Breaking free from the paycheck-to-paycheck lifestyle

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Breaking free from the paycheck-to-paycheck lifestyle
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Living paycheck-to-paycheck stinks. I think all of of us have been there at one time or another. You know the feeling — the money from tomorrow’s paycheck (and then some) is already spent before you even have it in your possession. Many of us are stuck there and can’t seem to get out.

Did you get a raise at your job? You might have hardly noticed as the extra money seems to get sucked up by life.

Some have chosen a lifestyle of ‘keeping up with the Jones” that takes every penny from them. For others, a lost job or other financial hardship has made it a struggle just to get food on the table. We’ve been in both camps, and neither is fun. We started in the first camp — buying nice things that we couldn’t afford, and then ended up in the second camp with a job loss.

Is today’s economy harder than in previous decades? For sure it is. Over the past 15 years, wages have simply not kept pace with the cost of living. But that doesn’t mean that we have to spend everything we get. However, sometimes we are dealt a hand that requires us to spend our every last dollar. But it’s very dangerous to become accustomed to living that way. So you NEED TO GET OUT OF IT.

Read more: 4 ways to trick yourself into saving more money

Breaking the cycles

The hardest part about getting out of the paycheck-to-paycheck cycle is that the drawbacks of this lifestyle, the reason you’re there and the reasons you’re not getting out are one and the same. That is the textbook definition of a vicious cycle.

But it’s more than that. It’s a CRAZY cycle with everything affecting everything else. All of these factors are working to keep you where you are.

I’ll show you what I mean by giving a few examples.

1.) Drawback #1 of living paycheck-to-paycheck: You forget what to do when you get a lot of money.

Sound familiar? You’ve spent so much time spending every dollar you get that your brain forgets how to NOT spend money when you get it. It’s become habitual.

When we were broke, tax return time was a blessing. But it never got us as far ahead as it should. With our $3,000 windfall, we would use some of it to pay off debt, some of it to ‘treat ourselves’, and then the rest would just sit there in the checking account and get piddled away. A month later it would be gone, and we would be back to square one.

And since we didn’t have an emergency fund set aside, that debt we paid off would eventually creep back the next time we had to fix the car or pay for a root canal. And wouldn’t you know it… next year at tax return time, we were in exactly the same spot and repeated the same cycle.

Most of the time, not knowing what to do when you get a windfall is what got you in this situation to begin with. But it’s also keeping you there.

2.) Drawback #2 of living paycheck-to-paycheck: A small emergency will lead to financial panic.

The car breaks. A trip to the ER leaves you with a $1,000 deductible to pay. Your sewer backs up. Every single day brings a risk that you will have to shell out more money just to fix something.

When your budget is on a razor-thin margin, just about anything can send it into a tailspin. The only solution available is usually to accumulate more debt, which leads to additional monthly payments and even tighter budget.

You might have once been in a position where you made more money than you need, but a streak of financial catastrophes means that is no longer the case. If you’re not planning for emergencies, sooner or later you will be living paycheck-to-paycheck.

3.) Drawback #3 of living paycheck-to-paycheck: You have trouble planning for the future.

How can you even begin to think about being debt-free, planning your retirement or helping pay for your kids’ college when you can hardly guarantee that your current months’ bills are paid? During those years of financial hardship (which we hid well, by the way), I remember listening to friends and co-workers discuss their retirement investments and what retirement age they were targeting.

I sheepishly nodded along pretending like I was on the same page. But there were a couple years where I couldn’t even afford to contribute to my own 401(k)! Yes, there was a match, and I left that money on the table (I am hanging my head in shame as I write this).

A total lack of financial freedom… a prison that I wasn’t ever going to break free of. Not being able to plan for my family’s future was a horrible feeling. But again, my lack of foresight about the future was one of the contributing factors leading me into the situation. And it was also keeping me there.

So how did we stop the cycle? And how can you stop the cycle?

Any number of financial experts can give you some great lists of what steps to take, and trust me, you need to have an action plan. You need to get an emergency fund, you need to proactively budget, you need to spend less, and you need to try to make more money. But chances are, you already know this.

What you don’t know is that you can do it. For any plan to work, it all starts in your mind.

  1. Start thinking differently.
  2. Stop being comfortable.
  3. Act.

A natural human tendency for any situation is to accept it and cope. But just because you make enough money to pay your bills does not mean that you are ‘doing OK.’ Ask these questions either to yourself, or your partner:

  • Do I want to live this way forever?
  • What would happen if I were to lose my job tomorrow?
  • How do I want to live when I am 70 years old?

Do these questions make you squirm? If so, good. Let that uncomfortable feeling propel you towards making different choices in the future than you have in past. Recognize the decisions and circumstances that led up to your current financial situation and make different ones. Resist the temptation to be comfortable and do not accept your current financial state as the norm.

Here’s how to start: Stop spending every dollar you get. Trust me, I understand what a tight budget is like, when every dollar (and then some) is accounted for by your monthly expenses. But you can find some money. It might just be $50 or $100 a month. Find it and don’t spend it. This money will be put to use by saving up an emergency fund, or paying down debt.

What if your rent or mortgage went up $100 a month? What if the price of gasoline goes up and costs you an extra $50 a month?

You’d find a way to pay it, right? Why? Because it’s a priority. You gotta have a place to live, and you gotta get to work. Saving money and breaking the cycle of living paycheck-to-paycheck is almost just as important. So you might have to spend less on food, cancel a phone line or even use less energy. Or you might have to work a few extra hours at your job.

No matter what your paycheck is, the money is there… somewhere. You just have to find it. There are many like you who have broken free from the paycheck-to-paycheck cycle and you can too.

Read more: What does it mean to be ‘broke’ vs. ‘poor’?

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