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Saving Money in 2022: Taxes, Refinancing, & More

Kat Tretina
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saving-money-taxes-student-loans-refinancing

After a brutal 2021, many people are focused on improving their finances and building a safety net. Whether you need to pay off debt or boost your emergency fund, there are multiple ways to cut corners and save money. Below, learn how to save money on student loans, credit card debt, car insurance, and more.

How to save money on student loans and other expenses

Saving money doesn’t necessarily mean you have to work a second job or live on rice and beans. You can improve your finances by using these nine tips:

1. Deduct charitable donations

Because of tax rule changes, you typically can’t deduct charitable donations unless you itemize your deductions. If you take the standard deduction, you usually can’t deduct your cash donations.

However, the Coronavirus Aid, Relief, and Economic Security (ACT) changed that. When you file your taxes in 2022, you can deduct up to $300 in charitable donations ($600 if you’re married and file jointly).

By taking advantage of this deduction, you can lower your taxable income and get a smaller tax bill, putting more money in your pocket.

2. Consider mortgage refinancing

If you’re a homeowner with a home loan, now is a fantastic time to refinance your mortgage.

Consider that in November 2018, the average interest rate on a 30-year fixed-rate mortgage was 4.94%. As of February 2021, the average interest rate on a 30-year fixed-rate mortgage is just 2.81%. By refinancing your mortgage, you could save thousands in interest charges over the life of your loan. Contact a mortgage lender to discuss your options.

3. Use the debt avalanche strategy

If you have multiple forms of debt, such as credit card balances, student loans, and auto loans, the most effective way to tackle it is the debt avalanche strategy.

With this debt repayment method, you make all the minimum required payments but apply any extra money you have to the account with the highest interest rate. Once that account is paid off, you take that payment and put it toward the account with the next highest rate every month.

By targeting the most expensive debt first, you can save more money and pay off your debt faster.

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4. Compare car insurance quotes

Your car insurance bill can be a major expense,

When you’re a recent college graduate, you may not know where to start when it comes to insurance, so you likely used the same insurance company as your parents. However, that can be a costly mistake, as rates can vary by company, and you likely have very different insurance needs than your family.

Instead, plan on shopping around and comparing insurance quotes once every year. By comparing auto insurance rates, you could save up to $670 per year.

You can use a tool like The Zebra or PolicyGenius to help you compare quotes from multiple companies at once.

5. Sell extra stuff

You likely don’t realize it, but the unused clutter in your home could be a source of extra cash. According to electronic reseller DeCluttr, the average American household has $264 of unused devices in their homes.

If you have a day without any plans, spend some time cleaning out your home and gathering unused clothes, toys, furniture, and electronics. You can sell those items on eBay, Poshmark, Gazelle, and Craigslist and use the money to make extra debt payments or to add to your savings.

6. Consolidate credit card debt

As of November 2020, the average interest rate for credit cards that assess interest was 16.48%. With such high rates, it can be difficult to make any progress paying off your balances.

If you’re struggling with high-interest credit card debt, consider applying for a debt consolidation loan. Debt consolidation loans are personal loans you use to pay off your credit card debt or medical bills. They typically have much lower interest rates than credit cards and fixed monthly payments, so you can save money and know exactly when you’ll be debt-free.

7. Claim the student loan interest deduction

Under the CARES Act, interest was set to 0% on most federal loans. However, if you made payments before the CARES Act was enacted, paid interest that had accrued, or made payments toward private student loans, you can still claim the student loan interest deduction on your taxes.

You can claim the student loan interest deduction even if you don’t itemize your deductions. If eligible, you can deduct up to $2,500 or the actual amount of interest you paid during the 2021 tax year, whichever is less.

8. Cancel recurring subscriptions

With so many apps, streaming services, and other subscriptions readily available, it’s easy to sign up for things without thinking about it. But when you add up the cost of all of those services, it can really cut into your budget. Canceling just a few of your subscriptions can help you save hundreds.

If the idea of calling each service provider is intimidating to you, Trim is a tool that can simplify the process for you. According to the company, the average yearly savings for users that enroll in all of the app’s features is $1,498.

9. Refinance your student loans

When it comes to student loan statistics,  the average borrower has a loan balance of $29,650 with a 5.8% interest rate and a monthly payment of $393. With such a high interest rate, thousands in interest charges can accrue, causing you to pay more than you initially borrowed.

If you’re looking for ways to lower student loan payments or are wondering how to lower student loan interest rates, consider student loan refinancing.

By refinancing your federal loans or private loans, you consolidate them into one. Rates are at historic lows right now, so you can qualify for a lower interest rate and save money over your loan term. Or, if you’re trying to figure out how to lower your student loan payment, you can opt for a longer loan term.

Just how effective is refinancing? Consider this example. Jane had $29,650 in loans at 5.8% interest and a 10-year repayment term. By the time she paid off her loans, she paid over $9,400 in interest charges.

To save money, Jane decided to refinance her loans. She qualified for a 10-year loan at 4% interest. With the lower rate, she paid only $6,373 and saved over $3,100 in interest charges.

 Original LoanRefinanced Loan
Loan Term10 Years10 Years
Interest Rate5.8%4%
Minimum Monthly Payment$326$300
Total Interest$9,495$6,373
Total Repaid$39,145$36,023
    Savings: $3,122

If you decide to refinance your student loans, make sure you get quotes from multiple lenders. You can use Purefy’s Compare Rates tool to get quotes from top refinancing lenders without affecting your credit score.

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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 11-21-2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 2.24% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 3.49% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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