Hey there, do you want to stop living paycheck to paycheck but feel like there's no way out? In this post, we're going to talk about several ways you can get out of the paycheck to paycheck rut. You don't have to be an expert in money management to get out of the grind.
There are many ways to stop living paycheck to paycheck. Some people are closer than others, and some people have more leeway to adjust their way of living, but much of the time, it boils down to these major categories.
1. Learn To Budget
Learn to create a budget. This is something everyone should learn how to do. My recommendation in getting started is to either use an app like YNAB (You Need A Budget) or download a budgeting spreadsheet like those included at Vertex42.com. Whether you have Excel, Google Sheets, Open Office, or a similar product, making a budget from a budget template is easy when using a spreadsheet.
You'll want to account for all of your monthly living expenses first, such as rent, utility bills, groceries, loans, subscriptions, transportation, and so on. Fill in all of that information, and you'll be left with what you have after your paycheck minus those expenses (Of course!).
Now, start deducting other expenses, such as how much you're spending on entertainment, going out to eat, new clothes, games, haircuts, hobbies, and anything else that might be either less common or variable each month. With variable expenses, take 6-12 months' worth of spending and average it into your monthly budget.
Once that's complete, the app or the spreadsheet should show you how much you have leftover each month, on average. If the number is negative, then read on, and let's find a way to change that. If the number is positive and you have money left over, great; however, that doesn't mean there isn't room for improvement!
2. Cut Back On Spending
I want to preface this by saying that we all need to spend some money on fun. If you're not having fun sometimes, you'll eventually feel miserable, and that's not the way to get by each day. That said, if your budget is tight, the first thing to eliminate is discretionary spending.
Discretionary spending is anything you're spending on things that you don't genuinely need. These can be things like gym memberships, video games, or going out to eat and drink.
We're going to update your budgets a bit. Think about ways to cut back on your discretionary spending. Can you go out to eat one less time per month or per week? Can you cancel a subscription or membership that you aren't using much?
After you've decided on what you can cut back on, remove (or reduce) those items from your budget. This should improve your situation, but it may be that you're still in the red, or you're in the green, but not by a lot. Let's look at the next thing to do.
3. Pay Down Credit Cards
This might be hard to do if you're already struggling, but once you lower your spending, the idea now is to take your extra money and pay down credit card debt. Paying down debt is great across the board but credit card debt is often the worst.
Credit cards can be dangerous if not used responsibly. While responsible use of certain credit cards is a great way to get bonus rewards, if you're carrying a balance each month and paying interest, that's money you're losing out on at the end of the month.
Related Post: 5 Excellent Benefits Of Having A Credit Card.
For example, if you owe $5,000 on your credit card, and you have an APR of 17%, and you never use the card again, and only pay down the minimum payment each month, it could take you a little over 13 years to pay it off!
Not only that, but you would be paying an additional $3,363 in interest. That's 67% more than what you owed!
In that regard, if you paid an extra $100 per month towards that same credit card, it would only take just under 3 years, and you would only pay $1,112 in interest. That's a savings in interest of over $2,200.
Another option to help pay down credit cards is to get a personal loan where you can consolidate credit card debt to a much lower interest rate. Some personal loan companies offer rates as low as 5.99%, depending on factors including your credit score, reason for needing the loan, and amount requested.
The short of it? Pay down those credit cards!
4. Tackle Your Fixed Expenses
Next, let's tackle your fixed expenses. These are bills that you might not be able to change, but they're still worth a look. You might be overpaying for things such as cable/internet and auto insurance. Reaching out to your service providers and sometimes even asking for a lower rate can be enough to get an arrangement.
If you kindly state that you're planning on taking your business elsewhere, many companies will either look into lowering your monthly bill or send you to someone who can. If that doesn't work, try shopping around for other providers.
Groceries come to mind. I wouldn't say to cut back on eating! Consider buying store-brand food, using coupons, or shopping at grocery stores that offer regular discounts. We're not trying to nitpick here, but if you're in a bind, we gotta do our best! You can also use a discount app, like Ibotta, to help you save on all of your shopping trips.
Still in a bind? Take a look at this article for some more ideas on how to lower your monthly living expenses.
5. Start A Side Hustle
We can only cut expenses by so much. But you know what's unlimited? Income, when done correctly. When you're not at your day job, a side hustle might be right for you.
Start a side hustle. That is, find something that makes you money outside of your full-time job. For more detail on side hustles, here's an entire post on 20+ side hustles you can do right now . Below are some examples of side hustle ideas.
Walk Neighborhood Dogs
Walking dogs can be lucrative if you walk several dogs at a time. If you love dogs and you live in an area where there are a lot of dog owners, consider hiring yourself out as a dog walker or general petsitter.
Fill Out Surveys Online
Filling out surveys online, at a website such as Swagbucks, is easy and doesn't take a lot of effort. You won't make much money doing it, but you may be able to add a few hundred dollars a month to your income by answering questions.
Get started filling out surveys at these four sites:
Write An eBook
I wager there's something you're good at that you could share with the world. Even if that's not true, some eBook writers simply do some research on a topic of interest and write their take on it. I recently published a work of fiction, a psychology fiction/thriller novel titled Persona Jeremy.
Start A Blog
Hey, what's this one? Isn't this what I'm doing right here? Yes, blogging can be a decent side hustle if you have a great topic to write about and an audience that enjoys what you have to say.
The best way to get started with blogging is by getting an inexpensive web host plan such as with Bluehost. With Bluehost, you can get started with just $3.95 per month, and create your own blog with a framework such as WordPress.
Related Post: How To Make Money Blogging: An In-Depth Guide
Sell Services On Fiverr
This site used to be one of those “Pay me $5, and I'll do (insert service)” – but now it's a fully functional site for all sorts of services at all sorts of price ranges. You can even hire people on Fiverr to help you polish some of your other side hustles (like editing your eBook or Blog!)
Another popular service to offer on Fiverr is being a virtual assistant. Virtual assistants help business owners with every day tasks such as managing their email, their social media, updating their websites, and more.
Drive For Uber/Lyft
Get some cash by driving others around. If you live in a busy area, or any area where there's a lack of mass transit, driving others can be a great way to earn more money.
Related Post: The Best Side Hustles You Can Do Right Now
6. Save Money Every Month
Now that you've saved money by budgeting your expenses, make it a habit to save every month. Put that money into a high-yield savings account. If you don't already have an emergency fund, begin accumulating one in a high-yield savings account.
Once you're saving regularly, you'll no longer be living paycheck to paycheck.
7. Make A Savings Goal To Stop Living Paycheck To Paycheck
Try to meet or exceed a monthly goal every month. Whether it's small, like $20, or large, like several hundred dollars or more, pick something reasonable. The idea is that your goal will be something to shoot for, and it will encourage you to keep at it.
Related Post: Crush Debt With As Little As $20 Extra Per Month.
Wrapping It Up
You can get out of the paycheck to paycheck grind by picking up The Dollar Blogger's Money Mastery System. I will teach you how to cut back on expenses, earn more money, and save up for your future, or for a dream vacation, car, or home.
It can take a decent amount of time to stop living paycheck to paycheck. It's not an overnight process, but through budgeting, lowering expenses, and saving every month; eventually, you'll begin to build up savings and have more breathing room should something unexpected come up.