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Are you tired of living paycheck to paycheck? Tired of worrying about the bills?
 
Just tired of struggling financially?
 
You’re not alone.

78% of Americans say they are currently living paycheck to paycheck. And with the popularity of books like these, it’s no surprise that many people are struggling financially. 
 
But here’s the good news:
 
Financial freedom is possible.

But knowledge alone won’t carry you to the finish line. You have to do what it takes to get where you want to be.

Are you ready? Here’s how to stop living paycheck to paycheck:

 
Budget Sheet


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Step 1 | Start Budgeting 

man writing his budget

Did you know that budgeting is one of your most powerful financial tools? 
 
As John C. Maxwell says, “A budget is you telling your money where to go instead of wondering where it went.”
 
So sit down and create a budget. Pay extra attention to your 6 necessities:

  • Housing
  • Utilities
  • Groceries (groceries only, not eating out)
  • Transportation
  • Clothing
  • Medical

Related: The Total Money Makeover: A Proven Plan for Financial Fitness

 

Step 2 | Save While You Spend

woman typing on laptop

Do you like saving money on everything you buy?

Me too. 

So my advice?
 
Use a cash back app called Rakuten.

You start by creating your free account. Then, you use the search bar to find the retailer you want to shop with.
 
For my visual readers, here’s how that looks:
 
 rakuten homepage
 
As you make purchases, you’ll earn cash back.

 
I’ve been using Rakuten since 2013 and I’ve earned over $1000 in cash back. Last year, I replaced a piece of furniture and got $59 from that purchase alone.
 
It’s an effortless way to save money on the things you need. And when you’re tired of struggling financially, things like this can make a big difference.

Note: The Rakuten link above gives you a $10 welcome bonus for signing up and shopping.

 

Step 3 | Identify Spending Leaks

man writing in notebook while looking at laptop
 
Have you looked at your financial statements lately?
 
Now is a great time to start. So pull up your bank statements, credit card statements, and receipts for the last month.
 
See if you can find any unnecessary purchases:

  • Eating out
  • Impulse shopping
  • Unused subscription services
  • High cable bills
  • Bank fees
  • Unused Gym Memberships
  • Failing to say “no” to your friends

 
I know it isn’t fun to cut your cable bill.
 
Or live by a shopping list at the grocery store. Or fighting the urge to eat out because you’re having another “I don’t feel like cooking” kind of night.

 

But you can’t fix what you do not acknowledge. You have to get clear of what’s coming in each month and what absolutely needs to go out.
 
And here’s the good news:
 
If you can push yourself through this step then you will double your chances of winning with money.

Related: How to Manage Your Money When You Don’t Have Any

 

Step 4 | Check Your Large Expenses

woman looking at laptop

Are you ready to tackle your large expenses?
 
More specifically, you need to judge your large expenses by how they fit in with these recommended budgeting percentages:
 

  • Housing: 25-30%
     
  • Utilities: 5% – 10%
     
  • Food:  10 % – 15%
     
  • Transportation: 10% -15%
     
  • Health: 5% -10%
     
  • Insurance: 10% – 25%
     
  • Clothing/Personal: 10% – 15%
     
  • Saving: 10% – 15%
     
  • Giving: 10%

 
When you’re tired of struggling financially, the smartest thing you can do is scale back your lifestyle. So how do you match up with the recommended budgeting percentages?
 
Your two largest expenses are probably your house and car. So here’s the deal:
 
Your housing cost (including taxes and insurance) should not be more than 30% of your take-home pay.
 
If your house costs more than that then you have two options:
 
    1. Get a roommate
    2. Move
 
Why? Because you can’t win financially if you’re living a life you cannot afford.

 

Now let’s talk about your car(s):
 
The total value of all your cars should not be more than half of your annual income. If you make $30,000 a year, then you shouldn’t be driving an $18,000 car.
 
What’s the bottom line?
 
Cars lose 50% of their value in the first four years. Plus, you shouldn’t be putting that much money into something that sits idle 90% of the time.
 
Do what you need to do to adjust your expenses

Related: Get a Financial Life: Personal Finance in Your Twenties and Thirties

 

Step 5 | Figure Out If You’re Actually Earning Enough

pink piggy bank
Forget about your debt for a second –  are you able to pay for your basic needs without adding more debt? The budget that you created from step 1 will answer this. 
 
If just the cost of living is pushing you further down, then you have to find more ways to earn money. 
 
These days, there are plenty of ways to generate extra income.
 
Plasma donations, cleaning houses, babysitting, and selling stuff you don’t need – show you that earning money is sometimes about thinking outside of the box.

Related: Why Didn’t They Teach Me This in School?: 99 Money Management Principles to Live By

 

Step 6 | Make Big Adjustments

dollar bills and check book

I’m not just talking about canceling your Netflix subscription or using coupons. I’m talking about getting serious about things that most people don’t think about.

It comes down to this:

When you’re tired of struggling financially, you have to make big adjustments:
 

  • Lower your utilities by only running the heat/AC when you need to. 
  • Lower your water bill by only washing clothes that are actually dirty (not just a shirt you wore once) 
  • Start meal prepping and freezing the leftovers 
  • Combine errands to save on gas money 
  • Say “yes” to used items 
  • Shop by the unit price to save money on groceries 
  • Buy a FoodSaver to preserve your food for longer 
  • Carpool with your friends and family

 
I learned several money saving tips from Annette and Steve of America’s Cheapest Family. They’re a family of seven that lived well on $35,000/year for 12 years.
 
Their story is definitely inspiring – and if you’ve ever wondered what to do when you are completely broke, that book is a game changer.

 

Step 7 | Pay Bi-Weekly  

man calculating his budget

Here’s my favorite uncommon tip when it comes to breaking the paycheck to paycheck lifestyle:
 
If you have debt, make bi-weekly payments.
 
By merely changing to this payment method, you’ll have an extra payment go towards your bills every year.
 
Why? Because the biweekly method equals out to 26 half payments – or 13 full payments made each year, instead of 12 full payments made on a monthly payment plan.
 
That extra payment will reduce your repayment time and the amount of interest you pay.

 

So here’s how it’s done:
 
Split your monthly bill in half and pay every other week. For example, if you’re paying $400 per month, then pay $200 every other week instead.
 
If you get paid biweekly, then this automatically works in your favor.
 
But there’s one important note here:
 
Make sure your lender implements your payments correctly.
 
In other words, make sure the extra payment is going towards your balance and NOT forwarded towards your next bill.
 
Always double check by logging in and checking your account or by calling your loan servicer directly.
 
People who are tired of struggling financially often find themselves on the wrong side of debt.

But the good news it the biweekly method works for all kinds of debt:
 
Student loans, car loans, credit cards, and mortgages.

 

As an example, let’s say the following numbers represent your current student loan debt:
 

  • Current Balance = $70,000
     
  • Interest Rate = 6.00%

 
I used the Calcxml Calculator to see how effective this method really is:

example of biweekly payment method
 
The monthly payment method is in green and the biweekly method is in orange.
 
See how the debt reduced faster with the biweekly method? That’s what you want.

 Step 8 | Develop a Cash System  

woman showing wallet full of money

The research behind this is simple:
 
If someone opts for cash, they waste 12%-18% less money than when they swipe with a card.
 
When you’re broke, you don’t have a whole lot of extra money to spend. So you need to keep track of every last dollar.
 
This is what makes the cash system so powerful:
 
It has a built-in accountability system.

 

When you use cash, you’ll only bring the amount you know you need.
 
That way, you’ll know exactly how much money you have left to spend. That makes you less likely to impulse shop and more likely to stick to your budget.
 
If you’re a beginner to the cash system, then I recommend trying cash envelopes. They’re cheap and they’re a great way to test the waters.
 
I decided to try the cash envelopes for myself. During the first month, I saved $187.

Needless to say, I was hooked.
 
After the first month with my new system, I decided to switch from the envelopes to the SavvyCents Wallet.
 
I liked the wallet because it was durable and didn’t need replacing like the envelopes did.

 

Step 9 | Build Your Emergency Fund

jars full of coins

Because life gets hard – and you and I both know that sh-t happens.

So you need to protect yourself against emergencies. Your safety net is your first barrier against new debt.
 
So before you focus on paying off debt, start by setting a goal to save $1,000 for your emergency fund.
 
Do whatever it takes to make that happen:
 

  • Save bonus checks
  • Save your tax refund
  • Save your raises
  • Work overtime
  • Sell stuff you don’t need
  • Get a side hustle

This step is very important. 40% of Americans say they don’t have enough money to cover a $400 emergency. Don’t be like them.

 

Step 10 | Design a Plan to Kill Debt

couple looking at laptop together

You’re sick and tired of being sick and tired. You’re tired of struggling financially. And you’re going to do something about it.
 
So here’s what it comes down to:
 
Debt is the enemy of financial success. And once you start seeing it that way, then you’ll do whatever it takes to free yourself from it.
 
So if you haven’t come up with a debt payoff plan, then now is the time to start.
 
We recommend using the debt snowball method or debt avalanche method. Both are great for getting the job done.

 

Step 11 | Lock in a Better Interest Rate  

man looking at paperwork
Interest rates are not fun.
 
Why? Because they’re what costs us so much extra money.
 
But what’s the alternative?
 
First, commit yourself to becoming debt free. Put the credit cards away.

Secondly,use a company like Credible to help you lock in a better interest rate.

Credible offers two free services:
 
    1. Student Loan Refinancing
    2. Personal Loans

 

What is student loan refinancing?
 
When they refinance your loans, they match you with a better loan with a lower interest rate. A lower interest rate will save you hundreds – if not thousands – over the course of your loan. And according to their research, Credible users save an average of $18,886 over the life of their loan.
 
If you have multiple loans, this means they’ll combine everything into a new, single loan. This makes keeping track of your bills simple.
 
(You can also refinance if you have just one loan)
 
What are personal loans?
 
Personal loans are ideal for credit cards and other types of debt. If you carry a high-interest rate on your credit cards, for example, then you can move that balance over to a personal loan.
 
Bottom line?
 
Know your options. Don’t feel stuck with a high-interest rate. Do what you can to lower it.
 
Note: You can read more about Credible in our Credible Review

 

Step 12 | Focus on a Better Future  

goals written on napkin

Want to know one of the keys to success?
 
Goals, goals, goals.
 
More specifically, breaking down your goals into manageable pieces.
 
It just works.
 
With goal setting, I found one thing to be true:
 
When you work backwards from where you want to be, you end up achieving more than you intended to.
 
Goals are not just for people who are tired of struggling financially, either. They will transform every area of your life.
 
So here’s what you do:
 

  • Set a goal
     
  • Break that goal into small, manageable tasks
     
  • Organize those tasks into the order in which they need to be completed
     
  • Assign a deadline for each task
     
  • Execute, execute, execute
 

 
The key here is to set deadlines.
 
If your ultimate goal will take you a year to complete, then it’s going to be unbelievably hard to hold yourself accountable for that entire year.
 
And when I say unbelievably hard, I mean it.

(This is why using the 12-week year method is so powerful)
 
You have to have milestones you can reach in the meantime. If you follow the goal setting steps from above, you will win in every area of your life.

Goal setting has a domino effect. 
 
So what are your goals?
 
Do you want to become debt-free? Save a certain amount of money? Invest in your retirement?

So what are you waiting for?

Thanks for reading.

Recapping What to do When You’re Tired of Struggling Financially

1. Start budgeting

2. Use a cashback app called Rakuten

Before you shop online, use Rakuten to score extra savings.

3. Identify the spending leaks in your budget

Like unused gym memberships, unused subscription services, eating out, and impulse shopping. 

4. Check your large expenses

More specifically, you need to judge your large expenses by how they fit in with these recommended budgeting percentages:
 

  • Housing: 25-30%
     
  • Utilities: 5% – 10%
     
  • Food:  10 % – 15%
     
  • Transportation: 10% -15%
     
  • Health: 5% -10%
     
  • Insurance: 10% – 25%
     
  • Clothing/Personal: 10% – 15%
     
  • Saving: 10% – 15%
     
  • Giving: 10%

5. Figure out if you’re actually earning enough

Forget about your debt for a second –  are you able to pay for your basic needs without adding more debt? The budget that you created from step 1 will answer this. 
 
If just the cost of living is pushing you further down, then you have to find more ways to earn money.

6. Make big adjustments

I learned several money saving tips from Annette and Steve of America’s Cheapest Family. They’re a family of seven that lived well on $35,000/year for 12 years.
 
Their story is definitely inspiring – and if you’ve ever wondered what to do when you are completely broke, that book is a game changer.

7. Use the biweekly payment method

Cut your bills in half and pay every other week. So instead of 12 payments every year, you’ll now have 13. 

8. Develop a cash system 

People who use cash spend 12%-18% LESS than when they use cards.

9. Build your emergency fund

10. Design a plan to kill your debt

We recommend using the debt snowball method or debt avalanche method. Both are great for getting the job done.

11. Lock in a better interest rate

Use a company like Credible to help you lock in a better interest rate.

12. Focus on a better future

Use goal setting to make this happen. 

 
Budget Sheet


Want to make budgeting easy?
Join our newsletter & get your free budgeting worksheet:


 


 

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