Todd Christensen Profile Picture
Staff Writer at Debt Reduction Services

Reduce discretionary spending to pay down debt and increase savings.

Top 3 Suggestions for Finding Pain-free “Extra” Money in our Budgets to Accelerate Debt Elimination or Savings

PowerCashTM is a powerful and effective principle for accelerating our debt repayment and/or our savings without feeling the pinch of cutting our expenses across the board.

Once we determine our amount of PowerCash (see below), we can use it for one of two big financial goals common to many households: 1) to expedite debt elimination by sending it to the highest priority account on our list (usually the one with the highest interest rate or the one with the lowest balance) or 2) to boost our emergency savings and long-term investments (retirement).

Step ONE is to understand how much we’re actually spending on our household’s “controllable” expenses. These do NOT include things such as rent/mortgage, utilities, loan and credit card payments, and contracted services (Internet, Phone, TV/Cable, etc.). “Controllable” expenses are those whose amounts spent we can influence through our consumption and/or shopping choices, such as groceries, gift giving, entertainment, dining out, travel/vacation, and even gasoline.

Step TWO involves tracking our controllable expenses for the month so we know how much we’re actually spending on them.

Step THREE is simply multiplying the monthly total of our controllable expenses by 10%. The resulting figure is our PowerCash.

Here are a few examples of what PowerCash could add up to:

1. Finding nearly $29 of PowerCash in Groceries

According to the, their average users spend about $286.91 per month on groceries.

PowerCash: 10% of this amount is $28.70. Could we survive on $258 of groceries instead of $287? Of course. It might involve some adjustments, but it’s definitely doable.

Reduce spending on restaurants to pay more toward debt and savings.2. Finding over $29 from other Food Expenses

The same video says that, on average, we spend another $294.55 on non-grocery food each month. This includes $14.40 at coffee shops, $51.79 at fast food restaurants, $172.27 at restaurants, $32.85 at bars, and $23.24 on other food options.

PowerCash: 10% of this amount is $29.45. Could we survive on $265.10 of non-grocery food each month rather than instead $294.55? A large percentage of us could probably do much better than that.

3. Finding nearly $10.00 from our Gift Giving

We are a generous society. Sometimes seemingly a bit too generous, but that’s certainly not for me to judge. The American Research Group estimated that the average American household was planning to spend $854 on Christmas gift giving in 2012. Additionally, 24/7 Wall St says that, based upon Bureau of Labor statistics, we spend well over $1,000 a year on gift giving. In 2009, at the depths of the recession, the amount was $1,067 per year. I think we can safely say we likely spend over $1,100 a year in gifts to others ($91.66 per month).

PowerCash: 10% of this amount is $9.67. Could we still feel good about our gift giving by spending $990 a year rather than $1,100? I think this would be especially true for anyone financing their gift-giving behaviors through credit cards.

The Grand Total

Add them all up and we come up with a total PowerCash sum each month of $67.82. Of course, actual amounts will vary by household, but $68 is certainly nothing to sneeze at. That’s about $813 a year that we could put into a savings or investment account. Without interest, that would be $8,130 over ten years. With a 9% average return from the market, that could be over $13,000 of pre-tax investments. Or we could use the money to pay down our debts.

Best wishes as you continue striving to live debt free. We know it’s not always easy, but it’s always well worth your effort.

If you have any questions, would like to discuss ways to meet your financial challenges, or, if you’re a current or former client, simply want to update us on your present situation, please contact us at your convenience. We are here to help you and look forward to hearing from you.

Have a great day!

Todd Christensen
Director of Education

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