Living from paycheck to paycheck month after month is stressful when your salary is devoted to expenses, when your spending exceeds your income, when unpaid bills keep mounting, and when the only invitations you get lately are delivered by the sheriff for you to appear in court. Financial advisors will tell you to budget according to your income, to not spend more than you earn, and to save for a rainy day. You’re probably thinking that’s easier said than done, right? Well, here are a few smart financial strategies that you can do right now to stop living from paycheck-to-paycheck.
Pay Yourself First
Image via Flickr by danielmoyle
Banks and creditors will have you believe that debit orders alleviate the pressure of meeting your financial obligations. Before you know it, your salary, which looked good sitting in the credit column of your bank statement, has disappeared in a stream of minus digits. Take back control of your money, and have the first debit order transfer 10 to 20 percent of your paycheck to a savings account or long-term security investment.
Before you do this though, ask your creditors if you can extend loans or credit agreements over a longer term to reduce the monthly deductions against your bank account and thereby account for the money you plan on paying to yourself.
Refinance Your Student Loan
Another way to reduce deductions against your paycheck is to refinance loans. Nowadays, refinancing student loans to reduce payments is particularly quick and easy to do. Completing one simple online form can compare student loan refinancing rates from up to 10 lenders in just a few minutes, without affecting your credit score. Federal student loan interest rates range between 6 to 8 percent, so bringing this down to 4.5 percent can mean a saving of $12,000 over the life of a loan.
Cut Your Credit Lines
If you have credit cards, cut them up. It’s just another temptation to spend money you don’t actually have, so get rid of them to stop yourself from accumulating more debt. Credit cards have the highest interest rates, so curbing your expenditure by not using them should be a top strategy to stop living from paycheck-to-paycheck.
Earn Additional Income
Use any extra time on your hands to earn additional income. Turn your hobby into a second job by creating a blog or special interest website to attract ad revenue. You can secure a domain name for as little as $10 a year, or get a free sub-domain with website hosting included. Then choose from a wide range of blog templates, and you’re all set to go. The last step is to get advertisers on your site to earn revenue.
If you’re not talented at writing, think about what you are good at and use this talent to generate a second income stream. Earning money from your hobby is always a good idea. You could teach others or sell products that are related to your hobby.
Applying any of the above strategies could help you stop living paycheck to paycheck.