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Saving Money for the New Academic Year & Beyond
We save money so that we can buy something in the future that we don’t have money for now. There is no real way to sugar coat it. If you want to buy something and don’t have the money for it, you have two choices: (1) save money and buy it later, or (2) borrow the money. If you borrow, you will pay interest and take away from your current budget in the form of monthly payments. Think of borrowing like taking a pay cut—nobody wants a pay cut. Try using these tips to save, instead.
• Save automatically with allotments and pay yourself first. Psychologically, putting money away before you ever see it is the best way to save. Military allotments automatically deduct a set amount of money each month and send it to a separate account that you have set up. Examples of separate accounts can be high yield savings accounts, 529 college savings plans, Roth IRAs, or an investment account/mutual fund.
• Pay off high interest debt. How much interest does your credit card charge you? Paying this off can save you a lot of money.
• Did you know that a balance of $5,000 on a credit card charging 14.5% generates $60 in interest charges per month? Paying off this balance would save you $720 per year.
• If your high interest debts cannot be paid off in 1-2 years, consolidate them into a personal loan or a debt consolidation loan. Try not to apply for more credit cards offering “teaser” interest rates. This can lower your credit score and usually results in you having more debt.
• Pay off debt first. Use your current savings and any extras funds, like tax refunds, bonuses, birthday presents, etc., to pay down debt. Then, worry about saving or investing money. Stop paying 14.5% interest on credit cards to earn 1% in your savings account at the bank.
• Save your pay raise before you get it. Military personnel usually get one or two pay raises every year, and if you can commit to saving at least half of each raise, you will be in great shape. These pay raises can include annual cost of living increases, longevity raises, or raises due to promotion.
• Save on sales tax. Sales taxes account for thousands of dollars of spending every year.
• Shop at the NEX and Commissary
• Take advantage of state specific tax-free back-to-school days. States that participate in these tax-free days are Alabama, Arkansas, Connecticut, Florida, Iowa, Maryland, Mississippi, Missouri, New Mexico, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia. Check to find the specific days that will be “tax free” in your state.
• Examine ALL your bills with a fine-tooth comb; don’t trust any of them. See if there are any overages or ways to cut expenses.
• For example, on many occasions, cable or internet companies have charged rental fees for equipment that wasn’t being used. Be on the lookout for these and end the excess charges as soon as possible.