5 Good Financial Tips For Reducing Debts and Saving Money in 2020

Did you know that the average American is now more than $38,000 in personal debt, EXCLUDING mortgages? 

Average, inflation-adjusted personal debt is higher than ever and has risen more than $1,000 in the last year alone. 

While interest rates are low right now, there’s no reason why they couldn’t go up in the future, making it much harder to service all this outstanding debt.

Are you looking for finance tips for reducing debts and saving money in 2020? If so, you’re in the right place. Take a look at the following tips you can use to boost your savings and slash the amount of money you owe. 

Use Financial Apps

Do you have any idea how much money you’re spending and on what?

For most people, the answer is “no.” You go about your daily business, buying things you think you need, only to find out at the end of the month that there’s no money in the kitty. Where did it all go? 

While you can comb through your receipts and bank statements, it is often considerably easier to use a financial app; a special piece of software for your phone that links to all your bank accounts. Whenever you make a payment using your card, the app logs the expenditure and then provides you with a bunch of helpful metrics, letting you track your financial position. For instance, categorization allows you to quickly see how much you’re spending on rent, groceries, entertainment and holidays. You can also view your disposable income and how much you’re able to save every month. 

Here are some top picks for financial apps in 2020: 

  • Apple Card
  • PocketGuard
  • Wally
  • Mint
  • Dollarbird
  • MoneyStrands
  • Money Lover

Cut Up Your Credit Cards

What’s driving the staggering level of indebtedness among American consumers? One of the biggest culprits is credit cards.

Credit cards are helpful in some situations. For instance, if you want to book a holiday, many people will choose to use a credit card because of the protections that it offers. If you’re defrauded, the credit card company is liable for the lost money. 

People rarely use credit cards for their intended purpose. Instead, they’re a tool that they can use to buy the things that they want when they don’t have the money in the bank to do so. They are, therefore, a constant temptation. What’s more, if you don’t pay back what you borrow in full, you can be liable for some pretty big high-interest bills. Not good.

If you struggle to control spending on a credit card, switch to debit instead. 

Ask Your Creditor To Lower Your Rates

Creditors can sometimes screw themselves over by charging rates of interest that borrowers simply can’t afford. While lenders benefit from interest payments, they can find themselves in hot water if they place too much of a burden on borrowers.

If you’re treading water financially, struggling to stay afloat under a mountain of debt, then it can help to explain your situation to the lender. Show them that if things continue as they are at the moment, they will be lucky to get all their money back. Explain that if you paid a lower interest rate, you’d be able to give them the interest and principal back in full and they wouldn’t have to write off the loan. 

Try Counselling

If your indebtedness is the result of behavior, not circumstance, then you might benefit from counseling. It can help you get to the root of the psychological motivations for why you might be spending more than you can afford. 

For instance, could you be spending to relieve the pain of a traumatic event? Do you lack self-control? Or are you currently unable to see some of the benefits of saving today for a brighter future? 

Make Your Savings Work For You

Merely putting all your savings into a regular account and hoping for the best is not a good way to build money in 2020. With interest rates so low, cash in checking accounts actually loses value through time, thanks to inflation. 

Fortunately, there are several ways that you can put your money to work, allowing it to increase in value over time. Take a look at the following ideas: 

  • Invest in stocks and shares ETFs
  • Put your money into a mutual fund
  • Invest in long-term government bonds
  • Invest in private bonds
  • Put your money into real estate or REITs

So there you have it: five financial tips for reducing debt and saving money in 2020.