the paycheck-to-paycheck cycle
My husband and I live paycheck to paycheck each
week and struggle to save any money due to bills that are always due.
I realize that I have credit card bills and school loans that are
extra bills floating around each month, but how can I pay them each
month and still save toward unexpected expenses or a new home someday?
What is it that I am doing wrong? I talk to many people who are in
the same boat as I am and still have money to go on vacation and buy
or build a new home! I don't understand! Please help! -- Kimberly
You seem to know what you should be doing, and
I will be glad to help you find a way to save. You really don't
know how others spend their money or what kind of debts they may
be carrying to take vacations and have new homes. You might be surprised
if you knew your friends' complete financial stories. For instance,
I have a friend who tells me how much money he wins gambling. Funny
thing is, he never mentions his losses. Well, you know your whole
situation, so here goes.
- Set a goal. This may seem a strange
way to start, but it will give you and your husband a common reason
to do this and will provide a shared encouragement to keep it
up. One goal could be that vacation you were mentioning, as well
as a savings account for unexpected expenses.
- Track your spending. The next
thing you both need to do is find out exactly where your money
is going. You will be surprised if you track your spending closely
for two months. I want you to account for every dollar spent,
especially the cash-out-of-pocket expenses. I call them "money
- Watch what you eat -- and where.
Eating out has become a way of life for many families. Setting
a limit of one meal out per paycheck may help. Eat all of your
meals at home, brown-bag it every day, and have a coupon contest
to see how much you can save in a week using them. Remember to
always shop with a list, and never shop when you're hungry.
- Pay your bills on time. Pay close
attention to the due dates on your bills so that you do not get
hit with late-payment fees or have your interest rates raised.
- Build a spending plan. After
you have tracked your spending, it's time to sit down as a family
and come up with a budget that you can live with. It doesn't do
any good to have a budget if you can't stick to it. By tying the
goal you set to your budget, you will have a powerful motivator
and tool to get what you want.
- Start saving at work. Now that
you have your expenses under control and have probably snipped
from 10 percent to 20 percent out of your usual spending, ask
your employer to direct deposit that amount into a savings account.
Also ask that half of any raises, bonuses or tax refunds go into
the savings fund and the other half to you for current expenses.
Do more than half if you can. Once you start to save, it will
- Sell something. Nearly everyone
has something they don't want or need. A garage
sale can generate some extra funds. So can the sale of more
expensive items such as unworn jewelry or vehicles. If the garage-sale
idea doesn't work, consider eBay or some other online
auctioneer. Put the money you make into your savings account.
- Seek other employment. Second
jobs are rarely fun, but they are a way to get to your goal. Every
strategy listed here has that goal in mind -- to maximize income
and reduce expenses.
Kimberly, I hope this helps. Good luck!
Debt Adviser, Steve Bucci, is the president of Money Management International
Financial Education Foundation. Visit MMI
for additional debt
advice or click here
to ask a debt question.