Years ago, I thought having a stable job and paying bills timely is the norm… I thought so too that using credit cards to purchase the things that you like is part of that norm. Yet, the worst part of the norm that I have believed is relying on your paycheck solely and working myself 7 days each week so I can pay all my bills and live a lifestyle that doesn’t even fit me is the best.But I am so wrong! However, I have denied the fact that I have lived in that norm for so long….
For so long, I have lived like a hamster on a spinning wheel that keeps on running until I get exhausted and burned out. I worked myself too hard just to pay bills alone. Yeah, just bills… Not enough savings for emergencies. Living a life that doesn’t even allow me to have a good night sleep wasn’t fun at all. I believe that there’s more to life than just being trapped in the cycle of working to pay bills.
So after the incident of having our flight back to Canada got delayed for another 2 weeks ( that drained my emergency funds and savings) it brought me to this realization that I can break this cycle and I can live a better life. Our family deserve a better life. You know, when you have that stable job, you thought that you are able to handle every single thing that comes your way. I am wrong! So wrong…WHY? Because a good paying job is not a guarantee to a better life especially if you lack knowledge about handling finances properly.
When you reached that point in life that ENOUGH IS ENOUGH, it’s time to act as a real adult. Yes, being in this cycle of living brought me too much stress and anxiety. I worry about every single bill that needs to be paid and where the hell am I going to get that money. I wished for magic or miracles to happen! But that only happen in fairy tales stories…
Sometimes the ugly truth can bite you hard and it hurts so much which brings you to your reality. No more dilly – dallying. And no matter how hard it is, you need to take that first little step to get things better. It will always start with your desire and eagerness to end up such horrible situation. Small leap for your dream to a better life is what matters.
When I made that decision to stop this cycle, I began to ask myself questions that brought us to this situation. I asked…
Why are we in this situation?
Why is it that the money we have in the bank doesn’t last long enough?
Where did our money go?
What am I spending our money on?
What is wrong with me?
How am I not handling our money wisely?
These numerous questions that had been played in my mind over and over again has brought me to my senses to finally see the root of the problem and how did it all started. It brought me to a realization that I need to change so I can make things better. I decided to reflect on myself how to turn things around so we can live a worry- free life.
These are some of the steps that I have taken to break the cycle of paycheck to paycheck living:
1.Track your expenses
My husband asks himself often ” what is this $15 transaction?” or “where did I spend this amount?”. Sometimes, if were not being mindful of our spending, we always end up asking ourselves questions like my husband does.
When I use to spend money carelessly, I wouldn’t even mind asking for a receipt. Nor do I know how much I spent on food or gas on a monthly basis. That’s how careless I am when it comes to finances. But do you know, tracking your expenses gives you an idea where did you spend your money?
Tracking your expenses doesn’t have to be a pain. Yes, it does require work especially if you do it manually like me. Call me an old school but by using pen and paper, it keeps me motivated and accountable. If this isn’t for you, you might want to download an app that you can use like Mint, YNAB, and etc.
2.Create a budget.
The b word isn’t the sexiest thing on earth but it’s one of the best tool that you can use to get your finances in shape. When it comes to creating a budget, it shouldn’t be restrictive. Always remember that the first few months is all about making it work until you finally figure out what’s working and what’s not.
For me personally, I budget by paycheck. Since I am being paid every 15th and 30th of the month, I allocate every dollar to every expenses that I need to pay within that period. I start by making a list of our income every pay period. Next, is to make a list of all the expenses/bills that needs to be taken cared of within that pay period. However, if you’re new to budgeting you might want to start slow. You might want to read this article about budgeting.
3.Build your emergency fund.
An emergency fund is a savings account that is intended for emergency situation like losing your job. This money is meant to cover your expenses while you’re on the process of looking for a new job. The very purpose of having an emergency fund is that it avoids you from going back to the use of credit again.
People suggest that you must have at least 3-6 months worth of expenses saved. However, if you’re starting out, save an amount that would make you feel comfortable when you go to bed every night. A $1000-$1500 is good starter fund depending on your situations.
For us, I’m on my way to building a month worth of expenses. After that incident that we were in last summer, I wasn’t able to get back to work for 2 weeks so I lost 2 weeks worth of paycheck. The $1000 starter emergency fund didn’t cover much of our bills that’s why I decided to keep on saving more.
4.Live below your means.
This one is that hardest for me so far. I know that I make good money and I used that as a justification to my spending habits. I always though that when you work hard, you deserve to enjoy life. Well, there’s nothing wrong with it but I lived way beyond my means.
Living life to the fullest because you only live once ( YOLO ), has been my motto. I bought way too much clothes because I deserve. I traveled because I worked too hard so it’s time for me to relax.A new car because I wanted to drive one. And so on…
What I didn’t realize is that I’m burying myself to debt by making these choices of a lifestyle that I don’t even fit. I was too ignorant about my finances because that was the norm that I once knew. The norm that kept me sleepless at night thinking how am I going to survive if I lose my job.
I am done! So done…
There are different ways on how to live below your means
- Eating out less, brewing your own coffee and packing your food to work.
- Cutting your unnecessary expenses like shopping for clothes and shoes.
- Substituting your cable to something cheaper or downgrading your phone plan
- Moving to a smaller house that gives you reasonable price of rent/mortgage
- Simply not spending the money that you don’t have on the things that you don’t need.
By applying all this steps, I was able to break the cycle of paycheck to paycheck living. I no longer worry when the next paycheck is coming or if I have enough money to cover all the bills before the next paycheck gets deposited in my account. Also, I no longer rely on overdraft. I used to think that overdrafts are like buffer/cushion ( extra money ) that covers unexpected bills. The difference is that cushion/buffer is your own money while overdraft is the bank’s money meaning you’ll get charged with fees when you use it. Take note that the bank doesn’t only charge you with fees but also interest if your account isn’t funded right away. It’s like using a credit card.
You don’t need to live this cycle all throughout your life. If you want to live a stress -free life then it’s time to take full control of your money and not letting your money take control over you. It’s not easy to give up the things that we like but it isn’t easy to live in that kind of cycle either. Would you like to be stressed and worried all the time or would you take that smallest step that could turn your life around in the long run?