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Steps to Reduce Debt & Save Money

Did you know that over 1.5 million bankruptcies were filed in the U.S. in 2004¹? Many people become mired in debt due to circumstances beyond their control, such as financial losses caused by unemployment, medical bills or divorce. However, debt can be brought under control if it is caused by uncontrolled spending or a lack of knowledge of credit and financial matters.

You can take steps now to pay down debt and start saving:

Pay Down (and Avoid Additional) Debt

• If you use credit cards, pay off the balances every month. If you don’t, you’re paying interest—often 20 percent or more a year—on everything you purchased.

• Limit the number of credit cards you have. Use your lowest-interest credit card, and then only for emergencies.

• Set a monthly limit on charging, and keep a written record so you don’t exceed that amount.

• Pay bills on time to avoid late charges.

• Avoid using blank checks you receive from financial services. These checks are cash advances that may carry a higher interest rate than typical charges.

• Pay cash.

Monthly Steps to Saving Money

Unforeseen circumstances happen. To help you prepare for them, you should have at least three to six months of living expenses stashed in your rainy day savings account. You can take steps today to build an emergency fund, save for a home, save for an education, or save for retirement.

Finding Money to Save Every Month

Save $.50 a day in loose change


Cut soda/pop consumption by 1 liter a week


At work, substitute 1 coffee for 1 cappuccino


Bring lunch to work (saving estimated $5/day)


Eat out 2 fewer times a month


Borrow, rather than buying, one book a month


Maintain checking account minimum to avoid fees


Bounce one less check a month




Can you think of at least two more areas where you can find money to save every month?

Manage Loans to Save Money

Remember that loans are a liability that reduce your wealth, so choose yours carefully. By shopping for and negotiating the lowest interest rate, you can build wealth by investing what you saved on interest payments.

$15,000 Car Loan for 5 Years

Interest Rate

Total Interest

Lender A



Lender B



Lender C



How much money would you save if you chose Lender A vs Lender C?

You can also save interest expense by increasing your monthly payments or choosing a shorter payment term on your loan.

$15,000 Car Loan at 10 Percent Interest




Number of Payments





$   484

$   380

$   318

Total Paid




Interest Saved

$  1,698

$   861


You can choose a shorter payment term with higher payments. By budgeting enough money each month to make the higher payments, you will reduce the amount of interest you ultimately pay, which means – even more savings!

By making wise choices, you can develop strategies and take immediate steps to control debt and build a nest egg for yourself and your family.

¹ Administrative Office of the U.S. Courts, March 2005

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