Do you often feel like you’re living paycheck to paycheck? Does it feel like as soon as you get paid, you go right back to being broke?
If you’re feeling a bit hopeless about your financial situation, you’re not alone. More than 75% of Americans are living paycheck to paycheck, with approximately 68% having less than $800 in savings.
If you’re relying on your credit card to get you through emergencies, it’s not hard to understand why it feels like you can just never get ahead. It can be emotionally and mentally taxing to be living a paycheck to paycheck lifestyle. But the good news is you can change it.
The chances are high that you’re making some serious mistakes that are prohibiting you from getting ahead financially. If you’re serious about getting out of the paycheck-to-paycheck lifestyle and are ready to make some big financial changes, then read on.
You have more car than you can afford
I cannot tell you how often I hear people complain about not having enough money as they drive off in their newly leased top of the line car. Buying more car than you can afford is a serious mistake that way too many Americans make. If you’re not currently putting anything toward your savings account, but yet are driving a car that is five years old or less, then you’re making a big financial mistake that is costing you big.
What to do: Think about downsizing your car and getting something that will be better for your budget, even if that means buying used, or taking public transportation for a while. Auto loan debt is a big reason Americans continue to live paycheck to paycheck. It’s definitely a hard decision—who wants to give up driving their nice car?—but it is one that will make a big stride toward getting yourself out of the paycheck to paycheck rat race.
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You’re not saving 10% of your paycheck
If you’re living paycheck to paycheck, chances are you’re not saving any money! And that is a big mistake. Any emergency that arises, whether it is a car repair or health issue, will force you to add more debt to your pile—ensuring that you keep living the paycheck to paycheck lifestyle.
What to do: If you wait till the end of the month to figure out what you can put into savings, you’ll never have any money left. Instead, pay yourself first by automatically transferring 10% of your paycheck to a savings account that is not connected to your checking account. This will force you to live on less. No more dining out as much, or spending frivolously. It will take a few months to adjust but once you make it a habit, you’ll have a nice savings cushion.
You have the latest technology
How many times have you upgraded your phone in the past five years? How big is your television? How many computers, laptops, tablets, ipods, and cell phones do you have? Are you seeing a trend here?
Perhaps technology is not your thing, maybe it’s another hobby, like golf. Take a real good look at your lifestyle and see what is causing you to spend to excess. Is your technology addiction out of control? How much money have you put toward your hobby in the past year?
Chances are you will find some type of excess that you can cut out.
What to do: You don’t have to cut out all the fun in your life to save money, but reducing your spending on the excess and sticking to a budget can really help you find extra money to put toward savings and break free from the paycheck to paycheck lifestyle.