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7 Ways To Spend Less Without Compromising Your Lifestyle
There are actually only 2 methods to get out of a dangerous debt level.
You either earn more or spend less.
And since earning more is easier said than done, the obvious plan of action is often to spend less. That is something that we have more control over.
You can save $5 by skipping tea break. But you can’t make an extra $5 by having your tea.
See the difference?
The problem is that when we hear about saving more money or spending less, the natural response is often a long-winded sigh.
This is because we unknowingly associate that with having to compromise the lifestyle that we have grown accustomed to.
That is not always the case as you will see from these ways to cut expenses.
1) Request for lower interest rates
If you don’t know, almost every term you see in a lender’s facility letter is negotiable.
You ended up with a bad deal because you did not negotiate hard enough or that your banker was just not helpful enough.
He has his commission to think about.
I’ve seen legal fees for mortgages fully subsidized, presumably concrete loan rates smashed to half, processing fees waived, etc.
If you can name it, it is negotiable.
The reason why you seldom hear loan officers tell you about it is because they want to work on straight-forward cases where you submit the required documents, they process it, and you sign the contract.
You get the credit facility, and they get their commissions.
Over-complicating matters will just be a distraction that holds them back from other applicants.
And many times, all they need to do to offer better terms is to send an email to a product manager. Even when a product is supposedly non-negotiable. But offering better terms can compromise their commissions.
You see the paradox?
Once it gets around your head that everything is negotiable and how simple it is for product managers to change their terms, you will start seeing the matrix.
Getting lenders to give you better terms is no longer a face-off of you versus the bank.
It is you versus the banker. A person against another.
If you can convince your banker to help you, you are well on your way.
So call up your bank and request for more favorable interest charges. Cite their competitors if you have to. Because of intense completion in banking, bringing competition into the fold is like flipping switches to their motivation.
Should you fail to get your bank to cede ground and give you better rates, just change banks. There is probably a better deal next door anyway.
2) Pay less, pay often
When you work out the money you repay on a monthly basis compared to one on a bi-weekly basis, you will realize that you will end up paying more each year.
But if you look closer at your loans, you will see that even though you are paying more, a huge portion of those payments are made towards the principle.
In the long term, you will save on interest charges.
To add more power into this strategy, whenever you get a windfall, use it to partially redeem the loan.
This cuts up the principle even further. Your installments become smaller and you pay less total interest again.
3) Always pay your credit card bills in full
Credit cards have one of the most expensive interest rates known to man. And for many, interest is due because they forgot to settle the balances instead of being cash-tight.
Do you think someone in the bank is betting on people’s forgetfulness to generate that extra revenue?
You will have to repay the full amount you owe sooner or later. So don’t delay your payments for the fun of it.
If you cannot afford a designer bag with cash, you cannot afford it. Don’t buy something and let the next pay check pay for it.
If you must get into negative territory, search the market for cards that have the lowest rates.
4) Tax planning
There is a reason why accountants are well paid. They know how to present numbers that minimizes liable tax. That is perfectly legal.
And I actually think that there are more people overpaying their taxes than those that underpay. This is because they don’t have a good comprehension of how deductibles work.
Think about it this way. The more money you pay the government, the more money they will use to bailout billion-dollar corporations.
Pay your taxes. But make sure you are paying as little as you can with legitimate tax planning.
5) Consolidate your debts
Debt consolidation loans don’t just help you save on interest charges, they also help make everything more convenient as well.
Instead of paying for 3 loans at 10%, 11%, and 12%, why not consolidate all 3 into 1 loan at 10%? It’s a no-brainer.
Instead of having to write 3 checks, you will now write just one.
A common way of consolidating debts is by tapping on home equity loans. These loans are secured against your property. And secured loans have a lower risk, and therefore, lower interest. For once, you house will be working for you too.
6) Don’t let your cash idle
You probably already know that interest on savings accounts are very low. But you still keep a significant amount of money inside.
Why do you do it?
The very least you can do is to put your cash into fixed deposit accounts. They at least give you a much better margin.
Other liquid assets that can give you good gains include structured deposits, unit trusts, REITs, Treasury bonds, stocks, and eve insurance.
Don’t be lazy and don’t let your money idle.
You have worked so hard to save them. Don’t let inflation erode your money without a fight.
7) Only buy things that you presently need now
If you ask me how much money I have wasted on things I thought I would need but never came to using them, I wouldn’t be able to answer you.
There were so many that I’ve lost track of them. And very often, these purchases are made because I don’t want to miss out on a sale.
Stop buying things for the future just because you don’t want to miss out on a promotional discount.
A simple way to conquer this bad habit is to set a rule of only buying stuff that you can, and will, use immediately.
When retailers run promotions on merchandise that do not meet this criteria, move on.
I’m sure you will save a huge chunk of cash from practicing this.