Miscellaneous – $808/year
“Miscellaneous” seems like a vague category at first, but when I actually dug into the items included in that chunk, I quickly found that one big element makes up most of what falls under “Miscellaneous.”
Cutting Down on Your Miscellaneous Spending
Every dime in interest paid on credit cards or consumer loans (besides mortgages and auto loans) falls directly under the “Miscellaneous” category. The number is completely reasonable, too, when you think about the fact that the average American family carries about $8,000 in credit card debt. If they’re paying 10% on that debt, there’s $800 a year.
Obviously, the big solution for cutting this section of your budget is to cut your credit card debt. Here are some steps for doing just that.
Cut up your cards – now
Learn how to live without them. If you like the convenience of using a card, switch to using your debit card but sign for everything – don’t actually use it with your PIN, as you have more protection against fraud if you sign.
Call your credit card companies and ask for a rate reduction
Flip over your card, call the number on the back, and play a little hardball. Here’s my detailed guide for doing this.
Set up a detailed debt repayment plan in writing
Make a list of all of your debts. Order them by size or by interest rate (whichever you prefer – there are advantages either way). Then start paying them off by throwing big extra payments at the top one on your list. Here’s my detailed guide to starting your own debt repayment plan.
Automate, automate, automate
Automate an extra debt payment each month. Instruct your bank (via online banking, of course) to send an extra payment to your most painful debt each month – and then forget about it. Pay your bills as normal. The extra payment will whittle away at your balance over time.
Whenever you serendipitously acquire a bit of extra money or find a clever new way to save some money, don’t spend it on something frivolous. Instead, sock it away in your piggy bank and, at the end of the month, add that extra money to that month’s extra debt repayment. It’ll help melt away your debts even faster.
Get a “debt buddy.
This works just like a dieting buddy. Find someone who has resolved – like you have – to pay down their debts. Hold each other accountable. Share tips with each other. Engage in frugal activities together. You might just find that it blossoms a whole new lifestyle.
This seems scary, but it works. Tell your spouse about your debt situation. Tell your parents about it. Tell a few of your friends. Tell your sister. Then tell them exactly how you’re going to fix the problem. They will become your cheerleaders and your motivators to stay on track.
Use the other tips in this series
If you’re actively working to trim other parts of your budget, you’ll find that you automatically have more money for debt repayment, which helps you to trim away that “miscellaneous” part of your budget even faster.
I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.