5 Expenses You Can Cut to Save Money and Pay Off Debt

A new year brings new goals. For many, reducing debt tops the list.

Paying more than the minimum monthly payment accelerates your debt payoff. To do that, you need extra cash. The solution? Cut expenses strategically.

Here are five proven ways to reduce expenses and free up money for debt repayment.

Cut Energy Costs

The average American spends around $315 monthly on utilities. That adds up to $3,780 per year.

Energy prices hit 15-year highs in 2022. Inflation and supply chain issues drove costs up by 15.8% compared to the previous year.

The outlook for 2023 remains challenging. The U.S. Energy Information Administration forecasts residential electricity prices will increase from 15.02 to 15.39 cents per kilowatt-hour.

Rising energy costs squeeze household budgets tighter. You can fight back with these strategies:

• Keep air conditioning and heating at moderate temperatures
• Lower your water heater temperature settings
• Switch to energy-saving light bulbs throughout your home
• Unplug unused appliances to eliminate phantom energy draw
• Hang laundry on a line instead of using the dryer

Phantom energy alone adds around $165 to your annual energy bill. Small changes create real savings.

Eat Out Less

Most of us grab food on the go without thinking twice. A $2 coffee here and a $5 lunch there seem harmless.

Track every food purchase for one month. Coffee, smoothies, lunches, and dinners all count. The results will likely surprise you.

Breaking this habit takes commitment. Swap takeout for home-cooked meals. Pack your lunch for work each day.

Cooking at home costs significantly less than eating out. You’ll notice the difference in your bank account quickly.

Cancel Unnecessary Subscriptions

C+R Research surveyed consumers about their subscription spending. The findings reveal a shocking truth.

Most consumers underestimated their subscription costs by $133 monthly. They thought they spent $86 per month. The actual amount? Closer to $219.

Why the gap? People forget about subscriptions they no longer use. As many as 42% of consumers discovered forgotten recurring charges.

Review your subscriptions right now. Do you watch all your streaming services? Cancel the ones collecting dust.

Apply the same scrutiny to magazines, music services, websites, and gym memberships. Our partner Cambridge Credit Counseling can help you create a budget that accounts for necessary expenses while eliminating waste.

Shop Around for Cheaper Insurance

Many people set their insurance policies and forget about them. You’re leaving money on the table.

Compare insurance rates at least once annually. Your circumstances change, and so do insurance prices.

Car insurance is mandatory in most states. You might think cheap car insurance is hard to find, especially with a bad credit rating or traffic violations.

Shopping around reveals opportunities you didn’t know existed. Changed your work situation? Working from home means driving less.

Low-mileage drivers in California can save up to 32% with mileage-based insurance. Similar savings exist in other states too.

Check rates for home, health, and life insurance as well. Competition works in your favor.

Compare Multiple Providers

Get quotes from at least three different insurance companies. You’ll discover significant price variations for identical coverage.

Your current provider won’t voluntarily lower your rate. You must take action to find better deals.

Review Interest Rates

The Federal Reserve raised interest rates seven times in 2022. Your mortgage and car loan payments have likely increased substantially.

Higher interest rates make debt freedom harder to achieve. You’re paying more just to stay current.

Review interest rates on all your loans immediately. Compare lenders and refinance to secure better rates.

Credit card debt demands urgent attention. Credit cards carry the highest interest rates of any consumer debt.

You have two powerful options for tackling high-interest debt. Consider a debt consolidation loan to combine multiple debts at a lower rate. Alternatively, set up a debt management plan with a credit counseling agency.

A debt management plan through our partner Cambridge Credit Counseling can reduce your interest rates significantly. They negotiate directly with creditors on your behalf.

Free Up Cash for Debt Repayment

Economic challenges in 2022 hit many households hard. You can improve your financial situation starting today.

Ruthlessly slash expenses to redirect money toward debt. Every dollar you pay above the minimum accelerates your progress.

Small cuts in multiple areas create substantial savings. Energy costs, dining out, subscriptions, insurance, and interest rates all offer opportunities.

Track your progress monthly. Watching your debt decrease provides powerful motivation to continue.

Create Your Debt Reduction Strategy

Combine expense cuts with a solid repayment plan. Focus on high-interest debt first to maximize savings.

Make paying off debt your top financial priority. Redirect every freed-up dollar toward your debt balances.

Consider working with a credit counseling agency for professional guidance. They provide free consultations and personalized strategies.

You don’t need to navigate debt reduction alone. Professional help makes the process easier and more effective.

Build Better Money Habits

Cutting expenses teaches valuable financial discipline. These habits serve you long after your debt disappears.

Create a realistic budget that reflects your actual spending. Include categories for savings and emergency funds.

Automate payments whenever possible. Automation removes the temptation to skip payments or spend money elsewhere.

Celebrate small victories along your debt-free journey. Each paid-off account represents real progress toward financial freedom.