How To Stop Living Paycheck to Paycheck With 8 Strategies

How To Stop Living Paycheck to Paycheck | How to make more money | How to budget

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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 cycle. 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. Create a 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, such as rent, utility bills, groceries, loans, subscriptions, transportation, etc. Fill in all of that information, and you'll be left with what you have after your paycheck minus those expenses (Of course!). Check your checking account and credit card statement to see how much you're paying for everything.

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. 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!

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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 budget 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? Using an app like Trim can help!

Trim helps you find recurring charges to your bank account and credit cards and will either negotiate these charges or cancel them altogether (your choice!). For those charges that Trim can't do automatically, you will be alerted to the charges and the amount, which will allow you to cancel them manually should you choose.

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 in the green, but not by a lot. Let's look at the next thing to do.

3. Go on a Spending Freeze

When you want to stop living paycheck to paycheck, one thing to try is to go on a spending freeze. A spending freeze is when you stop all spending for a pre-determined amount of time, such as one or two weeks. When you stop spending, you force yourself to stop doing things you may do regularly, such as impulse buying or dining out.

One way to go on a spending freeze is to pay all of your bills on the first of the month and spend nothing for one or two weeks. By doing this regularly, you'll have extra money in your wallet each month that can go towards paying down debt or increasing your emergency fund.

4. Pay Down Credit Card Debt

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 risky for your financial health 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. 

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 three years, and you would only pay $1,112 in interest. That's a saving 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 your credit score, the reason for needing the loan, and the amount requested.

The drawback to a debt consolidation loan with a personal loan is that you can't use the debt snowball method to pay off your debts one at a time, meaning your monthly payment won't decrease until the entire loan is paid off.

Everyone's debt situation is different, and if you're considering debt consolidation, it may be beneficial to consult with a financial advisor.

The short of it? Pay down those credit cards as soon as possible.

Related Post: Too Much Debt, No Money: What To Do

5. Lower 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 politely state that you're paying too much for service and want to know what the company can do to keep you as a loyal customer, many companies will either look into lowering your monthly bill or send you to someone who can. Alternatively, you can use an app like Trim that will negotiate your bills automatically.

You can also try to shop smarter for groceries! Consider buying store-brand food, using coupons, or shopping at grocery stores that offer regular discounts. 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.

6. 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.

That way you can start saving and add to your emergency savings to cover unexpected expenses and get out of the paycheck to paycheck cycle.

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 live in an area where there are many dog owners, consider hiring yourself out as a dog walker or general petsitter. A site like Rover will link you up with local folks who need their dogs looked after. Oftentimes, people can earn around $1,000 per month walking and taking care of dogs through Rover.

Fill Out Surveys Online

Filling out surveys online at a website like Swagbucks is easy and doesn't take a lot of effort. You won't get rich filling out online surveys, 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

Writing an eBook does take considerable effort and marketing, but if you have a go-getter spirit and knowledge to share, then writing an eBook may be right for you.

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.

I started The Dollar Blogger at the beginning of February in 2020. One thing I will note is that it can take up to 6 months or longer to start earning income, and it takes a lot of work. That said, some people blog successfully enough to quit their full-time job, though this can take up to or over two years, depending on what you write about and how well you market yourself.

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 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 daily tasks such as managing their email, social media, updating their websites, and more.

You can do almost anything on Fiverr. Some gigs include graphic design, web design, programming, music, video recording, video editing, Pinterest design, social media management, content writing, and much 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 in 2020

7. 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. Read my full savings account guide here.

When you save money every month, you improve your situation for the long term. Then you can cover not only your monthly expenses but also invest for your retirement and work towards financial independence.

Consider using your tax refund to fund a high-yield savings account or to pay off some of your debts.

Related Post: 7 Smart Ways How To Spend Your Tax Refund This Year

Once you're saving regularly, you'll be able to stop living paycheck to paycheck.

8. 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.

It's so important to have goals, even if you don't make them all. Start small and make your goals incrementally higher until you reach a point where you are in a much better financial place.

LEARN HOW TO SAVE UP TO
$10,000 EACH YEAR

Download our 11 step guide on how to save up to $10,000 each year. You’ll also get regular money-saving tips sent straight to your inbox!

Unsubscribe at any time. We will not sell your information.

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Wrapping It Up

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.

When you are no longer living paycheck to paycheck, you enter step 3 of the 7 steps of financial freedom.

78% of Americans live paycheck to paycheck. In this post, I talk about how to stop living paycheck to paycheck through money saving tips, paying off debt, changing spending habits, and more.

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