Sign In
Get Started
Finance for Parents

Three Big Ways to Save and Get Out of Debt Fast

By Meghann FoyeMar 15, 2018

You’ve made a budget, have a plan to get out of debt and you’ve even found a credit card that offers a great points plan. But, what if there were some even sneakier ways to save?

We spoke to financial planners to see if they had some hacks that could make an even bigger difference in your balances by the end of the year, over the course of your mortgage and even over your lifetime.

It turns out that many people neglect what’s sometimes the best way to save money—in small amounts, done in an automatically, so that the earnings can pay off big in the long-term.

Here are three important ways to save, which can help you boost your personal savings and get out of debt:

1. Start Shoe-Boxing Away Your Personal Savings

It’s crucial to have an emergency fund, but finding the best way to save money can be easier said than done—as you probably know all too well if you’ve ever set up an automatic deduction from your regular checking account, only to go into overdraft when you forgot about it.

You might even try a savings challenge where you pay yourself a small amount each day (literally, this could just be a few cents) for a year, for a grand total of almost $700 after a year.

To get started, all you really need is a savings account. You can also get techy, if that's your speed. With Digit, an app that automatically draws small amounts into a side savings account daily (offering 1 percent interest), you can harness an algorithm to calculate the right amount to withdraw each day, based on your income and spending.

What’s even better is that you’ll keep track of your savings plan through a text alert each morning with your overall balance, so you’re always aware of exactly how much you have. You can withdraw from your balance anytime.

Potential Savings: $2,000 to $6,000 this year, depending on how much you earn. Plus saving on overdraft fees.

2. Readjust Your Bill-Paying Days to Increase Your Personal Savings

According to financial expert David Bach, one of the best budgeting tips is to readjust your mortgage payments from once a month to every two weeks. This could potentially save you tens of thousands of dollars in interest over the life of your mortgage and help you get out of debt sooner.

He recommends taking your monthly mortgage payment, splitting it down the middle, and then making the payment on the same day every two weeks, in line with the days you get paid.

So, for example, if you previously paid $1,500 each month, now you’d pay $750 every two weeks. Since you’re now making payments every two weeks rather than once a month, you’ll be making one extra payment a year.

Bach says that it depends on your mortgage, but paying this way could mean you could save up to $50,000 in interest on your loan, or the equivalent of getting out of debt (mortgage debt, anyway) off two to three years sooner.

Potential savings: $50,000 over the course of your mortgage.

3. Budgeting Tip: Tweak the Savings Plan for Your 401(k)

According to financial planner Graham Summers, many people only put away the same percentage their company will match (say, 6 percent), which is a big mistake if you can afford to contribute more than that.

“If you're only contributing up to the amount your employer is willing to match, you're leaving a ton of future money on the table. Stocks historically return 6 percent per year,” he says.

Every cent you put into your 401(k) is being compounded over your career. That extra $100 per month in contributions, through the power of compounding, can translate to hundreds of thousands of dollars more in retirement investment.

“If you’re feeling too pinched, you can always decrease your contribution amount, but most people never do,” Summers says. He notes that one of the best ways to save money is to reframe your mindset to help you see the benefit of stashing, rather than cashing, your paychecks.

“Increasing your contributions is the equivalent of ‘investing in yourself,’ whereas spending the money does little or nothing for your long-term financial stability,” Summers says. “The former actually has a benefit. The latter just means you have to work more. Which one do you prefer?”

If you don’t work for a company that offers retirement benefits, you might consider an app like Stash, which allows you to invest micro-amounts such as $20 a week. You can also use its system to set up an investment account.

Another option is ElleVest, an online investing platform specifically directed toward women and their unique financial needs.

Another thing that could be draining your savings? The fees you’re paying for your 401(k).

A difference between a 0.5 percent, 1 percent or 2 percent fee could add up to hundreds of thousands of dollars when you go to retire: “Some 401(k)s have very high fees and employees often don’t realize that they are the ones paying them in most cases. They usually believe their employer covers all the costs. It pays to look them up,” says Bobbi Rebell, a Certified Financial Planner and host of the Financial Grownup podcast.

Potential Savings: Hundreds of thousands over a lifetime.

Set a date on your calendar to implement these budgeting tips. Your future self will thank you.

Fabric exists to help young families master their money. Our articles abide by strict editorial standards.

Write a free will online with Fabric in minutes!

This material is designed to provide general information on the subjects covered. It is not, however, intended to provide specific financial advice or to serve as the basis for any decisions. Fabric Insurance Agency, LLC offers a mobile experience for people on-the-go who want a easy and fast way to purchase life insurance.

Subscribe to our newsletter

Written by

Meghann Foye

Related Posts

Finance for Parents

Can You Afford to Become a Stay-at-Home Parent? How to Find Out

Working vs. being a stay-at-home parent is a major decision. We’ve created a framework to provide financial clarity about your best options.

By Julie Pierce Onos
Finance for Parents

Your Fall Money Checklist: 5 To-Dos

As you get back in the swing of the daily grind, we’ve got some money to-dos to keep your financial life chugging along smoothly.

By Allison Kade
Finance for Parents

What’s the Difference Between a Godparent and a Legal Guardian?

As you’re thinking about your estate planning, it’s important to understand the distinction between a godparent and a legal guardian.

By Sarah Li Cain

Fabric Picks

Finance for Parents

How Does a No-Exam Life Insurance Policy Work?

No-exam life insurance policies let you skip the in-person medical exam. There are several types available, so understand the different options.

By Jessica Sillers
Finance for Parents

9 Myths About Life Insurance—and What You Should Know

We’ll help you sort fact from fiction, and learn what you need to know about how life insurance really works.

By Allison Kade
Finance for Parents

What Should You Do With a Life Insurance Benefit?

What is it like getting a life insurance death benefit? What should you actually do with it? We break it down with expert advice.

By Melanie Lockert

About Fabric




Subscribe to our newsletter

© 2020 Fabric Insurance Agency, LLC

Fabric Instant is an Accidental Death Insurance Policy (Form VL-ADH1 with state variations where applicable) and Fabric Premium is a Term Life Insurance Policy (Form ICC16-VLT, ICC16-VLT19, and CMP 0501 with state variations where applicable). Policies are issued by Vantis Life Insurance Company (Vantis Life), Windsor, CT (all states except NY), and by Vantis Life Insurance Company of New York, Brewster, NY (NY only). Coverage may not be available in all states. Issuance of coverage for Fabric Premium is subject to underwriting review and approval. Please see a copy of the policy for the full terms, conditions and exclusions. Policy obligations are the sole responsibility of Vantis Life.

Fabric Insurance Agency, LLC (FIA) is an insurance agency licensed to sell life, accident, and health insurance products. FIA will receive compensation from Vantis Life for such sales. The NAIC Company Code for Vantis Life is 68632. See the Terms of Use for additional information regarding FIA.

Plan like a parent. is a trademark of Fabric Technologies, Inc.