I’d like to welcome guest writer Stacy B. Miller to my blog. Stacy wrote this very informative article and it’s definitely worth a look! She’s a great writer and I appreciate her contribution to my blog. Show her some $aving George love and go check out her blog Kissyourmoney.com
Do you want to save more for the festive season shopping? Do you want to boost your emergency fund for the rainy days? Well, there are 2 ways to do so.
The first option is to cut down your living expenses, which is not that easy but possible. All you need to do is eliminate your unnecessary expenses.
The second option is to cut down interest on your debts or loans. This is also possible if you use the following tips:
1. Negotiate with your creditors: Are you a loyal and responsible customer? Do you always pay your credit card bills before the deadline? Do you always maintain your credit-utilization ratio below 30%? If so, then the credit card company must be fond of you, and they would hate to lose you especially at a time when the nation’s credit card debt has touched the 1.2 trillion mark.
Call the customer care representative and ask for a rate reduction on your credit card. Initially, the customer care representative would say, “sorry Sir, this is the best we can offer you” or “it isn’t possible to reduce your credit card interest rate.” That’s pretty normal considering they’re getting paid for increasing profit margin of the company. Don’t hang up after hearing those lines. Just inform the representative that another credit card company has offered you a better deal, and you would like to know the procedure to close your current account.
The customer care representative would ask you about the deal. Tell him bits and parts of the deal. The customer care representative would give you a better deal.
2. Consolidate your debts: You can save a good amount by consolidating your unsecured debts like credit cards, store cards, utility bills, payday loans, etc. There are 3 ways to consolidate debts –
(i) Debt consolidation program: This program combines your unsecured debts into a single monthly payment plan with a lower interest rate. You’ll have only one monthly payment each month instead of multiple payments.
The debt counselors negotiate with the creditors to lower your interest rate and arrange an affordable monthly payment. This simplifies the bill payment process. One benefit of a debt consolidation program is that your late fees and fines are waived off. So you can save money here as well.
Just make sure you check the credentials of the debt consolidation company. Check its accreditations and fee structure. Read the debt relief laws so that no one can scam you.
(ii) Debt consolidation loan: Here you roll multiple unsecured debts into a new big loan with lower interest rate for saving money. You have to make a fixed monthly payment till the debt is paid off completely.
|Secured debt consolidation loan||Unsecured debt consolidation|
|You have to pledge a collateral against the new loan||There is no need to pledge a collateral for obtaining the loan|
Usually, the interest rate on a secured debt consolidation loan is lower than the unsecured debt consolidation since it is less risky.
(iii) Balance transfer credit cards: Are you swimming in high-interest charges? Are you tired of paying high-interest to your creditors? If so, then you can rollover your balance to a 0% APR credit card.
Suppose you’re paying 16% interest on your present credit card. You decide to roll over the balance to a 0% APR credit card and save 16% on your interest.
Remember one thing. The credit card company will charge 0% interest rate only during the promo period, which lasts for 6 months – 18 months. Once the promo period is over, creditors will increase your interest rate. So try to pay off the outstanding balance within promo period if you want to save money.
3. Refinance your loans: Do you have a home loan? Are you lagging behind your payments? If so, then you’re in trouble. If you default on your mortgage loan months after months, your lender may foreclose your property. Before you lose your home at the auction, you can refinance your current home loan. This means you can replace your existing home loan with a new loan at a low-interest rate.
Your goal is to lower your monthly payments. If the interest rate on the new loan is not low, then you can’t save a penny. Remember this fact.
It’s enticing to refinance 15-year home loan with a 30-year mortgage since this will cut down your monthly payments. But this means it will take a longer period of time to pay back your lenders. Probably, you’ll pay more on the interest over the life of the loan. Calculate how much interest you have paid on your old loan and how much you’ll eventually pay on the new loan.
You can use a mortgage refinance calculator to figure out your monthly savings, lifetime savings, new payment amount, and the number of months until you break even. This will give you an idea on the total cost of refinancing. You’ll realize if it is a good deal.
You might be surprised to know how much you could possibly save by reducing the interest on your current debts even if there are additional charges for doing so. Use the aforementioned tips to reduce interest on your secured and unsecured debts. You can use online debt payoff calculators to know how much you can potentially save by reducing interest on your debts. Once you get the figure, it’ll be easier to decide how much extra you can spend on Halloween, Black Friday, Christmas, and the New Year. Set aside a certain amount for your emergency fund also. You may need it when your car breaks down or you want to make a short trip suddenly.