Living paycheck to paycheck causes unnecessary stress in life. You end up depending on your employer’s pay cycle to pay your bills and maintain your livelihood.
If you ask somebody who lives in this situation the question “What is living paycheck to paycheck?”, I am certain you’d hear horrible stories and not so many wonderful stories.
A better way of living is to live freely without regard to when your next paycheck is coming in. This is no easy feat, however.
There are a ton of people who live such lifestyle even when they try their best to get out of such situation. This doesn’t have to be you.
A recent paycheck to paycheck statistics reveals that half of American families are living paycheck to paycheck. Yikes.
While living paycheck to paycheck seems to be a normal part of many people’s lives, living that way may or will sometimes lead to a ton of problems. These problems may involve not being able to satisfy the basic personal needs and some other important things in life.
I have read and heard these paycheck-to-paycheck stories. The beginning, the middle, and the end of such stories aren’t for the faint of heart.
For example, my wife and I used to live in such cycle. I’ll tell you that it was not fun at all. It was a headache to say the least.
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Ways To Stop Living Paycheck To Paycheck
If you want to stop living paycheck to paycheck, rest assured that it won’t be easy to break the cycle but it’s always possible to break it even when you don’t have the extra cash.
This doesn’t mean that you can’t get out of it. This doesn’t mean that you’ll be in this situation forever. No, that’s not what I meant.
It can be difficult to break but not impossible.
Here are several effective ways you can follow to stop living paycheck to paycheck.
1. Admit you have a problem.
This is always the first thing you need to do when you have a problem, that is, admit that you have a problem.
You can’t solve a situation if you don’t acknowledge that there’s a problem at hand. Admit you have a problem and are in need a solution to it.
It may sound simple to do but a lot of people are afraid to do just that. Take responsibility for what you did and what is going on in your life.
When I was in debt, I blamed myself of the situation that my wife and I were in. I looked into my credit card debt numbers, savings account figures, etc. and realized the math didn’t add up and that’s why I was in a big hole.
From there, my wife and I figured out ways to make things right. I got a side hustle to earn extra money, got a personal loan to save on interest payments and make lower monthly payments, etc. In less than 3 years, we paid off our 40K debt (story here) and stopped living paycheck to paycheck.
2. Create and stick with a budget.
Getting out of the paycheck-to-paycheck cycle is contingent upon you having a simple, working budget and sticking to it. When my wife and I were struggling, budget was one of those things we paid attention to.
You can use an MS Excel sheet as a starter. But if you’ve tried everything you could to make your budget work and not get anywhere or simply don’t know where to start but want to, Qapital, is a great option.
Qapital lets you save for the things you want, just by doing the things you do. Buying a coffee? Filling up gas? Those could save money just by using Qapital. It’s a simple idea that has a great impact.
First, you set a goal. For me, it was to save enough to take a Las Vegas trip. I set “rules,” which, when triggered, transfer money into my Qapital account.
For example, if I meet my daily-step goal, $4 is transferred in. Or if I make a purchase of $5.85, the leftover 15 cents is transferred over.
To put things in dollar terms, we saved $6,000 last year towards our goals because of Qapital.
Click here to create a FREE account with Qapital and start saving money without lifting a finger.
3. Pay off credit cards with high interest rates.
The words ‘credit card due or payments’ always get people wooried especially when money is tight.
What makes sense? Paying off credit cards with 14.99% annual percentage rates (APRs) or paying off personal loans with 4.99% APRs? I bet your answer would be paying off those personal online loans.
If you are diligently trying to pay off your credit cards but feel as though a large portion of your paycheck goes to those, then, personal loans would be one of your best options.
Personal loans typically offer lower interest rates than those of the credit cards.
My wife and I had to get a personal loan with 4.99% APR and consolidated all our credit card bills, which had an average rate of 14.99%. We paid off our credit card debts right away and paid off our loan in just 2.5 years. We’ve been debt-free since then.
I highly suggest you look into Upstart. With Upstart, you can apply for personal online loans for reasons like paying off credit cards, taxes, medical bills, etc.
Upstart’s borrowers save 24% compared to their credit card rates. You can find your rates in 2 minutes (without affecting your credit score), agree with the terms and conditions, and get your money the next day.
Click here to get started with Upstart and learn how much you can save with simple debt payment tricks like this.
4. Live well below your means.
To put things into the simplest perspective, the easiest way to get out of paycheck lifestyle is to cut down your expenses to the lowest possible. That’s the first and probably the most important thing you need to do when trying to live cheap.
You can do that the old fashion by trimming down the easiest ones like gas and entertainment expenses and, then, go for mandatory expenses like food and utilities. That process is tedious though and may not work all the time.
The better and easiest solution is to use Trim. It’s a FREE financial assistant that saves you money. It’s user-friendly and easy to install. It analyzes your accounts and searches for ways to save you money on everyday expenses like utilities, cable/internet bills, insurances, and more.
Once your account is active, you don’t have anything else to do. Trim will do the rest. It is easy to use and so effective that last month alone, Trim users saved over $1,000,000 for its customers.
Trim cut our on-contract Verizon phone bill by $16.75/mo. That’s $201/year. (see my bill’s images below).
Click here now to start using Trim and let it start cutting your expenses just like it did for people like me.
5. Save even before you get your paycheck.
When your employer offers direct deposit, make sure you take advantage of that and have another account where you can stash a couple of dollars of your paycheck automatically.
Every time I got my paycheck, I always thought I only had this much money and did not pay attention to my other account.
What happened next? I found myself with more than $800 extra in my second account.
So, how do you do this when you are already living paycheck to paycheck and not have enough money for all the bills? The answer is try to stash $1 every paycheck automatically. It’s a dollar you can cut on some other expenses you have.
From there, you can increase your automatic savings as you get more comfortable with stashing more money.
6. Make the right financial decisions.
Escaping the paycheck-to-paycheck life comes down to fixing your past failed decisions and making the right decisions moving forward. Of course, it is easier than done.
In reality, it’s hard to make those right decisions when you don’t know when, where, and how to begin. Frankly speaking, sometimes all it takes is a helping hand from others.
Ask help from someone close to you. When my wife and I were struggling, we asked for my brother’s help. He was knowledgeable of our situation and was more than happy to help us unconditionally.
You can also use Cinch Financial, a patented intelligence platform – the world’s first true financial brain. With Cinch’s help, you’ll know what expenses to cut, how to payoff your student loans fast, get the best options for insurances, save extra money easily, etc.
It will help you look at your whole financial life in all angles. It will analyze your banking activities, insurance, debt, and even spending and give you advice to make all those important things work right and in sync. There are no ifs, buts, and tricks with Cinch.
It is like no other financial app. It doesn’t get paid by companies, it has zero ads, and, best of all, it won’t sell your data. It literally works for you.
Cinch is simple, straightforward, and easy to use. Click here to get Cinch Financial for FREE.
7. Go back to the basics.
So, what the heck does this mean?
It simply means that you go back to satisfying your basic needs and letting go of your wants.
If you are trying to stop living paycheck to paycheck and/or trying to be debt free, one of the best things you can do is to limit your spending to what you only need. It may be hard to do it but it will definitely help you out in the long run.
When my wife and I were paying off our debt especially our credit cards, we completely stayed away from buying what we wanted and focused heavily on what we needed.
We even got a personal loan to consolidate all our debts and got the lowest interest rate, which saved us a ton of interest in just a few years.
Where did such change of lifestyle take us? It took us to a debt free life in just 2.5 years even when I was the only one working in the family and didn’t make a ton of money to begin with.
8. Know where you stand.
Do you know the exact reasons why you live paycheck to paycheck? Do you know your debts, how much you owe, what you can afford with what you and don’t have, etc?
You need to look at your credit report.Understanding and keeping your credit in a good state can and will help you improve your budget. How?
Good credit rating can help you reduce your payments on loans and other debts over time since a better credit can give you access to lower interest rates.
When we started our getting out of this paycheck cycle, our first stop was to look at our credit. We used Credit Sesame to look at our financial health for FREE.
With it, I knew what’s going on with my credit inside and out. It also showed us different offers to help us slash our debt even further that I, otherwise, wouldn’t have access to without using Credit Sesame.
Click here to get a FREE account with Credit Sesame. The sooner you check and monitor your credit, the sooner you can get out of this paycheck-to-paycheck lifestyle.
9. Be smart and get paid for what you are already doing.
To stop from living paycheck to paycheck, you not only need to understand how to save but also know how to save money after you’ve already spent money.
You can do that with Paribus. Paribus will track the prices of the items you purchased and put a claim for refund on your behalf. It’s that simple.
No more lines, arguments with customer service, driving miles and miles to get to the store, etc. Paribus will do all the leg work and it also won’t get a cut of your savings. Seriously, it doesn’t get better than that.
We manage to cut so many of our bills of ours by using this app. My wife and I have received refunds of over $70 in 2 months because of Paribus. That’s $70 without us lifting a single finger. It’s that easy. Click here to start getting money back with Paribus for FREE.
Be sure to also use those credit cards that give you cash back, points, and/or rewards, but make sure you pay it on time and in full to avoid additional charges.
For example, we use our Discover Card because it gives us 5% on certain purchases. In a given year, we average $300 (see image below) in cash back because of the Discover deals plus free FICO score, and ever-increasing credit limit, which is good to increase your credit score.
Now, my credit limit on this card is $60,000 and my credit score is around 765 (get your FREE credit score here, too). Plus, I get money back all the time. Thanks to the wonders of Discover Card.
10. Create a buffer in your checking account.
Another way to stop living paycheck to paycheck is to create a buffer in your checking account.
This will ensure that even if you don’t receive one of your paychecks, you are still able to pay your bills. It is a good idea to keep at least one rent or mortgage payment worth of money in your checking account as a buffer.
This way, if there is an error in payroll at work or something happens to make me miss a paycheck, I am still able to keep a roof over my head.
Here are some quick tips to save money and create that buffer:
- Stop ordering convenience food. Instead of buying takeout, delivery, or going to restaurants, cook meals at home with cheap groceries.
- Cut the cable cord. You can watch your favorite television shows via Hulu, Netflix, or Amazon Prime. These are all a fraction of the cost of cable.
- Sell your unwanted items. Do an audit of your home and collect all of your unused and unwanted items that have value. Sell them in a garage sale, on Craigslist, or on eBay.
- Earn cash back rewards from your credit card. Just make sure you pay it off in full each month to avoid paying interest.
- Do price comparisons. Before you purchase something, check the price on Amazon and other online retailers. You can often find things cheaper if you search for them. This can save you a few dollars here and there.
- Use coupons and refund tracker. When shopping online, use Honey, a desktop add-on that automatically scans for the best coupons without you having to find them elsewhere. Also use Paribus.co, which files a price adjustment on your behalf when the products you bought become cheaper.
In addition to the tips above, here are some more tips to help you save money and create that buffer:
- Socialize for free. Going to happy hours and other social events that require you to spend money can burn your budget pretty quickly. Opt to spend time with people in free settings such as volunteering.
- Buy generic items. Certain medicines and foods can be bought in the generic brand than the name brand without a loss in quality. Generic brands are usually cheaper than name brands.
- Eat leftovers. Try making your meals in larger batches so that you have leftovers for the next day. This will save you money and time.
- Bring your lunch to work. Avoid buying lunch when you are at work. That $5 to $10 per day adds up quickly. Instead, use your leftovers for lunches at work.
- Move to a lower cost of living area. If you are having trouble finding ways to save, it could be because most of your money is tied up in your rent or mortgage. Consider moving somewhere that will be easier on your pocket.
11. Find and work on a side hustle (One side hustle can make you $2,000/mo working 4-5 hours/day)
Here’s a continuation of what I said about using your free time for better purposes.
Once you have found ways to save money and create a buffer in your checking account, it is time make sure you are maximizing your income. The more money you make, the less likely you are to live paycheck to paycheck.
I particularly like taking surveys (click here to see the 25+ Best Survey Sites). When you hear the word “survey”, probably the first thing that comes to your mind is scam. Not true at all.
When my wife was a stay-home mom, we collectively made around $600 per month doing surveys (which also include testing products for FREE and testing websites).
She works full time now but we still manage to make $200 – $300 per month from taking surveys.
Here are some side hustle ideas to get you started:
- Teach English from home. Teach kids English online from the comfort of your home. With VipKid, you can make as much as $2,000/mo working 4-5 hours a day. That’s it. As VipKid teacher, you get all the training and materials for teaching for FREE. Who doesn’t like that kind of side hustle? Click here to become a VipKid teacher.
- Uber/ Lyft Driving. If you own a decent car and have a clear driving history, you can drive for a service like Uber or Lyft. These are today’s modern taxi services that connect you with riders via a mobile app. How much you make will depend on how often you drive and if you drive at peak times like Friday and Saturday nights.
- Rent A Room In Your Home. If you own your house or condo and have a spare bedroom, you can rent it out to people needing a place to stay. This can bring in a significant amount of money each month depending on the area in which you live. Use a service like Airbnb or Craigslist to post your room for rent. Then, screen candidates. Come up with a lease agreement and then start collecting rent!
- Freelance Writing. If you are good with words and have expertise in any area, you can be a freelance writer. There are plenty of companies and websites looking for people to write content for their pages and blogs. Sign up with job boards like Upwork and Freelancer to start looking for jobs. You will probably start at a low hourly/per-word rate. As you gain experience, you can charge more.
This post is jam-packed with ideas to get you started on the path to stop living paycheck to paycheck. Consider using some of my money saving techniques or trying out one of the side hustles I mentioned.
Once you take action, you are bound to see results. Any extra money you save or make will make a difference in your finances.
When you break the cycle of living paycheck to paycheck, you will be more free and in control of your finances.
What are you doing to stop living paycheck to paycheck? Are you ready to stop living in such paycheck to paycheck lifestyle?