There's no magic formula for cutting expenses and reducing debt, but the following commonsense strategies deliver solid results.
Rethink Your Credit Card Situation
There are several ways to deal with high interest cards and plastic-based debt. Step one is to acquire a clear picture of your specific situation. List every card payment you make, each card's balance, every interest rate, all the different annual fees, and how much you pay on each one per month. Don't go ballistic and cancel the ones you haven't used for a while or have very low balances. It's advantageous, from a credit score perspective, to keep them open and paid off instead of closing the accounts.
Step two is making a plan of action. No two plans are identical, but a common part of winning strategies is to pay the smallest balance cards to zero as quickly as possible. That way, you can focus on the others and devote more time and funds to getting them to zero, which is the ultimate goal. Don't view cards as an inherently evil force. They're not. Many charge reasonable rates and no annual fees and can come in handy in an emergency. Plus, having an open credit line serves to bolster your credit score.
Refinance Student Loans
For millions of working adults, there's no faster way to reduce monthly expenses than by refinancing education loans. Even if you only pay on a single college loan, it's smart to refinance it into a new loan. The beauty of the tactic is that it costs nothing, takes just a few minutes, can be done completely online, and can seriously reduce your monthly cash outflow almost immediately. What's the point, other than replacing a higher payment with a lower one?
Transforming your college loan situation delivers multiple benefits in addition to lower payments. Not only do most people end up with more favorable interest rates and better terms on the new loan, but they also get more time to repay. Having more time means less financial pressure, more room in the budget, and the chance to use the extra money to pay off credit cards, save for a home, or take a well-deserved vacation.
Pay in Advance for Vacations
For some reason, even those who are otherwise financially careful tend to forget their everyday financial guidelines when planning a vacation. Most overlook the fact that it's possible to save as much as 50% on total trip expenses just by paying for major components of a vacation in advance. That translates into huge savings on accommodations if you're willing to book about 90 days ahead of time and make a deposit of around half the total bill. Likewise, those going on longish journeys can use the same tactic to reduce airfare, tour fees, car rental package prices, and homestay charges. In the travel industry, prepayment is king and consumers who know that one rule can score significant savings on overseas and domestic vacations.
Join a Food Co-op
Most medium-sized and large metro areas have one or more food co-ops. Some of the organizations charge a small annual fee to join, but the potential savings far outweigh that minor expense. The trick about co-ops is that consumers need to plan their purchases carefully and know what kinds of food items they can store and which ones they eat regularly. Before joining a co-op, study your weekly meal habits, noting which items you prefer, the amount of storage space in the freezer and frig, and the amount you spend in an average month on food.
Armed with that detailed data, make a shopping list for your first co-op trip, and avoid impulse buying. Co-ops are an excellent way to score major discounts on staples, but they're not a good resource for specialty items. So, expect to make a trip to the local grocery or food club location even after joining a co-op. What's the payoff? Regular members can slice about 10% off total food bills by purchasing most of their staples at a co-op.
