How to Break the Living Paycheck-to-Paycheck Cycle

[Young_Chitlin]

@Sion have you had a chance to read the article?

 

[traestar]

I also saw this article yesterday and also looked at the comments afterwards. I believe it was a great contribution as well, @Sion nailed it as usual. However there was a specific user named HerrKutz who was saying basically "no shit sherlock", which he actually does make a point from the other perspective of this situation. But I'm glad you shared this and although I didn't add my take on the page, since I'm here I'll express it here:

Never assume that people aren't already taking budget cuts and living below the means in order to make a living. I work for the government and where I'm at I believe over 50-75% of the employees there were furloughed, this year we've had two different government shutdowns. Imagine how they (regardless of how much they make) would have to budget their money and find ways to survive until that rebound check comes in. I was fortunate for both times to not be affected.

But however from my perspective, I'm dealing with that regardless of the shutdowns. I'm living paycheck to paycheck right now. The amount of money that I get paid for a normal person who doesn't have a substantial amount of debt (or cares lol), they would love to have 40K...but I relate to the many recent college graduates looking for that starting break to help pay down their debt. I'm in that category and do not IMO relate to others, so to answer the "how to break living from paycheck to paycheck" question, it's a combination of many things and patience.

I participate in the stock market game with @Sion as well as many things on IC and more recent have took my attention to my career at this point. My solution to this problem is basically look for a better position elsewhere. I've done more career management over the course of 4 months than I've ever imagined, because I needed to evaluate why it was so difficult for me to find another position. I've had arguments with friends and family over me staying at my current job, the thing is is that it's about working to what you are good at. When you want just a job to pay your bills, a salary job is great but when you are working on your career, it's a different ballgame especially today regardless of the job market. You want to be apart of positions that will develop and use your essential skills and build as you move on other positions. When you become comfortable at your position and not active on bettering your career, you could get out of your debt with your current job but you would allow time to pass by without playing the field. Thats basically my situation and why I've decided even though I'm still at this current job and I see no other positions around the building to build and the lack of training and updated technology, why I'm so fixed on leaving.

So back to the debt, with over 50K in debt collectively, I'm looking at paying it as soon as possible. Right now, if I focus on my credit card, I would be able to create more options and opportunities to pay the other debt. Basically I'm doing whats called the "snowball method" where you are paying the lowest debt (as well as the others) but paying it all the way down to 0, then focusing on another debt. My problem is when I pay off all my bills, I have only few dollars remaining for two weeks, so I end up using more resources to get through the next pay period. Now I will stay at my current job until I see something better, but now I'm more into networking and looking to talk with people in the IT industry in order to find out how they got into their position.

My solution to the paycheck to paycheck is to create a plan. My plan is to reach 60K or more (my friends and family believe I'm being alittle unrealistic lol) in my current situation and with that much I could not only help put extra money to pay down debt but be in a better career position (Data Scientist, Software Developer, etc) where I'm bring my current skills to a new position while learning and adapting to the newest technologies and programming languages. Part of that plan would help my goal to pay off my two credit cards in FULL, then focus on my car loan, then get to my student loan in that order. While doing that, start saving to my money market account, invest more, etc. So hopefully I can fulfill my goals!

 

[Young_Chitlin]

I also saw this article yesterday and also looked at the comments afterwards. I believe it was a great contribution as well, @Sion nailed it as usual. However there was a specific user named HerrKutz who was saying basically "no shit sherlock", which he actually does make a point from the other perspective of this situation. But I'm glad you shared this and although I didn't add my take on the page, since I'm here I'll express it here:

Never assume that people aren't already taking budget cuts and living below the means in order to make a living. I work for the government and where I'm at I believe over 50-75% of the employees there were furloughed, this year we've had two different government shutdowns. Imagine how they (regardless of how much they make) would have to budget their money and find ways to survive until that rebound check comes in. I was fortunate for both times to not be affected.

But however from my perspective, I'm dealing with that regardless of the shutdowns. I'm living paycheck to paycheck right now. The amount of money that I get paid for a normal person who doesn't have a substantial amount of debt (or cares lol), they would love to have 40K...but I relate to the many recent college graduates looking for that starting break to help pay down their debt. I'm in that category and do not IMO relate to others, so to answer the "how to break living from paycheck to paycheck" question, it's a combination of many things and patience.

I participate in the stock market game with @Sion as well as many things on IC and more recent have took my attention to my career at this point. My solution to this problem is basically look for a better position elsewhere. I've done more career management over the course of 4 months than I've ever imagined, because I needed to evaluate why it was so difficult for me to find another position. I've had arguments with friends and family over me staying at my current job, the thing is is that it's about working to what you are good at. When you want just a job to pay your bills, a salary job is great but when you are working on your career, it's a different ballgame especially today regardless of the job market. You want to be apart of positions that will develop and use your essential skills and build as you move on other positions. When you become comfortable at your position and not active on bettering your career, you could get out of your debt with your current job but you would allow time to pass by without playing the field. Thats basically my situation and why I've decided even though I'm still at this current job and I see no other positions around the building to build and the lack of training and updated technology, why I'm so fixed on leaving.

So back to the debt, with over 50K in debt collectively, I'm looking at paying it as soon as possible. Right now, if I focus on my credit card, I would be able to create more options and opportunities to pay the other debt. Basically I'm doing whats called the "snowball method" where you are paying the lowest debt (as well as the others) but paying it all the way down to 0, then focusing on another debt. My problem is when I pay off all my bills, I have only few dollars remaining for two weeks, so I end up using more resources to get through the next pay period. Now I will stay at my current job until I see something better, but now I'm more into networking and looking to talk with people in the IT industry in order to find out how they got into their position.

My solution to the paycheck to paycheck is to create a plan. My plan is to reach 60K or more (my friends and family believe I'm being alittle unrealistic lol) in my current situation and with that much I could not only help put extra money to pay down debt but be in a better career position (Data Scientist, Software Developer, etc) where I'm bring my current skills to a new position while learning and adapting to the newest technologies and programming languages. Part of that plan would help my goal to pay off my two credit cards in FULL, then focus on my car loan, then get to my student loan in that order. While doing that, start saving to my money market account, invest more, etc. So hopefully I can fulfill my goals!

The bold perfectly describes my situation. It's frustrating af to not have much money when you are working your tail off to get it. I'm looking at getting a second job to have some extra spending money, but also to pay off debts. The snowball method sounds like a good plan to follow

 

[traestar]

I also saw this article yesterday and also looked at the comments afterwards. I believe it was a great contribution as well, @Sion nailed it as usual. However there was a specific user named HerrKutz who was saying basically "no shit sherlock", which he actually does make a point from the other perspective of this situation. But I'm glad you shared this and although I didn't add my take on the page, since I'm here I'll express it here:

Never assume that people aren't already taking budget cuts and living below the means in order to make a living. I work for the government and where I'm at I believe over 50-75% of the employees there were furloughed, this year we've had two different government shutdowns. Imagine how they (regardless of how much they make) would have to budget their money and find ways to survive until that rebound check comes in. I was fortunate for both times to not be affected.

But however from my perspective, I'm dealing with that regardless of the shutdowns. I'm living paycheck to paycheck right now. The amount of money that I get paid for a normal person who doesn't have a substantial amount of debt (or cares lol), they would love to have 40K...but I relate to the many recent college graduates looking for that starting break to help pay down their debt. I'm in that category and do not IMO relate to others, so to answer the "how to break living from paycheck to paycheck" question, it's a combination of many things and patience.

I participate in the stock market game with @Sion as well as many things on IC and more recent have took my attention to my career at this point. My solution to this problem is basically look for a better position elsewhere. I've done more career management over the course of 4 months than I've ever imagined, because I needed to evaluate why it was so difficult for me to find another position. I've had arguments with friends and family over me staying at my current job, the thing is is that it's about working to what you are good at. When you want just a job to pay your bills, a salary job is great but when you are working on your career, it's a different ballgame especially today regardless of the job market. You want to be apart of positions that will develop and use your essential skills and build as you move on other positions. When you become comfortable at your position and not active on bettering your career, you could get out of your debt with your current job but you would allow time to pass by without playing the field. Thats basically my situation and why I've decided even though I'm still at this current job and I see no other positions around the building to build and the lack of training and updated technology, why I'm so fixed on leaving.

So back to the debt, with over 50K in debt collectively, I'm looking at paying it as soon as possible. Right now, if I focus on my credit card, I would be able to create more options and opportunities to pay the other debt. Basically I'm doing whats called the "snowball method" where you are paying the lowest debt (as well as the others) but paying it all the way down to 0, then focusing on another debt. My problem is when I pay off all my bills, I have only few dollars remaining for two weeks, so I end up using more resources to get through the next pay period. Now I will stay at my current job until I see something better, but now I'm more into networking and looking to talk with people in the IT industry in order to find out how they got into their position.

My solution to the paycheck to paycheck is to create a plan. My plan is to reach 60K or more (my friends and family believe I'm being alittle unrealistic lol) in my current situation and with that much I could not only help put extra money to pay down debt but be in a better career position (Data Scientist, Software Developer, etc) where I'm bring my current skills to a new position while learning and adapting to the newest technologies and programming languages. Part of that plan would help my goal to pay off my two credit cards in FULL, then focus on my car loan, then get to my student loan in that order. While doing that, start saving to my money market account, invest more, etc. So hopefully I can fulfill my goals!

The bold perfectly describes my situation. It's frustrating af to not have much money when you are working your tail off to get it. I'm looking at getting a second job to have some extra spending money, but also to pay off debts. The snowball method sounds like a good plan to follow

Well first off, I've heard many people going through this exact situation themselves. When you have a vast amount of debt, it takes a grave percentage of your wages especially during your beginning entry level of your career. My problem with my current job is also the reason it would be very difficult to find and work a part time job, its the fact of working office hours on the weekday that blocks times to work elsewhere. It's possible and weekend jobs is possible, but I have to make sure it doesn't interfere with my primary job. So I'm basically bottlenecked, pending I don't find anything. I have a raise expected soon and it will help but I don't believe it's going to be enough, but I do know that it'll speed things up alittle.

I have a plan C in the process where I'm setting up to do freelance jobs, that'll take alittle time and since I was planning that anyway, that doesn't matter.

Basically my plan consists of going through a rundown of all the long term debts (loans, bills, etc) from small to largest. Then create a cycle of which I am distributing my revenue towards multiple resources. And for each resource, once it's paid off, it becomes another option again. But then also the money you used to pay that debt since it's done will now go to another loan or bill and the process continues. Part of my cycle also includes savings such as a money market account, investment account, 401K, etc. Now you are creating a resource of which you can go to for emergency reasons.

I just sat down and ran down all my debt, savings accounts, and worked out a schedule to follow to fulfill my goals. Next, I created a salary goals spreadsheet where I would calculate the amount of money that I make now and include the bills and loans that I pay on a bi-weekly basis. Then compare it to a chart of different salaries and see what type salary would boost my progress.

 

[black caesar]

Great article. I've been there before. It takes discipline to save. Also, you should save 20% for your check into an emergency fund account.

 

[traestar]

Here's an update: my raise: 1%. I'm done with this job

 

[LUClEN]

earn more income

 

[Young_Chitlin]

Dude at the bank told me to pay off my smallest credit cards first, to have a savings account to fall back on in the event you lose your job.

 

[traestar]

Dude at the bank told me to pay off my smallest credit cards first, to have a savings account to fall back on in the event you lose your job.

Was he the CSR (customer service representative), Financial Advisor, or Bank Teller?

Part of the snowball method is to pay off the easiest and smallest debt first, get that out of the way. Then move on to the next one. A Savings Account for example could be a "savings account" at a said bank. But I recommend earning Annual Percentage Yield with a money market account from a reputable company. When you put funds in a money market account, it compounds interest based on how much money is in that account. So you are making money by depositing your money at the bank. This will basically be your emergency savings in case of events like losing your job and also even looking for your job.

To organize and plan out how much money you want to save, use this calculator here:
http://www.bankrate.com/calculators/savings/saving-goals-calculator.aspx

 

[Young_Chitlin]

Dude at the bank told me to pay off my smallest credit cards first, to have a savings account to fall back on in the event you lose your job.

Was he the CSR (customer service representative), Financial Advisor, or Bank Teller?

Part of the snowball method is to pay off the easiest and smallest debt first, get that out of the way. Then move on to the next one. A Savings Account for example could be a "savings account" at a said bank. But I recommend earning Annual Percentage Yield with a money market account from a reputable company. When you put funds in a money market account, it compounds interest based on how much money is in that account. So you are making money by depositing your money at the bank.

I believe it was a financial advisor

 

[traestar]

Dude at the bank told me to pay off my smallest credit cards first, to have a savings account to fall back on in the event you lose your job.

Was he the CSR (customer service representative), Financial Advisor, or Bank Teller?

Part of the snowball method is to pay off the easiest and smallest debt first, get that out of the way. Then move on to the next one. A Savings Account for example could be a "savings account" at a said bank. But I recommend earning Annual Percentage Yield with a money market account from a reputable company. When you put funds in a money market account, it compounds interest based on how much money is in that account. So you are making money by depositing your money at the bank.

I believe it was a financial advisor

That makes sense, they would give that type of advice. I used to be a bank teller a few years ago.

BUt still, invest in a money market account! You will not regret it.
http://www.bankrate.com/funnel/savi...=CR_searchMMASavingsRates_checking_MMASavings

 

[traestar]

Right when I was on that savings goal calculator page, I just created a pdf of what I'm looking to save

 

[traestar]

Today, I just got an email from my director saying that they are going to look at giving me a promotion. This should give me enough time before I look for a better job.

 

[King Erauno]

check this:

use 60% of your monthly income for bills...including rent, lights, cable, carnote ..etc

the other 40% you break up into 4 (10%)

1. 401k

2. savings

3. pocket money

4. debt.

i got this shit to work for me years ago. i used to live paycheck to paycheck when i had a lower salary and made it work. since then i've been making much higher salary but the same principles apply.

 

[King Erauno]

back into this thread..and re reading again. you guys should minimize 401k contributions and cut up your credit cards/close them. minimize your monthly expenses...and stack 2-3 g's for an emergency fund. then..begin paying off debts using the snowball method

 

[traestar]

back into this thread..and re reading again. you guys should minimize 401k contributions and cut up your credit cards/close them. minimize your monthly expenses...and stack 2-3 g's for an emergency fund. then..begin paying off debts using the snowball method

After paying off CC debt, I'd hold on to those credit cards before I close them. Give a little time for your credit score to reflect the change, because I believe I read somewhere that doing that could hurt your score if you do it too early.

I haven't done 401k contributions in three years because of my debt, but I do STILL have a few IRA accounts. That loan option is still there for BIG IMPORTANT down payments like a house, car, or property. But I want to focus on stability first before making ANY big purchases.

 

[shit_happens]

back into this thread..and re reading again. you guys should minimize 401k contributions and cut up your credit cards/close them. minimize your monthly expenses...and stack 2-3 g's for an emergency fund. then..begin paying off debts using the snowball method

After paying off CC debt, I'd hold on to those credit cards before I close them. Give a little time for your credit score to reflect the change, because I believe I read somewhere that doing that could hurt your score if you do it too early.

I haven't done 401k contributions in three years because of my debt, but I do STILL have a few IRA accounts. That loan option is still there for BIG IMPORTANT down payments like a house, car, or property. But I want to focus on stability first before making ANY big purchases.

Not putting at least 5% in your TSP(401K) is a huge mistake as a gov employee, no matter what your financial status is. You are leaving a 5% match on the table. It is free money. You should invest at least 5%, if not 10%, THEN increase your withholding to equal your current take home pay. The 5% reduces your taxable income which means you can afford it because you pay less income taxes now. I doubled my account balance in 2013 following this method. If you are inputting anything into your IRA it should be diverted to your TSP because your employer isn't matching your IRA contributions but they will match your TSP. Furthermore, if you receive a tax refund every year, you should adjust your withholding even more to put the refund into your TSP over the course of the year. Trust me, I received this financial advice last year it is the best advice I have ever received. You can use the IRS's withholding calculator to assist you. When you increase your balance, you can take small loans (i.e. $10,000) @ 2-3% to pay off debt at higher interest rates.

 

[traestar]

back into this thread..and re reading again. you guys should minimize 401k contributions and cut up your credit cards/close them. minimize your monthly expenses...and stack 2-3 g's for an emergency fund. then..begin paying off debts using the snowball method

After paying off CC debt, I'd hold on to those credit cards before I close them. Give a little time for your credit score to reflect the change, because I believe I read somewhere that doing that could hurt your score if you do it too early.

I haven't done 401k contributions in three years because of my debt, but I do STILL have a few IRA accounts. That loan option is still there for BIG IMPORTANT down payments like a house, car, or property. But I want to focus on stability first before making ANY big purchases.

Not putting at least 5% in your TSP(401K) is a huge mistake as a gov employee, no matter what your financial status is. You are leaving a 5% match on the table. It is free money. You should invest at least 5%, if not 10%, THEN increase your withholding to equal your current take home pay. The 5% reduces your taxable income which means you can afford it because you pay less income taxes now. I doubled my account balance in 2013 following this method. If you are inputting anything into your IRA it should be diverted to your TSP because your employer isn't matching your IRA contributions but they will match your TSP. Furthermore, if you receive a tax refund every year, you should adjust your withholding even more to put the refund into your TSP over the course of the year. Trust me, I received this financial advice last year it is the best advice I have ever received. You can use the IRS's withholding calculator to assist you. When you increase your balance, you can take small loans (i.e. $10,000) @ 2-3% to pay off debt at higher interest rates.

I'll check into that thanks. But one thing to correct you, I worked for the gov but I was NOT a full government employee, as a contractor they did have different IRA/401K packages but those were from primary contractor I worked for. They were no different than the plans that other temp HR agencies have. I actually forgot about the employer match, because the job I was in about 4 years ago took that away later on down the year. But I will actually look into that now with my current contractor firm.

 

[Young_Chitlin]

http://twocents.lifehacker.com/common-debt-traps-that-keep-you-living-paycheck-to-pa-1637915715

 

[Young_Chitlin]

Got one of my credit cards paid off. On my way to debt freeland