All of the following are quotes lifted directly from popular personal finance blogs:
“I went without buying any new clothes or shoes for a whole year – it was hard, but totally worth it to get all my debt paid off!”
“I never, ever go to restaurants or put my clothes in the dryer; it doesn’t seem like much, but I really want to buy a house soon and I need every penny for my downpayment.”
“I sold my car, my T.V., and my baseball card collection to pay off my credit cards. I miss that stuff, but nothing beats the feeling of being debt free.”
Actually, I’m lying. None of those quotes came from personal finance blogs; I made them all up. But you probably believed me because personal finance bloggers are notorious for taking really drastic measures to accomplish their financial goals. In fact, when PF bloggers fail to get adequately “intense” about improving their finances, readers start questioning how serious they really are about paying off that credit card or saving for a comfortable retirement.
But what if “gazelle intensity” isn’t your thing? What if you really want to start cleaning up your debt and beefing up your savings but you’re just not the count-the-toilet-paper-squares type? I have good news: there are some really effective, really lazy ways to improve your financial situation. For example:
1. Round your debt payments to the nearest hundred
Consider the following scenario: you take out a car loan for $12,000 at 7% interest. The term is 5 years (60 months). At that amount and rate, your monthly payment would be approximately $237. If you rounded that payment up to $300 – which would require you to scrape together a mere $62 per month – you would shave one year and two months off of the loan’s life and save yourself over $500 in interest. Now imagine you used this trick with all of your debts – you could be out of debt years before you originally though you would be and save yourself thousands in interest. Food for thought.
Consolidating your debt payments is a tricky decision, especially if you have a lot of debts. But assuming you can consolidate your credit cards into one loan for an interest rate less than the rates on the cards, this move could really save you money and simplify your life. When you consolidate, there’s no “which card should I pay off first?” or “which card should I throw the extra money at this month?” dilemma. The choice is clear. It’s much easier to attack one enemy than many.
3. Save or invest windfalls
Instate a personal policy: all bonuses, extra income, and “third” paychecks get saved or invested. This strategy is particularly helpful if your monthly bills come pretty close to your monthly income, that is, you don’t have a lot of extra money for saving or investing on a monthly basis. If you follow your self-imposed policy faithfully, before you know it you’ll be sitting on a decent nest egg.
Have you ever promised yourself that you’d save $X.XX next month, but then when next month rolls around, you somehow didn’t follow through? If you automate your savings and extra debt payments, you won’t have to worry about forcing yourself to carve out the extra cash because you will have already built it into your budget. This is the easiest way to get yourself to do things with your money that require extra effort and discipline. If you treat your savings like a bill and your extra debt payments as if they’re just part of the regular payment by automating them, you’re tricking yourself into making smart choices. Nothing wrong with that!
Do you prefer to take an intense approach to your finances, or a more gentle one? What are your favorite “lazy” financial moves?