How to Break the Living Paycheck-to-Paycheck Cycle

By: Trent Hamm

Look for Regular Expenses You Can Trim Away

The first big step is to trim your monthly expenses. Reduce that cable bill and that cell phone bill. Get rid of unused memberships, like gym memberships or country club memberships. Look for ways to tone down your home energy use. Start a carpool or start using public transportation. Start cooking at home more and eating out less. All of these things will ease the monthly pressure on your wallet, allowing you to stop feeling like you’re falling behind and instead start getting ahead a little.

Cap Your Non-Essential Spending Each Month
We all spend some money on things we don’t really need. Instead of just spending as opportunities arise, put a cap on that spending each month. Allow you and your spouse a cash allowance each month and agree that your discretionary spending comes from this cash and this cash alone. Make the amount lower than what you normally spend, but not enough lower that you’re tempted to cheat. Then, when you’re used to the amount, consider lowering it a bit more until you find a sweet spot of savings and fun.

As You Gain Some Breathing Room, Move Towards Paying Bills Right When They Come In

One thing that many people living paycheck to paycheck waste money on is late fees. You’re a couple days late on a bill because you were waiting around for your paycheck, so you’re dinged for an extra five bucks. It used to happen to me all the time—and it was a serious money leak. The best solution for handling this as you move towards financial stability is to start paying your bills as soon as they come in–that way, you avoid the late fees by a mile. Later on, as you get more comfortable, you can develop your own bill-paying routine–I pay mine monthly–but the best way to handle things just as you’re getting some cash built up in your account is to pay bills ASAP.

Don't Carry more Than One Credit Card with you

Leave the rest at home. The only reason you should be carrying a credit card in your pocket is to cover emergencies or for specific purchases. Thus, carrying more than one credit card in your wallet is not only an identity theft concern, it’s also temptation to spend more than you should.
I personally have three credit cards. Two of them are for specific purchases only, so I leave them at home. The other is my general use card, and it’s the only one that resides actively in my wallet. Because I recognize that I need to keep a healthy free balance on it for emergencies, it makes the temptation of the plastic much lower.