You’ve probably heard the phrase ‘consumer debt’ thrown around quite a lot, usually with a negative connotation. But what exactly is it? And is it actually bad? I’m breaking down everything you need to know about consumer debt, and sharing the deets on whether or not it’s actually bad.
What is consumer debt?
Consumer debt is money that you, the consumer, owe. There are usually two types of consumer debt.
Revolving debt (aka credit cards)
Fixed loans (usually a car loan or student loan)
Home loans (aka mortgages) aren’t usually considered consumer debt. Seems crazy, I know. The theory is that your home will always retain its value. That’s why they’re considered a personal investment into local real estate. I think that sounds pretty darn fancy, so I’m going with that definition of a mortgage 😉
Is all consumer debt bad?
It depends on who you ask. The personal finance expert Dave Ramsey is going to tell you that it’s always bad and that you should get rid of it ASAP. Many other personal finance experts will tell you that it’s more nuanced than that. The type of debt, the amount compared to your income, and what the interest rates are also determine whether consumer debt is “bad.” Let’s go into detail.
What are the interest rates?
One thing to look at when considering whether or not consumer debt is bad is what the interest rates are. The interest rates for credit cards are often in the range of 20% APR or more, meaning that if you keep a balance of $10,000 on your credit card, by the end of the year you’ll have paid $2,000 in interest. That’s a lot. On the other hand, car loans are often more in the 4% APR range, so you’ll be paying much less in interest for this type of loan. This is why credit cards are considered “bad debt” while car loans typically aren’t.
Either way, you’ll be losing money in interest each month that you have debt. The only question is how much money you’ll be losing.
How does it affect your credit?
If you’re not careful, having consumer debt can really hurt your credit. This might not seem like a big deal, especially if you’re not planning on going further into debt. But having bad credit can affect you in ways you might not expect, like buying that house when you’re finally ready to settle down. Having too much consumer debt and bad credit can also keep you from other financial goals, like going on that dream trip, visiting family for the holidays, or taking a pay cut for your dream job.
But don’t I need consumer debt to build my credit?
Like most things, the short (and frustrating) answer to this is… sort of.
Your credit score is based off of several things. One thing that creditors want to see is a mix of revolving and fixed loans. That means they want you to have a credit card and student or car loans. Preferably both. But this only accounts for about 10 % of your credit score.
What matters more is that you’re paying all your bills every month and not borrowing the maximum available to you. If you can trust yourself with a credit card, feel free to keep that (or get your first). Just make sure that you pay it off in full each month. There’s a minimum payment (usually around $25 or so), statement balance, and current balance. The statement balance is what you want to have paid off in full each month.
Is it actually possible to get out of consumer debt?
The short (and happy) answer to this is… definitely. Doing so usually isn’t easy, especially if you have a lot of debt. Maybe you’re feeling like it will take so long that it isn’t worth it, or that it’s literally impossible. But don’t give up hope! You can do a lot more than you realize if you set your mind to something. Get educated and take what steps you can to start the process of getting out of debt now. That might mean you just don’t take on any more consumer debt while you work on paying off what you have.
So what are the benefits of having no consumer debt?
Maybe you’re not really convinced that it’s worth it getting out of consumer debt. After all, our society has pretty much deemed it as normal. Necessary even. Can you even survive without student loans and a car loan? And more importantly, is that even a life worth living?
Here are some benefits of having no consumer debt.
Job flexibility
Imagine that you see this amazing internship or entry-level position for your dream company. It would require a move and a pay cut, but it’s in a field you love and you’ve always wished you could work there. Can you take it? Not if the job means you won’t be able to pay your student loans, credit card bill, and car loan each month. With those three monthly payments, you’re forced to think more about the salary than whether or not you really love the position. Which is kind of a drag.
A great credit score
We mentioned this briefly before. Sometimes you need some consumer debt in order to build your credit. But usually your credit score just gets better and better the less consumer debt you have. The better the score, the more opportunities you have available to you. Maybe that means buying a house. Or it could mean taking out a small business loan and starting that business you’ve always dreamed of. Maybe it means having an edge in your application for that apartment downtown you’ve been eying.
You can build wealth
So if you’re not paying money to pay off your debts each month, what would you even do with it? The short answer is “build wealth.” When your monthly income isn’t going to different bills each month, it means you can save it instead, whether it’s for retirement, a new car, or for a down payment on your dream home.
Invest in yourself
If your extra money isn’t going to creditors, you can use it to invest in yourself. Maybe that means going on a meditation retreat. Maybe that means going to counseling once a week, or hiring a life coach. You could even use that money to go back to school and learn about the things that excite you. There are a myriad of ways you can invest in yourself.
Invest in yours and your family’s future
Chances are, you’re probably not saving as much for your retirement as you could be. It feels like it’s some other person and their family that would benefit from that, not yourself. Realize that the more you save now, the more time your money has to grow over the years. The more it grows, the more you and your loved ones have. Imagine being able to pay for your kids’ and your grandkids’ college, or being able to start a scholarship program, or whatever it might be. There are lots of wonderful things you can do with money invested now.
A Final Note
Hopefully this answers some of your questions about consumer debt. In the end, money is just a tool for your life. The amount you have or the amount you owe doesn’t place meaning on you. The goal is just to use the tools given to us to the best of our ability.
Credit scores and credit reports can feel like really murky waters. Figuring out what a good credit score is can feel daunting, let alone even figuring out how to make yours better. I remember being afraid of checking my credit score for years because I was worried it wasn’t excellent. That and for some reason figuring out the actual steps to find out what it was felt unknown and overwhelming. But don’t worry, everyone has to start from the bottom, and the basic rules are pretty simple to understand. Here’s all the essentials on how to check your credit score.
Why Your Credit Score Matters
Knowing why you should work on your credit score is the first step. It seems like one of those things only your distant future self will need to worry about. That could be true, but it takes years to build your credit score, so the sooner you start, the better. Here are some big reasons why your credit score matters.
It can affect your ability to rent a home
According to NerdWallet, nearly 1 in 2 landlords say that your credit history is one of the top factors in deciding whether or not to accept your lease application. If you have a bad credit score, that could seriously affect where you can live, especially if you’re living in an area where the housing market is more competitive.
You might not be able to buy a home
Unless you’re paying in cash, your credit score can definitely affect whether or not you’ll be able to get a mortgage. It can also affect how much interest you pay, even if you are approved for a home loan.
Credit checks can be used as part of the hiring process
Your credit score, aka the 3 digit number, isn’t necessarily looked at by employers, but your credit history can be. They might look at your history to see whether you’ve been a reliable person when it comes to paying your bills, as that can be an indication of whether you’ll be a reliable employee.
You might not qualify for mobile phone deals
If your credit score is really low, you might be stuck with a pay-as-you-go plan. The best mobile phone deals are usually reserved for those with excellent credit scores.
It can make your car insurance payments higher
This seems like a pretty raw deal, but it looks to be true. Having a low credit score might make it difficult to get good insurance rates, depending on where you live.
You might not qualify for better loans or credit cards
When you’re buying a car or applying for another type of loan, you might end up getting a much higher interest rate than you would if you had a high credit score. You also won’t be approved for credit cards with the lowest fees + interest rates and the best perks.
What Your Credit Score is Based On
Now that we know WHY it matters, what actually determines these mysterious and important three little numbers? Quite a few things actually.
Your payment history for loans and credit cards
It’s really important to pay all of your bills on time and in full. The longer you do this, the more it helps you.
Your credit utilization rate
This only involves your revolving credit (aka credit cards). You take the amount that you owe and divide it by the total limit and that’s how you get your credit utilization rate. So if you have two credit cards with a limit of $5,000 on one and $5,000 on the other, your total limit is $10,000. If you owe $1,500 on one card and $1,500 on the other, you’ve utilized $3,000 — so your credit utilization rate is 30%.
You’ll want to keep your credit utilization rate at 30% or lower (preferably lower. Some experts say lower than 20% or even 10%). One thing to keep in mind is the utilization rate per card. You don’t want to put $3,000 on one card, because then the utilization rate for that card would be 60%, which can also hurt your credit, even if your TOTAL utilization rate isn’t above 30%.
Type, number, and age of credit accounts
The longer you’ve had a credit card that you regularly pay off, the more reliable you look to lenders. It’s also more rewarding to have a mix of different types of credit (fixed loans vs. revolving credit). This is probably going to be a credit card and a student loan or car loan. Before you go out and get that car loan, look into how much it will boost your credit score. It usually isn’t worth it.
Number of inquiries for your credit report
You certainly don’t want to go out and open multiple new accounts all at once. For one, this makes you look desperate. Lenders will wonder why you suddenly need all the money. Two, this will affect the number of inquiries for your credit report. And last, it’ll cause the average age of your credit to go down significantly.
Credit score vs credit report
So what’s the difference between a credit score and a credit report?
The credit SCORE is the 3 digit number, ranging from 300 to 850. The credit report is all the things that go into your credit score. Things like credit cards, number of on-time payments, number of loans, etc. ALL the details go into your credit report.
A credit score is generally considered good if it’s in the range of about 650-720. A score is often considered to be excellent if it’s 720 or above. I’ve seen different opinions on different websites, however.
There are Three Different Credit Scores???
Just when you thought you had this figured out, I tell you that you actually have three different credit scores. This is because there are three different bureaus that gather this information, and they each create your score a little bit differently.
Experian
Equifax
Transunion
They all pretty much use the same information, though sometimes certain landlords or creditors won’t report to all three bureaus.
Where to Check Your Credit Score
Credit card / bank account
A lot of bank accounts and credit cards are doing this fun thing where they give you your updated credit score every so often. We have bank accounts at Capital One and I can regularly check my credit score there.
Mint
You can also see your credit score at Mint.com. Once a month it’ll allow you to get an update and shows you all the different factors going into your credit score. I get excited to refresh it every month. It feels like a game and I get to see if I can bring my score up.
Annualcreditreport.com
Under federal law, you’re entitled to one free credit check with each bureau per year. It’s always a good idea to take advantage of this. If you’ve never checked your reports or it’s been a long time, go ahead and pull all three reports at once. Otherwise, consider pulling one report every four months so that you can take a peek more frequently.
Also bear in mind that this website will give you your credit report, not your credit score (see above). But since it’s so easy to get your credit score from other places these days, it’s hardly worth paying money somewhere to get that info.
What if something on my credit report is wrong?
Maybe you just checked your credit score (good job, friend!) and realized that there was something wrong with it. Before you panic, you should know that you can actually dispute things on your credit report. If there’s a substantial error on your credit report that you get fixed, it can cause your score to go up by 25 points. According to the FTC, 1 in 20 people have substantial errors on their credit report, so it’s definitely worth looking into.
You can find a more detailed explanation of how to dispute something on your credit report here.
How to improve your credit score
It can feel like a long arduous process, but starting now will definitely help in the long term. There are some easy fixes that can improve your credit score right away.
Keep paying your bills on time
Pay off your credit card in full each month
Use less than 30% of the max limit, but preferably less
Paying off your card weekly or bi-monthly might help with this!
Dispute incorrect charges
Don’t apply for credit too frequently
Ask your credit card company to increase your limit
Over time, you’ll see your credit score gradually increase.
What if I don’t have a credit score at all?
If you don’t have a credit score at all, the best thing you can do is apply for a credit card. For some reason, credit card companies make it easiest to get your first credit card when you’re in college. You can usually see if you’re pre-approved before applying for a credit card. This will give you an idea of whether you’ll be accepted without putting an unnecessary credit check on your credit report.
If you’re NOT in college and have no credit, then a secured card might be the best way to go. This is basically a credit card with training wheels. You start with a deposit, usually around $300 to $500, which acts as your limit. You’ll want to make sure that your payments are reported to credit bureaus so that it actually does improve your credit score.
Now it’s your turn!
Best of luck as you put these steps into action and start improving your credit score! As you’re working on improving your financial literacy and getting in control of your finances, consider bringing your friends along with you. A lot of times personal finance is a taboo topic, but not talking about it is only hurting us! Feel free to share this post with a friend who’s interested in feeling educated and in control about her money too.
Saving for an emergency fund is, in my opinion, one of the least fun financial goals you can possibly have. But it’s also arguably the most important. Having an emergency fund is the first place you should start when getting your financial life in order. Today I’m answering all your questions about emergency funds.
What is an emergency fund?
It’s a savings account with a minimum goal of $1000 to be used for emergencies only. If you foresee car repairs in your near future, that does not count as an emergency. This money is set aside for things that are unforeseen and outside your power. Think car accident, house fire, or getting laid off from your job.
Do I really need an emergency fund?
Yes.
But here’s why. The fact is, emergencies do happen sometime or later. It’s better to be prepared for when it will inevitably happen rather than hope that it won’t. Imagine that you just got a new job with an awesome new salary. You’ve been keeping a tight budget for months. But now you have a little extra spending money and you want to treat yourself. Besides, you just got a new job, so you can make up for the money next month.
But then imagine that someone without insurance rear-ends you on your way to work one morning. It’ll take a while for your insurance company to work things out, and then even longer to get your car fixed. Since you just started your job, you don’t have any leave built up. Imagine how much less stressed you’ll feel knowing that you have an emergency fund to get yourself to work until your car problem is resolved.
Even if you have insurance for all your valuables, it’s still important to have an emergency fund. Sometimes it can take quite a while for insurance money to come through. If your house burns down (though I sincerely hope it doesn’t!) you’ll need a place to stay, new clothes and toiletries, and food to eat that very night. There’s no waiting for insurance money to buy all that.
Can’t I just use my credit card for emergencies?
You might be thinking that you can just put a rental car or any repairs necessary on a credit card, but this is dangerous for several reasons.
You’ll most likely end up paying a lot extra in interest. Many credit cards are upwards of 20% APR in interest. That adds up really fast.
Instead of building your emergency fund back up, you are now just paying off your credit card + interest.
There are some things that you can’t actually pay with a credit card. A contractor might not accept credit cards for repairs on your home. While plastic works most of the time, it’s no guarantee.
Your issuer can actually cancel or reduce your credit line. While this doesn’t happen often, it’s certainly within the realm of possibilities. Especially if you get laid off.
You should never use your credit card as your emergency plan.
How much should I keep in an emergency fund?
While you’re paying down debt:
Many experts recommend having at least $1,000 in your emergency fund until you get out of debt. For example, if you have $2,000 in credit card debt and $15,000 in student loans, you might consider having an emergency fund of only $1,000 while you aggressively pay off your debt. This means that all your extra moneyis going to go toward your debt, including things like your tax returnand birthday money. The $1,000 cushion will help you with most emergencies, such as a last minute car repair, a vet bill, etc, while you aggressively pay down debt and avoid paying more in interest.
When you don’t have debt:
After you’ve paid off all your debt (except for a mortgage), then you should start saving for 3 to 6 months of living expenses in your emergency fund. This will protect you if you lose your job for some reason. Losing your job is stressful enough. It could be much less stressful if you know that you have 3 to 6 months to find a new one before you start going into debt.
Calculate how much money you need to spend to keep your household running. You’ll want to include things like rent, insurance, food, gas, etc. That’s your monthly living expense. Then multiply that by at least three.
You only need to have three months’ worth in your emergency fund in situations where you have a secure job, have little monthly expenses, or your spouse brings in enough to cover your monthly expenses. Circumstances in which you definitely want to have 6 months’ living expenses in your emergency fund are if your job isn’t as secure (perhaps a seasonal job), you’re self-employed, your the primary breadwinner, or your income fluctuates significantly month to month.
Three to six months of living expenses is no small chunk of change. While it might be tempting to invest it somewhere and watch it grow, it’s a much better idea to keep your emergency fund liquid. Your best bet is to keep it in a designated savings account or Money Market account. You want to be able to get to your money quickly. It’s not really an emergency if it’s planned out, so you’re only going to need to access it at the last minute.
We have our emergency fund in a Capital One 360account. This is a good option because we can get to it quickly if we need to, but it also accrues more interest than a normal brick and mortar bank savings account will. As of the time I’m writing this, our money earns about 1% APY just sitting there. That’s not a huge amount, but it’s pretty good considering how accessible it is. Our other bank only offers .05% APY.
One thing I love about the Capital One 360 accountis that it’s easy to open more than one savings account. I find it really helpful to have different savings goals in different accounts. It makes me much less tempted to use my emergency fund for other savings goals, like our travel fund or our car fund. If you’re interested in opening an account, you can use my referral linkto get a $25 bonus.
How do I keep myself motivated to keep contributing to my emergency fund?
Saving that much money is no easy feat. And as I said earlier, I don’t think that it’s a very fun financial goal either. What’s kept us motivated in saving is the idea of how much more financially stable we’ll be once we reach our goal. It’s important to keep the WHY in mind.
But sometimes even that doesn’t seem like a good enough reason. Since saving an emergency fund is an important commitment to me, I know that I’m going to keep working at it even if I have some hard months. Some months the only way I can convince myself not to reallocate the money is by reminding myself that I can start working on other, more exciting financial goals after our emergency fund is all topped off. Until we’ve built up our emergency fund, it would be risky to save up for a down payment on a house, go on a super fancy vacation, etc.
Other strategies for saving an emergency fund?
I have two words for you. Automatic drafts. I think that setting up automatic drafts are crucial for any type of savings goal. It’s great accountability and you don’t have to think about it. Set up the drafts to occur right after you get your paycheck. You’ll be surprised how quickly you adjust to having that money automatically taken away. It’s almost as if it was never in your account.
It’s also important to check your accounts often. If there’s anything less fun than putting your money in an emergency fund, it’s paying overdraft fees. That’s why you want to make sure that you’ve kept enough in your checking account to pay your bills after your savings has been taken out. Eventually, this will become a habit. Besides, it feels really good knowing where your money is instead of wondering if you’ll have enough.
How do you track your progress on your emergency fund?
I love to use Mint to keep track of our finances. On the desktop version of the website, they have a goals page that is fun to use. There are several different ways you can set your goals up. Seeing myself get closer to the goal each month is incredibly exciting and motivating. Getting ahead is even more exciting.
There are a lot of other ways to keep track of your progress too. Lots of people use bullet journals. Just google “bullet journal emergency fund” and you’ll find lots of ideas. If you have kids and want to get them involved, you can print out a chart and have them help you fill it in each time you save a certain amount. Capital One 360 also has a way for you to track your savings goal.
The important thing is that you learn what works for you and keep at it. Don’t be afraid to track your savings goal in more than one way.
A Final Note
While saving for an emergency fund may not seem like fun, it’ll get you one step closer to living the better life. Once you’re prepared for an emergency, you can focus on other things like
buying a house
getting your dream job
going on the trip of your dreams.
save to upgrade your car
quit your job and start your own company
support the causes you love
Saving up an emergency fund is a lot of work but it’s more than worth it. My husband and I are currently at 54% of our savings goal. Know that we’re in the race with you and cheering you on! We can do this!
Being frugal can feel really hard and impossible, especially when you’re first starting out on improving your financial journey. When you’re just getting started on spending more selectively, the FOMO is real. You probably have visions of yourself joining a nunnery–having no fun, wearing the same clothes for years, and mostly hanging out in your room alone, staring out the window. But it doesn’t have to be as scary as it seems. Here are some tips for how to save money without feeling deprived.
Spend Selectively
The whole point of getting control in your finances is not so that you can hoard all your money, but so that you can have enough money for the things you really care about. If you really couldn’t care less about what your coffee tastes like but need a caffeine fix, order it black instead of getting a $6 blended drink. Unless you’re already extremely financially self-aware already, there’s probably something that you’re spending money on that you don’t really care that much about. Maybe it’s going to see a movie every month with your friend when you’re somewhat indifferent about movies. Maybe it’s the expensive face wash you’ve been using for years but are kind of indifferent to. Try to think of things that you aren’t really passionate about and save money in those areas first.
Create a Challenge
If you’re really feeling the urge to buy some fresh clothes, you can create a challenge for yourself to try new outfits with what you already have. Ask a friend over to give you a fresh pair of eyes and help you get more creative. You can invite your friends to do the challenge too. It would be a great way to get some new ideas and build some excitement into the clothes already waiting in your closet.
Get Creative with Social Engagements
If you and your friends are used to spending time with each other by going out to eat or seeing a movie, it can feel like saving money = not having any friends. But that’s just not the case! Get creative and suggest new things for your friends to do. Chances are, they’ll really enjoy the change of pace. Instead of going out to a movie, you can invite them over to your place for games. If weather is nice, you can meet them at a park for a picnic. There are lots of fun free and cheap things to do. You just have to be intentional about planning them.
Go Off the Beaten Path
There are a lot of fun things to do by yourself for free too. If you’re saving money by cancelling your gym membership, try out some new ways of exercising, like going on a hike or a bike ride. If you’ve given yourself a limited budget for books, utilize your local library. There are thousands of books you can enjoy for free, and the librarian might just have some great suggestions for you. Instead of thinking that saving money means that you can’t do anything at all, use it as an opportunity to learn of new things you can do for free.
Use Automatic Drafts
If I set up automatic drafts to take money out of my account the day after I get paid, it doesn’t really feel like I had the money to begin with. You’d be surprised at how quickly you adjust to having less money after you get paid. When the money isn’t there smiling at you from your checking account, you’ll be less tempted to spend it. If you don’t have to remember to make the transfer each paycheck but have it done automatically, the chances of your savings account flourishing grows astronomically.
Instead of Buying New Gadgets, Buy New Cases
I’ve discovered that when I get a new case for my phone, it feels like getting a brand new phone. This should be done with caution of course, because you don’t need to be buying a new phone case every other month. Another trick is to refresh your wallpaper or screensaver every so often. It makes things feel fresh and new even if you are carrying around a four-year-old iPhone.
Unsubscribe from Emails
My contentment rating goes up a ton when I’ve unsubscribed from emails from my favorite stores. I really don’t need to know when the new line comes out or when there’s a killer sale. If you’re not getting those emails, you’re not constantly getting reminded of all those pretty things you’re missing out on. And truth be told, you probably don’t really need them anyways.
Plan When You’ll Eat Out
Studies show that half the enjoyment of a thing is the anticipation of it (I don’t have a link to a study, but pretty sure I read this in this bookAND this book). Instead of just eating out when you don’t feel like cooking dinner, plan it out in advance. That’ll at least double your enjoyment factor and you’ll get more bang for your buck. On top of the extra enjoyment is the benefit that you probably won’t eat out as often if you have to plan it first, saving you lots of money as well.
Give Yourself Fun Money
My husband and I do this and it’s been a lifesaver. To be honest, I don’t spend my fun money very readily. But it’s really nice knowing that I have it there. I feel like getting a handle on your finances is a bit like going on a diet. If you restrain yourself too much, you can end up gorging on all the foods you’ve been avoiding, leading to some serious regret. Just knowing that I have a small monthly allotment to spend things on wants and not just needs makes me feel less deprived.
Stop Window Shopping
This also includes internet window shopping. It can be really tempting to check out what your favorite stores have available at the moment, but this only makes saving money harder. Keep your blinders on when it comes to shopping. You’ll be a lot happier in the long run, even if it feels hard at first.
Find Free Concerts and Events
Lots of cities have free events you can go to. This is a great way to spend time with your friends and loved ones without spending a dime, whether it be a concert in the park or a killer fireworks show on the 4th of July. Just remember to bring water and snacks with you. It’s not a free event anymore if you have to buy a $5 bottle of water and spent $12 on food. I’ve been eyeingthese pretty water bottles.
I hope these tips helped you find ways you can start saving money without feeling deprived. Feel free to share this post with a friend who’s working on reaching financial goals without killing her social life!
It can be really easy to justify needing things in today’s world. So many services and objects are purchased because it’s the norm and not because they’re actually necessary. When you have important financial goals, many times you’ll have to make some sacrifices in order to reach them. The added bonus, I’ve discovered, is that purchasing less not only saves you money, it also makes your life simpler. Here’s a list of things I’m living without for the sake of frugality and simplicity.
Chick-fil-A (every week)
I can’t give it up entirely, but I’m certainly not having it every week. I basically live for the Spicy Deluxe sandwich. What’s your Chick-fil-A order?
A coffee table
We bought one used at a garage sale and I decided it was too bulky for our little living room, so we’re selling it. I thought about buying another one that was better suited for our space, but we’ve been living without it for a while and it’s actually kind of nice. Now we no longer to stack piles and piles of stuff on top of it. Definite win!
A step stool
I’m not the tallest person, so I need help when it comes to reaching objects hiding higher up. I thought about buying a step stool, but then I realized that a chair works just fine. Which is great, because we have a few of those, and now I don’t have to store a step stool.
Frequent hair cut + color
Now that my hair is getting longer, I can get away with only getting it trimmed every 4-6 months. I don’t use much heat on my hair, so that keeps it looking healthy (and saves me tons of time!). The last time I got it colored, I asked for a color that would grow out well so that I can go a while in-between cuts. I’m saving so much money this way!
Alcohol at home
This is something that my husband and I decided recently. It’s mostly because our bodies feel better when we limit our drinking. The added bonus is that we can save a lot of money.
Expensive Workouts
I’ve promised myself that when I double my current income, I can start paying someone a lot of money to help me exercise. Until then, I’m keeping my body healthy by doing yoga with YouTube and going on walks, both of which I really enjoy. There are plenty of free ways to exercise, so paying money for it doesn’t seem like a great way to use my husband’s and my limited resources.
New Books
I occasionaly buy a new book from an author I love if I know that it will fit the following criteria:
I’ll read it more than once
I’ll want to mark it up
It was written by an author I’ve followed for a long time
Pre-ordering books from authors you love is one of the best ways you can support them, but buying books can really add up. A book a month can easily come out to about $180 a year or more. I’ve discovered that I don’t frequently reread books. The types that I do reread are usually helpful non-fiction books. Now that I know this about myself, I can be more selective about the books that I actually purchase. If in doubt, I’ll check it out from the library. If I find myself wanting to check it out a second or third time, I give myself permission to buy it. This has only happened once or twice though, with books like this and this. If you’re interested in finding audiobooks for cheap or free, check out this post.
Massages
I would love to get a massage once a month. That sounds heavenly. In reality, it doesn’t really help us toward our savings goals. There are other things that I could spend my money on to get more bang for my buck. And that’s also a couple hours a month I’m saving too!
Cable Television
Admittedly, this isn’t that hard for me. I’ve lived without cable for years. Even when it was available to me, I rarely utilized it. Netflix is my main source of entertaining television. But the fact that we don’t buy cable saves us upwards of $500 a year. And maybe one day I’ll be able to kick the Netflix habit for good.
Subscription Boxes
This one and this one were my favorites. There are so many more I’d be interested in. The problem for me is that I don’t always love everything that comes in them, which clutters up my home. It also costs money, so there’s that. I save more money and space if I avoid these tempting treats.
Coffee On The Go
I never buy coffee to go. My rule is that I can order coffee if I’m on a road trip or I’m meeting a friend. This means the Starbucks drive-thru is out for me, but I save a lot of money in the long run. Even if I only ordered a $5 latte once a week, that’s $260 by the end of the year. Yikes.
A Fancy Apartment or Home
Don’t get me wrong, we have a nice apartment. But it’s definitely not the nicest one we looked at. We could have gotten something much more convenient or glamorous had we paid more each month. Renting a home instead of having an apartment would have also been nice, but we went with the cheaper route for this season. Especially since we (sadly) don’t have any pets.
Magazine Subscriptions
You can view a lot of magazines for free through your library. I’ve found that I’m mostly happy living without them though.
Manicures + Pedicures
I’m super lazy when it comes to doing my nails. I was thinking the other day that it would be nice if they could just magically become polished and pretty. I don’t have magic, but nail salons are the next best thing. Realistically though, there are way more important things to me for me to spend my money on.
Frequent Vacations
Would I even be a millennial if I didn’t want to go on more vacations? Traveling is important to us, especially since we have family living all over the place. We certainly make it a part of our budget, but we try to be smart about it and often tell ourselves no to vacation ideas. My husband is better at this than me 🙂
An Upgraded iPhone
I would LOVE to have a brand new iPhone. Mine is 3.5 years old, which is basically geriatric in the cell phone world. But goodness phones have gotten expensive. I’ll have to save money and live with a slow(er) phone until I can really justify getting a new one.
What have you given up to save money? Do you miss it at all, or is it something you’re hoping to add back in to the budget as soon as your income increases or you reach your next goal?
In most things in life, it’s important to know yourself and make systems work for you. This is definitely true when it comes to saving money. I read all sorts of things that people do to save money on various things. It’s important to remember how to save money and be financially responsible in a way that works for you. Instead of feeling guilty about spending money, I like to sit down and think about what’s important to me. Then I can save on all the things I don’t care much about and be okay with the things I won’t give up to save money.
Haircuts
I’ve heard of people who cut their own hair or have their husbands do it in order to save money. I’m not quite at that level of frugality (yet). I’m really wanting to grow my hair out, so I’m nervous to try an at-home cut that would result in needing to go get it fixed somewhere and have it get cut even shorter. But just because I’m not willing to forego on haircuts doesn’t mean I have to break the bank. The last time I got it colored, I asked for something that would let me go a while before I needed to do it again and they were happy to oblige. I’m also not above coloring it myself with one of those boxes you get from the store. They work perfectly fine for most colors (especially if you’re going darker and not lighter) and you save a tonnnnn.
I’ve also been getting my hair cut at a school for yeeeaarrs. They have an instructor oversee it and I’ve never had a problem with my hair coming out bad. It takes them a little bit longer to cut it, but I have a little more time than money, so it’s worth it to me. It’s also a new person every few cuts, so I don’t have to worry about hairstylist loyalty. Cheating on your hairstylist makes you feel guilty and is a real problem when you’re trying to save money. For any of you Oklahoma readers, you should definitely check out the Hair Arts Institute.
Fresh food
It would be much cheaper if I only purchased rice and canned beans and things of that nature. Eating well is important to my husband and I, so we splurge for meat and fresh produce. Sometimes I feel guilty about this and think about cutting back our food budget, but in the end it’s a worthy investment. Especially if we’re not going over budget for fast food (talking to you, Chick-fil-A).
Coffee
If you really think about it, coffee is a want and not a need. Theoretically, I could save money if I stopped purchasing coffee. But I just can’t. I try to limit this expense by drinking it mostly at home, buying the cheap and non-hipster coffee beans, and putting plain, boring milk with no sugar in it. Occasionally we’ll get coffee out, but it’s a special treat when we do.
Eating Out
We really try to limit the number of times we eat out per month. It’s hard, but our bodies and our wallets thank us. In an imaginary world in which we are capable of doing everything we’re supposed to, we wouldn’t eat out at all. But money is also meant for our enjoyment, so if we can eat out in moderation, it’s definitely a win.
Travel
I love to travel. In fact, that’s part of why I care about saving money in other areas… so we can travel more. Charles and I met while in England and we’ve had lots of traveling adventures on our own. Now we’re really looking forward to traveling together. In addition to this, our family is scattered all over the place, so it’s important for us to be able to spend the money to go and see them when we can. We save money where we can on traveling, but don’t erase it from our budget entirely.
Cable Internet
If we gave up having internet in our apartment, we could save $544 a year! That’s a lot! But then it would be pretty challenging to pursue this whole blogging thing. Not to mention we wouldn’t be able to watch Netflix. So with that in mind, $544 is worth the expense. But mainly because of blogging ;).
Gifts
Giving gifts is definitely one of my love languages (that is, when I can get myself organized well enough to remember to buy them!). Gifts don’t have to be super expensive, but it is important to me to be able to give them. I’ve seen other people tell their friends and families that they’re not going to be giving gifts for a certain season of financial strain. That seems to work for them, but for me, the cost of gift-giving is worth it.
Have you thought about what you’re not willing to give up in order to save money? Leave a comment and let me know!
Hi, I’m Kelsey! I live in the DC area with my husband and two cats. I currently spend my days working from home, reading all the books, and enjoying home life in our new-to-us 1940s condo. Read more about me here.
