More than ever, individuals and families are experiencing economic hardship. Not only is this due to the Covid-19 pandemic but also the loss of federal assistance programs. Approximately 54% of all Americans are living paycheck to paycheck.
Some feel there is no way to stop this endless cycle. However, making several smart changes helps families thrive instead of just survive.
Here are some tips on how to stop living paycheck to paycheck:
Stop Using Credit Cards –
The first thing to do is take all the credit cards and cut them up or store them away somewhere safe, but remove them from your wallet. They are the worst thing to have right now. Regardless of how much a paycheck is, debt continues to increase when people spend more than they make.
From this point on, everything needs to be paid for in cash. If it’s not available, then delay the purchase. The lack of credit cards helps to eliminate those feelings of instant gratification and focus on living within one’s means.
Plan Out Expenses –
Budgeting doesn’t mean the elimination of spending money. On the contrary, it allows individuals to put some away for what’s needed instead of wanted. On top of this, budgeting helps save money for an emergency.
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There are several budget templates available online. Some of these are already filled out with standard income and expense categories. What people need to do is review available funds and separate them into the proper areas. Ensure money is left over to build an emergency fund.
You can use our free Budget Builder tool to help you set up and maintain your budget.
Click Here for our Budget Builder free tool.
Create A Debt Snowball –
A primary reason why people continue living paycheck to paycheck is their enormous amount of unsecured debt. As they accrue more of this, their credit scores decrease. As a result, it’s harder for them to get loans or other assistance to help them payoff the debt. A way to start eliminating this is to create a debt snowball.
On a sheet of paper or Excel spreadsheet, list debts from smallest to largest. Next, pay the minimum on the rest of the items except the first. Devote as much cash as possible to it to eliminate the debt as quickly as possible.
When it’s paid off, take the funds previously used for it and redirect the focus to the second largest debt. Through constant vigilance, these debts will disappear. This provides a good deal of breathing room for an individual or family.
Consolidate What Is Owed –
Another big reason why debts never seem to be paid off is due to the late fees and interest tacked onto them. As a result, little of the monthly payment actually goes to the principal. You can fix this by signing up for a Debt Management Program with a non-profit credit counseling agency.
Speak to a certified non-profit credit counseling agency to get this process started. They work with a client’s creditors to come up with a debt repayment plan that works for everyone. The totals are then consolidated into one lump sum that’s collected and paid out monthly to the creditors. Not only is the total payment usually lower, but the interest rates are considerably less.
It’s critical to quickly implement these tips. The faster an individual visits a credit counseling service and reduces their spending the better. Although it might be hard sometimes, the reward will be no longer living paycheck to paycheck.
Taking the right steps to manage your money can help you stay out of debt. If you make smart money choices, you will be able to afford more financial opportunities in the future. People with better credit and less debt are able to qualify for better financing options and can take advantage of other special deals. Take charge of your finances today so that you can have a better financial future!
If you need help getting out of debt, contact Advantage CCS today. The call is completely free and always confidential. We’ll get you started with a budget and list your options for debt relief. A Debt Management Program may work well for your situation, and you can discuss that option with your certified credit counselor. We have been helping people get out of debt since 1968, and we can help you too!