Change a Little… Save a Lot

Posted on 12. Apr, 2016 by in Bookkeeping Articles, QuickBooks, Small Business Tips

MoneyChanging your financial situation can seem to be an overwhelming task. Like most large problems, the best way to address them is to break them down into smaller, more manageable problems. The same holds true with your financial well being. Here are five small ideas that can yield big results to help improve your financial health.

  • Make incremental payments on debt as soon as possible.  Make extra principal payments on your debt as often as possible and as soon as possible. The way bank amortization schedules work, you pay most of your interest during the early months of your loan repayment.

Example:  $200,000 loan; 30 years repayment; 4.5% interest

The monthly payment is approximately $1,013.

Payment            Interest           Principal 
First $750 $263
Last $4 $1,009

Cut out one annuity bill.  Gone are the days when you buy something and then you are done. Now you pay a monthly fee for as long as you use a service. Examples of this are software licenses, cloud storage, television viewing, cell phone services and more. Why not cut out one such service. Put the savings aside for a better use.Payment

  • Eliminate one add-on service.  Take a look at bills that have a number of add-on services. Cell phone and internet bills are likely candidates. Do you need that special cable package? Do you fully use your cell phone data plan? Look for ways to cut a little bit out of each of your bills.
  • Pay yourself.  When you pay your bills, pay yourself. Place the funds in a hard to reach banking account. Ideally one that does not have internet access. Set a financial goal for this money. It might be to pay for a fun vacation or a special purchase. You will receive a double benefit from this approach. One for hitting your savings goal and one for the joy of purchasing something you want without going into debt.
  • Conduct a competitive review.  Key suppliers rely on our inertia. When was the last time you reviewed your auto and home insurance? What about other service providers like cell phones or trash pick up. Choose a service and solicit three vendors to provide competitive quotes. Your current supplier might still be the best, but you will never know if you don’t periodically check.

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