If you want to save money, you need to look at the interest rates. Reducing debt with the highest interest rates is the first thing you should look at. It doesn’t matter if it’s a credit card, a house loan, or a monthly instalment for a new TV/ phone/ laptop/ car, you need to eliminate the highest interest rate FIRST. High interest rates are only good for your investment savings account.
For unemployed people, struggling entrepreneurs and women with low paying part-time jobs it can be a real challenge to pay off your debt and prioritise bills with the highest interest rates as their payment date isn’t scheduled according to the highest interest rate unfortunately. Wouldn’t it be great if your first monthly bill was the one with the highest interest rate. 😛
Don’t fall for despair though. There are some tips and tricks you can do to keep track of your bills.
- Go through the interest rates of ALL your bills. When I had a full-time job, I didn’t pay attention to interest rates, bank fees, and other extra costs but these things matter more than you think.
- You can’t avoid credit card payments. Some bills can be postponed and negotiated with the bank, but unfortunately most credit card payments can not. Keep this in mind when you use your credit card.
- Negotiate mortgage loan payments with the bank. Another bill you can’t postpone, but of course it also depends on the country, bank and type of loan you have.
- Avoid buying stuff with monthly instalments. Check the interest rate first! If you buy a new phone, check how much you’ll actually end up paying in the end of your one or two year contract. (It’s A LOT more.)
- Avoid getting a loan to pay off your bills. These high interest loans that private companies offer to EVERYONE without checking your credit score are tempting and easy to get, but as usual, when something comes easy there’s a catch. They charge huge interest rates. Calculate how much your debt is, your interest rate on that debt and is it worth paying off that debt with another high interest loan.
For more information and tips, you can buy my Budgeting Tips 2020 from my Shop. (Also available in Finnish.) This post wasn’t sarcastic by the way. 🙂 These tips are real and serious. Be safe, happy and don’t spend your pennies on stupid crap my dear readers. ☺️💰