Eight years ago, the editor of Living on a Dime — Tawra Kellam — and her family found themselves $22,000 in debt, with an income of $20,000. Within five years, the Kellams had paid off their debt. She shares a few secrets here:
- Stop eating at restaurants. According to Kellam, it’s one of the top sources of overspending. “You can easily save $2,000 to $4,000 a year by eating at home most of the time,” Kellam says. She suggests families come up with 10 basic dinner menus that are tasty and easy to make. Rotate them each week.
- Pay the extra cost for an energy-efficient stand-up freezer next time you replace this appliance. The energy savings over time is worth it, Kellam says.
- Annualize savings. To help you cut back on extras, figure out what they cost per year. For example, eliminating one bag of potato chips a week from their grocery bill saved the Kellams $104 over the course of a year.
- Visualize it. Keep a graph or other visual aid where you see it often that shows your progress toward savings and debt-reduction goals. It can give you more incentive to save.
- Take small steps. It’s unrealistic, for example, to reduce your food bill from $600 a month to $250. Instead, start by trying to spend $25 less a month, then $50 less, etc.