Advertising
Advertising

No Debts! Eight Simple Ways to Save for an Emergency

No Debts! Eight Simple Ways to Save for an Emergency

Most people amass huge amounts of debt during their youth, which they are unable to pay off for many years. There are some who manage to keep their debt in check, or even remain debt free, but once a disaster strikes and there are suddenly some hefty unexpected bills to pay, they too can find themselves in a deep financial hole that’s difficult to dig out of. This is why it is important to have some money squared away for rainy days.

An emergency fund can help you deal with things like your car breaking down, you or someone you love getting seriously ill and spending a lot of time in the hospital, or being invited to an out-of-the-bloom wedding. However, once you have paid the bills, made your credit card and other payments, and spent a large chunk of your salary on groceries, there is often not much left for your emergency fund. Well, fear not my friend, there are plenty of ways to get a bit of extra money and build up a decent emergency fund.

1. Sell your junk, and some of your valuables

Yard sale

    A quick rummage through your basement, attic and garage can reveal plenty of fairly useful stuff that just sits collecting dust. Just because you don’t have any use for it doesn’t mean that you won’t be able to find someone who will. Take all the junk out and organize a yard sale. You can also look at some of your valuable items that don’t have a lot of emotional value for you–things like paintings, home décor, some jewelry, that relatively new tablet that you barely use, and so on. You can use websites, like Ebay or even some forums, to sell virtually anything that you have lying around.

    Advertising

    2. Make a big shopping run once a week

    The quickest way to burn through your salary is to use your credit card for small purchases throughout the day. It’s very difficult to keep track of how much you’ve spent–hint, it’s a lot more than you think–and you’ll constantly think of something else you need or want. If you only go on a big shopping spree once a week, with a carefully crafted list, and use cash for any minor purchases during the rest of the week you will be able to control your spending much more effectively. Buying things in bulk can often save you some extra money on different items as well.

    3. Avoid overpriced big-name brands

    Stone vs iPhone 3G

      While it’s worth investing in more expensive high-quality models when it comes to shoes, electronics and cars, for example, a lot of the products out there are very easy to manufacture and utilize cheap active ingredients and materials–that which makes them work. Such items include toothpaste, shampoo, soap, a variety of skin care products, simple t-shirts, most drugs and workout supplements.

      In order to find the best deals and the most cost-effective options, you just need to be patient and dedicated when shopping. Take your time and really look around. With a bit of trial and error, you will soon find out which items you can and can’t cut corners on. By sticking with the basics and going for functionality over marketing hype, you can cut your shopping costs in half.

      Advertising

      4. Look for another job

      An additional source of income can really help make things easier if you want to save for emergency, without sacrificing much in terms of comfort. You can make use of any skills you might have, or just go with a simple job that doesn’t require a lot of skill.

      Even if you don’t have any particular skills, you have plenty of opportunities to get some free training for a bunch of different professions, from web designer to teacher to nurse aid. These are all jobs that can help you earn a decent amount of money on the side. Be sure to contact your friends, family and acquaintances to see if there are any positions open where you would be a good fit–a bit of networking can yield some impressive results.

      5. Do freelance work

      Freelance work

        If you can’t find the time or energy to work two jobs, you can consider doing some freelance work from home. Even after a long day at work, you can find the energy to sit down at the computer and clock in another 3-4 hours at the computer. Most of us end up spending as much time on the computer playing games or updating our social media profiles anyway, so it’s easy to make a shift to doing something a bit more productive.

        Advertising

        Check out websites like Elance or Freelancer, and you will quickly find tons of available jobs for anything from writing, data entry, editing and translation, to website and app design. If you’ve got a bit of talent and skill, you can make a quick buck. You won’t get enough to support your family with a few work hours a day, but it will be more than enough to quickly build up a respectable emergency fund.

        6. Monetize your hobby

        Another great way to secure some extra income that you can save for an emergency is to find a way to earn money from your hobbies. You may be able to sell all manner of handcrafted décor and jewelry on Etsy, hold martial arts classes in your garage, teach people how to sing or play piano on Skype, sell some unique collector’s items and so on. You can even pick up a new hobby as a means of becoming proficient in a certain area, say woodcarving, with the ultimate goal of earning some extra money out of it. Almost any hobby can be monetized one way or another, particularly if you’ve acquired a good deal of skill over the years.

        7. Start obsessing about your carbon footprint

        Eco conscious

          Even if you aren’t much of a hippie and don’t care about the environment, which you should, there are plenty of hidden benefits to being an eco-warrior, namely cost reduction. You see, the way we get our energy isn’t all that clean or good for the environment. Even electricity is produced in power plants which are responsible for around a third of all U.S. greenhouse gas emissions.

          Advertising

          Our cars pollute the environment, we use up a huge amount of natural resources and create incredible amounts of garbage that gets thrown out. You get the gist of it. Once we start being more eco-conscious we stop leaving the lights on in rooms when we leave, turn off the devices when not in use, never leave the water running longer than it is necessary and use our cars less often.

          A few simple changes around the home can help save a whole lot of money in the long run. Installing and programming a decent thermostat can shave about 25% off your heating bill, while improving your home’s insulation by caulking up windows and doors, using draft stoppers and window insulation film will bring the cost down even more. Invest a bit of time and effort into converting your home into an eco-friendly zone, and try to reduce your carbon footprint as much as you can. This can make a big difference in how much money you spend every month.

          8. Start making good use of piggy banks in your home

          When people say that every penny counts, they are being quite literal, and quite right. Loose change, one dollar bills and a few fives and 20s here and there–you can spend these without even realizing it, or you can put them into your little savings box each chance you get. It is not something that will reduce your quality of life–in fact, you probably won’t even notice it at all–but all this leftover change and a few larger bills will slowly add up.

          Get a big enough container and put a little something in there each day–even just the loose change in your pocket at the end of the day. After several months, when you open it and pour the money out on the table, you will be pleasantly surprised. It’s not uncommon to see people save up a few hundred dollars this way, without any special effort.

          Staying out of debt is a matter of being responsible with your money and being prepared for unforeseen circumstances. A good emergency fund will help you get through tough times. Anyone can save up a decent amount for money for their emergency fund as long as they heed some of this basic advice.

          More by this author

          Ivan Dimitrijevic

          Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

          40 Amazing Date Ideas for Valentine’s Day 50 New Year’s Resolution Ideas And How To Achieve Each Of Them 8 Fun and Unique Birthday Party Ideas for People in Their 20s 50 Cleaning Hacks for Your Home That Will Make Your Life Easier 9 Unexpected Benefits Of Foot Massage That Make You Want To Have One Now

          Trending in Money

          1 The Definitive Guide to Get out of Debt Fast (and Forever) 2 25 Easy Tips on How to Save Money Fast 3 What Is a Good Credit Score (And How to Get One) 4 9 Millionaire Success Habits That Will Inspire Your Life 5 10 Reasons Why Following Your Passion Is More Important Than Money

          Read Next

          Advertising
          Advertising
          Advertising

          Last Updated on July 10, 2020

          The Definitive Guide to Get out of Debt Fast (and Forever)

          The Definitive Guide to Get out of Debt Fast (and Forever)

          Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

          Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

          Identifying All of Your Debts

          The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

          Here’s how you can get started identifying your debts:

          1. Own Your Debt

          Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

          Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

          2. Make a Debt Tracker

          It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

          Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

          3. Get Your Debt Number

          Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

          Prioritizing Your Debts

          All debt is not created equal. It’s imperative to understand that there are different types of debt.

          Advertising

          1. Understand Bad and Good Debts

          Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

          There are three main types of bad debt:

          • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
          • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
          • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

          Good debt is identified as investments in your future. Here are three common types of good debt:

          • Student Loan Debt
          • Mortgage Loan
          • Business Loans

          2. Decide Which Debt to Pay off First

          Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

          Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

          If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

          3. Don’t Pay the Minimum Amount

          Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

          Removing Obstacles to Pay off Debt Quickly

          Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

          1. Set a Reminder to Track Your Debt

          “If you can’t measure it you can’t manage it.” -Peter Drucker

          It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

          Advertising

          Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

          Set weekly and monthly goals so you can have short term wins and keep the momentum going.

          2. Hide Your Credit Cards

          If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

          Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

          3. Automate Everything

          Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

          4. Plan Ahead

          Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

          For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

          5. Live Cheaply

          The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

          • Live with roommates
          • Cook dinners and prepare lunches for work instead of eating out
          • Cut cable and choose Netflix or Amazon Prime
          • Take public transit or bike to work

          Finding the Lowest Interest Rates

          The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

          If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

          Advertising

          1. Maintain a High Credit Score

          Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

          • Never miss a payment
          • Don’t exceed 30% of your credit limit
          • Don’t sign up for more than one card at once
          • Limit hard inquires, like auto-loans and new credit cards
          • Monitor frequently with free credit-tracking software

          2. Find Balance Transfer Offers

          Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

          Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

          If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

          How to Get Rid of Debt Forever

          Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

          1. Keep Monitoring and Adjusting

          Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

          Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

          2. Earn More Money

          There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

          Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

          Here are some examples of ways to earn more money:

          Advertising

          Talk to Your Boss

          Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

          Start a Side Hustle

          This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

          Build an Online Business

          There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

          3. Celebrate Your Wins

          As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

          While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

          4. Set New Financial Goals

          Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

          Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

          These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

          Conclusion

          Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

          Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

          More Tips on Getting out of Debt

          Featured photo credit: Pepi Stojanovski via unsplash.com

          Reference

          Read Next