MONEY Gas

Here’s What Americans Are Doing With the Gas Money They’re Saving

Gas nozzle and money
Tim McCaig—Getty Images

The government's Energy Information Administration estimates the average household will spend $750 less on gas this year. So where's that money going?

Americans are enjoying a nice raise at the moment, in the form of dramatically lower gas prices. The government’s Energy Information Administration estimates that the average household will spend $750 less on gas this year, which is like getting a roughly $1,000 raise, since the savings aren’t taxed. For a little perspective, the 2008 economic stimulus package passed by Congress designed to save America from the worst of the recession sent a maximum of $600 to American households.

The gas price drop means even more to struggling lower-income earners: the bottom fifth of earners spend 13% of their income on gas.

That’s the good news. The bad news? Retailers aren’t seeing much, if any, of that money.

Americans spent $6.7 billion less on gas in January than November, but retail spending actually fell slightly during that span. That means lower gas prices are not acting as a surprise stimulus plan for the economy.

So where is the money going? To the bank.

The Federal Reserve Bank of St. Louis recently reported that Americans’ notoriously low personal savings rate spiked in December, to 4.9%, from 4.3% the previous month. The cash that’s not going into the gas tank is going into savings and checking accounts instead.

Few Americans save enough money, and many have insufficient rainy-day funds. With the recession fresh in their minds, many Americans appear to be more concerned with restoring their severely damaged net worth than buying stuff.

But Logan Mohtashami, a market observer and mortgage analyst, suspects something else might be at play.

“People don’t think the gas price (drop) is a long-term reality,” Mohtashami said. Despite government predictions to the contrary, he says, consumers aren’t adjusting their spending to a new normal, and instead they’re holding onto their cash for the next rise in prices.

Again, that kind of pessimism is sensible, and it’s good for personal bank accounts, but it’s not so good for growing the economy.

How much are you saving thanks to lower gas prices? What are you doing with the “raise?” saving or paying down debt? Planning a better vacation? Driving a gas-guzzler more often? Let me know in the comments, or email me at bob@credit.com.

More from Credit.com

This article originally appeared on Credit.com.

MONEY Budgeting

How to Start Tracking Your Spending in 7 Minutes Flat

stopwatch with money/dollar on it
George Diebold—Getty Images

If you want to save more or get out of debt, knowing where your money goes now is an essential first step.

As part of our 10-day series on Total Financial Fitness, we’ve developed six quick workouts, inspired by the popular exercise plan that takes just seven minutes a day. Each will help kick your finances into shape in no time at all. Today: The 7-Minute Spending Tracker

Seven minutes is a little tight to create a budget, but it’s enough to tackle the first step: pulling together all your spending info using a budgeting tool such as Mint. You’ll need your credit and debit cards to get started.

0:00 Surf to Mint.com and register for a free account.

0:42 Mint asks for your credit card providers and bank. As you type in each one, a list of possible matches will pop up. Select the right one and enter the online login and password you use for that account. (Mint is a secure site and cannot get to your money.)

3:02 Mint will need a minute to pull in all of your transactions, which it automatically slots into categories like “Cellphone” and “Groceries.” Problem is, the app doesn’t always get it right. To fix that, click the “Transactions” tab.

3:34 See those “uncategorized” charges? You can select them to choose a correct label. This is pretty tedious, so tick the box that says “always re-categorize X as Y.” That way, Mint will put all future transactions from that retailer in the right place.

5:02 When you did that, you probably also noticed some charges Mint tried to identify but placed into the wrong bucket. Scroll through those and correct them the same way.

6:30 Grab your phone and download the Mint app. Having the program handy will help you keep on top of charges.

7:00 Now you’re ready to click the “Budgets” tab and create a spending plan. For more help with that, check out our Money 101 stories on creating a budget you can stick to and setting financial priorities.

Previous:

Next:

  • Day 6: Cut the Fat From Your Budget
  • Day 7: Find Ways to Save More
  • Day 8: Boost Your Earning Power
  • Day 9: Learn How Better Health Can Help Your Finances
  • Day 10: Shore Up Your Safety Net
MONEY credit cards

3 Secrets to Maximizing Your Credit Card Travel Rewards

travel rewards first class
iStock

A ticket to the first-class cabin may be in your future if you follow these strategies

Consumers lately have been favoring credit cards that give cash back over those with travel rewards.

Less than half of credit cardholders surveyed by ThePointsGuy.com recently accumulate travel points or miles, and only one in three Millennials. It’s no wonder, given that airlines have seriously devalued frequent flier miles and made it more difficult to redeem points for tickets.

“But there is still tremendous value in getting the right travel card,” says Brian Kelly founder of ThePointsGuy.com.

What to Look For

•A hefty bonus. Sign-up bonuses among the 20 most popular travel cards increased 25% this year, according to Kelly. And in some cases, he adds, just a single bonus can provide enough miles for a first-class airline ticket anywhere in the world.
•Flexible redemption options. To get the most for your spending dollar, Kelly notes, you’re likely better off skipping airline-branded cards that let you rack up miles on a particular carrier (since these limit your redemption opportunities) in favor of cards that let you transfer miles to other loyalty programs or allow you to use the rewards you’ve accumulated as cash toward any kind of travel purchases.
Most travel cardholders either aren’t don’t have such a card or don’t take advantage. ThePointsGuy.com’s survey found that, among the 42% of people who have a travel rewards card, only 19% have ever transferred rewards points or miles from their credit card to an airline’s loyalty program.

•No foreign transaction fees. These are another self-inflicted wound for consumers. According to the survey, one-quarter of all credit cardholders have to pay a fee when they buy stuff overseas (it’s typically 2% to 4%), and one-third don’t know if their card charges them extra. With so many products available that do not charge this fee, a lot of borrowers are throwing money away.

Your Best Bets

MONEY’s two Best Credit Card winners for travel offer among the heftiest bonuses in the biz with no foreign transaction fees, and neither leaves you stuck with one airline.

The Barclaycard Arrival Plus World Elite MasterCard offers a sign-up bonus of 40,000 miles once you spend $3,000 within the first 90 days, in addition to two miles per dollar spent. You can redeem the miles as a statement credit against any kind of travel, and get 10% miles back when you do so. This means that the sign-up bonus alone will earn you $440.

Chase Sapphire Preferred‘s sign-up bonus comes in at 40,000 points after you spend $4,000 in the first three months. You receive double points for dining and travel spending, 5,000 points for adding an authorized user and a 20% discount when you book the travel through Chase. While you can apply the points as cash back for travel, you can also transfer them to a number of partner loyalty programs, including Southwest and United.

More from Money.com:

How to Balance Spending and Safety in Retirement

8 Tax-Filing Flubs to Avoid

The Easiest Way to Check Your Credit—Fast

MONEY Love and Money

Why Cupid Is a Tightwad

In the new normal, fiscal prudence is sexier than ripped abs or buns of steel

When it comes to romance, who needs good looks? These days, Cupid is all about smart budgets and a sterling balance sheet, according to the latest findings on love and money.

A whopping 78% of Americans in a relationship say they prefer a partner who is good with money over one who’s physically attractive, according to a recent poll from rewards credit card Citi Double Cash. More than half believe their partner is looking out for their financial future.

Which is not to say Cupid is blind—but the arrow-slinging god of desire may simply be smarting from the Great Recession. Only recently have jobs and wages begun to show much strength. In this new normal, financial survival is sexier than ripped abs or knowing your way around a wine list. So it is that 52% of Americans expect their valentine this year to order takeout, not take them out, according to a love and money study from Ally Financial.

The Ally study also found that 55% are attracted to potential mates with strong budgeting and saving strategies. Specifically, 21% are attracted to those who pay as they go and avoid debt of any kind, while 18% are attracted to those who know how to chase down and seize a bargain. Just 3% are attracted to a suitor who appreciates the finer things and has a high credit card limit.

These findings help explain the rise of a dating site like creditscoredating.com, which seeks to address the concerns of the fiscally prudent lovelorn.

Yet love and money will always have an oil and water quality. People in a relationship are more than twice as likely to say they are the saver and that their mate is the spender in the union, according to a poll from SunTrust. About half agree that they and their partner have different spending habits. And among those who cop to relationship stress, the top cause is financial behavior.

The good news is that two-thirds say they do not have serious recurring arguments with their partner about money, Ally found. So this Valentine’s Day why not go cheap? The data suggest your date will adore you for it.

Read next: This is the sexiest financial habit

MONEY Workplace

Now That You Can Surf at Your Desk, Standing Is So Passé

Surfdesk
Rebecca Farmer

First came standing desks, then treadmill desks, now say hello to surfing desks.

To hear Joel Heath tell it, standing was just too hard.

“I started experiencing pain in different places,” he told Fast Company about his experience using a stand-up desk. “I just felt like there had to be a better way. I started to play with the idea that if you put a subtle rocker under the foot, you could move out of a sedentary state.”

So Heath created the Level, a surfboard-like platform that requires users to constantly shift their weight in order to keep their balance. FluidStance, the company behind the product, says that research conducted by the Heeluxe Testing Lab in California shows that introducing movement beneath one’s feet increases heart rate by 15% compared with sitting.

It’s the next evolution of the standing desk, which grew in popularity after studies showed that sitting for long periods of time could be bad for your health.

Kent Hatcher, ergonomics director and engineer at HumanTech Inc., likened using the Level to balancing on a stability ball, which requires your core muscles to work continually to keep you from falling over. “I see a product like this being great for some conference rooms, or occasionally used by people at a standing desk,” he says. “But it would take a period of acclimatization to get good at using the mouse and keyboard while wobbling around.”

Indeed, similar products like treadmill desks have been shown to affect performance-related tasks like typing. Heeluxe’s testing of the Level found no statistical difference in the number of typing errors made by Level users compared with those sitting at a desk, but even the occasional typo might be worth it. “Generally, the scientific community seems to think that the overall health benefits of standing and movement on the muscles and skeleton outweigh any sort of [performance] declines,” Hatcher says.

Level has clearly tapped into an enthusiastic niche market. The company’s crowdfunding campaign, launched on Jan. 12, raised $126,255 in less than a month—more than three times the original goal of $40,000.

FluidStance offers three different versions of the product: the Original Handmade Level ($389), the American-made Level ($289) and the Pacific Level ($269). That’s a lot more than the $22 you’ll spend building your own standing desk, but it certainly looks like more fun.

 

MONEY Sports

The Super-Size Numbers Surrounding the Super Bowl

How many wings will we eat this Sunday? Who's watching just for the commercials? How much money have people bet illegally on this game?

Click through the gallery for answers to all of the above, as well as other fun facts about what people are eating, drinking, and spending come Sunday.

 

  • $30 Million

    Fans outside the University of Phoenix Stadium before the 2015 Pro Bowl at University of Phoenix Stadium on January 25, 2015 in Glendale, Arizona.
    Christian Petersen—Getty Images

    The amount Arizona will spend to host Super Bowl XVIX. That figure is low, though, compared with the $50 million San Francisco, the host for next year’s Super Bowl, estimates it will need to spend. Last year’s hosts, New Jersey and New York, spent $70 million.

  • 36%

    Seattle Seahawks' Chris Matthews (13) and DeShawn Shead celebrate after overtime of the NFL football NFC Championship game against the Green Bay Packers Sunday, Jan. 18, 2015, in Seattle.
    Elaine Thompson—AP

    Proportion of Americans rooting for the Seattle Seahawks to win the game. The Patriots hold only a little less of the public’s support, with 31% rooting for them, but more people (33%) simply don’t care who wins, the Emerson College Polling Society found.

  • $119.95

    New England Patriots quarterback Tom Brady's jersey on the rack at the Olympia Sports store. The Patriots will face the Seattle Seahawks in Super Bowl XLIX on Sunday, Feb. 1, 2015, in Glendale, Ariz.
    Charles Krupa—AP

    The price of a New England Patriots’ jersey bearing star quarterback Tom Brady‘s name. A similar jersey for Seahawks’ quarterback Russell Wilson sells for $20 less on NFLshop.com.

  • 158 Million

    150129_EM_SBNumbers_Avocados
    Getty Images—Getty Images

    The number of avocados Americans will consume around the championship game. After all, when you’re eating 11 million pounds of chips, you need a lot of guacamole. Don’t forget those beloved chicken wings: We’ll order up 1.23 billion of them on game day. And how will we wash all this food down? With 325 million gallons of beer, of course.

  • 2,400

    table of high calorie fast foods
    fStop Images—Alamy

    The number of calories in the snacks the average person will consume during the game. That makes this Sunday the second biggest day for gluttony after Thanksgiving, according to the Calorie Control Council.

  • $3.8 Billion

    Super Bowl proposition bets are displayed on a board at the Westgate Superbook race and sports book Tuesday, Jan. 27, 2015, in Las Vegas.
    John Locher—AP

    The worth of all illegal bets the American Gaming Association expects to be made on this year’s game. That figure is 38 times greater than the $100 million that will be bet legally.

  • $4.5 Million

    Bud Light 90-second "Coin" Super Bowl Commercial
    Anheuser-Busch Bud Light 90-second "Coin" Super Bowl Commercial

    Cost of 30 seconds of air time during the Super Bowl, up $500,000 from 2014. Another big change: More of this year’s commercials will be paid for by companies you’ve never heard of. But no matter who is behind the ads, only 5% of people find them bothersome. The vast majority of viewers, 77%, find them entertaining.

  • 111.5 Million

    Denver Broncos fans watch their team play the Seahawks during the first half of the Super Bowl, inside Jackson's, a sports bar and grill in Denver.
    Brennan Linsley—AP Denver Broncos fans watch their team play the Seahawks during the first half of the Super Bowl, inside Jackson's, a sports bar and grill in Denver.

    The record-breaking number of people who tuned into last year’s game, when the Seahawks defeated the Denver Broncos. About seven out of 10 households watched, according to Nielsen.

  • 19%

    Victoria's Secret Super Bowl advertisement featuring Victoria’s Secret Angels playing football
    Michael Seto

    The percentage of people who say that the commercials are the most important part of the Super Bowl. Another 9% tune in for the halftime show, while 12% value getting together with friends. Only 36% of people said the actual game was most important. The remaining 24% planned to skip the game all together, the National Retail Federation reports.

  • 25.3 Million

    150129_EM_SBNumbers_TweetsSent
    Kacper Pempel—Reuters

    Tweets sent out during the course of last year’s game by the 5.6 million people who logged on to share their thoughts, according to Nielsen.

  • 26%

    150129_EM_SBNumbers_SBParty
    Lund-Diephuis—Getty Images

    Proportion of people who plan to attend a Super Bowl party this Sunday. Another 18% will host their own parties.

  • $78

    refrigerator of beer
    Simon Battensby—Getty Images

    Average amount people who will watch the Super Bowl plan to spend on food, beverages, and team merchandise, up from $68 last year, according to the NRF.

  • $69,241,725

    New England Patriots players warm up during practice Wednesday, Jan. 28, 2015, in Tempe, Ariz. The Patriots play the Seattle Seahawks in NFL football Super Bowl XLIX Sunday, Feb. 1, in Glendale, Ariz.150129_EM_SBNumbers_Payroll
    Mark Humphrey—AP New England Patriots players warm up during practice Wednesday, Jan. 28, 2015, in Tempe, Ariz.

    Payroll total for the Seattle Seahawks this year. The Patriots “only” spent $53,952,046 on salaries this year.

  • 26%

    goalposts with light flare from sun
    iStock

    Percentage of people who say that God plays a role in determining the outcome of a game, the Public Religion Research Institute found.

  • $92,000

    Superbowl Ring
    Elaine Thompson—AP

    The salary bonus each player on the winning team received last year, because, you know, a diamond-encrusted title ring and lifetime bragging rights aren’t enough. Players on the losing team got a $46,000 consolation bonus, Sports Illustrated reported.

  • $7,114

    A general view of the exterior of MetLife Stadium as a fan holds his Super Bowl XLVIII ticket prior to the Super Bowl XLVIII game between the Seattle Seahawks against the Denver Broncos in East Rutherford, New Jersey on Sunday, February 2, 2014. The Seahawks defeated the Broncos 43-8.
    Scott Boehm—AP

    Price of the cheapest Super Bowl ticket on secondary market ticket sale site TiqIQ as of Thursday afternoon.

  • Watch Now

TIME Budget

Government Budget Cuts Are Hitting ‘Red’ States Hardest, Say Analysts

A red traffic light stands in front of the U.S. Capitol building in Washington
JAMES LAWLER DUGGAN —REUTERS A red traffic light stands in front of the U.S. Capitol building in Washington September 30, 2013, approximately one hour before the U.S. federal government partially shut down after lawmakers failed to compromise on an emergency spending bill

Experts suggest the discrepancy may point to the politicalization of public spending

Recent governmental budget cuts have not been distributed evenly with slashed spending hitting pro-Republican states the hardest, according to new analysis by Reuters.

Funding for a range of discretionary grant programs has fallen 40% in Republican states compared to a drop of only 25% in swing states or states that tend to support the Democrats, claims the news agency.

“I would suggest these numbers would tell us there is politicization going on,” said John Hudak of the Brookings Institution, who helped Reuters analyze the federal spending.

The money that the government allocates to discretionary spending goes to initiatives like the Head Start preschool education scheme and anti-drugs programs.

Read more on the study at Reuters

TIME animals

Americans Could Spend $703 Million on Their Pets This Valentine’s Day

78318123
Getty Images Dog wearing tiara

Nothing says "I love you" like a diamond collar

The candy and flowers industrial complex that is Valentine’s Day had gone to the dogs. Literally.

One in five Americans will take their pets into consideration on Feb. 14, according to a new study by the National Retail Federation, a trade association. Out of a total of $18.9 billion spent on the holiday, consumers will drop $703 million on their furrier companions, the group forecasts.

While the figure at first appears staggering, the retail group points out that consumers will just spend $5.28 on their pets on average.

But even though opting for heart-shaped Milkbones suffices, nothing says I love you like splurging for that diamond dog color Fluffy’s been eyeing.

MONEY consumer psychology

7 Ways to Trick Yourself into Saving More Money in 2015

piggy bank in various clamps and a vice
Steve Greer—Getty Images

These simple strategies can help you squeeze more out of your budget—and end the year with a lot more cash socked away than you started with.

If your New Year’s resolutions included growing—or starting—your savings, you’re already ahead of the pack.

Only about a third of Americans recently surveyed by Fidelity made any kind of financial resolution this year; and of those who did, just over half were aiming to stash more cash.

Kudos to you for taking this important step toward financial security.

Want to make sure your good intentions aren’t derailed before the month is out? The key is taking initial actions that will make repeating good habits easier, says University of Chicago economist Richard Thaler.

“We tend to revert to our long-run tendencies,” says Thaler. “To effect real changes, you have to make some structural change in the environment.”

With that wisdom in mind, the seven life changes that follow will help you save more money this year.

1. Use Inertia to Your Advantage

Research by Thaler and others has shown that people are victims of inertia: If you aren’t used to saving money with regularity, it’s likely going to feel like such a chore to start that you’ll never bother—or, you’ll quit after one account transfer.

But when your money is already being saved automatically, inertia works in your favor, since it’ll take more effort to stop saving than to do nothing. That is why a growing number of 401(k) plans offer automatic enrollment with a default monthly contribution rate.

Still, you may need to stick a hand in the machine if you want to have financial freedom in retirement, since the default rate (often around 3% of salary) won’t get you far in your golden years. Most planners recommend saving at least 10% of income.

Even if you set up your own plan, you probably haven’t touched your contribution rate since; more than a third of participants haven’t, according to a TIAA-CREF survey.

You can benefit from another relatively new feature called “auto-escalation.” Offered by nearly half of companies, auto-escalation lets you set your savings rate to bump up annually at a date of your choosing and to an amount of your choosing.

For other savings accounts, harness your own “good” inertia by setting up automatic transfers on payday from checking to savings (if you don’t see the money, you won’t get attached to it). Better yet, ask your HR department if you can split your direct deposit to multiple accounts.

2. Keep Your Eye on One Prize

Setting up automatic savings works well if your income and expenses are predictable; but what if either or both aren’t set in stone? You can save money as you go, but you’ll be more successful if you narrow your objectives.

Research from the University of Toronto found that savers often feel overwhelmed by the number of goals they need to put away money for—a stress that can lead to failure. Thinking about multiple objectives forces people to consider tradeoffs, leaving them waffling over choices instead of taking action.

One solution? Prioritize your goals, then knock out one at a time. If you know you need to contribute $5,000 to your retirement funds this year, focus on completing that first. Once it’s done, move on to saving for that dream home.

Another strategy is to think about your goals as interconnected; participants in the Toronto study were also able to overcome their uncertainty about saving when they integrated their objectives into an umbrella goal. So, for example, if you are saving for both a car and a vacation, consider setting up a “road trip” fund.

3. Focus on the Future

A part of what keeps people from saving is that we don’t connect our future aspirations with our present selves, research shows.

One way to get around that is by running some numbers on your retirement using a calculator like T. Rowe Price’s. When participants in a study by the National Bureau of Economic Research were sent exact figures showing how retirement savings contributions translated into income in retirement, they increased their annual contributions by more than $1,000 on average.

Another easy trick? Download an app like AgingBooth, which will show you how you’ll look as a geezer. One study showed that interacting with a virtual reality image of yourself in old age can make you better at saving.

This trick can work for more than just retirement. Another study found that when savers were sent visual reminders of their savings goals, they ended up with more cash stored up. Consider leaving photos of your goal (e.g., images of your children or dream home) next to the computer where you do your online banking to cue you to put more away.

4. Ignore Raises and Bonuses

As Harvard professor Sendhil Mullainathan has said, the biggest problem with getting a bonus is it’ll likely make you want to celebrate and spend it all—plus some.

The windfall creates an “abundance shock,” which gives you a misleading sense of freedom.

The simplest solution to this problem is to pretend you never got the raise or bonus in the first place, and to instead direct that new money into savings right away. (Remember the 401(k) auto-escalation tip? Set your contribution to bump up the week you get your raise.)

The same goes for when you return an item to a store for a refund or get a transportation reimbursement check in the mail. The faster you put extra cash into savings, the faster you’ll forget about spending it.

5. Make it Contractual

Carrots and sticks work.

One study asked smokers who were trying to quit to save money in an account for six months; at the end of the period, if a urine test showed them free of nicotine, the money was theirs. If not, the cash was donated to charity.

Surprise, surprise: People who participated in the savings account were more likely to have been cigarette-free at the six-month mark than a control group.

If you’re the type who responds to disincentives, enlist a buddy who can help you enforce upon yourself some kind of punishment if you don’t live up to your savings goal (e.g., you might promise a roommate that you’ll clean the bathroom for six weeks).

Maybe you respond better to positive feedback? Simply having a supportive friend or relative to report to on a set schedule may help you achieve results, as many of those who have participated in a group weight loss program like Weight Watchers can attest. Or you might look for some (non-monetary) way to reward yourself if successful.

You can use the website Stickk.com—inspired by the aforementioned study on smokers—to set up a commitment contract that involves incentives or disincentives.

6. Keep Impulses from Undoing Your Budget

Setting aside cash is only half of the equation when it comes to saving more: It’s just as important to keep spending under control.

Most people know to shop carefully—and early—for big-ticket items like cars or airline tickets (which are cheapest 49 days before you’re due to fly). But the premium for procrastinating on smaller items can also add up: Studies show that people spend more on last-minute purchases partly because shopping becomes a defensive act, focused on avoiding disappointment vs. getting the best value.

So give yourself plenty of time to research any item you’re planning to buy. And always go shopping with a list.

When you see an item that tempts you to diverge from your list, give yourself a 24-hour cooling-off period. Ask a sales clerk to keep the item on hold. Or, put it in your online shopping cart, until the same time tomorrow (chances are, that e-tailer will send you a coupon).

Or you could try this trick that MONEY writer Brad Tuttle uses to determine whether an item is worthy of his dough: Pick a type of purchase you love—in his case, burritos—and use that as a unit of measurement. For example, if you see a $120 shirt you like, you can ask yourself, “Is this really worth 10 burritos?” Likewise, you could measure the cost of an item in terms of how many hours of work you had to put in to earn the money to pay for it.

Also, since gift-shopping procrastination undoes a lot of people’s budgets, you might think about starting a spreadsheet where you can jot down ideas for presents year-round. That way, someone’s birthday rolls around, you can shop for a specific item on price rather than spending out of desperation.

Finally, remember that “anchor” prices can bias us to be thrifty or extravagant. So when you are shopping for products that range widely in price (like clothes or cars), start by inspecting cheaper items before viewing pricier ones. That way your brain will stay “anchored” to lower prices, and view the costlier options with more scrutiny.

7. Force Yourself to Feel Guilty

Surveys show that about a third of people don’t check their credit card statements every month.

That’s a problem, and not only because vigilance is your best defense against extraneous charges or credit card fraud. Seeing your purchases enumerated can also help reign in spending by making you feel guilty—one of many reasons people avoid looking.

Another perk of staying up-to-date with your bills: It makes you more aware of paying for redundant services, like Geico and AAA car insurance or Netflix and Amazon Prime and Hulu Plus.

Keep in mind that shaving off a recurring monthly payment gives you 12x the bump in savings. So a few of these expenses could boost your annual savings by a few hundred bucks. That’s a lot of burritos.

More on resolutions:

Read next: These Types of People End Up More Successful and Make More Money

Listen to the most important stories of the day.

MONEY Debt

7 Ways to Free Yourself From Debt—for Good!—in 2015

How to pay off debt
PM Images—Getty Images

These smart and easy strategies can get you back in the black before you know it.

If you’re in debt, getting out may seem impossible.

One in eight Americans don’t think they’ll ever pay off what they owe, according to a survey by CreditCards.com.

But it’s a new year and a new balance sheet. And the seven steps here can help you put hundreds more towards your bills every month—while still living the kind of life you want.

Can you taste the freedom?

1) Know What You Owe

It may sound easy, but this can be the hardest part, says Gail Cunningham, spokesperson for the National Foundation of Credit Counseling. “A disturbing number of people come to our offices with grocery bags filled with bills,” she adds.

After you’ve tallied up your total debt, make a “cash-flow calendar” to track how much money is going in and out of your accounts, and when, Cunningham says. When do you get your paycheck, and how much do you get net taxes and benefits? When is each bill due every month, and what is the typical cost? How much do you spend on each of your other expenses, and when?

The more you want to procrastinate on this step, the more you need to do it.

“People resist doing this,” Cunningham says. “I think that’s because they’re afraid of what they’ll find. There’s nothing like seeing your spending staring back at you. That could force a behavioral change.”

2) Follow the 10×10 Rule

If you want to create a debt-repayment plan you can follow, you need to set reasonable and sustainable goals. Curb rather than cut your spending, advises Kevin R. Weeks, president of the Association of Independent Consumer Credit Counseling Agencies.

“Just like a New Year’s resolution to get in shape, it’s very difficult to go cold turkey and say, ‘I’m going to do all this, this week, or today,'” Weeks says. “People bite off more than they can chew, with good intentions.”

Start slowly by following Cunningham’s 10×10 rule: “If you could shave $10 off 10 disposable spending accounts, you’d never miss it, never feel it, never feel deprived—and you’d have another $100 in your pocket,” she says. “Little money adds up to big money.”

3) Spend Cash

Researchers have found that when people shop with credit cards and gift certificates, they are more likely to make impulse purchases on luxury items because they feel like they’re using “play” money. If that sounds like you, cut up the plastic.

And force yourself to feel the pain associated with spending real money by going on a cash-only diet.

“People who live on a cash basis typically save 20% over their previous spending, without feeling deprived,” Cunningham says. “It’s because using cash creates a heightened sense of awareness. You are more contemplative, and you realize you’re going to have to pay for things with hard-earned cash. Something clicks in that allows you to feel better about not buying the item.”

4) Tackle Christmas First

There are two possible ways you can go when it comes to prioritizing your debts: You can pay off your highest interest-rate balance first to cut your financing charges the most or you can pay off a small debt first to build confidence and momentum.

To decide which path is best, you need to know what drives you, Weeks says.

Whichever way you choose to go, Cunningham recommends beginning with a goal of paying off all your holiday spending debt by the end of the first quarter of 2015.

“That will keep you from dragging that debt along with you all the way through 2015,” Cunningham says. “You’ll be back to where you were debt-wise before the holidays.”

No matter what, expect a series of small steps. “It’s going to take time,” Weeks says. “If you’re looking to lose 50 pounds, you should focus on losing the first five and then you move yourself forward. It’s the same thing on the financial side.”

5) Reduce Your Rates

Don’t do all the work yourself. Get your lender to cut your interest rates.

One way to do that is a balance transfer. Many credit cards offer promotions of 0% interest for a year or more if you transfer your debt from an old card and pay a small fee.

You can save $265.48 on a $5,000 debt with a typical balance transfer, according to a new report from Creditcards.com. That’s assuming a 3% balance transfer fee, a 12-month 0% intro APR, and the debt being paid off within the year.

You could do even better than that if you used Money’s pick for a balance transfer card, the Chase Slate, which currently offers a 0% APR for 15 months, no balance transfer fee in the first 60 days, and standard APR of 12.99% to 22.99% after the promotional period.

If you won’t be able to pay off your debt in the promotional period, however, this might not be the best option. You don’t want to move your debt only to possibly get stuck with a higher APR than the one you already have. A better choice: Move your debt to the Lake Michigan Credit Union Prime Platinum Visa, which has no balance transfer fee and an ongoing APR starting at an ultra-low 6%.

Or, simply call your issuer and request that your APR be reduced. In another report, CreditCards.com found that two-thirds of people who asked for a lower rate got it.

6) Stop lending so much money to the IRS

The average household got a $3,034 tax refund last year. In other words, every month, an extra $253 was taken out of your paycheck and loaned to the IRS interest free!

Sure, you’ll get it back after you file your taxes, but don’t you need it now?

“I don’t want anybody to receive an income tax refund—that $250 a month can make a major, life-changing difference,” Cunningham says.

Rather than paying interest on your debt every month while the government gets your money, you should be funneling that cash toward your balance. On a $5,000 debt at 16%, adding $250 a month to a payment of $200 a month, you’d save $675 in interest and get your debt paid off in just over a year vs. two and a half.

You can put your money back in your pocket by adjusting your withholding on a W-4 tax form.

Of course, you don’t want to owe money at tax time, so use the government’s withholding calculator to figure out exactly how many allowances you should take. File your new W-4 with your human resources department and give yourself a raise.

7) Ask for help

If you can’t stop taking on debt or are really unable to make payments on what you owe, you may need professional help. Credit counseling can be especially useful if you’re struggling with student loan debt or medical debt, not just credit card debt.

Find a nonprofit credit counselor through the National Foundation of Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Financial counseling should be free, though agencies can charge an enrollment fee for a debt management plan, which will consolidate your debt into one payment with a more reasonable interest rate, Weeks says.

If you don’t need professional help, but you need someone to keep you honest, ask a friend to be your accountability partner, Cunningham suggests. Share your debt repayment plan and check in periodically about how you’re doing. Leverage the positive power of peer pressure.

“People don’t want to let somebody down,” Cunningham says. “They don’t want to have to admit that they weren’t as committed to their plan long-term.”

More on paying off debt:

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