Cutting Expenses to Free Up Cash for Auto Loan Payments[yoast-breadcrumb]
Cutting Expenses to Free Up Cash for Auto Loan Payments
Having an auto loan payment each month can really put a squeeze on your budget. Especially when money is tight, that recurring car payment may feel like a huge burden. While you may not be able to get rid of your auto loan just yet, you can take steps to free up some extra cash each month to put toward paying it off faster.
Cutting back on expenses probably doesn’t sound fun, but it can be incredibly rewarding to see your auto loan balance decrease more quickly each month! With some strategic spending adjustments, you can find hundreds of dollars to reallocate toward debt repayment. This article will give you lots of ideas to trim expenses and make accelerated auto loan payments.
Evaluate Non-Essential Expenses
Start by taking a close look at where your money is going each month. Make a list of all your regular expenses, and put them into two categories — essentials and non-essentials. Essentials are things you absolutely need to pay each month, like housing, utilities, food, transportation, and minimum debt payments. Non-essentials are nice-to-have expenses that you could potentially cut back on or eliminate.
Here are some common non-essential expenses to evaluate:
- Dining out
- Entertainment and recreation
- Clothing and accessories
- Club memberships
- Cable TV and streaming services
- Magazine and newspaper subscriptions
Be brutally honest with yourself about what brings value to your life and what doesn’t. For example, if you dine out several times per week but rarely feel satisfied with the experience, cutting back could free up a lot of cash without negatively impacting your lifestyle.
Create a Leaner Grocery Budget
Groceries are an essential expense, but there are still ways to trim your food budget. First, take an inventory of what you currently have in your pantry, fridge and freezer. You can use up items you already have on hand before restocking.
Meal planning is another great way to waste less food and money each month. Decide on recipes for the upcoming week, make a grocery list based on only those ingredients, and stick to that list when shopping. Buying things you don’t end up eating is essentially like throwing money in the trash.
You may also benefit from choosing less expensive grocery items. Opt for store brand non-perishables rather than name brands, buy produce that’s in season, and purchase family packs of meat to freeze in portions. Small changes can lead to big savings over time.
Negotiate or Cut Back on Utilities
Utility costs may not be quite as flexible as other expenses, but you still have some options to reduce them. Call your providers and politely ask about any available discounts you don’t already have. You may be able to get a lower rate by bundling services, paying bills automatically, going paperless or signing up for a longer contract.
Using less energy and water around your home can also lead to lower utility bills. Turn off lights when not in use, lower your thermostat temperature, take shorter showers and run full loads of laundry and dishes. Every bit of conservation helps.
Downsize Your Housing
Housing is likely one of your largest monthly costs. Downsizing to a smaller living space can dramatically reduce this expense. Consider options like:
- Moving to a smaller apartment
- Getting a roommate to split housing costs
- Renting out an extra room in your home
If you own your home, you could take more drastic steps like selling and moving into a more affordable property. Just be sure to consider all the costs involved so you end up saving in the long run.
Drive Less to Save on Gas and Maintenance
Transportation is another big budget item for most people. Luckily, there are quick ways to spend less on driving:
- Combine errands into one trip to avoid extra mileage
- Carpool with others if possible
- Use public transportation or walk/bike for short trips
- Work from home when you can
You can also save on maintenance costs by properly caring for your vehicle. Follow the recommended schedule for oil changes, inspect your tires often and fix minor issues right away before they become major repairs.
Cut the Cord on Cable
Cable TV packages can easily cost over $100 per month. And let’s be honest, how many of those channels do you actually watch? Fortunately, there are now tons of cheaper entertainment options.
First, see if you can call your provider to negotiate a lower rate or smaller channel package. If you’re still not happy with the price, you can cancel cable entirely and switch to streaming services like Netflix, Hulu and Disney+. You can also find many shows and movies for free on services like Tubi, Pluto TV and Peacock.
Suspend Unused Gym and Club Memberships
It’s easy to hang onto a gym membership even when you rarely go. But that monthly fee definitely adds up. Call to see if you can put your membership on hold for a few months to save some cash in the short term.
The same concept applies to any club memberships, subscriptions or services you pay for but don’t really use. Go through your credit card statements and look for charges that you can temporarily pause or cancel altogether.
Shop Around for Cheaper Insurance
Take some time to compare rates on any insurance policies you have. There may be an opportunity to get lower premiums, which equals instant savings each month. Here are some tips:
- Compare quotes from at least three auto and home insurance providers
- Ask about bundling discounts from one company
- Raise deductibles to reduce premiums
- Drop unnecessary coverage like rental reimbursement
You can also save on life insurance by opting for a term policy rather than a more expensive whole or universal life policy. And make sure you have the right amount of coverage — not too much or too little.
Avoid Impulse Purchases and Hidden Fees
It’s easy to swipe a credit card without thinking about whether you really need something. But those little impulse buys add up fast. Give yourself a mandatory waiting period before any non-essential purchase to avoid buyer’s remorse.
Also carefully monitor accounts for hidden fees you may have forgotten about or not noticed before. These include ATM fees, overdraft charges, late payment fees and interest charges if you don’t pay your balance in full each month. Every dollar counts when trying to pay off debt.
Pick Up a Side Gig
Cutting expenses can only take you so far. To really accelerate debt repayment, you need to boost your income. Taking on a side gig is a great way to earn extra cash that you can throw directly at your auto loan principal.
Thanks to the gig economy, your options are practically endless. You could drive for a rideshare service, deliver food, walk dogs, tutor students, rent out your home on Airbnb, freelance in your field of expertise, referee youth sports games and so much more. Find something that fits your schedule and pays reasonably well.
Sell Unused Items
Finally, don’t underestimate the value of unused possessions around your home. These could be turned into quick cash to pay down debt:
- Old electronics
- Jewelry you no longer wear
- Designer clothes and accessories
- Musical instruments
- Sporting goods and exercise equipment
Sell locally through Facebook Marketplace, Craigslist or OfferUp. Or get better prices by listing items on eBay and Poshmark. You can also make quick cash by selling to pawn shops or using services like Decluttr and Gazelle that buy your used electronics and other items.
The Bottom Line
An auto loan payment doesn’t have to feel like a financial ball and chain. With some strategic spending adjustments, you can find extra money in your budget to pay off your car faster and take back control of your money.
Cutting unnecessary expenses, downsizing your lifestyle and taking on additional income streams can make a huge impact. You’ll be amazed at the financial progress you can make in just a few months of focused effort. It takes dedication, but the reward of becoming debt-free faster is well worth it.