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By: Tessa Collette

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February 27th, 2018

How to Save Money and Pay off Debt

Credit and Debt | Saving and Budgeting

Vermont Saves Week takes place from March 26 through April 3, 2018. In celebration, here are some ideas to help you learn how to save money and pay off debt.


Eliminate small debt, high-interest debt, and then the rest

Reducing debt and saving money go hand in hand because you can’t save money if you use every paycheck to pay off debt and monthly bills. How do you get a grip on your debt so that more of your earnings can land in your savings account?


Prepare to pay off debt by listing what you owe on all of your loans, lines of credit, and credit cards. First organize the list by the amount you owe and decide which debt you can pay off most easily. Then organize the rest of your debt by interest rate. Pay the minimum on the larger debt while you pay off the small debt. Then focus on the highest interest debt, paying that off before focusing on the next highest interest debt.


Watch this short video for an illustration of how you can pay off your high-interest debt first.



Make sure you have the lowest rates

As you are paying off your debt, make sure you have the lowest rates possible on your loans and utilities. It never hurts to ask if you’ve got the lowest rates, and it usually helps a lot. Simply call your financial institution to talk about the rates on your mortgage, car loans, personal loans, credit cards, and any other debt you have. Then call your utility companies—including phone, cable, and internet—to request lower rates. If you can’t get a good rate, you may want to look for a better deal elsewhere.

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Adjust your spending habits

Old habits are hard to break, but you can break them! The trick to adjusting your spending habits is to understand what you’re doing wrong. To get a grip on how your spending habits are hurting you, track how you spend. Look in your checkbook or online banking account and your credit card accounts and notice where you are spending money. Which purchases could you have lived without? Do you tend to get coffee every morning or lunch every afternoon? Maybe you could start making coffee and lunch at home. Could you find some no-name brands that you enjoy? Can you downgrade your movie package? Make a list of the spending choices you are willing to change and change them.


Need a vacation but don’t have a lot to spend? Read these five tips for traveling cheap.


Save small amounts

Saving doesn’t have to be big to be meaningful. If you save three dollars a day for the year, you will have saved $1,095. Three dollars isn’t much—you may already pay more than that for coffee every day—but your savings by year-end could pay for a weekend vacation. As you can see, savings add up and it doesn’t have to hurt.


You can also save around the house by paying attention to how you use utilities. Reduce your energy bill by only using lights when you need them and unplugging electronics and appliances that you’re not using. Lower your heating bill by winterizing your home, lowering the heat a few degrees, and putting on an extra sweater. The more you think about it, the more you’ll find you can shave costs in many areas of your life.

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Don’t buy it if you can’t afford it now

Back in the “olden days,” people saved money before they bought things. Just because you have credit doesn’t mean you have to use it to buy expensive things. By waiting and saving your money, you save all of the interest you would pay if you took out a loan or put it on your credit card. Once you have money in the bank, you can make the purchase on your rewards credit card (to earn points on your credit card and strengthen your credit rating) and pay off the debt before it costs you anything in interest.


Your credit cards can help you save.
Read our eBook, Saving Money with Credit Cards to learn how.



About Tessa Collette

Tessa Collette is a Senior Consumer Loan Advisor, and has worked for VSECU for just over 5 years. Her position allows her to help our members navigate the lending world and decide which loan product is best for their goals. Creative lending, where she can lower monthly payments and save members money on interest, is her favorite part of her position.

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