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When You Should Spend Money to Save Money

When You Should Spend Money to Save MoneySaving money is always a good idea, especially in challenging economic times. However, sometimes you have to spend money to save money. While that may seem counter-intuitive, there are good reasons to pay extra on an expense now that could save you hundreds or thousands of dollars in the future.

Pay Extra on the Mortgage

Making one extra house payment a year can reduce your overall mortgage balance by several thousand dollars over the life of the loan. You can make that payment from an income tax return, a job bonus, or the sale of unused household items.

To accelerate the payoff on a $200,000, 30-year mortgage with a 5% interest rate, make an extra $742 house payment each quarter, and you’ll save $69,483 in interest and pay off your loan 10 years early!

Check with your mortgage lender about possible prepayment penalties in your loan terms that could prevent you from making extra payments or paying your home off early. Paying extra now can help you pay off the mortgage sooner and free up that hefty payment each month.

Buy a New Car

Instead of driving a beater that requires frequent repairs, invest in a newer model car that comes with a warranty and is in good condition so you will have reliable transportation. Putting a car in the shop for repair and arranging for alternate transportation can be very inconvenient and even costly. When you buy a reliable late model or new car, you can rest easy knowing your vehicle should drive safely and consistently. When you pay off the car, and if you can do it early, you will have a great running vehicle that has been well maintained. A good car can last a decade or longer if you take care of it. Instead of driving something that may not get you there safely or at all, consider a reasonable car payment on a car that will get you where you need to go and eliminate costly repair bills.

Earn a College Degree

There are many ways to earn college credit these days whether you go full-time or take an occasional class. Some courses are offered online, making it convenient to study from home based on your schedule. Various kinds of financial aid are available, from loans to scholarships to grants. Some employers pay tuition remission when employees maintain an average or above grade point average. A college degree has been proven to provide a generous return on investment in career opportunities, so getting a degree is rarely wasted.

Buy a Coupon Discount Book

A coupon discount book for a modest fee offers discounts or freebies on items you need or enjoy. For example, you can find many restaurant coupons and entertainment discounts, and also helpful services like dry cleaning or car rentals at reduced rates when you buy a coupon book. You can also find two-for-one deals that you can share among family members or with friends. Check out vendors featured in a coupon book to be sure they offer services you will use. Spending $20 or $30 could save you hundreds.

Buy Yourself Gift Cards.

Some supermarket chains offer cash or discount incentives for buying gift cards at their store. For example, if you buy a gift card for a product that you would use anyway, such as a coffee shop or restaurant, not only will you have the card available in preparation for your next visit to that vendor, but you may earn bonus points at the supermarket for things like fuel discounts. You may also earn discounts or cashback fees on hair salon visits, dry cleaning, and other valuable services. Check with your favorite supermarkets to see if they offer gift card purchase incentives. You might be able to double your benefits by purchasing gift cards to earn bonus points that offer reductions for things that you would purchase anyway.

In planning your monthly budget, invest in a few key initiatives that will save you money in the long run. Spend a little time reviewing available opportunities to find those that will maximize your purchasing power. Be careful not to spend more than you can afford, and don’t get caught up in the excitement of saving money to the point where you crimp your budget. Buy with an eye on the future.


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