The good news, as we emerge from the COVID-19 pandemic, is that most Americans have paid down credit card debt, largely by re-assigning funds they might otherwise have used for travel, entertainment or dining out. In fact, total credit card debt in the U.S. dropped by 13% by the end of the third quarter of 2020, according to the Federal Reserve.
But many people still need to bulk up emergency savings. Only 39% of Americans have enough savings today to pay for an unexpected $1,000 expense, reports a Bankrate.com survey. If your income is stable, use any combination of these five easy ways to stash away extra emergency funds.
- Reduce Monthly Bills – There are many ways to do this. Ask for lower interest rates on credit cards and other loans. Bundle internet, phone and cable bills. Examine where you are overspending; coffee shop or bar bills? Unused memberships or subscriptions? Too many frivolous purchases?
- Reassess Credit Card Habits – Credit card balances add interest that burns through your budget. Pay down balances as quickly as possible and use credit cards as 30-day accounts, preferably with cards that pay you back in cash or other rewards.
- Sell What You Don’t Use – Whether it’s outworn clothing, unused kitchen ware or an extra car or TV, if you’re not using it, sell it either online or at a garage sale, and squirrel away the cash.
- Pick Up a Side Hustle – If you can write, bake, babysit, or mow a lawn, sell your skills for extra income. Advertise locally or on websites like Fiverr that let you list your services.
- Keep Your Money Safe – Even with interest rates still at record lows, a savings account at an online bank or local community bank is still the best way to make sure you’ll be able to access the money when you need it most.
