Best way to save money and pay off debt?

I am currently working towards paying off debt (cc, car loan, school loans, rent, medical bills) and I also want to start saving. Last year went well after my boyfriend and I got our income tax refunds back. We saved the money but stupidly booked a trip to disney world and now that money is gone-but our bills aren't. We both owe a lot for different reasons, but we always pay more than the minimum and pay on time. I started an ING account to save each pay week for us, but with the holidays we have depleted our savings. I really want to figure out the best way to save money, pay off debt and if possible still be happy. We live in an apt and his daughter comes to visit pretty often-so there are 3 of us and a dog. Besides things like packing lunch and not eating out and drinking coffee from home rather than starbucks (all those little tips we already do) but what else is there so that this time next year we wont be in the same boat-but rather a HOUSE!? Thanks Chesney-Yeah, I have actually had the ing acct for a few years (it was empty though.) So that is the main reason I want to save and pay off debt so we can get a house and have our wedding! I can't see having a wedding if I don't have a house to me that is more important since we will pay for it all on our own. I've been thinking about saving with the 503 (similiar to 401k) with my work but I don't feel safe not being able to withdraw my own money when I need to or feel safe that I won't lose it all bc our ecomony is so terrible!

Public Comments

1. Hey I don't have a great answer for you and I'm sorry but good for you starting an ING account, if i'd known i'd sent you a referral link, you would've gotten 25.00 bucks! :) but anyways.... Im in the same 'boat' you are... im trying to do this and it's hard, esp since we're getting married in 4 months...
2. Unfortunately, your decisions to spend are big (Disney trip, lack of scrimping for Christmas gifts) while your decisions to save are small (packing lunches, home-brewed coffee). Significant purchases (e.g., new HDTV, clothes that look really good, weekend getaways) will overshadow regular cost-saving techniques. You have to fight against those temptations with every fiber of your being. Your choice to start that regular savings was excellent but you have to avoid using the money for day-to-day self-bail-outs. Look into some debt-consolidation services, to get the most out of whatever money you have for bill-payments. Check to see if you could move to cheaper living quarters, as rent is usually one's biggest expense. You are no-doubt seveeral years from being able to buy a house, but start now to put money in a longer-term (and normally higher interest) savings program for that critical down-payment.
3. Your biggest problem appears to be not budgeting for exceptional expenses. You are doing o.k. in an average month, but then comes a trip to Disney World or presents for Christmas and your debt goes back up again. The right way to handle this is to create an annual budget that includes things like vacations and presents. Part of your savings every month will be targeted towards vacations and other discretionary spending, and the rest towards paying off debt. That will allow you to spend what you've budgeted while still making progress on reducing your debt. There are two keys in making a budget that will work for you. The first is to allow enough money in the budget for life's little pleasures. If you don't allow yourself to have fun, the budget will seem like a straitjacket and you'll start to ignore it. The second, given a reasonable budget, is to discipline yourself to stick to it. If you find you can't afford an expensive vacation, you may have to find a cheaper destination, at least until you've made progress in eliminating debt. Best wishes.
4. You and your boyfriend should consider putting aside a certain amount of money each week. I recommend $25 each. It will hurt at first, but it adds up fast, and you quickly forget about it. If you can keep at it, that you'll have $200 a month and $2,400 by the end of the year. Start January 1st! If you find that it was easy, bump it up $5 next year. Good luck!
5. 1. Start with a budget. No matter if you think it is a waste of time or not, a budget really helps because you cannot manage what you cannot measure. A budget that is realistic incorporates all of you expenses and income and when you exceed in either category, you know instantly why and you can use this to help make any necessary changes. 2. If you get some credit card offers with low teaser rates which do not charge too much for transfers, take them. You will use these to pay off the highest rate cards first and having available credit helps your credit score. DO NOT aquire new debt! 3. Make the minimum payment on all the lowest rate/fee cards and apply all of the "over-payments" to the highest rate cards first. Interest is like a snowball rolling down a hill and the quicker you pay off the highest rated cards, the more the money you are paying will go to actually reducing the balances. 4. If you are planning on a home purchase, paying off the cards quickly helps your credit score and since having unused credit helps your score, you will not only qualify for a larger amount on your mortgage, the interest rates will be lower. 5. Pay off the bills prior to saving. When it comes time to purchase a home look for a new home from a builder with a down-payment assistance plan. If you time it right, next year will still be a bargain time for you to purchase and there is a good chance the rates will be very favorable.
6. Have a set amount of your money automatically go into a savings/investement account. Before you can spend it. That way its like you never had that money, but before you know it you have a lot saved up. Dont ever take money out. Act like it doesnt exist. Like 300 a month before you se it goes into savings. After 12 months that is 3,600 dollars.
7. Two words: Focused Intensity!! What my wife and I have chosen to do is to focuse all of our efforts on getting the debt down first. What we have done is built an emergency fund of $1,000. We were able to do that in about 2 months. That will be used in the event of a major emergency. We keep it in a liquid account (Money Market account) that allows for check writing as well as a cash card where we can withdraw funds. While we are paying our debt down we have chosen to suspend any contributions to savings or our 401k plans. Now this isn't something that we will be doing for 5 or 10 years (paying off the debt). While being intensly focused we use all our extra money to pay down our debt, while of course taking care of things like rent and food, etc. We won't take really any vacations or anything like that, as that money will be used for our debt. We should be able to pay off, after interest, about $100,000 in debt (including student loans) by the end of 2010. Now two or three years sounds like a long time to not take any vacations or to suspend your 401k or savings, but think of how many more vacations you can take or how much more you can contribute to your 401k when you don't have to worry about paying anyone else? Once all of our debt is paid off we will have freed up close to an additional $1,000 monthly! So that can be used for saving to the 401k or anything else. Of course we do use a budget to really see where our money goes. I would recommend checking out Dave Ramsey and his Financial Peace University plan. Or simply pick up the Total Money Makeover book from him. That is what has changed our lives.
8. People wrote a lot of things. I will keep my answer simple. These are what I find to be the major areas we lose a lot of money in. Good luck. -Rent (renting too luxuriously than necessary) -Entertainment/Vacation expenses (too many movies!) -Food (not enough coupon clipping, too much dining out) You can realistically save $10-$15k/yr. I wouldn't mind having that cash in my pocket right now.