Penny Power – How to Save Money without Pain

Saving money shouldn’t be too painful a task for you. You don’t need to be hungry, nor be that stingy friend who wouldn’t come to concerts or basketball games because you’re trying too hard to save every penny. The following are painless ways for you to save money that can lead you to your much deserved financial freedom.

Track your money

It’s usually in doing the little things that you can start to save up bigger and bigger as the days go by. There could be parts of your expenses that you may have overspent on, and you still would’ve enjoyed your life without it. The best way to know this, though, is by keeping track of your money.

recording-finances

Tracking your spending also forces you to look at your financial reality, and that’s not a bad thing. If you ask anyone older than you if they regret not getting a handle on their finances sooner, most would say yes. Take advantage of your younger years – start tracking your spending now to have more security and freedom later. Your future self might thank you.

The truth is that you have a finite amount of money to allocate to certain categories, as they are usually based on what you earn. Laying out your expenses compels you to prioritize where you want your money to go. Mindlessly spending on things isn’t going to get you where you need to go. You need a plan, and tracking your spending is one way to create that plan. If you want to accelerate saving or paying down debt, having a clear picture of your finances can also help you determine how you can accomplish both all at the same time.

Improve your credit score

A good credit score can save you thousands of dollars in interest on everything – from a home loan to a car loan, and from school loans to credit cards. When you apply for a credit card, mortgage or even a phone hook up, your credit rating is checked. Credit reporting makes it possible for stores to accept checks, for banks to issue credit or debit cards, and for corporations to manage their operations. Depending on your credit score, lenders can determine what risk you pose to them.

credit-score

According to financial theories, increased credit risk means that a risk premium must be added to the price at which money is borrowed. Basically, if you have a poor credit score, lenders may not shun you (unless it is utterly awful); instead, they would lend you money at a higher rate than the one paid by someone with a better credit score.

If you’ve never focused on your credit score before, the place to start is to get your free FICO score online. Once you know where you stand, you can begin to improve your score and lower your interest payments.

Refinance your mortgage

The results of improving your credit score can also affect other aspects of your finances, like with your mortgage. Some people opt for refinancing to get a new mortgage to replace their original mortgage, which ultimately aids in the improvement of their credit score.

saving-money

Refinancing is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage. For borrowers with a perfect credit history, refinancing can be a good way to convert a variable loan rate to a fixed, and obtain a lower interest rate. Then again, for borrowers with less than perfect, or even bad credit, or too much debt, refinancing can be risky.

One of the main advantages of refinancing, regardless of equity, is reducing an interest rate. Often, as people work through their careers and continue to make more money they are able to pay all their bills on time thus increase their credit score. With this increase in credit comes the ability to procure loans at lower rates, and therefore, many people refinance their mortgage aiming to get better rate. A lower interest rate can have a profound effect on monthly payments, potentially saving you hundreds of dollars a year.

If you can reduce your interest rate by one percent or more, it is often beneficial to refinance. By doing so while making payments on a mortgage, people are able to take out substantial home equity lines of credit as the difference between the appraised value of their home increases, and the balance owed on a mortgage decreases. This is particularly true for those with high rates due to less than stellar credit scores. If your score has improved, you may qualify for a better rate.

Start Cooking!

Another big source of spending splurge usually comes off of eating out in fancy restaurants, or trying to get by lunch through fast food. The thing is, no matter the situation, eating out is always more expensive than cooking for yourself. Plus, cooking your own food allows you to keep track of the nutrition (or lack thereof) of the food that you take in.

cooking-money

They say that the key to saving money with meals is to look for healthy foods that are versatile and nutritious. The long list includes: peanut butter, oatmeal, canned beans, garbanzo beans, lentils, eggs, almonds, apples, bananas, grapes, fresh or frozen spinach, carrots, kale, canned tomatoes, chicken breasts, broccoli, onions, garlic, brown rice, potatoes, sweet potatoes, nuts, tofu, and milk (almond, soy, rice or cow’s). Thankfully for you and for the rest of the world, many online guides are showing this trend of making cheap and easy meals under $5.

By the end of the day, you would find out that you won’t need to spend so much money just to eat good food.

Take the cheaper or the more valuable options all the time

Look at your constant expenses and see if you can lower their costs. For example, try looking at your internet connection and how much you really need: if you won’t need so much data allowance or so much speed, you can lower your monthly costs to an internet connection that would cater to your needs.

You can also consider getting rid of your home telephone. This is a great way to save money. Many don’t do it because of the 911 service, and that’s understandable. Other than that, with today’s technology, more often than not, there’s no reason to keep a landline. If you do, consider reducing your service to the minimum, and only use the phone in an emergency.

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Also, if you can choose appliances labelled as “energy-saver,” look long term and calculate if you can save more money if you replace your current appliances. Try to replace incandescent bulbs with compact fluorescent light (CFLs) bulbs. These bulbs use 75% less energy and last 10 times longer. They do take some getting used to, and they won’t work in every light fixture. However, using them where it makes sense can save energy and money.

Furthermore, do look at your variable expenses, especially your leisure ones. Even buying concert tickets or flight tickets can be lowered significantly if you know how to. For example, look for tips to save on tickets for the Clippers games online, and you would learn that you won’t actually need to spend hundreds of dollars if you just find the right timing to purchase one.

There’s so many ways that you can get the most value out of your money, you just need to know where to look for them.

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