Living paycheck to paycheck is a vicious cycle. Consistently running out of money before your next paycheck arrives and not saving prevents you from ever truly getting ahead. While climbing out of this endless debt cycle isn’t easy, it can be done.
Try these tips for getting off the paycheck-to-paycheck roller coaster.
Change your mindset
If you’re living paycheck to paycheck, chances are you’ve got a “just enough” mentality. Such a mindset causes you to think in terms of what you need to survive rather than what you require to thrive. In order to stop the debt cycle and start saving, you must first start thinking in abundant terms. This way of thinking gives you the necessary motivation to save.
Consider the consequences
Scare yourself a little and think about what would happen if your house of cards were to come tumbling down. What would you do if you lost your job or your car broke down? Picturing your reaction to such circumstances and what could occur, such as the loss of your home, is sure to make you nervous. Use those nerves to make some changes.
Be merciless with your budget and savings
The fact that you’re living paycheck to paycheck is a clear indication that you are spending too much. Review the amount you’re spending and cut out all unnecessary expenditures, at least until you’ve deposited a month’s worth of living expenses in an emergency savings account. Remind yourself that foregoing cable television is preferable to living a life on the brink of financial disaster.
Avoid sinking further into debt
Don’t make your financial situation more dire by falling into debt traps and using credit, even for everyday expenses. Remind yourself that if you can’t pay for something with cash, then you probably shouldn’t be buying the item.
Pay off debt
Owing a lot of revolving debt keeps you firmly planted on the financial edge. List all of your debts, starting with the smallest balance and pay that off first — then make your way down the list. Even if you can only pay an additional $10 a month toward your debt, you’ll be moving forward rather than standing still like you’ve been doing.
Earn extra income
Coupled with reduced spending, earning more money is the quickest way to pull yourself out of debt. Rather than think of the additional funds as a part of your regular spending money, earmark the extra earnings for saving and paying off debt.
How do you stop living paycheck to paycheck? Share your ideas in the comments.
Photo Credit: B Rosen