(NEWS10) — Saving money while paying off debt can seem like a daunting task without proper guidelines set in place.
For a majority of Americans, saving $5,000 is more important than losing 5 pounds, according to a study conducted by financial company Fidelity Investments.
While it may seem impossible for some, it can be done. NEWS10 compiled five recommendations for saving money and paying off debt from Rebecca Gramuglia, Personal Finance expert at TopCashback.com.
1. Start living within your means.
Gramuglia suggests using the ‘50/20/30’ rule when budgeting.
- 50% of your after-tax income should be spent on housing essentials
- 20% should be spent on financial priorities like paying debt and saving money
- 30% should be spent on lifestyle choices, like vacations
She said to think of budgeting as a means for you to be in charge of what your money does, not the other way around.
2. Track your spending.
Sticking to a budget is the key to financial freedom, Gramuglia said. Tracking your expenses is the smart way to do so.
She suggests making a list of all monthly expenses on a spreadsheet to determine whether the budget is realistic.
3. Set measurable goals.
She said its easier to maintain a goal and hold yourself accountable if there is a set deadline.
4. Create a debt payoff plan.
Using the “avalanche method” could be a way to achieve financial freedom. She describes the avalanche method as attacking the high-interest debt first to save money in the long run.
She said to make higher payments on the high-interest debt first while making the minimum payments on the other accounts and repeat the process until all debt is eventually paid off.
5. Commit to no-spend days.
Finally, Gramuglia said it can be wise to assign a no-spending day each month and use it towards your savings.