I made a really stupid mistake last week (at least I may have) which made me appreciate that we’re not living paycheck to paycheck. It was payday and I checked my stub excitedly…and then not so excitedly saw that I had made around $50 for 2 weeks of work.
Something was very very much not right in this picture.
First chance I got, I called payroll and explained “I think there are a few hundred dollars missing from my paycheck.”
She looked through her records and saw that all she had was a timesheet from one day (certain weekend days are done in a separate paycheck) that I’d worked 4 hours. So that was all she could pay me for. She said that the person who normally delivered timesheets had the last week off, so perhaps that was the problem. The best solution was to get a signed copy of my timesheet to her as soon as possible.
Well, thanks to a great supervisor and the amazing turnaround time of the payroll lady, I had my new check before leaving work that day.
Three lessons I drew from this were a) the payroll lady is awesome, b) it’s a good idea to check pay checks/stubs as soon as you get them and c) it’s good we’re not living paycheck-to-paycheck, if the payroll lady hadn’t been as awesome it would have been quite scary.
Of course, if you are living paycheck-to-paycheck, it’s not quite so easy to just not be. For some people, it’s entirely a choice because you like to buy lots of exciting and expensive gadgets, etc. It’d only take one pay cycle to get a thousand or more saved up.
But most people aren’t just frittering away a thousand dollars a month or every two weeks. Many times it’s more a matter of low earnings, combined with a real or perceived need to spend it all (I say perceived because sometimes people think they need things they probably don’t…we all do it).
So how does one get out of that cycle?
There are two ways to have more money. In a few words: spend less and/or earn more. The rest of personal finance is figuring out how to do those.
For saving money:
1) If you don’t have a budget or spending plan, one of those is critical. You need to see where your money went. Then you need to be able to direct where it goes. That way you can more easily direct some of it into savings. Consider analyzing your bank statement or even recording transactions.
If you don’t want to track your money, try signing up with a free group like Mint.com (or a paid program like Quicken) which will show where all your money goes. It won’t give the same specifics, but you can at least tell how much is spent at grocery stores, on rent, etc.
2) Identify areas where you can cut back. Since this may feel bad, try finding substitutes. If you spend $20/month on renting movies, try to see what your library has in their video section. Swap DVDs with friends (online swap programs are ok too, but they do make you pay for shipping yours out, so factor in that cost) and go through your old favorites.
Try building a budget where you cut back on some areas and divert the savings into an account which will serve as some sort of emergency fund. Or if you have an emergency fund, then it could be a kind of spending/savings cushion.
3) Find support/motivation to continue. Maybe you can’t find something to make it all better and you just feel deprived. That’s when you have to weigh what you want more. If you want to feel comfortable in the present but anxious about the future (we’re assuming that something motivated you to make this change) more than you want to feel comfortable about the future, then you’re not going to be willing to give up as much for that secure future. You may want it, but you’ll have to figure out how to want it enough to do more.
Dave Ramsey has a particular knack for convincing people that they really do want to be debt free more than they want that new plasma. If he works to help you act in what you know is your best interests, great. If not, something else might.
I’d suggest starting by reading a bunch of blogs specifically geared towards frugality. If you can get in the spirit, it’s much more exciting. These blogs often have great instructions for couponing, spending less at the grocery store, etc.
For earning more money:
This is more of a long-term project. One short-term solution is taking on certain contracting-type positions or possibly a part-time job. Those may not be something you can keep up for too long but could earn you several thousand dollars for an emergency fund or cushion account.
A second short-term solution is selling things that you no longer need. Craigslist, garage sales, eBay, etc. It’s less guaranteed to make money than working at a legitimate job is, but it works for some people.
If you’re looking for a way to make money soon and for a short period, those are what I’d recommend. Making money online through blogs or products takes more months to get going, as a general rule. Most attempts to make money quickly fall flat on their faces. So I would strongly advise against starting a blog or website specifically to earn money. At least not if you want to see that money soon…blogs require build-up.
In the longer term, the best way to earn more money is to get it from your primary employer. This may involve participating in career advancement opportunities, further your own education, etc. I’m less of a career blogger than many (being much younger in my career) so I won’t pretend to have all the answers. Again, I’d recommend checking around the blogosphere and your library as well. The 650s (Dewey Decimal) should have plenty of career books.
Have you gotten out of a paycheck-to-paycheck cycle? What advice would you offer?