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How a lower cost of living can help you pay off debt faster

Every penny saved is a step toward your debt-free future.

Choncé Maddox

Contributing Writer at Tally

February 5, 2020

Getting out of debt often requires that you change your lifestyle and focus on making regular (or even additional) payments on your accounts. To get out of debt, you can’t have the same spending habits as you did when you got into debt.

If you’re looking to pay off your debt faster, the first step is to stop accumulating more debt. Then, you can start changing your lifestyle and working toward a lower cost of living.

You don’t have to make huge sacrifices to start saving money. If you’re wondering where to start, here are some effective ways to lower your cost of living so you can free up more money in your budget to pay off debt faster.

Save on regular household items

Buying items like soap, toothpaste, garbage bags, bath tissue and laundry detergent each month can really add up. Just because you need to buy these items regularly doesn’t mean you must pay full price.

Start ordering your regular household items online via Amazon Subscribe and Save to cut costs. This is a free feature that anyone with an Amazon account can use to save between 5% and 15% on items they subscribe to receive either monthly, every two months or every three months. You’ll only get charged once a month for any subscriptions that month and the items will get shipped straight to your door automatically.

Reduce food waste

Are you constantly throwing food out that has either gone bad or your family simply didn’t want to eat? You can save money by shopping smarter and cutting down on food waste.

First, always shop with a detailed list and limit the number of times you go to the store. Shopping less means you’ll be less likely to buy extra food that you don’t really need. Next, focus on planning meals based on the food you actually bought and write it down. Make use of every food item purchased by adding it to your meal plan so it doesn’t go to waste.

You can also consider using a free resource called This helps you keep track of the shelf life for common foods you buy and know how long certain foods will last in the fridge and freezer.

Also, go through your fridge and cabinets each week to check dates, reorganize food (so it’s more visible and likely to get eaten) and revise your meal plan as you go.

Consolidate your phone bill

Cellphones are a common staple that many households have so it’s important to realize how this can add to your cost of living.

Instead of paying for separate plans and fees, explore your options with getting a family plan under one prepaid service provider. Total Wireless offers three lines with unlimited talk, text and data for $80, while Metro PCS offers 4 lines for around $120 and some of their service plans include a free Amazon Prime subscription.

House hack

A good rule of thumb is to keep your housing expenses lower than 30% of your income. This is a nice threshold to keep in place because it ensures you’ll have enough money to cover other important expenses.

When you’re trying to pay off debt, you may even want to go even lower than 30%. Explore your options and see if you can start house hacking which involves renting out a spare room, basement, or another additional area of your home in order to offset your housing costs. You can start doing this with the help of sites like Airbnb. You can also try getting a roommate to help lower housing costs.

Bundle streaming services

It’s no secret that you can save a lot of money by getting rid of your cable TV package. Popular streaming services, like Netflix and Hulu, can affordably fill in the gap.

Still, more and more streaming services are being launched each day. If you subscribe to too many platforms, you’ll find yourself paying as much as you would for cable. Luckily, some streaming services have partnered together to offer multiple services for one low monthly fee. For example, you can now get Disney Plus, Hulu and ESPN+ all for just $12.99 per month due to their partnership.

Drive an older car

The average car payment in America is $554 for a new vehicle and $391 for a used vehicle. You can avoid a car payment altogether if you commit to driving an older vehicle.

Cars depreciate over time, which means you may pay less for a used vehicle — even if it’s just a few years old. Financing a used car or buying one outright can help you free up hundreds of dollars in your budget that can be put toward debt.

If you live in a very walkable area, you may not even need a car. Consider saving money by using public transit, carpooling with friends and coworkers, and even walking or riding your bike if possible.

Shop around for auto insurance

Shopping around for the best car insurance rates is something you should do every few years although one in three Americans have never done it. Comparing auto insurance rates can save you hundreds or even over $1,000 per year that can be put toward debt instead. It’s also something that you can do rather quickly.

The Zebra is a home and auto insurance comparison site that helps you compare rates in your area and find out what the average auto insurance rates are according to your age.

Learn how to cut hair

How much do you spend each month on haircuts? A standard men’s haircut ranges from $15 to $25. Women’s haircuts are generally more expensive, but it all depends on where you go and what type of style you get.

Regardless of these factors, paying someone else to cut your hair regularly is going to cost you money. Learn to cut your hair and you can eliminate this budget category completely to put more money back into your pocket! There are plenty of YouTube videos out there that can show you exactly how to cut hair and the right techniques to practice.

Avoid long-term subscription contracts

Subscriptions can be dangerous because you’re signing up to pay for a service monthly instead of just incurring a one-time cost. Comb through your budget and make sure you’re not paying for any unwanted or unused subscriptions.

Read the fine print when you’re signing up for something to make sure you can cancel within a reasonable timeframe. For example, some monthly subscriptions require you to keep the service for 12 months or longer. These are not the type of contracts you want to have if your goal is to lower your cost of living.

Every extra penny can go toward debt

The best part about lowering your cost of living is that every extra penny you save can go toward a financial goal. In this case, you probably want to pay off your debt once and for all.

If you free up around $400 per month by lowering your cost of living for example, that means $4,800 can be added to your debt payments throughout the year. Plus, you’ll set yourself up for future success by learning to live below your means long-term.