If you are living paycheck to paycheck, you know it. You feel it nearly every day, in one way or another, and it’s awful. You are always scrambling and stressed. You are frustrated and tired. And let’s not even talk about overdraft charges. Because just, no.
That is the bad news.
The good news is that you only have to break the cycle once.
Why Breaking The Cycle Is Everything
As soon as you break the cycle, you are able to back away from the financial edge, which allows you to make better decisions; because you aren’t stressed about every little, tiny hiccup that comes along,
Right now, the smallest little expense is an ordeal—an emergency, even—because you are right on the edge. From your current vantage point, about to plunge into full-fledged financial doom, it might be hard to even imagine living any other way.
Way Less Stressful
But take even a few steps back, and you’ll see that the little-expenses-turned-big-stresses just kind of melt away, you don’t even notice them. It is possible to be intentional with every dollar, and have money waiting around to spend on things before you even need the money. It is possible to forget it’s payday because you have no need to pay close attention.
No More Juggling
When you break the paycheck to paycheck cycle you won’t feel afraid to open a bill, because you know you don’t have the money to pay it yet. You won’t have to count the days (hours?) until you get paid again, in order to cover last month’s remaining bills (late. again.). You won’t have to time bills and paychecks and remember who you paid late last month.
Imagine getting a bill and just opening it and paying it. If you are thinking, “Well, yeah, that would be amazing, but so would living in Hawaii, and that isn’t going to happen either.”—keep reading!
How You Can Break The Paycheck To Paycheck Cycle
Eighty percent of people live paycheck to paycheck, which means breaking the cycle is fairly uncommon.
If you want to break the paycheck to paycheck cycle in your own life, it isn’t going to be business as usual.
Know that when you start—when you first really commit to tackling this—it is a sprint.
Money In, Money Out (In That Order)
Right now, you are just going along. You spend money. You get a paycheck. You spend money. You get a paycheck.
All I want you to do is slow down the spending, little by little, until we can turn it on its head. The idea is to the get the money first. Get the money, then spend the money.
Once you break that cycle, you can maintain it much easier. But getting there is going to take the most effort. When I say “sprint,” you either have to boost your income, even temporarily, or cut your expenses. You don’t have to cut your expenses forever, but just for a little bit, to give yourself the ability to get caught up.
Option One: More Money Coming In
Selling stuff is a legitimate strategy. Would a couple hundred dollars go a long way? Yes! Get creative. What do you not need or not use anymore? Or to take it one step further, what are you willing to sacrifice because breaking this cycle is just that much more valuable?
On average, new budgeters using YNAB, break the paycheck to paycheck cycle in less than four months. It doesn’t happen overnight. But it can. You just need to free up some cash. Maybe you got some money for your birthday/wedding/graduation. Would a tax refund help? Absolutely. Could you get a second job—drive an Uber, freelance, tutor?
This is not a long-term situation, you are just looking, wherever you can, to free up some cash flow.
Option Two: Less Money Going Out
The flip side is reducing your expenses (slashing, might be more appropriate).
If you are living close to the edge, you probably have already cut out a lot of the obvious extras, so this is where you are going to have to get ruthless. You might have to give up some things you love, some conveniences you are accustomed. It might be hard. But it is not forever. This is a short term fix, just to get the traction you need to create some space and get money before you need to spend it.
This isn’t just cutting back on eating out, this might be eliminating eating out for 60 days. Again, not forever. This is a short-term, all-out sprint to cross the finish line as soon as possible.
No frills, luxuries, or entertainment (or whatever it is for you) for 60 days. Of course, you can do it. It is just 60 days. It is a sprint.
Now at the end of a sprint, you collapse over the finish line and you can’t manage another step. This is not a lifestyle you can maintain for very long—and you don’t have to. Recognize this is a sprint. A means to a very fruitful end.
The New Normal
The reality is you are probably going to have to attack this from all sides: freeing up some extra money and spending less. Once you break the cycle, and you resume a much more normal pace, every time you get paid, you will decide what those dollars need to do before you spend them. You will budget every dollar.
Once you are getting paid first—and spending second—you can decide what is most important to you, and make sure your money is doing those things. As long as you are spending less than you earn, and the budget will keep you honest, you will never be surprised by another overdraft charge ever again.
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