5 Steps to Follow to End the Paycheck-to-Paycheck Cycle Immediately

Most of us have experienced the paycheck-to-paycheck cycle at some point in our lives – 76% of us to be exact, according to CNN Money. But just because you feel like there’s no end to the scraping-by-right-before-payday rut, doesn’t mean you have to continue living that way. In fact, no matter what your income is like, there are proven methods you can implement right now, that will break the paycheck-to-paycheck cycle. These are our top 5 steps for giving yourself a little more wiggle room in your budget.

1) Establish a “Cushion Fund”

Even if you track your spending to a tee, it seems like there are always little things (sometimes big things) that come up unexpectedly, leaving you with little-to-no money, or even forcing you to use a credit card in order to just get by. The best way to ensure you can handle these unexpected, yet common situations it to establish a cushion fund – which is really just a small amount of extra money you leave in your bank account, that you only touch for things you need, when your paycheck is running low. A $500 cushion fund will help eliminate the paycheck-to-paycheck cycle, because if something unexpected comes up – you can handle it!

I know you’re probably thinking “How can I save up extra money if I don’t have any extra money to save?!”  My answer to that is: Do one of two things to get your cushion fund started: 1) Earn more. 2) Spend less. Earn extra money by doing easy things you see immediate return on. Here are a couple of examples:

  • Become an Uber driver for TWO weeks to save $500. Yes. That’s all it takes. Sacrifice your nights and weekends for two weeks driving customers, and you can easily earn $500.
  • Join Care.com and start babysitting twice a week. Babysitting even just twice per week can get you up to $200

Or, do one of my money-saving challenges and go on a spending fast. Then save the money you would have spent during the challenge and add it to your Cushion Fund account.

2) Do one thing per month to increase your income

Kind of like what I just mentioned above. I’m not recommending you get a second job, but just one Uber ride, or babysitting gig can land you an extra $20-$80. Take a couple hours out of your 240 hours in a month, and get yourself a few extra bucks that will help you grow your income. For someone living paycheck-to-paycheck, even a little bit helps. Here is a list of the easiest ways to earn extra money:

  • Uber driving
  • Babysitting
  • Dog Walking
  • Dogsitting
  • Taking surveys online

3) Negotiate a lower amount for your monthly bills

If you refuse to give up cable, here is a wise suggestion: call your cable company and tell them you are thinking of cancelling your cable due to high costs. Ask them what they can do to lower your bill (if they didn’t already offer you a lower amount the moment you said “cancel”). I just did this last month. My cable bill was $75/month, and they agreed to reduce it to $59/month for 6 months, in order to keep my business. You can even negotitate a lower amount for your loans. Granted, the loaner will not eliminate any of your debt, but they will usually work with you to give you a lower payment amount for a temporary amount of time. Here is a list of bills that will almost always be reduced when you call and ask for a reduced payment:

  • Cable
  • Internet
  • Hospital/medical bills
  • Auto Insurance
  • Student Loans
  • Pet insurance
  • Cell phone bills
  • Landline phone (ok if this one applies to you – you shouldn’t even have a home phone – cancel it!)

4) Look at your bank account. Every. Single. Day.

This seems like a ridiculous tip, but trust me on this. When you go days without looking at your bank account, you can find yourself surprised at how much you’ve spent, and you may not have a realistic picture of what you have available to spend. If you view your bank balance sporadically, you might see your balance and think you have x amount of money to spend that week, when you actually forgot about an upcoming bill payment that you don’t notice until the next week. Looking at your balance every single day will remind you how much you have to spend, and will prevent you from overspending. Spending and saving are both very mental and emotional actions. You need visual reminders of your finances. I’ve heard many people say “ugh I can’t even look at my checking account right now”. Those people are living paycheck-to-paycheck, with no end in sight. Don’t be one of those people!

5) Find a frugal alternative to something you buy regularly

I refuse to tell people to stop buying things that make them happy. I am, however, all about finding cheaper alternatives to things we already buy. This to me, is the most satisfying way to save money. Here are some examples of frugal alternatives, and how much they could save you:

  • Daily Starbucks – Invest in a $25 single-cup brewer, and brew your own coffee. Buying a Grande coffee each day will cost you $3. K-cups cost $.50.
    • Potential Savings: $75/month
  • Dinner out – Let’s say you go out to a sit-down restaurant every Friday and Saturday night. For one weekend a month, eat at a take-out or casual dining eatery instead. This means, cheap food, and no tips, for two nights per month. That’s not too drastic of a switch and…
    • Potential Savings: $50/month
  • Household goods – We all need basic household goods, like Ziploc bags, trash bags, paper towels, dishsoap, etc. Instead of running to Target when you need these things, do one of two things: 1) Buy it from the Dollar Store instead or 2) Extreme Coupon your way to some super cheap (or free) stuff.

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