3 Ways To Save More Money

Nicole Pederson-McKinnon, at the Sydney Morning Herald, is a great writer and a sound financial advisor. This week she wrote about the saving mistakes many of us are making, and how eliminating them would provide us with extra savings. It was a great read, and one I found incredibly accurate. Here are her suggestions, with my thoughts on how to use them to our savings advantage.

Pay Off Debt

It’s a big debate in personal finance circles- do you save or pay off debt first? Do you do both at once? What’s more important, an emergency fund or a couple of thousand of your credit card? Nicole P-M opts for the pay down debt approach, suggesting that the savings you will make from avoiding interest far outweigh the amount you will earn on your savings, though she agrees an emergency fund is a must. Personally, I think an emergency fund is the first port of call, urgently followed by paying of credit card debt. Once that is done, I think a strategy of saving and paying off asset debt simultaneously is positive, though a lot of people prefer to be without any debt whatsoever.

Cut The Fees

Overdrawing fees, bank fees, late fees and ATM fees. They cost a significant amount of money and we pay them without blinking. A couple of steps work here. Firstly, always organise your day so you enough time to get to your bank and not have to use another ATM. Sit down and work out what fees you are paying, and whether you should consider consolidating some accounts. Remember, fees eat away at the interest you are earning, as does inflation. You might be sitting on 6% interest, but what are you sitting on in actual terms.
As mentioned in the article, it’s also crucial to consider whether your money is parked in the right place. I only recently re-checked the interest on my current saving account to find it was 3.5%. Ten minutes later, and I had the money parked with another account with the same bank and earning 6%. It’s very easy at the moment to take advantage of bank competition and earn some better interest.

The Bare Minimum

If you’re reading this, then chances are you’re fairly interested in personal finance and by now are well aware that paying off your credit card at the minimum repayment rate is not a sound payment strategy. But it has recently become legally binding that lenders show exactly how long it will take should you pay at minimum rate, and often it’s around half a century. The interest you will pay over that time is often enough to cover the initial debt a couple of time over.
Firstly, consolidate your debt and then look at a balance transfer to give you some space. If you have an emergency fund, look at a rate you can sustainably live on and put everything else towards the card. I moved home to get rid of my credit card debt- a tough year but one I will never, ever regret. Do whatever it takes, your long-term finances will thank you for it.