Living Paycheck-to-Paycheck? Top Five Ways Get Ahead
Friday, February 29th, 2008
Has your wallet been so empty that you thought, “There must be something cheaper than Top Ramen. Isn’t there a Middle or Bottom Ramen?” When the technology bubble burst eight years ago, I had that problem. While I felt alone at the time, I now realize that I wasn’t.
I was talking with Joseph Sangl just the other day and he said something that shocked me, “The sad fact is that over 70% of Americans live paycheck-to-paycheck. They can’t see past this week, so taking the time to think about retirement and funding some of their dreams is a foreign concept!”
If Mr. Sangl is right, much of America is teetering on the edge of bankruptcy. That’s extremely scary to me. With that in mind, here are some tips to save money and get you out of the paycheck-to-paycheck grind.
- Home - Many people own homes bigger than they need. This means that they spend more not only in rent and mortgage, but also to heat and furnish the home.
- Car - It seems that everyone is looking to get a better and better car. If your neighbor gets a Toyota Avalon, you get a Lexus. The person next door sees the Lexus and gets a more expensive, better BMW. I made this mistake and bought a more expensive car that I should have. I’m seriously considering making my next car one a used one that gets me from point A to point B.
- Food - I’m always surprised at how many people go out to lunch. At $10 day, it adds up to $220 a month (assuming a 22 day work-month). Don’t forget about going out for dinners as well. It’s easy to spend $150-$200 going out to dinner a few times a month.
- Subscriptions - Do you watch enough HBO to justify the cost? What about that Netflix subscription? Do you need as many minutes on your cell phone? Can you switch to something like a $15 Vonage plan for your home phone?
- Splurges - I love technology and gadgets. However, it’s easy to get caught up in buying a stereo system one month, an iPod the next month, and an iPhone the month after that. Other people might like to cook and find themselves buying new specialty appliances and cookware every couple of months. These kind of things add up each month. I found that if I wait, I can get my technology fix via Craig’s List for a small fraction of the original cost.
With a little work, you may find that you can save $500-1000 a month from the above tips. If you put that money in savings, you’ll soon find that this period’s paycheck is not something that you have worry about. These ideas may not help everyone living paycheck to paycheck. If you find yourself still having trouble, you might want to look to increase your income. That’s a topic for another day.
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Lazy Man has been a lender at Prosper since February 2006. He is the author of the personal finance blog, Lazy Man and Money and the health and fitness blog, Lazy Man and Health. He enjoys watching Boston sports while sipping diet cola.
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