If you live paycheck to paycheck, you may desperately look for ways to improve your finances and get out of the hole. Unfortunately, increasing your disposable income is much easier to say than do. This isn’t meant to discourage you; however, you may have to get proactive and take extreme measures to get your finances under control. Here are some reasons why you'll always live paycheck to paycheck.
1. Your Income Isn’t Increasing
If you’re in a dead end job where your income does not increase, you'll probably live paycheck to paycheck. If you really want to get out of the hole, look for ways to earn more money. Maybe you can seek out other job opportunities with another company, or take steps to supplement your income, such as getting a part-time job or starting a side business.
2. You Have Too Many Credit Cards
A lot of credit card debt is another reason why it's hard to stop living paycheck to paycheck. Even if you earn decent income, if you're paying hundreds of dollars each month on credit card bills, this can eat at your disposable income leaving you broke at the end of every month. Recognize the problem and take steps to remedy your debt. Pay more than your minimum payment if possible, or negotiate a lower interest rate with your creditors.
3. You Have Too Much Student Loan Debt
Credit cards aren’t the only problem that keep you living paycheck to paycheck — but also mountains of student loan debt. Unfortunately, you can't get out of a federal student loan, but you can consolidate your loans to a cheaper rate, thus lowering your monthly payment. And if you experience financial hardship, speak to your student loan lender about forbearance or deferment. These provisions temporarily stop your payments for up to one year.
4. You Live in an Expensive Area
If the cost of living in your area is through the roof, you might not have extra money at the end of the month. You can't change the cost of rent in your area, but you can choose to live in a place within your budget. This might involve moving farther away from work or school, or perhaps getting a roommate to share expenses. If you can reduce your monthly expenses, you’ll have more cash for savings.
5. You Can't Stop Shopping
You want to look good, and there are undoubtedly things that you need but if you get into a trap of shopping every weekend, you could end up spending money that you don't have. You might end up with extra credit card debt, or you might not have money to pay your living expenses. Recognize the danger of overspending and take steps to improve the situation. For example, leave your credit cards and cash at home, shop alone to avoid peer pressure, or give yourself a modest splurge budget each month.
6. You Don't Know How to Budget
If you don't budget your money, there's a good chance that you'll spend bill money on other things, such as shopping and recreation. A budget isn’t hard to establish, and it essentially helps you assess what's coming in and what's going out. This way, you'll have enough cash to get through the month without getting into a hole. With a good budget, you can allocate funds for savings, which builds your emergency fund.
7. You’re Not Proactive
To stop living paycheck to paycheck, you need to get proactive. This involves figuring out the reasons you don't have extra cash, and then developing a plan to reverse the situation. For example, if you're stuck in a dead end job, consider going back to school or taking classes to help you qualify for higher-paying positions.
Living paycheck to paycheck reduces your options. You might be unable to plan for your retirement, save for your kids education, take a vacation, or care for other expenses that pop up. But if you can increase your disposable income, you'll be able to manage emergencies and enjoy life to the fullest.
What are other ways to stop living paycheck to paycheck?