This is a situation that surprisingly large number of people find themselves in, a situation where we live paycheck to paycheck. By living paycheck to paycheck I mean barely paying the bare necessities every month like rent and bills. Those who are in this situation can suddenly find their bank balance to be zero with bills coming due. This situation can quickly go from bad to worse if you lose your job. If you are living paycheck to paycheck then there is little chance of building an emergency fund, with the loss of a job there is little hope of paying rent or making bill payments. This is not a pleasant situation to be in and it can be stressful. So what is to be done? The answer is simple: Budget!
By creating a simple budget and making a commitment to stick to it, we can dig ourselves out of this dire situation. We have to be willing to live on a budget and stick to it at all costs. By making a budget we can get a grip on our finances and pay off those long overdue bills and be in a position to take care of bills in a timely manner.
The key is to embrace the idea of budgeting. Once we do that we can work towards changing our spending habits that have gotten us in so much trouble. Budgeting will help you make a financial plan to get out this situation. The key is to bringing your expenses under control.
Track Your Expenses
If you are in this situation it is likely that you are not tracking your expenses. Track each and every expense you make. Go through your bank and credit card statements and make a note of your expenses. It is time to take a look at your financial health.
Figure out all non-essential expenses and make a plan to cut out as many of these expenses as possible. This will not be easy and it may require some changes in your life but with a little pain you can free up some of your valuable income.
Stop Using Debt
Living paycheck to paycheck often means taking on debt to meet our financial commitments. Credit card debt is on of the easiest ways to obtain and it is one of the most expensive. To break out of this cycle you must reduce your credit card debt as it is taking your money that could be put to better use. Start by paying off as much as you can and go from there to eliminating your credit card debt. It will require a lot of discipline and that’s why building a budget is of utmost importance.