Money Smarts Blog

How to pay your bills and still have a life

Dec 21, 2022 || IHMVCU

Two young people with arms up on kayaks

Ever get a paycheck and it's gone faster than you can say direct deposit? Ever have that happen 52 paychecks in row?

If you're consistently waiting for your next paycheck to make day-to-day financial moves - like filling up your gas tank or buying groceries - you're probably living paycheck to paycheck. And if you're living paycheck to paycheck, you're probably not saving.

So how do you fix it? Sure, selling plasma is an easy and only mildly invasive way to get a quick $20, but we're talking about long-term solutions here. You don't want to always be stressing about money and may want to take a vacation today, and let's not forget about retirement.

Here are 5 tricks to help you get back on track:

1. Cap non-essential spending. Figure out how much you spend and how much of that isn't even defendable and cut that out first. This doesn't mean you can't spend any money on anything fun, just thing long and hard before you start scrolling Amazon.

2. Snowball your debt. If your debt is (at least relatively) reasonable and your finances are otherwise manageable, but you're struggling to figure out how to actually pay it off quickly, try a debt snowball. Pay only the minimum payment on all of your debt except the one with the lowest balance. Put all of your payment energy and extra payments into that debt until it's paid off. Once it's paid off, take whatever you were putting towards that debt plus any extra money and put it towards the next debt. Repeat until you're debt free.

3. Stop using your balance as permission to spend. So we've all done this, right? You want something - to go out to dinner or buy an expensive new pair of shoes or whatever - but before you can spend the money you have to check your balance to see if you can afford it. The thing is, if you have to check, you can't afford it.

Don't even look. Spending money on unnecessary things because you have a little extra cash is perpetuating the paycheck-to-paycheck cycle.

4. Create a budget and stick to it. We're big fans of the 50/30/20 method. It works like this:

  • 50% of your budget goes towards necessary expenses. These are things you need to survive.
  • 30% of your budget goes towards things that help you enjoy life. These are wants, and you could live without all of them.
  • 20% of your budget goes towards paying down your debt and saving/investing.

This budget works because it includes fun stuff, and the important stuff. Oftentimes when we think of budgets we think of something boring and restrictive. And yeah, budgets are super boring, but they don't have to be restrictive.

5. Don't spend just because your friends do. We assume that if our friend bought a brand new car with leather and heated seats and all that other stuff your old car doesn't have, they can probably afford it. And that might make you want to start thinking about buying a new car, because if they can afford it, why can't you?

Keeping up with the Joneses won't do anything to improve your financial situation. If you want to believe that everyone you know can afford every lavish purchase they make, that's fine. Just don't use it as an excuse to make poor financial decisions for yourself.

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