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10 Reasons You Are Living Paycheck-to-Paycheck

10 Reasons You Are Living Paycheck-to-Paycheck
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Seventy-eight percent of Americans live paycheck-to-paycheck, regardless of their salary. And 71 Percent of all U.S. workers say they are in debt.

In fact, 10% of Americans earning over $100,000 a year can’t make ends meet.

So why is this!? Why can’t we seem to get our finances under control?

Everyone has different reasons (or shall I say excuses?).

But before we get into the list, let me just say my husband and I have made ends meet on ONE salary of $33,000 (before taxes). At the time we only had my first born Lexi, but we still managed to go out to dinners, watch movies, put money in a savings account monthly, and paid off a car.

So don’t tell me you don’t make enough money. Don’t tell me you will be better off when you get a raise.

I don’t want to hear it. If we could make our $33,000 household income work for a family of 3 (newborn included, that means plenty of diapers!), you can too.

Here are some reasons you probably live Paycheck-To-Paycheck and how to fix it

 

Always Upgrading

We are naturally consumers and we always want the next best thing. I was wrapped in that world in high school and college. I would get the latest iPhone and then Apple would come out with a new, shinier one and I just had to have it. Does this sound familiar?

It doesn’t have to be phone, we all have our vices. Whether it’s the hottest pair of shoes, the new car, the shiny new laptop.

We get wrapped up in this consumer-mindset that it drags us down. It’s not really our fault, we are bombarded daily with hundreds of thousands of advertisements. Before making any purchase, ask yourself whether you really need it.

Does your phone work properly? What is the cost-to-benefit of purchasing a new one.

Always consider the cost-to-benefit of something.

For example, a new iPhone would set me back about $900 bucks and the benefit would be a slightly better camera and a faster thingamajig (do we even know what we’re buying?!). The cost-to-benefit here is very low.

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Practice this exercise with every purchase, especially the extravagant one!

 

Lack of a Budget

 

I’m honestly shocked when my girlfriends tell me they don’t have a budget. They kind of just estimate their costs and spend accordingly.

This is the absolute worst mistake you can make.

I assure you, you have a million things in your head and there are a lot of purchases you will forget. Then your credit card statement comes along and you are shocked at how high it is. Some of the things you purchased you don’t even remember!

Stop being surprised by your credit card statements!

Sit down every month and write down your income, your mandatory costs (mortgage, water, misc. bills) and allot specific amounts for the rest of your money.

For example, if I don’t budget my money, I can easily spend up to $1,000 a month on groceries! That was my main problem in College.

So I now set a grocery budget of $400 a month (about $100 a week) and shop accordingly.

Also, keep a ‘fun’ budget. That’s your movies, theme parks, etc. And if you go over any other budget, you have to deduct it from your fun one.

This allows you to stay motivated to stick to your budget.

It’s NO fun overspending on groceries and not being able to go watch a movie or take my daughter to an arcade.

 

Spending More As Your Income Increases

This ones a biggie. You think if you get that raise, that promotion, you’ll finally be okay!

The reality is, you probably won’t.

Unless you develop a better relationship to money, as your income increases so will your costs.

Trying to increase your income while maintaining your costs the same is the absolute best route to success.

If tomorrow you were to get a $10,000 pay raise, what would you do?

Would you immediately want to upgrade your house? Car? Most people would.

This goes back to reason one, regardless of how much you make, check the cost-to-benefit ratio of purchases!

 

 

You Keep Paying the Minimum On Your Debts

 

Maybe you do have a budget, but you want to free up some cash so you only set aside enough to pay the minimum on your credit cards.

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This is the equivalent of flushing money down the drain

If you pay the monthly minimum on your credit card purchases, you’re likely never going to pay off what you owe. Paying the minimum 2 percent on a bill of $5,000 could cost you more than $13,000 in interest and take you over 39 years to pay off (at an assumed 18% APR).

If you pay the monthly minimum on your credit card purchases, you’re likely never going to pay off what you owe. Paying the minimum 2 percent on a bill of $5,000 could cost you more than $13,000 in interest and take you over 39 years to pay off (at an assumed 18% APR).

Thats a whole lot of numbers, I get it. Point is, if you have debt, don’t pay the minimum, you are just creating a bugger problem for yourself down the line.

 

You Don’t Plan For Irregular Expenses

As the saying goes, failing to plan is planning to fail.

Are you setting aside money for car maintenance, birthday gifts, or any other bill/fee that creeps in on you unexpectedly.

The mistake I see all the time is failing to plan for irregular expenses. That includes not only the bad stuff like car repairs and home maintenance, but fun things like travel and gifts. You should regularly be putting money away for these kinds of expected but irregular expenses so that when they happen, you’re not left scrambling to find the money and they don’t blow a hole in your budget.

Consider either save more money for these expenses or allot a certain amount in your current savings for them.

 

Paying for Unused Memberships

Do you still have that gym membership you’ve only been to once this year? These memberships sites can be making a real dent in your monthly income.

You should check your subscriptions regularly to see if you are 1) still interested in maintaining the subscription and 2) see if there has been a rate increase you weren’t aware of.  Some companies are sneaky and gradually increase your rate, others do let you know, but if your like me, you have a million emails and sometimes miss those important PSA’s

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But honestly. There was a point in my life I think I had about   subscriptions, and I was probably only using my Netflix and gym one.

I canceled the 13 others and automatically felt lighter.

 

You Avoid Your Credit Card Statement

So. Many. People. Do. This. and I understand,

It’s scary,

You just want to make your payment and move along, you don’t want to look at the $86 uber ride or that brunch that got out of hand with the mimosas (a $35 mimosa?!? seriously?!?!)

But denying your reality is the absolute worst thing you can do for your financial future.

Besides the fact you need to be aware of you financial statements so you can plan accordingly; if you don’t check them, your card could be stolen without your knowledge and you could actually be paying off someone else’s debt.

Studying your statements can also give you important information and tell you whether you are living beyond your means.

 

You Spend Impulsively 

 

You go to online retailers or perhaps your intention at the mall is to simply window shop, but once you’re there, something catches your eye and you’re hooked! You just have to have it.

If you have no intention of spending money, don’t bring your credit card with you.

Maybe take a $10 for parking just in case, but definitely (if you do take your cards with you everywhere) consider the cost-to-benefit of the purchase.

Thee are many items we feel we absolutely must have and once we get home, the appeal goes away and it collects dust in our closets.

 

 

10 Reasons You Live Paycheck to Paycheck

 

10 Reasons You Live Paycheck to Paycheck

 

10 Reasons You Live Paycheck to Paycheck
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