There’s nothing easy about getting out of debt. The companies that loan you money for everything from your morning latte, to the car you drive to get to the coffee shop, to the gas you put in the tank to power it, want you to live on credit. Getting out of that hole means developing new habits — and change is always difficult. Clawing your way out of a lifestyle of debt means painful adjustments as you try to make the same amount of money cover your living expenses and pay back the money you’ve borrowed. Getting out of debt is a hard road, and many fail to even get out of the starting gate.
Every plan for getting out of debt starts with saving an emergency fund. Dave Ramsey suggests starting with $1,000; when I started it took me months to scrape together $2,500. Any change is difficult, but there are some tricks that make getting over that emergency fund hurdle a little easier. Here are five of the least painful ways I know to start pulling together a little cash.
Rounding Entries In Your Checking Account
If you write checks or set up electronic payments to pay bills, one easy way to save cash is to start rounding the amount up to the nearest $5 or $10 amount before deducting the payment from your balance. $124.15 becomes $125.00 in your expense ledger, $234.60 becomes $250.00. I originally started doing that because the math was easier and, after a couple months, when I balanced my checkbook, there was an extra $600 in the account. Surprisingly, online banking actually makes this technique more difficult because you can check your balance daily. Keeping the charade going means keeping a separate spreadsheet with income and expenses. Another advantage to this deliberate padding of your checking account is that it’s like having your very own overdraft protection, saving you a $25-$35 hit from using your bank’s overdraft service.
Variation on the Penny Jar
Change jars are great but the progress of those pennies, dimes, and quarters can be painfully slow. You can kick up the results of your penny jar by including $5 or $10 dollar bills from your wallet as part of the change you toss in the jar. That not only multiplies the amount of money in your change jar, but makes you far more careful when it comes to breaking that $20 or $100 dollar bill.
Another helpful item on my savings journey was discovering that my employer had a paycheck deduction program for savings, where they would automatically deduct $50 per paycheck into a savings account of my choice. Mixed in with all the other deductions, it was hardly noticeable — and added up to an extra $1,200 a year in savings.
Sell Your Junk
If you’re like most people, you have a depressing amount of money tied up in junk that sits around in a closet or packed away in boxes for months on end. That detritus of consumerism continues to build up until you move, which necessitates hurried trips to the local thrift store trying to get rid of it all at the last minute. In the span of a couple days, all that junk transforms from a waste of space into a waste of money. Instead of giving away your junk in the midst of a move, start turning it into cash right now. Separate it into boxes and put a price tag on each item; that way you won’t be pressured into dreaming up a price on the spot when someone inquires. You’ll also have time to check similar items on eBay to get an idea of the selling price. If you can’t hold a garage sale, find a local flea market or weekend fair. Most of the time you can rent space for $25-$35 dollars; and traffic at the big ones can be quite heavy.
Rebates & Coupons
I have friends who are masters at product rebates, and it’s really incredible what kind of money they can get back on everyday purchases. Instead of pocketing the cash from rebates and coupon savings, divert that money to your savings account.
While none of these saving tricks adds up to a lot of money on its own, together they form a steady stream of cash flowing into your savings account. Once you get into the groove of putting extra money into savings, you’ll be amazed how fast that money grows. You’ll blow through your savings target in no time; then you can start diverting some of that extra cash to paying off bills.
Every tough journey begins with a first step — and the easier and less painful that first step, the sooner you’ll get going.