Living paycheck to paycheck is no real way to live. Struggling to pay your bills and being able to handle a financial emergency is stressful.
Ultimately, your wait until you earn your next paycheck in order to pay the bills. It’s almost impossible to relax, save money and get out of debt.
If you’re longing to escape this cycle, this article is for you.
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Ways to Stop Living Paycheck to Paycheck
How can you stop living paycheck to paycheck when you can barely make ends meet? Most people start saving money by doing three key things.
1. Challenge Your Expenses
If you want to start saving more money, it’s crucial that you examine and challenge all your expenses to make sure you know where every dollar is going.
It’s also a good idea to identify the areas of your budget where you might be overspending and wasting money. It may not sound like a lot, but spending an extra $5 here and $10 there can really add up.
Go through your expenses line by line and see which ones you can possibly cut.
Cancel Unnecessary Expenses First
There are many ways to save money. Start by canceling the unessential expenses that you can live without temporarily. You can always restart them later once your finances improve.
Not living paycheck to paycheck is going to require some upfront sacrifice.
Some easy expenses to cancel first include:
- Cable TV
- Expensive cell phone plans
- Subscription boxes
- Gym membership
- Going to restaurants
You won’t be able to cancel every monthly bill. For example, consider switching to a prepaid cell phone plan. You can get a similar phone plan for a lower rate and no contract.
If you still have cable, you can cut your bill by choosing a TV streaming app like Sling TV instead. With Sling TV, you pay $40 or $55 for a monthly cable plan with a 7-day free trial.
Read our Sling TV review to learn more about cheap cable TV.
Focus on Essential Expenses
It’s vital to prioritize your spending for these essential expenses:
You can still look for ways to “challenge everything” and spend less on these vital expenses.
It can take several months of practice to get into a new and cheaper routine. Keep challenging yourself to reduce spending each month.
Here are some ways to reduce spending on vital expenses:
- Start dining out less and plan meals to cook at home
- Cancel meal delivery kits and buy groceries
- Pack your lunch for work
- Price match for groceries and goods
- Buy used clothes
- Attend free events for entertainment
- Turn your lights off at home
- Unplug devices when you’re not using them
- Reduce bank fees by switching your bank
Make a Budget
Tracking your savings can be easier if you use a budgeting app. Many budgeting apps also let you make a monthly spending plan.
Seeing how you spend your money lets you calculate how much extra money you have each month by reducing expenses.
If you need help making a spending plan, use these common monthly expenses as a guide. There are ways to spend less on many essential bills.
2. Renegotiate Your Bills
Being able to save money on your recurring bills is another way to stop living paycheck to paycheck.
Remember, your goal is to spend less than you earn to escape the paycheck lifestyle.
Use a Bill Negotiation Tool
Check out a free tool called Trim that can automatically cancel subscriptions you no longer want and even renegotiate some bills for you.
Trim looks for discounts for these recurring bills:
- Cable TV
- Cell phone
- Medical bills
- Satellite radio
If Trim can reduce your bill amount, they keep a 33% success fee of the annual savings. You save money and don’t have to spend time calling customer service.
Compare Insurance Rates
Being loyal to your insurance provider doesn’t mean you’re paying the lowest premiums.
It’s a good idea to compare insurance quotes at least once a year to avoid overpaying.
Gabi, for example, can help you find cheaper insurance for multiple insurance products. It’s free to use Gabi and there is no obligation to switch insurance providers.
Compare rates for these insurance products:
- Auto insurance
- Homeowner’s insurance
- Renters insurance
If your current insurance provider is the most affordable option, ask the insurance agent for discounts.
Also, consider raising your deductible or canceling optional coverages to reduce your premium cost. You may not need rental car assistance on your car insurance, for instance.
3. Refinance Your Debt
The third step to stop living paycheck to paycheck is to refinance debt. Reducing your interest rate and monthly payment amount can reduce your monthly expenses.
Consider refinancing these debt types:
- Credit cards
- Personal loans
- Medical debt
- Private student loans
- Home mortgage
With a lower interest rate, more of your monthly payment will go toward the principal balance instead of interest. Therefore, you can pay off your debt faster and spend less money in the process.
Pay Off High-Interest Debt First
You can save the most money by paying off and refinancing high-interest debt first.
Credit card debt tends to have the highest interest rate which means there are more opportunities to get a lower rate.
You can ask the credit card company to temporarily lower your rate. Another option is using a debt payoff app like Tally which can refinance your credit card debt with a lower interest personal loan.
Low-interest debt like student loans or a home mortgage can be more difficult to get a lower interest rate.
Compare Refinancing Costs
Any time you refinance debt, look for any refinancing costs. The lender may charge an origination fee and application fee that reduces your total potential savings.
Most lenders only perform a soft credit check to give you a loan quote to not hurt your credit score.
When refinancing doesn’t make sense, consider making extra debt payments. Paying off debt early can reduce your total interest costs.
Download our Debt Snowball worksheet to make a debt payoff plan.
Other Ways to Spend Less Money
Here are a few other suggestions to reduce spending and stop living paycheck to paycheck.
Try a No Spend Week
This might seem hard to imagine, but it is possible to go an entire week and not spend any additional money. This will involve taking your lunch to work, eating dinner at home, and watching free movies at home.
This can be a great way to cut your expenses in a short period of time, but just know that it is not forever.
A “no spend week” can be good to get your finances on track and build a financial cushion.
Once you pay off debt and reduce many of your expenses, then you can consider loosening the reigns a bit.
Find a Way to Earn More
Reducing spending isn’t the only way to stop living paycheck to paycheck. You may need to make extra money to pay the bills and meet your financial goals.
Get a Side Hustle
Earning extra money through a side hustle is a good start as you can set your work schedule and use your skills.
It’s possible to make extra money online or locally.
Some side hustle ideas include:
- Online surveys
- Freelance gigs
- Food delivery apps
- Pet sitting
Some side hustles pay more than others. Try a few ideas and see what works best for your time, skills and salary needs.
Sell Unwanted Items
Another way to make money now is by selling items you don’t need.
You can use buy and sell apps to make one-time sales for small and large items. You can sell items locally via “porch pickup” or online to buyback vendors like Decluttr.
If you can sell something that currently has an interest loan, use the proceeds to pay off the loan.
Save More Money
Reducing your monthly expenses and paying off debt are two effective ways to reduce money stress. But you should also make goals for the extra cash in your bank account.
Build an Emergency Fund
Transfer your extra income into a savings account you don’t use to pay the monthly bills.
You may decide to save up to three and six months of living expenses.
It may take a long time to reach your savings goal. So, start small and start by saving $500 and then $1,000, for instance. You will eventually get several months of cash reserves.
One unique way to grow your emergency fund is by doing the savings challenge. You can save over $1,000 a year by practicing this challenge.
To consistently get into the habit of saving money, you’ll want to pay yourself first and automate your savings by setting up automatic transfers every month.
Transfer your automated savings into a high-yield savings account.
Set a realistic savings goal and treat it like a regular bill.
Consider an automatic transfer of $100 per month, or whatever your budget allows. You can increase this amount as your finances improve.
No matter what your income is, you have to prioritize saving over spending in some cases.
Otherwise, you’ll never be able to set aside any money.
You can set up automatic transfers monthly, weekly or each time you get paid.
Saving money while living paycheck to paycheck isn’t easy, but it’s possible and worth it. Use these tips and strategies to help you lower your expenses and increase your income so you can save more.
The more you are able to save, the more financially stable you’ll become. As a result, you can break the paycheck to paycheck cycle.