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How the Debt Snowball Can Get You Debt Free Faster

Posted on September 7, 2021

There is no faster ticket to financial freedom than being debt-free. Having debt can weigh us down and keeps us stuck, making it difficult to make the changes we want to in life for the better.

When we are in debt, more of our money goes to covering past decisions rather than funding future opportunities.

When you don’t carry debt, you free up your hard-earned money to put towards the things that truly add value to you such as, adding to your retirement savings, saving for a goal that is important to you or changing to a new career that you are passionate about but that involves taking a pay cut.

Several years ago, I came across the Debt Snowball Method for reducing your debts, being just one of numerous debt repayment methods.

I’d always considered focusing on the interest rate the smart way to go about debt repayment. It seemed more financially savvy to me to focus on the dollars involved and the interest saved.

But since discovering this method of debt repayment, I could also see the benefit in paying off debts from the lowest to highest balance over-focusing on the interest rate or dollars saved.

It is really a personal preference, personal finance is just that, personal!

Benefit of the Debt Snowball Method

The main benefit of the Debt Snowball, is that this debt repayment method is designed to give you ‘quick wins’ when it comes to your debt as you focus on paying as much as possible onto the lowest debt until it is paid off. This is a great debt repayment method for people who have a number of debts with different balances and who need that little extra reward when it comes to sticking out their financial goals.

Paying off debts is a hard slog. When you see how many years and repayment periods are left on your debt, it may seem like there is no light at the end of the tunnel and you may feel like you will be stuck paying those debts off indefinitely.

The key to the Debt Snowball is building momentum. Building new habits is tough and we often need instant rewards in order to keep us working towards our goals and that is why this debt repayment method can give us the small financial wins that we need to stay motivated when paying off debt!

When we want to lost weight we join a gym and closely watch the scales. It can be hard to stay motivated when those scales don’t budge in the beginning. When you finally lose that first kilo, it feels amazing! And all your effort starts to feel worth it. The small win, helps you stay focused and feel more determined on your weight loss journey.

Can you imagine trying to lose weight if you didn’t notice any benefits for 6 or 12 months? This is why the Debt Snowball can be so effective at helping you get on top of your debt. It focuses on knocking down the smallest and easiest debts to tackle first. With each debt repaid, you can see your progress a lot sooner than if you attempted to pay out a much larger debt.

There are no short-term solutions to paying off debt. It is likely going to be a slow and difficult journey but one that will be well worth it!

Imagine all the things you could be doing with your cash if you were debt-free:

Buying your first home, being able to finally take that dream holiday, starting your own business or investing for your retirement. These goals will be easier to fund once you get your lingering debt out of your life!

Keep these dreams at the forefront of your mind! If you have a partner, discuss what your dreams are together. Maybe you have the same dream, maybe they are different. But these dreams are going to be the motivation you need to keep going when things get hard.

>> If you like this post, you’ll love: “10 Easy Tips Save Money Groceries Budget“<<

But just before you dive into how to start your Debt Snowball I want to talk about something that is extremely important for your financial journal and a must before starting your Debt Snowball – the importance of building an Emergency Fund!

BUILDING AN EMERGENCY FUND

Before attempting to Snowball your debts you need to save an Emergency Fund. This will be a financial buffer for any financial emergencies that pop up whilst you are paying off your debt. It’s critical to have an Emergency Fund as you can’t pay off your debt whilst you are still living off your credit cards and adding to your debt. We don’t want to keep digging a hole for ourselves while we are trying to pay it off. You’re just going to end up back where you started and finding the whole process slowly destroying your original motivation to get on top of your debt.

Many finance experts recommend having an Emergency Fund between $2,000 and 3-6 months of expenses. I recommend having a starter Emergency Fund of at least $2,000 or ideally one month’s expenses set aside for financial emergencies at a minimum. This is a reasonable savings buffer to help you in times of emergency to put out any financial fires that come up whilst you are paying off your debt.

Of course, some of you may not feel comfortable with such a small Emergency Fund, so if that is you, you can certainly bump that up to 3-6 months’ expenses. But you do need to weigh up how much you want to set aside. It doesn’t make much financial sense to save a huge amount earning 1% in interest when you are paying 22% interest on your credit cards! That money is going to serve you better by paying down your high-interest debt!

Do what it takes to save up your Emergency Fund quickly so you can start paying down your debt as fast as possible. Ensure that your Emergency Fundis only used for emergencies. If you need to replace a tyre or you have a dental emergency, the money will be there for you. Just be sure to save up and top up your Emergency fund again as soon as possible!

Once you have saved your Emergency Fund you can move onto your Debt Snowball.

Check out these 40 Side Hustles to Help You Pay Off Your Debt Quicker!

THE DEBT SNOWBALL

With a small amount of planning, you can be well on your way to paying down your debt.

Please remember, this is just one of many debt elimination strategies so you don’t have to use this approach to pay off your debt if it doesn’t resonate with you.

Here are the four steps to use the Debt Snowball Method.

Step One:

Write down all your current Consumer Debt (Exclude your mortgage) in an Excel worksheet or on a piece of paper. Go back to your loan paperwork, online banking, or credit card statements and work out what your current debt balances are for all outstanding debts as of today.

Then, take note of what Interest Rate you’re paying and your monthly Minimum Repayment.

For the Australians out there, getting a current HELP loan debt statement is not possible as these are only sent out annually with your tax return. Instead, enter the HELP balance that was on your most recent Tax Assessment paperwork and make a note to update this when you get your next one.

Step Two:

Once you have written all your debts down, number them from 1, 2, 3 and so on from the smallest balance to the largest. Debt Number 1, the smallest debt balance will be the one that you are going to pay off first and attack with your Debt Snowball first. The last debt will be the highest debt balance.

Work out based on your budget, how much extra on top of the minimum repayments you can afford to put on your smallest debt for that month. If your lowest debt has a minimum monthly repayment of $25 and you can spare another $100 a month, start paying the $25 minimum repayment plus the additional $100 repayment, or whatever it is that you can afford.

Continue to pay Debt Number 2, 3 and so on as minimum repayments. Continue to do this until Debt Number 1 is fully paid off. Be sure to utilise any additional income, such as bonuses or tax refunds to go towards your debt. We want to make sure we are throwing every dollar we can at our debt! If you were under budget for the month, you can add that extra money as an additional top-up payment on your Number 1 debt to help you knock it down even faster.

Step Three:

Once your smallest debt is repaid, take the minimum payment for Debt Number 1, in the example above, that would be $25 a month, and add your additional repayments of $100 a month and add this to the minimum repayment for Debt Number 2 – your second lowest debt.

This means you will now be paying a much larger amount on your second debt – saving you significantly in interest and getting you to your debt-free goal much quicker. If your monthly repayments for Debt Number 2 were $40 you will now pay the minimum amount of $40 plus the $25 and $100 you were using to pay off debt number 1. In effect you are building a ‘snowball’ of your repaid debt repayments! Continue to do this until debt number two is paid.

Step Four:

Continue to do this for each of your debts in the snowball until the last one is paid off. For each new debt paid off, you will be taking the past minimum repayments plus your additional repayment and carrying it forward to the next debt in your snowball. Like a snowball, the repayment for each will grow and pay off a bigger chunk of each debt as it grows and moves to your next biggest balance.

Debt Snowball Worksheet

In order to help you keep track of your Debt Balance and Debt Snowball Repayments, I have created a Debt Snowball Worksheet so you can keep all your Snowball info: Current and Closing Balance, Interest Rates, Minimum Repayments and your Snowball Repayment in the one place.

It will help you to create a monthly budget so you can pre-plan how much you have to pay towards your Debt Balances and will calculate your Debt Free Date each month so you know when you will be debt-free!

Check out the Debt Snowball Worksheet to help you to track your Debt Free Journey and motivate you on your Debt Free Journey!

Your Debt Snowball Worksheet Will help you to Track Your Debt Free Journey

STOPPING THE DEBT CYCLE

Here are some tips to help you stay out of debt and to help you get to your debt-free journey sooner:

If you can’t afford it, don’t buy it. This one may seem obvious, but in 2020 the 6 million active Buy Now Pay Later Users (Source: RBA) in Australia haven’t got this memo. If you are using credit cards, whatever you are buying you are likely paying 20% or more in interest each month whilst that amount remains unpaid. Does that sale price look so good now?
Cut up your credit cards. If you are the kind of person that can’t resist a good deal, you can’t pay your credit card off in full each month it might be time to cut those cards up or hide them away until you have got your finances under control, where you can afford to pay them off in full each month.
Start setting goals! It can be easier to part with your hard-earned cash when you have no plan or goals for your money. Having a goal can help you keep that goal top of mind and help you when making purchasing decisions. You can ask yourself, do I really want this extra pair of shoes I don’t need or do I want to keep that money for my holiday?
Learn to be content with what you have. Do you really need a brand new $35k car on finance when your current car works perfectly fine? Are you willing to pay x dollars every month for the next 60-plus months? In good times and bad – when you are unemployed, when you are trying to live on one income when you decide to cut back hours at work to study for a new career – that debt is going to still be there!
Avoid shopping! It’s surprising how little you spend when you avoid going to the shops unnecessarily. If you have endless emails from clothing shops or stores that tempt you unsubscribe from them as well. Instead of going shopping, meet a friend for coffee, read a book, watch a movie. There are plenty of hobbies that are much cheaper and more valuable uses of your time.

Minimise With Me Financial Coaching

If you are still struggling with paying off your debt and staying motivated on your debt-free journey, consider hiring a Financial Coach to help you achieve your financial goals. You can check out Minimise With Me Financial Coaching Services here for more information on how you can start spending your money with intention so you can spend your money with intention.

For tips on how you can save more money to help free up cash for your Debt Snowball check out 11 Everyday Tips to Save Money.

How would you feel if you were debt-free? How would it change your life? Let me know in the comments below 🙂

Grocery Budget Challenge

Posted on July 21, 2021

Grocery Budget Challenge

I want you to calculate how much you have spent on groceries over the last 3 months, so your monthly grocery budget spend. The steps are below:

Simply go through your bank or credit card statements and add up all amounts spent on groceries over the last 3 months (so working backwards from today by 3 months) and total up how much you spent. If you want a more accurate figure, go back 6 months and total up the grocery spend.
Divide the total grocery spend you calculated by 3 or 6 months (how ever many months you went back in your statements).

This will give you your average monthly spend on your grocery budget.

With the above 10 tips in mind and your average monthly spend amount, I then want you to try and decrease your average grocery budget from what you calculated by 10%. So if your grocery budget came to $700 a month on average, I want you to try and cut it down by 10% ($70 in this example).

See how you go! You might find that you can easily cut it by 10% or more, and can redirect those savings to another financial goal! And even if you can only save $10 a week on your groceries, that’s still a whopping $520 a year back in your pocket! How awesome is that?! 🙂

For more tips to save on your grocery budget check out 6 Tips to Drastically Cut Your Grocery Bill and 15 Tips to Reduce Food Waste and Save Money!

Organising

How An Organised Space Can Save You Money

Posted on January 4, 2021

I’ve always been a bit frugal, trying to limit waste and unnecessary spending where I could, and had a desire to get more organised – don’t we all! After living out of home for five years, I realised we’d developed some bad habits.

We were tossing massive amounts of spoiled food each week. Most of it was fresh food we’d bought with good intentions but just hadn’t gotten around to eating. Finding stuff in the pantry was a difficult process with random cans thrown in sporadically and no real organisation system. We’d go shopping listless and come home with five cans of corn only to realise we already had eight in the pantry (true story! ‘;)).

We were constantly leaving things to the last minute. Often realising we’d forgotten to buy a birthday present, we’d rush around hoping we could find something the day of the party in sheer craziness. Cleaning was an ordeal having to try and vacuum around whatever clothes and furniture items we had on the floor.

I was sick of the disorganisation and having unnecessary stress in our lives. After being overwhelmed by clutter, and the anxiety and stress it caused me I set out to change my home environment. I wanted to have a more calming space – I didn’t want to see mess everywhere and trip over things.

Once starting the decluttering process of my home I realised there was an added benefit to having an organised space. It was aiding our budgeting and helping us to save more money. And we will never be perfect when it comes to organisation, but trying to be a little more organised goes a long way.

Here is How an Organised Space Can Save You Money and how it has benefited us.

1. Save on groceries and buying duplicates

Since organising our home we can now see what we have at a glance. In the pantry, all cans are lined up, long-life milk, snacks are in one place which makes creating our shopping list that much easier. Our fridge is no longer filled to capacity as we only buy what we will need for the week ahead. This means we can reduce the food we are wasting each week and save on our grocery bill. Having an organised space allows us to avoid bringing home multiples of an item we already have, whether that be groceries or things we’ve misplaced and had to rebuy.

2. Reduce your clothing budget

Organising your wardrobe is a huge game-changer in terms of spending. Before I discovered the amazement of being organised, I used to have my wardrobe and drawers overflowing with clothes. Each wash day I’d shove a new pile in, on top of the stuff that had just become accustomed to staying at the bottom of the drawer. I remember the first time I decided to declutter my wardrobe, I found three pairs of black shorts. I’m not sure how many pairs of black shorts anyone needs, but the fact that I had three that I had not only not worn in years, but didn’t even know I had them was quite eye-opening to me.

From that moment I realised how important it is to keep what you have organised and to regularly assess what you have so you know what items you own.

In the past I would just buy new clothes, chuck them in a drawer or in my wardrobe with the intention of wearing them and often completely forgot I had ever bought them. I’d never really taken stock of what clothing I owned. Now when I go shopping I know at least 99% of my wardrobe off the top of my head. I know what shoes I have to mix and match with outfits and can better select what I am bringing into my wardrobe.

3. You’re more content living in a smaller home

Since organising our home the feeling of claustrophobia has diminished. I no longer feel like our house is too small and that we need more space. I’m rarely tempted to look at larger homes to buy. Even if it springs to mind when I see a nice photo of a home, I remember how much I love cleaning a smaller home and how I would never want the additional hours of work to pay for one and lost hours keeping up with the maintenance that comes with a bigger home. After decluttering all areas of our home we’ve actually managed to free up some storage space and are in no rush to fill them back up.

4. Planning ahead is easier and you can avoid impulse purchases

About two years ago I started using a diary to get more organised. After about a year I switched to a Bullet Journal and was instantly impressed by the simplicity it brought to my life. By being more organised and writing in my bullet journal I am able to save money in numerous ways. Whether it be planning ahead for dinner so I can avoid buying take-out that night. Making a note to buy a gift for someone a month ahead instead of running around the day before in a rush and blowing the gift budget. Or making a note to compare prices on a new purchase in order to get the best price and save money.

5. You’ll become more intentional with purchases

Now that we have decluttered our home we are very keen to keep it from getting out of hand again. This impacts my day-to-day activities and spending. I no longer walk into shops aimlessly to pass time or find some kind of satisfaction from buying something new.

Before I buy anything now, it has to hold up to a range of requirements. I will ask myself questions such as do I really need this? Do I have a place for it? Is it something I will be willing to dust from now until when I get rid of it? Most of the time the answer is no and I walk away from it.

When you start making more conscious decisions with what you are purchasing on a daily basis you develop new habits and soon enough the desire to buy lessens and your desire for a calm, organised space keeps you from reverting back to old habits.

6. Save money not having to replace lost items

Have you ever gone to look for something and not been able to locate it? I am pretty sure we have all been here. You think to yourself, maybe I never had it or gave it away? You go out to replace the items. Sometimes the original turns up and you feel a little silly but even after turning the house upside down at the time you couldn’t find it! This is another way an organised space can save you money. By having organisational systems in place you can avoid losing things in your home and replacing them. Even more importantly this wastes another important resource, your time. Imagine all the more important things you could be doing with the time wasted looking for lost items.

7. You can sell your unwanted stuff online

Another way an organised space can save you money is as you organise you will truly realise how much excess you have in your home. After a while we begin to grow used to seeing our stuff and don’t realise how much of it there is.

Have you ever walked into someone’s house and felt claustrophobic from all the stuff?! You’ve probably not even noticed your house might be heading in the same direction. It’s not until you start questioning what you do and don’t use that you realise you could live without some of the stuff cluttering up your home.

The great thing about decluttering is that your unwanted items can be useful to other people and that can help you claw back some of the money spent on excess items you have in your home. You will never get all of your money back, and sometimes you won’t get any of it, but it is possible to sell your clutter and add to your savings account.

It is truly amazing how much you can get for old electronics, gaming consoles, clothes, camera gear, books or whatever other junk you might have in your ‘to-go’ pile. If you’re reluctant to give something away because you spent a lot of money on it, sometimes knowing that you can get a little bit back from it by selling it makes the letting go process a little easier.

Alternatively, if you don’t need the money or don’t have the time, donate unwanted items to a local charity. Think of all the times you’ve found something you love in an op-shop for a few dollars because someone was generous enough to donate it. Pay it forward!

8. Being organised saves you time and stress

When you plan ahead and get organised you can save one of your most precious resources – time! Imagine all the things you could do with your spare time if it wasn’t spent doing mountains of laundry each week! No looking for lost items or spending half an hour clearing out food in your fridge that has gone bad. As they say, time is money and an organised space can save you both! When you no longer have to live with the consequences of an unorganised space, you’ll have more time to spend on more enjoyable things.

How have you found an organised space has saved you money? Comment below with your experience!

Budgeting

19 Things I Did in 2019 to Save Money

Posted on December 31, 2019

Happy New Year Text written in neon pinkish white

The past couple of years, I have done a post on the things I did that year to save money, here I am sticking with that tradition, and have compiled a list of the 19 Things I did in 2019 to Save Money to help inspire you with new ways to save your hard-earned cash! Don’t forget to check out my prior post 17 Things I Did in 2017 to Save Money for more ideas on how you can save money! And don’t forget to sign up to the Minimise With Me Mailing list for your free eBook ‘101 Ways to Save Money, Whilst Still Living Awesomely’!

19 Things I Did in 2019 to Save Money

Saved On Electricity By Using My Utility App

Early in the year, I discovered that my utility company had a handy, dandy app that was super helpful in monitoring Electricity and Gas usage at our home. I downloaded my utility app and monitored it to get electricity use and our bill down. It was great to see how much electricity and gas we used day-to-day and to experiment with how to get it down. I managed to get one of our Electricity quarterly bills down from the initial predicted $550 amount, to a much smaller $400. It’s a great motivator when you can see your bill is going to be high so you can make more of an effort to reduce your bill.

It also allowed me to enter my gas meter reading so the charges would be accurate rather than an estimate.

Some adjustments we made to our electricity use, as a result, were turning off stand-by power, setting our aircon to 24 degrees instead of 18 (I was more than happy as I am not keen on living in Antarctica ;)) and just trying to be more mindful of our power use E.g. Turning off lights that were not necessary and leaving the heater off until it was really needed.

With water restrictions, I am doing my best to save water and money on water.

Estimated savings: $200 a year

2. Resisted Upgrading My Phone Plan

My husband and I have sat on our 15GB data phone plans all year, despite easily being able to quadruple our data for $10 or $20 a month extra but instead, we just made the 15GB plans we had work.

Estimated savings: About $10 each, a month – total $240

3. Taking Advantage Of Big Sales

If I ever need to buy any big ticket items, I do my best to buy those things when they are on sale, such as on June 30 for end-of-year sales or Black Friday.

Of course, we don’t go looking for things to buy, but buy what we specifically want or need. Earlier in the year I was after a new quilt and picked one up from Adairs for 50% off saving $100 (although I would never pay $200 for a quilt ‘:)) and scored some new shoes for 35% off, saving myself $35 and replaced my old jeans with new ones when they had a buy one get one free offer.

And whilst I am there, I do research on as many purchases as I can! You can’t imagine the time I spend researching something that is $60 (it can be annoying to buy things I can’t deny), but at least when I buy something, I know I really need or want it, and it should be a quality product that will last. At least I do my darndest to make sure it is 🙂

Estimated savings: Who knows, would be in the hundreds!

4. Cancelled Our Second Streaming Services

At the start of the year, we were paying for both Netflix and Stan but realised that one is enough. There is only so much time in a day! So we cancelled Stan which was a$10/mth saving. We still have our Netflix subscription, which adds value to our lives regularly, but if we ever find we have nothing we want to watch on that platform, we’ll happily cancel it, or switch it for something else.

Estimated savings: $120 a year

5. Takeaway “Hacking”

I am completely making up the term, takeaway hacking, it’s really just a phrase to describe how we cut our eating out budget by getting takeaway vs dining out, more often. My husband and I both LOVE good food, so one thing we have both said we will justify spending on in our budget, is the food we love! But, there are always ways to save money, so we started finding creative ways to still eat food we love from restaurants, but save at the same time.

Often instead of dining out and paying $55-70 for a meal like we did 1 – 2 times a week in the past, we would instead eat at home. This way we were able to cook our own rice, eat our frozen stash of naans, and have drinks from home saving us about $15-20 a meal. So at least once a week, instead of paying our usual $55 or $75 to dine out, we would get takeaway for $40. This alone has saved us about $780 over the year.

We then ‘hack’ our eating out further by splitting our takeaway into two (or more) meals where we can, for lunch or dinner the next day to make further savings.

And we don’t feel like we are missing out. We skip the issues with slow service, paying top dollar for drinks, and a bit of a personal gripe of mine, paying $8 for the equivalent of $0.50 of rice.

We often buy naans for $13 for a pack of 15, which alone saves us about $8 by having our own naan instead of ordering them each time. We did the same by buying frozen samosas in bulk which cost us a few dollars, instead of the $10 cost of each entree. Of course, we don’t always do this, sometimes we will go out and buy what we want, but it certainly has made us rethink what we order. Now we often get dishes we can share and therefore end up ordering less and will skip the entree on other occasions. And when we eat out, we always ask for a takeaway container so nothing is ever wasted!

Estimated Savings: $780

6. I Brought My Lunch To Work More

Continuing with the food theme, I also upped my bringing my lunch to work game and most weeks did so 2-4 days a week. This saved me about $6 a day! So on a 2 day a week saving alone, this is about $600 a year saving. Not to mention when my husband does the same. He spends a lot more on food in a day, so if I assume, just one lunch was brought from home a week that is another $780 saved 😀

Estimated Savings: $600+780 total of $1380

7. Continuing to Meal Plan

In 2019 we continued with our Meal Planning routine, which has helped us stick to our $400 a month grocery budget.

We haven’t technically saved money here, as we have been doing this for some time, but by sticking to meal planning, we are not spending more money than we needed to on groceries so I think it counts!

Estimated Savings: Nothing extra in 2018, but we aren’t spending more, so yay!

8. Travelling Domestically

We knew we had plans to travel overseas in 2020, so in 2019 we traveled only domestically. Including a staycation in our own city for 3 nights for our 5-year wedding anniversary. We could have spent a lot more, but we decided to instead do something smaller and do some overseas travel in 2020 (Update: Ha! Joke was on us! Our next overseas trip was in Dec of 2022. Splah!).

Estimated Savings: Not having to pay for overseas flights alone would have saved us a pretty penny!

9. Maintaining Our Cars

After years of being slack with car repairs, thinking I was saving money by delaying my service, and just generally being slack at booking in services when I was supposed to, I eventually realised that that is why so many of our cars in the past have died!

I now make sure I service our cars on time and hopefully will avoid any major car issues! We’ve had my husband’s car now for 5 years and mine for 3 so touch wood we can keep them for a lot longer by looking after them! (Update: It’s Dec 2022 and both our cars are still going strong at 11 and 6 years respectively).

Estimated Savings: In the thousands!

10. I Sold More Clutter

Continuing with my prior year clutter selling goals, in 2019 we continued to sell anything that did not add any value to our lives!

Estimated Savings: I actually lost track of this year, but it was at least $500.

11. I Cut My Own Hair

I’ve been dying my own year for years, and this year decided to continue that saving by cutting my own hair. I never liked sitting at hairdressers anyway so not missing out here, and any trip I don’t have to make to the shops is a good thing in my eyes!

Estimated Savings: Approximately $200 a year

12. I Utilised The 7/11 App For Petrol

A friend of mine recommended me the 7/11 petrol app (Australians only sorry!) which has been such a lifesaver! Our petrol now jumps up about 35 cents with the petrol cycle (updated Dec 22: It now jumps up 50c!), so having to fill up on the high days, really hurts your hip pockets! By locking in the cheaper price, we save about $13 for my car’s tank and about $20 for my husband’s. It takes a bit of paying attention to the price cycle and locking in the price at the right time, and remembering to use the voucher before it expires, but the effort is totally worth it when you see your $15 savings! That is some serious cash!

Estimated Savings: Basing it on a fortnightly fill up about $858! I’d estimate it is more though!

13. We Stayed Home More and Thought of New Ways to Have Fun

We have become masters of cheap entertainment! Some of our free & fun activities are:

Watching comedy or docos on Netflix. Netflix keeps putting up some great stand-up comedy!
Watching a movie or new TV show
Playing board games like Rummikub, Scrabble, or our Nintendo Switch
Going for a late-night walks
Watching interesting interviews on YT or ones on things to do on our next holiday in our chosen destination.
Make dessert at home e.g. homemade waffles

We keep outings for things that we really want to do, like seeing a movie we are keen to see or going to see a favourite band play or musical.

Estimated Savings: If we estimate that we save $20 a week on entertainment that’s $1040

14. We Chose to Invest Over Spending

Here’s where that old rule ‘Pay yourself first’ comes into play. We realised how behind the ballgame we were on investing, so in 2019 we prioritised adding to our investments over spending money. When you can save or invest your money, it really takes away from any thoughts you may have about spending everything! Some people feel the urge to spend every last cent, so why not spend it on something that will in time grow your wealth?! We of course spend on things we need or want at times, but do prioritise travel, saving, and investing.

Estimated Savings: Hard to say here, but instead of buying things that depreciate, we are buying things that create a passive income!

15. We Continued To Save All Lump Sums We Got Over The Year

All extra funds on top of our regular salaries – tax refunds, bonuses, pay raises, additional holiday pay, etc were utilised to throw onto our mortgage. We keep 10% in a house fund for updates and the rest goes straight to our mortgage. Again, money we could have eaten up with lifestyle creep or spending and upgrading our electronics and decor, etc, but we chose to pay off debt!

Estimated Savings: Very approximately $3600 a year based on Dec 2018 vs Dec 2019 interest (annually)

16. We Went Digital

We went digital as much as possible saving ourselves on ink and paper costs. No more printing insurance or bank statements, and any statement that cost a fee to be mailed out was negated by switching to e-statements. Not a huge saving here but everything adds up.

Approximate savings: $100

17. I Went to the Dentist More

This is certainly a weird one, but a valuable lesson for us people trying to adult. My husband has a really bad tooth chip in 2019 that he left until the last minute when he was in excruciating pain. Turns out the sooner you go to the dentist, the cheaper the visit is, so like the car service, I am learning prevention is the best medicine and paying $150 for a dental visit is a lot better than paying $1,500 for a root canal (plus – ouch!!!!!!).

I’ve had a very irrational fear of dentists since I was little and am still working on this hehe, but at least now in the back of my head, I have a potentially huge bill to encourage me to make those necessary regular appointments! Now the $150 visits don’t hurt as much either 😉 (December 2022 Update: Pleased to report that I found an amazing dentist and go to the dentist for regular check-ups each year now and my pearly whites are thankful for it!)

Approximate savings: Not sure, but could be lots – and more importantly saving on more severe dental work!

18. I Picked Up a New Side Hustle

In addition to my side hustle of selling unloved clutter, I created an Etsy store to sell organisational printables and budgeting worksheets to help readers of Minimise With Me get organised with their lives and finances! It doesn’t make a lot of money but is an avenue for me to add some income in the future and something I enjoy doing as my passion is to help people minimise stress in their lives and help them on the path to build wealth!

Approximate savings: ???

19. We Went Without

To save money in 2019, we sometimes just went without.

I’ve been wanting a newRobovac for over a year now, but still have not gone out and bought one seeing as our Dyson V8 is still working perfectly fine. Our lounge has a couple of dodgy recliners, but again we have made do as otherwise our lounge still does the job. We have the same television we first bought when we moved in 8 years ago. We could have upgraded to a new smart TV but, instead decided to invest $99 into a Chromecast to make it perfectly functional. We did upgrade some things, like a few pieces of decor and a new dining table but mostly we have just made do with what we had or got creative. I recently sprayed out kitchen handles black for a DIY budget kitchen upgrade and just focus on creating neat and tidy spaces we love rather than spending and upgrading every time there is the urge.

Approximate savings: n/a

[Photo by Crazy nana on Unsplash]

Don’t forget to sign up to the Minimise With Me Mailing list for your free eBook ‘101 Ways to Save Money, Whilst Still Living Awesomely’!

Of course this is all in unison with everything I have done over the prior years, don’t forget to check out my prior post 17 Things I Did in 2017 to Save Money!

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂

Question: Which of the above suggestions are you hoping to implement in 2023 to save money? Let me know in the comments 🙂

Budgeting

How to Use the Envelope Budgeting Method

Posted on August 26, 2019

Budgeting Envelopes are a great tool to help you stick to your budget

The Envelope Budgeting Method is a great tool to help you with your Zero Based Budget to stay within your budget. It’s an easy method to track your spending in by category and to keep you informed of when you’ve spent your budgeted amount for a particular expense. If you are struggling to stick to your budget and finding trying to budget blind isn’t working for you, the Envelope Budgeting Method is a great way to give you some control and a birds eye view of your budget expenditure.

Cash Budgeting Envelopes

Generally the Envelope Budgeting Method uses cash that is divided up and placed into separate envelopes with an expense tracker on front of the envelope to tally up your spending as you go. Each time you spend money you would take the cash out of the envelope for the appropriate category, for example, if you were buying groceries you would take cash out of the grocery envelope, you would then note the following on the front of your Grocery Envelope:

Date
Store
Description and
Amount

You would then calculate what budget you had left over, by subtracting your total budget for the month from what you just spent and entering that amount in the Balance column. You would place your receipt inside the envelope.

I would avoid using cash envelopes to hold large amounts of money i.e. If you are using cash envelopes to save up for your annual Insurance or Car Expenses which might involve leaving hundreds of dollars around the house. For these, I would use a completely separate account for your Sinking Funds where you can put away for larger, ongoing expenses.

Digital Budgeting Envelopes

I have hacked the Envelope Budgeting Method which usually involves a cash envelope system after giving it a go for a handful of months and created a Digital Budgeting Envelopes which I found suited me more. It is essentially the same concept except it eliminates the need to carry around lots of cash and physical envelopes in your bag. It also eliminates the issue with couples not having access to the envelope when the other partner has it.

To use the Digital Budgeting Envelope you can track your expenditure in the digital envelope file via your Google sheets which you can access from your phone at any time and share with your partner so you can both access and update the same file in real-time.

Again, if you spend money here you would note the Date, Store, Description and the Amount but this time the final balance will calculate for you in the Balance Column.

The Digital Budgeting Envelopes also don’t require you to physically set up the envelopes every month, you simply duplicate the worksheet and just change the month.

Setting up your Envelopes

Cash Envelopes: If you are using the Envelope Budgeting Method with Cash Envelopes you can simply withdraw your cash from your bank account and put the cash into the envelope. Fill in the Category, Month, and Budgeted amount, print off your Envelopes and glue them onto your envelope (110x220mm).

Digital Envelopes: The best way to track your digital envelopes is to set up an account that will be used exclusively for your envelopes budget. For example, if you have 5 envelopes that you want to track and that total budget is $1000 for the month you would transfer $1000 each month to an account exclusively for your envelopes. If your envelopes start on the 1st of the month on the 1st you would deposit your $1000 amount and ideally have at least $1 remaining by the 30th or 31st to show that you are in budget.

What to do with Unspent Budgeted Amounts?

At the end of the month with the Envelope Budgeting Method for both the Cash & Digital Envelopes, the final balance of each Budget Category will be totaled so you can see what is left.

For example, if your monthly grocery budget is $400 and you’ve only spent $360 this month, you could either transfer the $40 to your savings or use it to pay off debt if you have debt, or you can carry that amount across to your next months envelope. So with the cash envelopes you would move the physical $40 into your new envelope for the next month and with your digital envelopes you could just add in a line at the top of your grocery list and just adding carry over from prior month and then adding a -40 and that will add to your total budget so the following month you would actually have $440.

With the cash envelope you would deposit your $40 into your account and move it to your savings or pay it onto Debt. Or you could add the $40 cash into your next month’s envelope, it is totally up to you. If you want to take advantage of being under budget, by all means, put it to good use and save it or put it towards paying off your debt!

With the digital envelope you would simply transfer the money from your envelope bank account to your savings or pay it onto your debt. Alternatively, leave the cash in the account which would carry over to the following months envelope.

Don’t forget to note the movement on your envelopes if you carry the cash over from prior month by adding a $40 into your prior month to show that money is allocated and adding a -$40 into the new months envelope to show that amount has been added to your new months budget for that category. So in this example the following month you would actually have $440 for your groceries budget category.

What if I am Over Budget in a Category?

It’s important to avoid borrowing money from the following month’s envelopes if you are over budget, this is a slippery slope and will become a bad habit you might never catch up with. Instead, borrow within the same month from other categories. In the above example, if you had $40 leftover in your Grocery fund and you wanted to buy some take out later in the month but had used all all your take out budget, you could carry that amount across to your Entertainment Budget. To do so you would add in a line in the Grocery Category: e.g. “Transfer to Entertainment” $40 and in the Entertainment envelope you would add in “Transfer from Groceries” -$40. Make sure to take the money out you enter the amount as a positive and to add it into the other category you pick it up as a negative! Double-check your balance to the right of the entry to make sure you picked up the transfer correctly!

Categories of Budgeting Envelopes

Budgeting envelopes are mainly designed to help you to control your spending in problem spending categories, those categories that aren’t always so easy to stay in budget. For example, you’re probably not going to go nuts buying excess petrol and your electricity bill might increase of decrease with the change of seasons but isn’t really going to blow out in a spending spree. But your clothing budget might and you might easily spend $800 on your groceries instead of the $400 you budgeted, so with the budget envelopes, we want to focus on the more fluctuating expense categories.

The idea is not to have 30 separate envelopes which will be too tedious and for little benefit, the goal is to stick to the main problem spending areas in your budget.

These might be:

Groceries
Miscellaneous Spending
Home Repairs
Concerts
Entertainment
Clothing
Kids Expenses
Alcohol
Beauty

or any other categories relevant to your budget.

Filling in Your Budgeting Envelopes

It does take some getting used to and get into a habit of writing down what you spent as you go and it can sometimes be a nuisance writing down what you’ve spent when you’re trying to battle kids and a grocery trolley through the car park, but there are ways to make the budgeting envelopes work for you. We want to make budgeting work around you, not be onerous and too difficult to maintain!

I came up with a slightly more flexible system that worked for myself with the envelopes. As I spent money, I would stick the receipt in my bag as I exited the grocery store or left the drive-through and then once I got home and unpacked everything, or had a moment spare, I’d then go and grab my receipt and fill in my envelope and record the expenditure.

Another method for people that don’t want to just fill in their envelopes 24/7 is to fill out your envelopes in smaller chunks. To do this I have a small plastic wallet in my handbag where I collate all receipts and once or twice a week I will go through those receipts and add them into my digital budget envelope or cash envelope. I will tick the top of the receipt on any that I have picked up and will also scan the receipt and save it in my Google Drive if it’s a receipt I want to keep a digital record of. Otherwise once I have picked up a receipt if it is for something I don’t need to keep I will just shred or recycle it once I have recorded the expense.

I do recommend when you first start your budgeting envelopes that you do fill them in frequently as you go, rather than chunk as you will be getting to know your budget and your budget limits and it will take a few months to get used to that and if you don’t update them as you spend you might find that you do go over budget, so until you feel confident of your budget, do update your envelopes as you go. Of course, if updating it as you go is your preference then just stick with that.

Storing your Envelopes & Receipts

With the digital budgeting envelopes I would suggest you keep one file for each year. Start a new one at the start of a new year, so you can choose whether you start that in January or July whether you want calendar or financial year. Set up your Google Drive folders or equivalent by expense category e.g. Clothing, Home Repairs, Warranty and so on so you can easily find your scanned receipts when you need them.

With your cash envelopes they will build up over time so I would suggest once every three months you take a photo of the front of any older envelopes for reference and recycle them. Then scan what receipts you wan to keep copies of, e.g. for returns, warranties, or for insurance purposes and shred or recycle the other ones you don’t need to keep like groceries, beauty expenses, etc.

And there you have it how to use envelopes for your budget. And to get you started I have a Cash Budgeting Envelope Printable and a Digital Budgeting Envelope in my store which you can check out. These come with detailed instructions for how to set up your cash or digital envelopes.

Do You Want to Learn How to Spend Your Money With Intention?

If you want to take control of your financial future, stop stressing about money and learn how to spend your money with intention, book in for your free Q&A call to see how Minimise With Me Financial Coaching can help you gain clarity around your finances!

You can learn more about Minimise With Me Financial Coaching services here.

This week’s comment question: Have you ever used budgeting envelopes? Did you find they helped you to stay on budget? Let me know in the comments below!

Budgeting

13 Realistic Tips to Pay Off Your Mortgage Faster

Posted on October 30, 2018

Paying off your mortgage doesn't have to be miserable. Check out these realistic saving tips to pay off your mortgage faster.

I’ve listened to hours upon hours of financial advice from finance gurus like Dave Ramsey, Scott Pape and Chris Hogan and the one thing that gets repeated again and again is the importance of paying off your debt so you can start building wealth. This is simply because when we don’t have any repayments we get to keep our pay cheques. Sure there are still bills to pay bills will always be there, but when you have no debt: no credit card repayments, no monthly car repayments and you own your home you have more of your pay to keep and to make your money work for you. And with the most recent rise in mortgage interest rates which are predicted to keep going up after a long stint of interest rate drops, it’s extremely important to try and pay off your mortgage faster whilst the times are good.

Let’s imagine this following scenario.

You buy your first home when you turn 30. With a 30 year mortgage term you are going to be putting a large chunk of your pay, often more than 25% of it towards towards paying off that mortgage until you are 60.

Imagine if instead of paying your mortgage off in 30 years you could bring it down to 15 years and own your own home by 45 instead of 60. And if you buy your home later in life, or through other circumstances you didn’t get to pay off as much of it as you would have liked, think of how great it would be to own your home before retirement. Future you is going to be super happy with you.

There are many financial and lifestyle opportunities that open up when you not longer have to pay off a mortgage. These include:

Being able to reduce your workload from full-time down to part time, or completely changing careers to something you love even if it doesn’t pay as much as your last job.
Being able to retire early
Eliminating a house or rent payment altogether from your budget
Being able to travel to your dream destinations
Having the extra cash to help your kids with college
The freedom to spend more on you

Who wouldn’t want those things!

But I want to have a life now!…

I often hear people say they’d rather enjoy their life whilst they are young then worry about debt later if at all, but this doesn’t have to be a one or the other scenario. Paying off your mortgage doesn’t mean having no life for the next ten to fifteen years. It’s certainly possible to find a balance between enjoying life and paying off your mortgage. It certainly won’t be without it’s sacrifices, but if you get a little creative and focus on some savings methods that don’t require you to miss out on anything such as making sure you are getting the best interest rates available you can get that mortgage paid off with much less pain than you think. Let me help you with how.

Check out 13 Proven Ways to Pay Off Your Mortgage Faster so you can have a life and be debt free – house and all much sooner!

**This post contains affiliate links. If you make a purchase of a product from the links in this post I will receive a small commission, at no cost to you. This allows me to keep my blog advertisement free and support the running costs of my blog. I only recommend products I believe will add value to others and that I love myself.**

13 Realistic Tips to Pay Off Your Mortgage Faster

Make extra weekly repayments

Unless you want to spend the next 30 years or so with a mortgage, and paying for your house three times over with interest added on top, don’t settle for paying the minimum repayment on your mortgage. It is as it indicates, only the minimum you should be paying. Every little bit extra you can throw on top adds up.

Even if you don’t have much to add to your minimum repayment minimise what you can in your budget and redirect that money to your mortgage. Check out these tips to save money and my eBook 101 Ways to save money for ideas on how you can free up some money in your budget to pay off your mortgage faster.

On a $400,000 mortgage at 4% with a 30 year term, and extra $20 a week shaves off $26,367 in interest and 2 years and four months. Throw $50 a week on top of the minimum and that increases to a saving of $57,555 and 5 years and 3 months! Those are some serious time and cash savings! You can calculate your own repayments with this awesome calculator here.

Don’t forget to pay your mortgage weekly, over monthly to save again on your monthly interest.

2. Utilitise all extra money
One of the best ways to pay off your mortgage faster is to utilise those lump sums. Instead of buying a new TV with your tax return, bonus or any other sums you come into, take that chunk of cash and use it to smash down your mortgage term. Tax returns, bonuses, inheritances, gifts and so on can go a long way to reducing your mortgage balance.

Again life doesn’t have to be miserable to get ahead, if putting all your bonus feels too torturous, that’s fine you can still treat yo’self a little, take 10% to spend on something you want or need and put the other 90% on the mortgage. Or work out a split that works for you and make it a habit. Keep in mind that it’s helpful if you can throw any lump sums you get onto your mortgage as early as you can. This will knock the interest bill down much faster.

Check out how the Debt Snowball can help you get debt free faster!

3. Avoid adding to your mortgage

It can be very easy to gradually increase your mortgage over time. You start with your first home, five years later and with a couple of kiddies you decide your humble abode isn’t big enough and you take on a bigger mortgage. Next you’ve refinanced your mortgage for a new car and a kitchen and bathroom reno. Before you know it your mortgage is more and more difficult to get on top of. Refinancing can be a slippery slope where it become too easy to just refinance every must have into your mortgage and make it that much harder to pay off.

Instead, save up cash to pay for repairs or upgrades to your home or at least make sure that your new mortgage repayment is still within the 25% of your after tax income range. With that threshold in mind you can avoid letting your payments get over your head.

4. Sell your unwanted stuff

If you are finding your home is getting a bit cluttered, make some space and some extra cash to pay off your mortgage faster by selling your unwanted stuff. You’d be amazed by what money you can bring in from treasures collecting dust in your home. Check out how I made $5,000 selling my unwanted clutter here.

5. Stick to a budget.

“A budget is telling your money where to go instead of wondering where it went.”
― Dave Ramsey

Wise words from Dave Ramsey. If you don’t know where your money is going you aren’t going to be able to spend it with intention. By sticking to a budget you can make sure you are spending money more efficiently which leaves more to throw onto your mortgage. You can then go even further once you’ve got the hang of a budget, and transfer any spare cash in your monthly budget that you didn’t end up spending such as unspent grocery money to put on your mortgage. Every dollar counts.

6. Get creative with fun

Having a goal to pay off your mortgage doesn’t mean that life has to be boring. Find free or affordable ways to have fun and stretch your dollar. Make a three course meal at home instead of going out. Look for vouchers and online deals for activities to get buy one get one free offers or other discounts. Go for a walk with a friend instead of getting a coffee. Ask family to buy your kids memberships to the museum or zoo in place of other gifts so you have free entertainment all year. Learn to appreciate things in life other than shopping and eating out. There is plenty of free fun out there to be had 🙂

7. Take advantage of Mortgage Offset Accounts

Offset accounts are a great way to reduce your mortgage interest bill without having to actually pay the money on your mortgage. When you are picking a home loan make sure to find one that has a 100% offset account to save you on your monthly interest bill.

The way it works is, any money you have in the offset account linked to your mortgage will offset the interest you pay on your mortgage. So if you had a $200,000 mortgage and you had $10,000 of savings in your offset account, the interest on your mortgage would only be applied to $190,000 of the mortgage not the full balance.

With saving accounts interest rates around the 2.8% mark versus mortgage rates around 4% it is a great way to get more bang for your buck. An added bonus, as the debt savings are not income it’s tax free savings.

So let’s say continuing from the example above, you had $10,000 saved for an Emergency Fund and your mortgage rate was 4%. By letting that money sit in your offset account, you would reduce your interest bill by $400 a year. If you had put it in a savings account paying interest at 2.8% you would have only made $280 in interest and would have to pay tax out of it.

If your current mortgage doesn’t come with an offset account shop around for a better home loan that does include it so you can tap into those amazing savings!

8. Review your interest rate regularly
There are huge savings to be had from your interest rate alone. If you aren’t checking yours against your banks competitors regularly you are potentially missing out on savings of thousands of dollars per year and tens of thousands over the life of the loan.

A $400,000 home loan with a 30 year term at 4% is $440 a week versus $467 at 4.5%. If you were paying the higher rate you would be missing out on a whopping $1404 a year in interest savings. And if you are paying a much higher rate then advertised you are losing out even more.

If you find your banks rate isn’t a competitive rate or they are offering new customers a better deal call up and ask them for a better interest rate. Do your research first. If they won’t budge, consider switching banks. Don’t reward banks that are doing their best to rip you off. Finding a mortgage that is a better rate let’s you pay off your mortgage faster without you having to cut back your budget to do so.

And if your bank charges you a monthly fee for your mortgage if might also be worth changing. A $10 monthly fee might not seem like a drop in the ocean but if that $10 monthly fee was invested at 8% over the same 30 year term you could have had $15003. Doesn’t sound so small now 😉

9. Get motivated

One of the most helpful things that will help you pay off your mortgage faster is to get motivated and in a mindset to smash that debt. Even if you don’t know anyone who can support you in person you can always find others who are tackling similar goals in trying to pay off their debt. These are just a few ways to get yourself motivated to tackle your mortgage and help you stay focused in your financial goals:

Take notice of the interest you are charged each month. Instead of feeling bad about how high it is, watch it decrease month to month.
Calculate how much of your original mortgage you have now paid off as a percentage. (Original Mortgage-Current Balance)/Original Mortgage = What % you have paid off.
Print off a Mortgage chart at Debt Free Charts to colour in each time you hit a new goal.
Look at how much interest offset you are receiving each month thanks to your offset account. This will also encourage you to save rather than spend your money so you can save on even more interest 😉
Check out Dave Ramsey’s #debtfreescreams segment on YouTube for inspiration and to see how other people just like you finally paid off their debt or mortgage.
Get some support behind you. Find a friend, family member or your partner so you can hold each other accountable and motivated each other.
Check out the #debtfreecommunity on Instagram for other people who are in the process of repaying their debt tips, advice and motivation to keep you on track.
Read books like Scott Pape’s The Barefoot Investor and Total Money Makeover by Dave Ramsey to help you with developing a plan to tackle your debt.

10. Increase your income
Find out what you need to do to increase your income outside of side hustling and doing overtime. If you complete a course can you get a promotion? Can you get a new position with further study? Can you smash your KPIs at work and get a good raise or make the EOY bonus? Maybe you could find a better paying job if yours doesn’t offer any salary increases or opportunities for a promotion and negotiate a much higher salary at the interview.

11. Get #Hustling.
If getting a raise from work isn’t on the table at this moment, get creative and find ways to bring in more income. Other than selling your unwanted stuff, there are many other options to bring in more money. Consider taking on more overtime when you can, or take on a second job, even if it is just temporarily. It doesn’t have to be something mind numbing, use your talents. If you are an artist or good at crafts sell your work on Etsy, if you are a teacher or can teach anything you can tutor or coach on the side. Pick up some work on sites like Airtasker if you have some spare time or rent out a spare room on Airbnb to bring in some extra cash. You can even get paid good money for walking dogs, talk about winning if you love the outdoors and dogs!

The more you earn the more you have left over after expenses and can inject that straight into your mortgage.

12. Stop lifestyle creep
Do you remember a time when you easily lived off a small wage in your early 20s? With each pay rise you grew accustomed to earning that higher amount in a matter of a few weeks. Before you knew it, it seemed like your pay rise had disappeared and you didn’t have any extra to save or pay onto debt.

Instead of allowing lifestyle creep to happen, give yourself a reasonable amount to spend each month and resist increasing it each year. You’d be surprised how quickly you get used to spending a limited amount once you develop the habit.

The next time you get a raise, instead of absorbing it into your lifestyle and increasing your spending allowance, I want you to take the exact amount or your new raise each pay period and add it to your mortgage repayment. By all means if your bills increase since them update your budget to reflect that but anything left over can go straight to the mortgage. With each year and each pay rise your repayment should continue to grow!

13. Determine if you can afford your mortgage
If your mortgage is more than 25-30% of your after tax salary you are inevitably going to have a limit on how much extra you can add to your mortgage to pay it off earlier. If you’ve tried all of the above tips and still are struggling to make ends meet or are worried about how you will meet future repayments or interest rate rises this might be the time to consider whether you can afford your current home.

If you do the math and realise that you are can’t afford your keep your home, selling it might be a blessing in disguise and a fresh start. You can use any left over cash from your home to pay off your mortgage and potentially other debts you have and rent an affordable place for a year or two. You can then use that time to save up for a house deposit and start again in a couple of years with a much more manageable mortgage.

Being stressed to the eyeballs day in day out to keep your home is no way to live. And in the mean time whilst you save up for a new home, you can work on getting your income up ready to help you tackle a new mortgage in the not too distant future.

This weeks comment question: What are you doing to pay off your mortgage faster? Let me know in the comments below 🙂

[Photo: Bethany Opler @ Unsplash.com]

If you found value in this post I would be super appreciative if you could share it with others who might also find value in it 🙂