When you go online, you’d see a lot of stories about people being able to pay off their debts and saving money, too. You probably wonder if this is even possible. Or if they are just some gimmicks that will entice you to do something.
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The reality is a lot of people are able to save money and, at the same time, pay off their debt. That said, trying to do both is no easy task to do.
But believe it or not, there are ways you can use to make those two different, sometimes competing goals happen.
The following article will show you how to save money while paying off debt and highlight the following specific features:
- Easy ways you can save money and pay off debt (it’s not as hard as it may seem!).
- The best of both worlds, i.e., saving and paying off debt, is easily achievable and the following will show you how!
- You won’t even feel like you’re giving up much and you’ll save money, too.
If you are ready to make these things happen, read on!
7 Ways to Save Money While Paying Off Debt
Here are some ways you can put into action to help you save money and pay off your debt at the same time without putting too much pressure and stress on yourself.
1. Add to Your 401(k) Contributions
As you pay off your current debt, make sure that you have something to fall back on as you do so.
Adding money to your 401(k) contributions helps to ensure that you have some savings should you need them.
By adding to your 401(k), you can rest assured knowing that you have savings reserved should you lose your job or need extra money in the future.
401(k) contributions are a safe way to save money and allow for you to pay off debt while not sacrificing savings.
2. Look at Your Savings Account and Add to It
Another back up account you should keep in mind as you pay off debt is your savings account.
When you have a savings account that you contribute to, you can be confident knowing that you have money ready in the case of an emergency.
A savings account provides ready-to-access cash which is a great thing to have at the spur of the moment.
Although this type of bank account won’t bring you a high interest rate on your savings, it’s a good way to keep your money secure.
You should always have a savings account in your back pocket for those times when you need cash at a moment’s notice.
When you want to save money while paying off debt, be sure to take advantage of the usefulness of a savings account.
3. Determine Which Debt Should be Paid Off First
When you’re paying off debt and hoping to save as much money as possible, determine which debt should be paid off first.
Look at the interest rates and see which ones are higher.
The higher the rate, the more urgency there is to pay off that debt first.
This is basically a way to get free money when you don’t have to pay high interest rates.
When you make note of the higher interest rates, this can help you to zone in on debt which can and should be paid off first.
4. Put Savings Aside Immediately and Make It Non-Accessible
If you decide to pay off debt, make sure to put any additional savings aside so as to make it non-accessible.
Know what you need to pay on your debts and then take an additional amount and put it into a separate savings.
By doing so, you can pay off debt but also ensure that you have some money set aside.
Don’t make the extra cash easily accessible as this may prove to be too tempting and easy to spend.
5. Contribute to a Health Savings Account
Another way to save money and pay off debt is to use a health savings account.
Sometimes individuals have health savings accounts available to them where they can pay their health-related expenses and save money when it comes to tax payments.
You can pay less via a health savings account than if you paid out-of-pocket expenses, which means more money in your pocket.
Save money while paying off debt by using a health savings account to do so.
6. Pay Off Private Student Loans
If you have both private student loans and federal student loans, pay off the private student loans first.
These types of student loans have higher interest rates than federal loans and by paying these types of loans off first, you are saving yourself some cash in the long run.
Save some money in interest payments while paying off student loan debt and direct a majority of your payments to the private student loans while still paying the federal loan payments.
7. Pay Off Credit Card Debt
One of the most expensive forms of debt is credit card debt.
When you look at the high balances and the high interest rates, it only makes sense to pay off debt and pay these items off first.
If there are specific credit card balances which are higher and those with high interest rates, tackle those first.
Look at your income and pay only what you can manage while not sacrificing other debt payments or necessities.
You may also be able to grab some side hustles that can help you make money online.
If able to do so, paying off high interest credit cards first is highly advisable and will be a great boost to overcoming your burdensome debt.
This will allow you to easily save money while paying off debt.
Start a Side Business to Pay Off Debt
So how do you get money to pay off all these different forms of debt? Well, the best way is to start your own side hustle or business to make extra money to pay towards the debt!
Paying off your debt and saving money don’t have to be impossible. There are simple things you can do right now that don’t involve you sacrificing a lot of things that you need. All you need to do is start now and start little by little.