With the dawn of each new day, we’re given the grace of a fresh start. The New Year is also a time many of us reflect and feel as if it’s a clean slate. There’s no better time than TODAY to STOP living paycheck to paycheck. Here’s how we stopped living paycheck to paycheck, and how you can to.
If you feel constant anxiety. If you’re having trouble sleeping. You probably have debt, and live paycheck to paycheck. Many people do. We did. $90,000 worth of debt, four kids to feed, and minimum payments that surpassed our monthly take home pay.
It’s become “normal”. We all have payments, right? — WRONG!! There’s a growing breed of people who have NO payments, and live debt-free. They’re able to save massive amounts of money on an average income. They pay for vacations with CASH, and give to charities at will. I used to think that only existed in fairy tales, or for people who inherited fortunes or won the lottery. But we can do it too! Seriously.
Begin with one foot on the path, and then one day you’ll look back and see you’ve climbed a mountain.
The dream: A life that doesn’t involve your paycheck entering your account on Friday morning and leaving Friday afternoon (never to be seen again). A life of true financial security and freedom of choice.
How to STOP Living Paycheck to Paycheck
Step 1: Get Disgusted
If you want to stop living paycheck to paycheck and start building wealth, you have to reach a point of true disgust with your current situation. If you don’t, you’ll never have the grit needed to STOP your old habits and reach a new “normal”.
My Moment of Disgust: When my four-year old son was sick on a Saturday, I drove him thirty minutes out-of-town to reach an urgent care center, as opposed to the ER, to avoid paying a $100 copay (vs a $20 copay at Urgent Care). He was having trouble breathing, and vomiting due to lack of oxygen. His situation worsened as we drove. Once we arrived, the Urgent Care center had just CLOSED, and I had to drive my son back to our town to the Emergency Room. I wasn’t sure he would survive the drive.
Driving to the hospital was the most horrific hour of my life, and I vowed to NEVER have to make a decision that risked my child’s life based off a stupid copay again. We would STOP living paycheck to paycheck, get out of debt, build an emergency fund, and get financially free.
Step 2: Face Your Payments
It’s scary to look at your bills. I know. I’ve been there. I’ve been terrified to open the mail. The bills seem to keep coming, and they never seem to stop. But if you don’t face them, they really WON’T ever go away.
Open the mail, look online – do whatever you have to do to track down everything and everyone you owe. Write it ALL down. On paper or in an excel spreadsheet. You can’t get control of your money if you don’t know where it’s going. Knowledge is power. It’s time to face your bills.
Step 3: Get Current on Your Home and Focus on It
In order to breathe you need to know where you’re sleeping. If you’re worried about being evicted, that’s not conducive to clear thought. Therefore, your first priority is to get current on your rent or mortgage. Screw everything else. GET CURRENT on your home.
In addition to your rent or mortgage, get current on electricity, heat, water etc. Anything that impacts your house or apartment. Pay that first. (not last!) Food also needs to be first. Even if all you eat is potatoes. (Some people swear by a potato diet, I swear.) Buy those spuds FIRST, before you pay credit card bills.
Our Oil Bill Negligence: Our house has an oil tank, with oil heat. We have a budget pay program, with a capped price, and a monthly set payment. Unfortunately, we always left this payment until last, which meant we never had enough money to pay this bill at the end of the month. That meant every year we’d have a HUGE bill to settle up. This put our family at risk of running out of oil. With four kids that’d mean NO HEAT. That’s scary (and dumb!) stuff.
Step 4: STOP acquiring new debt, and STOP spending money
Seriously! No…. SERIOUSLY! Stop.
This is the time to get weird. Don’t go out to eat. Don’t buy new cars, clothes, jewelry, music, books, clocks, etc. We buy our clothes at Goodwill, and we basically only drive to work and back. That saves on gas and helps lower the wear and tear on our old (2003, 2004) cars.
You’ll never get ahead if you don’t stop spending. You know how you have to be in a calorie deficit to lose weight? Well you have to spend less than you make to have money. Duh! We all know these things, but we fail to do them. It’s time to.
Make a commitment to yourself to begin living differently. Starting now!
Step 5: Cut, Cut, Cut (Temporarily)
We cut our cable. We cut out entertainment. We cut up our credit cards (forever!). We cut out vacations. We cut our grocery bill — and got healthy in the process by switching to a fully plant-based diet.
Look for places to cut your expenses. You really don’t NEED a lot of things.
Step 6: Get Real on Wants vs. Needs
Look in your mirror and get real. There are a lot of things you’ve bought that you could really care less about now, isn’t there? I’m sure there are a ton of things you don’t need. If you can control yourself on Amazon, you’ll be able to pay off your debt, get rid of your payments and HAVE MONEY.
No Payments = Money
Step 7: Address Your Income
If you’re having trouble making it each month, you might really not make enough money. We had an income crisis for many years, which is why we relied on credit cards to buy food and pay oil bills. This only made our situation worse.
Start looking for a new career or job with a higher salary. I’ve switched companies 3-4 times in the past ten years, and each time I received a significant pay increase. Even if you decide not to accept the new position, you might be able to use your offer to negotiate an increase in current position. Win, win!
In the meantime, look for a second job or start SELLING STUFF.
Earn extra money any (legal and ethical) way you can.
Step 8: Settle in for a Climb
Paying down debt, to enable you to stop living paycheck to paycheck, might potentially take a few years. Don’t get me wrong: get aggressive and focused so it takes a FEW years, not ten years! But it won’t be overnight.
Find your happy place. Meditate or something. Patience is needed. But it’ll be SO worth it. We can celebrate together when we get there. My husband and I are still climbing.