If you find yourself living paycheck to paycheck, you aren’t alone. This game is one you feel you can’t win. There is no way out. But, there is. There are things you can do to end the paycheck to paycheck cycle.
Payday arrives. You pay your bills, pick up your groceries, fuel up your vehicle, and then the money is gone. You didn’t even have it in your account for 48 hours before it was all spent, and here you sit, broke until payday arrives again.
Living paycheck to paycheck may feel like a vicious cycle you can’t break. However, you CAN! You just need to know where to start and how to get out from under that heavy weight.
MY LATEST VIDEOSHOW TO STOP LIVING PAYCHECK TO PAYCHECK
1. You’ve Got To Have a Budget
Tthe first thing you have do is know where your money is going. You do that by giving every penny you earn a specific job. The more straightforward term for this is a budget.
You have to know where your money needs to go before you can make any changes to your spending. Without understanding where you spend, you will quickly run out of money before the next payday arrives.
2. Establish goals
What do you want to accomplish financially? Perhaps it is saving enough down payment to buy a home or maybe is a big vacation. Maybe your goal is just to get your head above water, once and for all.
Whatever your financial goal is, write it down. Then, and only then will you be able to make changes to help them become a reality.
3. Where Does Your Money Go?
Now, once you have your budget in place, look at those items where you may find you overspend. Do you grab a latte on the way to work every morning?
If you spend $5 a day, that is $25 a week and $100 in a single month! Imagine what you could do with an extra $100 in your pocket.
4. Step Away From the Plastic (even debit cards)
The simple way to stop overspending is to use cash. Not your debit card either. We are talking cold, hard, cash. I understand paying with plastic is more convenient. However, if you stick with CASH, you can’t overspend. If you have $100 to spend at the grocery store, you can’t spend $110.
On the contrary, if you use your debit card, it is easy to say “It’s just $10.” If you do that every single time you go to the store, that is more than $500 overspent in just a single year!
It can be tough to start using cash, but once you do, you’ll wonder why you didn’t start sooner!
Read More: How to Use the Cash Envelope System
5. Define needs vs. wants
Take a look at your budget and what do you need? You need clothes, shelter, food, utilities. However, do you “need” cable? Do you “need” to dine out every week?
A simple way to make from paycheck to paycheck is to cut back on your wants (even if temporary). That will free up money in your paycheck, allowing you to breathe a little easier.
6. Ask for help
If you are in debt or owe companies money, why not call and ask them if they can’t help. Many times, they are willing to help you make changes to your payment due date, adjust interest rates and more.
If you don’t call, you will never know what they may be able to do to help you!!
7. Never forget to save
You might think there is absolutely no way to save money when you struggle to live from paycheck to paycheck. But, if you don’t have savings, you will never end that cycle. Your savings account is there for your emergencies. It is too critical to your overall financial health to ignore.
Do what you can to save at least $1,000 – $1,500 to start. Then, add to it until you have at least one full month’s worth of expenses saved up.
You can do this by cutting out a few items form the budget, selling things you don’t need or even picking up a second job (temporarily). A small amount of even $25 a paycheck is a start and will be more than you saved previously.
8. Start a debt payoff plan
Another trick to stop living paycheck to paycheck is to get out of debt. Eliminate it once and for all.
Look at your budget for a moment. How much of it is being gobbled up by debt payments such as credit card bills and loan payments? What could you do if you didn’t have those monthly payments?
Getting out of debt may feel like an impossible feat, but if it matters enough to you, you’ll find a way to make it work. Even if you don’t make much money, there are still ways you can work yourself out from debt.
With some simple changes, you might find ways to free up some cash and end the cycle of living paycheck to paycheck.
Laurel Rulison says
My frustration is we do all those things already but keep getting slammed with ‘unexpected bills’ that have completely depleted our emergency funds. In the past couple of years, we spent about $10,000 fixing a car. It was spread out and by the time we hit the grand finale (a new engine at $5,000) we already owed $5000 for the older repairs. We had a car payment on another car and couldn’t afford a second car payment in addition to having the $5000 credit card bill. Last weekend, my son had a bad cold and a trip to Urgent Care led to a trip to the hospital, and with our deductibles, I had to put another $1200 on the credit card. Its this vicious cycle of being hammered by huge bills that is hurting us so badly. I know this so called Life. But I’m so tired of living so tight, owing so much and being so afraid of what’s around the corner.
Lacey says
Laurel – I totally understand where you are coming from!! I am in vicious cycle as well. I did want to tell you from experience though when it comes to medical bills you do not have to pay total upfront even though they make you think that. You can pay them $20 or whatever a month and they have to accept it towards the payment they cannot turn you over onto collections for this as long as you dont miss a month and you can prove it. I thought this might help because now you are paying interest on your credit card when in reality you didnt have to put it on the card. Believe me i found out the hard way too but just for future references. Hope this helps!
Jaclyn says
Lacey is correct. I work for an attorney. It is illegal for creditors to harass you for money. It’s called the Fair Debt Collections Practices Act. As long as you make payment arrangements with them and make them timely.
Tracie says
Actually, even if they accept your $20, it does not mean that it is an acceptable term. The repayment terms must be in writing and they must agree to them.
Yes, they cannot harass you, but know that thinking if they take my $20 they accept my terms will work, it does not. They can still turn you over to collections.