this past holiday season, you might wonder how you can start saving for the next one. That’s all the more reason you should start saving ASAP, says family finance expert Cat Alford. “I put $50 a month in a Christmas fund starting in January,” she says. This strategy has paid off — this year, she actually has money left over, rather than going into debt.
The temptation to spend is everywhere, but the hottest spot has to be your inbox. Consider unsubscribing from sales emails using Unroll.me.
Feel like you can’t afford to save? Here’s one trick to try. “My top quick and dirty tip would be to automate savings,” says Latoya Scott of Life and a Budget. “No matter how big or small, all it takes is setting up a direct deposit with payroll or auto deduction with your bank!”
If you have student loans, you might consider them “good” debt — it was for your education, after all. But when you add up how much interest you’re accruing each day, you might think differently. Use this formula to estimate your daily interest: (interest rate) x (current principal balance) ÷ (number of days in the year) = daily interest
Don’t let the term “minimum payment” confuse you. When it comes to paying your credit card, settling for the bare minimum makes you a slave to interest. Jason Butler, founder of The Butler Journal, says, “Pay more than the minimum on your credit card bill each month. Even if it’s five dollars [extra], it will help.”
Paying off debt can be a common goal for the new year, but the first step is to make a list of all you owe, says Holly Johnson, founder of personal finance blog Club Thrifty. “Create a list of each debt, how much it is, and its current interest rate. Once you have your list completed, you can figure out a plan to pay off your debts — or drastically reduce them — over the next 12 months,” she says.
“Individuals should at least take an annual pulse of their finances,” advises Magdalena G. Johndrow, a certified fund specialist at Farmington River Financial Group. “This doesn’t necessarily mean a full financial overhaul each year, but it could mean making small tweaks that in the long run may pay off.” As part of this annual review, Johndrow advises looking at your retirement savings and investment allocations, as well as assessing your budget and setting new goals. You might also want to call in the experts for your annual review if you’ve experienced big changes. “Every few years — or when a major life event occurs such as marriage or having a baby — I would suggest meeting with an advisor to thoroughly scrub through your financial plan. As life changes, you may need to modify your finances in ways you never considered,” Johndrow says.