I’ll get right to it: You want more money, you need more money, but you don’t have it.
I know this because I see your accounts. Not your account balances per se, I’m not talking about that. People have money in other banks and brokerages.
No, I see what you guys overdraft. I see how often you guys go below the monthly minimum. I’m the one you’re demanding all those fee refunds from.
You don’t have the money to achieve your financial goals. You may not even have the money to meet your monthly expenses! That’s not an enviable position to be in.
If you are unsuccessfully trying to build a nest egg, create an emergency fund, or achieve early financial freedom, living paycheck to paycheck and being unable to save money is the big problem you have to solve. But, like losing weight, the solution is simple but not easy. It’s the two pronged approach of spending less and earning more.
Like I said, “spending less and earning more” sounds simple, but there are so many ways to go about this that it can get kind of overwhelming. So to make your lives easier, here are 10 ways to spend less and earn more that you need to start doing right now in order to dig yourself out of your hole or just make your financial situation a little bit better.
1) Get Overdraft Protection
When you open up a bank account, you probably just tell the banker that you only want a checking account and nothing else.
What you should be doing is protecting your checking account from excessive overdraft fees using overdraft protection.
People seem to get overdraft protection mixed up with something else, so I’ll explain it now. When you overdraft, a transfer will automatically be made from your overdraft protection source to cover your overdraft. Instead of the roughly $35 overdraft fee charged per item, you will be charged either a single transfer fee or no fee at all.
So if you are swiping your debit card or a couple checks were cashed earlier than you expected, that you can potentially save more than $150 on bank fees. Per day. And yes, you agreed to those charges. Please don’t argue bank policy with me because you definitely won’t be getting any courtesy refunds if you do.
A typical example might look like this:
Bob isn’t that bright. He started his day with only $100 in his bank account. He forgot he had written a $75 check to someone, who cashed it that same day at another branch of his bank. So now he has $25. He then spends $30 on Insane Clown Posse CDs because he lives in the 1990s and hates good music. Now he’s got -$5. He then buys an expensive $10 latte from Starbucks (bringing him down to -$15), and later buys a $5 sandwich for lunch. Final total: -$20. Without overdraft protection, he’s gonna get hit with $105 in overdraft fees due to three transactions that either put the account in the negative or occurred while it was there. But if he had it, the total amount of fees paid would be $10.
Overdraft protection is usually opened through a separate and dedicated line of credit, though many banks will allow your savings account, HELOC, and even credit card to be used as a protection source.
Regardless of the financial vehicle used, overdraft protection is something that you should have on your account. It’s there to protect you and save you money in fees. Take advantage of it!
2) Use Paper Instead Of Plastic
Paper or plastic? No I’m not talking about your shopping bags, though I am talking about how you pay for groceries……and everything else.
Consider curbing your debit card usage and paying for things in cold hard cash.
The reasoning behind this is purely psychological, but quite effective. While using your debit card doesn’t give you any benefits or tack on extra fees, it makes you more willing to spend.
It’s easy to hand over a plastic card. It’s not like you lose anything. The store/restaurant employee always gives it back to you, and it’s the same card whether you’re paying a few dollars or a few hundred dollars for you purchase. But cash is finite. You’ve got to count that out and give it to someone, never to see it again. And the more money you spend, the more cash you’ve got to give.
In fact, this is one of many simple ways to protect your debit card. The fewer places you swipe your card, the fewer merchants have your information on their systems. And from there, the fewer chances that your card will be one of the ones that gets potentially compromised when a merchant’s payment system gets hacked.
Plus, you can set a budget for yourself that you can’t with a card. If you are only carrying $50 in cash with you, then you can’t spend more than that. With your debit card, nothing’s stopping you from going over your budget at GameStop, making horrible spending choices such as buying a $60 copy of Mighty No. 9 instead of just picking up a classic Mega Man collection.
3) Get A Second Job
If your current income isn’t enough to make ends meet or realize your financial goals, then consider finding another job. No, I’m not talking about leaving your employer and getting a higher paying job (though that is good too). I’m talking about finding a second job.
It’s not a glamorous way to earn more money, but having a second job can earn you a huge income boost, as well as pad your resume with more marketable skills and experience. Even a low paying job can make a huge impact.
You don’t necessarily need to go flip burgers at McDonald’s (though even those who are doing really good for themselves should try working a minimum wage job at least once in their adult life). There are plenty of work-at-home jobs that don’t involve telephone usage or any sort of customer service. I’ve done them myself (while working as a licensed banker during the day) and am looking for another one right now.
There are plenty of places to search for these types of jobs. I recently purchased and just started reading this ebook detailing 460 killer work from home jobs.
Just make sure you research the company before you apply. Home employment has a reputation for being a haven for scams and for good reason, but that doesn’t mean that there aren’t thousands of legitimate opportunities out there. Remember that if a company ever tries to collect a fee for applying with them, they are a scam. An employer is an employer and is expected to pay you for your labor, not the other way around. This is regardless of whether you show up to an office or work at home in your pajamas.
4) Refinance Your Student Loans
This one goes out to the 44 million Americans carrying $1.3 trillion of student loan debt on their backs with no way out in sight.
College graduates are looking for ways to pay off their massive amounts of student loans, and it’s nearly impossible for many of them. The college degree doesn’t get you a job or anything of value nowadays, and these kids simply don’t have jobs. Meanwhile, the interest rates that they pay on these high risk unsecured loans is more that they can handle.
The best thing you guys can do, if it makes sense, is to refinance your student loans. You definitely want to focus on community banks, credit unions, or any sort of organization that doesn’t focus squarely on making a profit. Those companies will be the ones to provide the best interest rates.
Depending on the amount that you owe, that could be hundreds of dollars saved every month. And you probably need every penny.
5) Refinance Your Mortgage
Don’t forget to look into refinancing your mortgage as well.
You might think that’s wildly unnecessary given that mortgage rates are still very low. A 30 year fixed rate mortgage is right now in the low-mid 4% range, after all. You’re not getting much lower without converting to an ARM.
But these aren’t student loans, where any balance over $50,000 is astronomical. Homes are very expensive. According to US Census Bureau data, median home prices have gone up from $17,200 in January 1963 to $345,800 in May 2017. And prices in the coastal cities are way higher ($345,000 is cheap where I am). At these amounts, even the smallest of interest rate changes can make a huge difference.
Let’s say you have a mortgage of that amount at 4.50%. That’s $1,638 you’re paying every month, including taxes and insurance. But if you can refinance it down to, say, 4.125%? That monthly payment goes down to $1,577.
That $61 per month saved doesn’t sound like a whole lot, but imagine how quickly you can build an emergency fund with it. Or cover extra bills? Or put it to work towards your retirement. Did you know that if you saved that $61 and put it in the stock market every month for 30 years, assuming a pretty reasonable 7% annual return (that’s about what the market will average out to), you will end up with an extra $75,347.44? That’s a huge amount for a seemingly trivial amount of monthly savings.
Just make sure it’s worth the closing costs.
6) Put Your Money To Work By Investing
I think I might have accidentally just covered this, but you should be investing as much of your money as possible.
Remember our example before, with the $61 in monthly mortgage savings ending you with $75,000 over 30 years?
If you had put that money in a non-interest bearing account instead, it would have equaled a mere $22,000.
That’s the power of compounding interest, and it’s important to start now. Because time in the market is more important that timing the market, beating indexes, how much you put in, etc.
For an interesting exercise in this, calculate how much money you’d have if you doubled $10 every day for ten days. Then calculate how much you’d have if you doubled a penny every day for thirty days. And prepare for the shock of your life as see the power of time mixing with compounding.
Put your money to work in the stock and bond markets. Start investing now and earn interest and dividends on your money. At first, it seems like it won’t make you a whole lot of money. But run numbers in any compound interest calculator and you’ll be absolutely amazed by what your results will be if you save and invest diligently over time.
Your future self will thank you.
7) Save Money And Your Health By Cooking Meals At Home
This might not be something you were expecting on this blog, but it is a great way to save money. Cook meals at home!
Trips to restaurants and even to fast food joints are expensive. If you eat out, expect to spend $10 or more on a single meal. I have coworkers that order breakfast to the branch every single day and eat sushi for lunch. And these are the tellers! I’m a licensed banker and I couldn’t possibly imagine spending that much money on food.
Instead, I buy cold cuts and make sandwiches. Some meat, cheese, and bread can last me for a week. I make simple dishes, like stir fry beef and vegetables, and bring them to work for lunch. I bought a Nuwave Brio Air Fryer for my apartment and it makes some pretty awesome dishes. Great considering I’ve been a Hot Pocket guy most of my life.
Plus, it’s good for your health as well as your wallet. Home cooked meals with healthy ingredients are better for you than the processed meat-like substances served as greasy fast food places.
8) Shop Around For Life Insurance
Do you have a family that depends on you? What happens to them if you die, financially speaking? Who’s taking care of them?
These are the things you have to worry about if you have a spouse, kids, and a mortgage on your home. There are chances that you might walk out the door and not come back. Especially if you have a risky job such as police officer, firefighter, or high-rise construction worker. And with those possibilities comes the risks of your family being left in the street.
Why not transfer those risks to a big company that specializes in managing them by buying a term life insurance policy?
Of course, that means paying insurance premiums. And while you need to buy as much coverage as you need to protect your loved ones, you still owe it to yourself to get the best possible deal and pay as little as possible.
So make sure you shop around for life insurance and get the best possible deals you can get. Money saved on insurance premiums is money that can, well, see #6 for ideas on what to do with all that money you’re saving.
9) Max Out Your Retirement Accounts
Whether you have a 401(k), 403(b), 457, or IRA, you want to be maxing out those retirement plans.
Because no one is more willing and able to take money out of your wallet than the Internal Revenue Service. More dangerous than most terrorist groups and having roughly the same level of ethics, the IRS wants all your money and does not give a good goddamn if you are struggling to get by and make ends meet. And from the average American, they will take 25% of your income. Check out this income tax bracket table to see where you fall (you can’t even find one from the IRS’s website! Would you believe that!?).
That’s the sort of taxes the rich should be paying, not regular wage workers!
But there is a way to shelter your money from the greedy hands of the United States Government, and that’s through the retirement accounts I mentioned above. By putting your money in a retirement account, you can deduct that from your income and pay less taxes. Not only does this mean a potentially bigger refund check coming your way or a smaller check that you have to write out to the IRS, but your money also grows tax deferred. Wouldn’t it be nice not to have to pay taxes on that money every year?
And what’s more, employer-sponsored plans will usually offer an employer contribution match. So up to a certain point, your employer will match your contributions to your retirement plan. Guys, this is free money from your boss! Take it!
If you don’t max out your contributions to your retirement plans, then at least contribute the minimum necessary in your employee retirement plans to qualify for the full employer match. Don’t turn down free money.
10) Cut Cable And Subscribe To Online TV Services
I’m not a huge TV watcher. I really just like Game Of Thrones, Adam Ruins Everything, and RWBY (which isn’t even on television, but an online TV show that I watch via Youtube). And I need to watch the second season of Ash Vs Evil Dead as well.
But here’s the thing. Cable TV is expensive. The average price of cable TV is roughly $100/month and has grown at more than four times the inflation rate.
By switching to TV streaming services, you can save a ton of money while watching your favorite shows. Cable TV is good, I guess, if you like sports and news. Or worse, sports news (I can’t believe people actually pay to watch journalists analyze someone running with a football). But the streaming services have huge varieties of shows that you can watch at anytime, including original exclusive shows.
Plus, I can just buy the Game Of Thrones DVD set once the show is complete for probably not much more than one month of cable. And I’ll actually own the show and can watch any episode anytime.
With Netflix and other competitors out there, I honestly see no reason to pay for cable TV anymore (other than Game Of Thrones).
Times are tough and we need to earn more money and spend less of it. There are tons of ways to do so, but many of them take a lot of effort, capital, or education.
These, on the other hand, are 10 ways to spend less and earn more that you need to start doing right now. Why? Because while some of them may not have a huge immediate impact, or others might require some investment over time, they are all immediately actionable methods of putting more money in your pocket month after month. And you should always be using whatever resources you have available to you to put yourself in a better financial position yesterday than you were today.
Readers–What do YOU think!? What do you do to earn more and spend less? Does anybody use the strategies I laid out above? Leave your thoughts in the comments below!
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