Reducing Monthly Expenses to Pay Down Your Debt

Starting the process of paying down your debt involves a lot more than the simple declaration, “no more.” It also requires a thorough review of your personal finances. That doesn’t just mean an assessment of the debts you owe, but also what you spend, on a monthly basis.

The first place to start is to see precisely how much money you bring in on a monthly basis. For some, this is easy as it’s simply their monthly paycheck. For others, it’s more complex. But whether you work for someone else, run your own company, do freelance work, or are currently unemployed, you need to evaluate your personal income first to properly understand what you can spend.

The next step is to review your personal spending. This starts, very simply, with your base monthly bills. Whether it is monthly student loan payment, monthly credit card payments, car payments, utilities, mortgage, or rent, it all counts and must be factored in.

After this come monthly expenses. You might look at these and immediately think: bills. But just because they are automatically deducted from your account every month, doesn’t mean they are inflexible and can’t be reduced. The key here is to pick out what you don’t use first, and what you do use, but may be able to go without or use less of, next.

For instance, start with your gym membership. How often do you go? Are you getting the most bang-for-your-buck with this money spent? If you feel you don’t go frequently enough to merit the monthly bill, stop going. Now, this doesn’t mean you should stop exercising. You can run or bike outside for free. There are plenty of places to take infrequent exercise classes, when you feel the need. But it’s not worth spending the money if you don’t use it.

Next, evaluate your cable bill. This can be one of the most expensive bills for any household. Are you paying for premium channels you hardly use? Is your internet bill too high for how much time you spend online at home? Could you go without one of these things for a few months? If you can, it could save you significant money and help you pay down your debt.

Finally, check on what you’re paying for insurance. Every month you have money deducted from your paycheck for health insurance, but how frequently do you use those services? Could you go with a higher deductible and save now, rather than spend that extra money every month? Or, in terms of car insurance, is there a better deal out there? Could you get a free car insurance quote online and get a lower rate from another provider, and save a few hundred dollars a year? This may not seem like a lot, but it can all add up rather quickly.

Also, don’t forget to check for any subscriptions to magazines or other services you pay for on your credit card. It may seem like you can’t give them up, but it could be the extra $50 a month you need to tackle your debt more effectively.

While it’s definitely important to manage your day-to-day spending, checking your bills to see if there is a way you can save is also important and a key to saving money monthly so you can pay your debts faster.

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