30-Day Debt Loss Challenge: Get financially fit

Woman looking at her savings, hoping to shave off some of her debt in the new year with Credit Karma's 30-day debt loss challengeImage: Woman looking at her savings, hoping to shave off some of her debt in the new year with Credit Karma's 30-day debt loss challenge

In a Nutshell

Do you have what it takes to pay down your debt in 2019? Take Credit Karma’s 30-Day Debt Loss Challenge to find out.
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Welcome to Credit Karma’s 30-Day Debt Loss Challenge.

The New Year is here, and with it, many people are committing to losing weight, spending more time with friends or tossing out the junk food — all in the name of our favorite January tradition: the New Year’s resolution.

While those are all worthy goals, they’re often hard to stick to. And people often fall back into old habits after only a few weeks of gym visits. So what’s it take to develop a resolution that lasts? And what kind of resolution has the potential for meaningful impact all year long and beyond?

We put our heads together at Credit Karma and decided the world needed a Debt Loss Challenge — a super-simple, easy-to-follow guide to chipping away at debt this new year.

While getting healthy is always a worthy goal, we think trimming debt is just as important as trimming your waistline, which is why we’ve designed this challenge.

So, if this sounds like the right resolution for you, let’s get started.

*When you join, we’ll send you another email mid-challenge to check in on your progress. We may report on participants’ progress anonymously.  

Day 1: Cancel your unused subscriptions

Do you make good use of all your subscriptions? Whether it’s a forgotten Netflix account or a magazine you never read, subscriptions can slowly drain your bank account. The subscription-tracking company Trim says users of its app cancel an average of two subscriptions totaling $30 of savings each month.

Day 2: Cook at home

Stop eating out. One 2015 study found consumers spend about $1,100 each year on takeout. If you cut takeout fare from your diet, you could save nearly $85 each month.

Day 3: Skip the Starbucks for the next 27 days

Brew your own coffee. A 2013 survey found working Americans spend about $85 a month ordering coffee. For about the same cost, you could make your own coffee for up to eight years!

Day 4: Make a grocery list

Did you know American families waste up to $2,275 each year on groceries they don’t eat? According to the Natural Resources Defense Council, you could save as much as $190 a month if you make a meal plan and write a grocery list before you step inside the store.

Day 5: Commit to a money-free weekend

You may have heard that Americans spend about $900,000 each month on avocado toast. And who can blame us? It’s easy to forget how much money you spent at brunch — especially after all those mimosas. But you’ll be surprised how much you can save during a money-free weekend. Get some activity inspiration here.

Day 6: Limit your utility usage

You may be able to cut your heating bill by turning down the thermostat every time you leave your home.

Bonus tip: Take shorter showers and turn off the water while you brush your teeth, shampoo your hair or shave.

Day 7: Make two monthly payments

Did you know Americans have piled up roughly $808 billion in credit card debt? According to the U.S. Census Bureau and the Federal Reserve, that leads to $107 in monthly interest charges per household each year.  If you’re carrying a credit card balance, try to make two monthly payments. Parting with more money than you’d like may feel painful, but the faster you can pay off your debt, the less you’ll be spending in interest charges overall — which means extra cash in your pocket down the road.

Day 8: Go generic

When you go grocery shopping, buy store brands (instead of name brands) to save money. Sometimes generic products are made by the same companies in charge of the big-label stuff, meaning the store brand goods are just as, well, good. Switching to generic is an easy way to save as much as 30 percent, without sacrificing quality.

Day 9: Take a ride with Lyft or Uber

If you live in a big city, it may be cheaper to car pool with Uber or Lyft than to own a car. You can save money on monthly car payments, insurance, registration costs, vehicle repairs, gas and parking.

Bonus tip: Drive for Uber to save even more money during your daily commute. If possible, you can also take public transportation, ride a bicycle or walk to work to maximize your savings.

Day 10: Sign up for a free trial

Not to bum you out, but most New Year’s resolutions fail by February. So before you spend hundreds of dollars on a gym membership you’ll seldom use, sign up for a free trial to figure out if you’re willing to commit.

Bonus tip: You’ll see a lot of gym promotions happening in January. While this can be a great time to sign up, the gym will likely be packed with people at the beginning of the year. Hold out until March, though, and you’ll start to see the crowds thin out.

Day 11: Score fun freebies at your local library

Call or visit your local public library to see if it offers free museum passes or discounts for other events and activities.

Day 12: Enroll in an automatic savings plan at your bank

If you instruct your bank to automatically transfer $5 each week from your checking account to your savings account, you could stash away $20 a month. Call or visit your local branch today to set this up.

Day 13: Ask your credit card issuer to remove a late fee

Think of it as a one-time courtesy. If you ask your credit card issuer for a clean slate, you could save up to $38 for each late fee it refunds.

Day 14: Negotiate your cable bill

If calling your cable company and asking for a discount sounds too intimidating, the free subscription-tracking app Trim will negotiate with your cable or internet provider on your behalf to lower your monthly bill.

Bonus tip: Cut the cord. You may be able to save more money by canceling cable and buying a digital converter box (or switching to online streaming only).

Day 15: Take a closer look at your cellphone bill

You may be paying for more data than you need or for services like a Wi-Fi hot spot you rarely use. If you find something you don’t want to be paying for anymore, call up your provider and ask that it be removed from your bill.

Day 16: Find unclaimed money

Check to see if you are owed any unclaimed money. State governments are holding more than $40 billion that people don’t realize belongs to them.

Day 17: Drink more water

Not only are soft drinks unhealthful, but they also take a bite (or gulp) out of your wallet. Cutting out sugary drinks could save a typical U.S. household as much as $70 a month.

Day 18: Unplug “vampire” appliances

Reduce your electric bill by unplugging appliances that use electricity even when they’re “off.” Vampire appliances include televisions and computers that suck up electricity when they go into standby mode.

Day 19: Donate old clothes to charity

It will feel nice to free up some space in your closet, and you just might qualify for a tax deduction. According to a 2016 report by Giving USA, taxpayers who donate claim an average of $5,800 in charitable deductions.  (Just remember to keep your receipts!)

Day 20: Don’t pay to file your taxes

Tax season is upon us. Did you know taxpayers spend around $152 on average each year for simple tax preparation by a professional, according to the IRS? Skip the pesky fees and file your taxes for free with Credit Karma Tax™.

Day 21: Don’t waste money going to the movies

Go to the movies every weekend? You might save money by watching movies on Netflix or Amazon Prime instead. Need your weekend movie theater fix? Then consider signing up for MoviePass. Pay $9.95 a month for access to unlimited 2-D movies, including new releases, at participating theaters. Ninety-one percent of theaters in the U.S. work with MoviePass. Keep in mind, though, that you can see only one movie per calendar day and that you have to get a same-day ticket — there’s no ordering in advance.

Day 22: Stage a virtual (or actual) yard sale

Turn your junk into someone else’s treasure. Whether you host a garage sale or sell your things on Nextdoor, Facebook Marketplace or Craigslist, you could earn a little more money to pay off your debt. (Hello, Day 7 challenge.)

Day 23: Use up your groceries

This could be a good time to skip your weekly trip to the grocery store. Instead, dig through your kitchen cupboards, pantry and freezer to find something to cook.

Bonus tip: Maximize your leftovers. Cook a big meal (such as a casserole, soup or a slow cooker masterpiece) that will leave you with at least three or four days of leftovers. Challenge yourself to finish all the leftovers before you go grocery shopping or dine out.

Day 24: Stop paying bank fees

Find a bank or credit union that doesn’t charge a monthly fee, stick to a budget to avoid overdraft fees, and don’t pay ATM fees when you can withdraw money from your own bank for free.

Bonus tip: Ask Truebill, a free service, for help negotiating with your bank to refund those overdraft fees.

Day 25: Host a potluck

Invite your friends over for a potluck. Everyone brings a favorite dish to share, and you all save money by splitting the food bill.

Bonus tip: Use this as a chance to celebrate nearing the end of your 30-Day Debt Loss Challenge. Share with your friends what you’ve learned and how much you’ve saved.

Day 26: Shop at a thrift store

Switch gears and buy secondhand clothing from a thrift store such as Buffalo Exchange, Crossroads, Goodwill or Salvation Army. You’ll be surprised at the gems you’ll find. (Plus, you won’t look like everyone else who buys off the rack.) Buying secondhand saves consumers $7 billion each year, according to one recent report.

Day 27: Lower your credit card interest rate

Call your credit card company today and negotiate for a lower interest rate. If the issuer won’t budge, consider transferring your balance to another card with a lower promotional interest rate.

Day 28: Lower your car payments

Refinance your auto loan through Credit Karma. You may be able to reduce your interest rate, which could lower monthly payments or help you pay off the debt sooner.

Day 29: Take advantage of cash back offers

Sign up for a cash back credit card and use the bonus to pay off your debt.

Day 30: Don’t overpay at the pump

Many gas stations offer a discount if you pay with cash.

Bonus tip: Better yet, find a cash back card that rewards you for gas purchases. According to AAA, the national average price for a gallon of regular gasoline in December 2017 was $2.42. So if the cash discount is 7 cents or less per gallon, you’d save more money by paying with a cash back card.

You could also save at least 5 cents per gallon if you use Pay with GasBuddy, a free app that helps you find cheap gas prices. GasBuddy estimates that drivers who use this service save an average of $28.33 per month.

Day 31 (bonus day): Way to go!

Take a deep breath — you’re done. Take some time to celebrate and crunch the numbers:

  • Compare this month’s utility bills with last month’s
  • Try to figure out how much you were able to put into savings after not eating out
  • Reflect on each challenge and take stock of what worked for you and what didn’t

Now that you’ve come this far, we encourage you to stick with these financial principles in the weeks and months (and year!) ahead.

Didn’t accomplish one of the challenges? Try again. Want to incorporate some challenges into your monthly routine? Go for it. Remember, you have the rest of the year ahead of you to keep working on your debt loss.

*When you join, we’ll send you another email mid-challenge to check in on your progress. We may report on participants’ progress anonymously.  

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.