Hello, I'm your host, Mr. Chuck, I retired accountant turn truck driver, I reduced my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination living paycheck to paycheck, feeling overwhelmed with bills, it seems there's never enough money to pay off how to get out of this cycle and have money to save. The first thing to do in this process is to review what happened, that got you and to this situation has got to be one of two things. It's got to be income related, or is gotta be spending related. So let's start with the income. What can you do if something happened in your past caused you to lose your income or have a reduction in income and how you're taking steps to remedy that situation. That's what you got to do. If it's an income related, perhaps you got laid off for a few weeks, because a COVID. And then when you went back to work, you have had not been able to catch up, where your bills may have gotten a little bit behind. Or perhaps you're still unemployed, and you hadn't been able to find a job that pays as much as the job that you had previously. So you're just getting farther behind. But you're thinking, I'm going to get a well paying job and I'll be able to catch up. But the longer you wait, the harder that's gonna be. So you need to take any job now. So they he can start being more current on Pan those bills. Even if you didn't lose your job, and you didn't get a pay reduction, maybe you're underpaid. Anyway, there's plenty of opportunities out there for you to look for a nother opportunity to make more money. Whether you quit your current position and move on to another company, that may give you a five or a 10% pay raise. Or even if they don't give you a pay raise, you make the same amount of money, but your health insurance is paid for, or the cost of your health insurance is significantly reduced by say 20 to 50%. It will make it worthwhile the effort to change jobs. Or maybe it'll be closer to where you live. So you'd have less commuting time. And course you use less gasoline to get to that new job. But if all of these types of scenarios are not the case, then perhaps you need to look at getting a second part time position so that he can earn more money. So you got to identify one happen in the past that got you into the living paycheck to paycheck situation. Perhaps that's what you've always done. And you never been able to break this cycle. So lot what is living paycheck to paycheck, while living paycheck to paycheck is your make enough money to pay your bills that are due currently, and have very little left over just enough leftover to survive until your next payday. You have no savings account. You have no emergency fund, and he hadn't been able to get anything established and start your savings plan. So if it's an income related problem, then you need to make more money. Whether it's through in a second job, maybe your spouse can take a part time job when when you're home. You can be with the children in the spouse can get a part time job, whatever the situation is, is something that you can overcome. But you cannot overcome this problem. If you don't realize what the problem may be. I'm not advocating to for you to start your own business or any anything like that, I'm just saying you need to increase your income. So whether you hadn't had a pay raise at your current position, for at least a year, maybe you need to go in and talk to your boss and see if there's a pay raise coming along. Anything that can help. Now, with inflation starting to kick in, and getting higher and higher, you're gonna just get farther and farther behind. Unless you do something to increase your income. Allows look at the other situation, that's about all I'm going to say about the income, because that's about all I can say, you need to do whatever it takes to make more money. The other half of the equation is you're spending too much. And the main place that people get in trouble is they start spending way too much on things they want. And they forget about the things they need, and then they get behind. And that would cause the similar situation. So quit thinking like a spender that I want that I want that online or buy it. Start thinking like a saver or an investor. Do I really need that? Can I get by without it and wait 24 hours or a couple days before you actually spend the money on it. And you will find out over time that will help you cut down on your spending on things you want. What are the things you need, the things you should be concentrating on paying first, and on time would be housing, which includes all the utilities and everything related to housing, transportation, the same thing includes purchasing an automobile and maintaining the honor bill, and everything related to transportation, automobile insurance, repairs, gasoline, in your car payment, can you reduce some of these items we're going to cover that later on. Another need is food. Are you eating out too many times a week in spending way more than you should be? Perhaps you should learn to cook and go to the grocery store, you can get the same quality meal for a lot less money. If you take the time to do it yourself. Sometimes you're on a claim, I don't have the time of this go out. Perhaps she's claim you don't know how to cook is easy to learn the cook law of watch TV, look at these little I'm not little but younger children who are cooking and making all these dishes on TV that I've never even heard of. So it is possible. Start out with what you like best learn to make what you like, and then gradually expand on it. It's not that difficult. I can do it. I got lazy, I got married, my wife takes care of it. So I don't have to. But 99% of our meals are from food purchased at a grocery store. Now there are reasons you're still living paycheck to paycheck, I have an article, go banking rates.com 10 reasons living paycheck to paycheck. It's in my show notes if you'd like to read it. But even if you're earning a good salary, you might still be living paycheck to paycheck, your salary may not be to blame. If you're tired of living paycheck to paycheck, consider taking steps to improve your financial circumstances. And you're not the only one. This like 34% of Americans have no savings at all, while another 29% have less than $1,000 socked away for emergencies. So you're paying the minimum on your debts. I don't think that's what's causing your problem. It could be if you have 10 credit cards, they're all charged up to the maximum limit and you're making a minimum payment so you're not ever making any progress of getting a balance reduce very much the interest is killing you. That could be the cause of you're living paycheck to paycheck. But why Did your credit cards get maxed out, let's say, while because you were too busy keeping up with the Joneses, your neighbor bought a new sports car, a former college roommate put a down payment on a four bedroom home. And your co worker were designer closes to the office every day. So you want to match or at least look like you're successful. Like all the people around you, in the people you may know. But he don't do that if you don't have the money to back it up. No matter how successful you are, and how much you had to show for it, there would never, there will always be someone out there with a newer gadget. And more tricked out right or a slightly bigger home. That's like keeping up with the Joneses would only hurt your bank account later on. When you can't make the auto loan payment for the new car you have sitting at the curb instead of trying to keep up with the Joneses. Learn how to live on a budget. Hmm, imagine that you failed a plan for irregular expenses. Perhaps you go on vacation once or twice a year, and you don't save up for it and you don't plan, he just go on a whim. And you end up paying more than what you need to maybe you forget to buy gifts for people's birthday presents or even Christmas. And then that the last minute, you're rushing around and spending more money than what you should be spending. And you also maybe you're not saving money for that automobile insurance that comes up every three months or every six months. So you're scripting and planning and, and you're trying to make your insurance payment on time, and the amount. And so you got to not pay something else. And you just plan, you failed to plan period, you have no plans at all about anything. And you're afraid to look at your credit card statements, he really don't want to know how much debt that you're in, he really don't want to know how much money is in your checking account, you really don't want to know that your checking account is a negative $1,000. And you're paying a whole bunch of bank fees that you don't have to and shouldn't. And you fail to think like an investor, he failed to think like somebody saving money. And you're not paying any of your bills on time. Therefore your payment of additional fees and service charges to everybody that you have a bill that you need to pay to. So how do you think like a saver by a covered part of it, you make sure that your needs are covered first, housing, transportation, food, clothing, for basics. Once that's covered, anything in excess of that is, do you really need that item or need to pay for that service? Can you get by without it? Oh, under housing, I would include internet. Nowadays the internet service is not necessary I want but it's more a need especially have children that have to learn from home because they're not allowed to go to school, because it's a snow day, or it's a COVID breakout or whatever the case could be. And they need internet service or they can link up and still go to school and learn something. So that's an internet service is more of a need and not necessary a want things that are one or an optimal luxury automobile. You really don't need and luxury automobile. You only need an automobile to get you from point A to point B, from work to the grocery store. And maybe a few places for entertainment. That's all what you really need. But maybe you want that sports car that's really fast with a big motor. Well, when you do that, your insurance is gonna cost a lot more. Everything goes up. Related to that item. II don't really need a boat. Even though you might be an avid fisherman, do you really need a$30,000 fishing boat? Probably not. You can get by without it until things are much better off. So that's What you got to do. And once you do that, how do you really the best way to keep track of this stuff is to put yourself on a budget. I'm not saying right away to cut back and quit spending, I'm saying, write down everything that you spend money on. So you want to categorize it by needs first, housing, transportation, clothing, food, maybe a little bit for entertainment. Those items, you need to make sure you have enough money to pay when those bills become due. When your mortgage payment is due, he got to know you have enough money to make that payment, when the utility bills are due, he got to know you have enough money to make those payments. That's basically what's happening. I've done this, I've lived paycheck for paycheck for 15 or 20 years, where I was always struggling to pay off at least one credit card that I could never really seem to get a paid off. Maybe sometimes it was two or three credit cards. Then i figured out, ah, I do a budget. Now I know what to do, when it's due, and how much is due, I can say I don't need to buy something, I don't really need, I can put it off for maybe a week and a half, then I have the money to make these timely payments on the things I actually need. And then when I save up a little bit of money, I can buy something that I want. That's how I did it. Keeping track of your finances is a major step and getting out of the cycle of living paycheck to paycheck. So you need to track your spending. Then once you're done tracking your spending, you need to create a budget. And then you can can continue tracking and look in how your budget is done. And I'm just saying a budget is just the amount of money that you pay on a monthly basis is not, we're not at the point yet, where you're cutting anything out of your life, we're just wanting to know where the money is going, how much money is coming in, how much money is going out, is this a matter of knowing that information, then once we know that information, we can densify or some of the problems may be and then we can start cutting out the items we don't really need. But maybe we want like going out to dinner five times a week, we want to do because we don't want to cook at home that we need to cook at home. So we have the money to go out to dinner, that one time a week, when we want to go out. I hope you understand what I'm trying to say here. It's not rocket science. It's not keeping track of your numbers down to the penny, which is helpful because I'm an accountant. I do that. But it's more of a mindset. It's more of identifying where the problems may lie, and try to solve the problems. And then once the problem is solved, you're living paycheck to paycheck is disappearing over time. And before you know it, you have extra money in that checking account that you can put into a savings account. Build up an emergency fund of at least$1,000 More than better. So when something goes wrong, or something pops up that you forgot about, you had the money available to pay for it timely. So what are you gonna do? What's this doing for you? It's gotten you paying a lot less late fees, a lot less interest, a lot less. Anything that they're going to charge you because you didn't make a timely payment, whatever they want to call it. And you're keeping more of your money for things you want in the future is called Planning. Looking ahead When, what do I want? 10 years from now? When do I want to retire? Do I want my children to go to college? How much is that gonna cost? Where's the money gonna come from? It's called setting up a plan. And if you have a lot of debt, you need a debt reduction plan. I've covered that multiple times. You need to have a life plan. What are your goals? Where do you want your finances to be? How much money do you want, when you retire? He may not even know. But he can start figuring it out by out and retire when I'm 55. I know these are my expenses, monthly expenses of $3,000 a month, times 12 months, that's$36,000 a year just to pay my basic living expenses. So I need 36,000 times the number of years I'm going to live after I'm retired, plus some extra money for entertainment, or whatever else you may want to do. So you can start thinking about these things, not gonna have the time you're gonna be stressed out, because you're living paycheck to paycheck. So identified the problem, tried to solve the problem, and then move on from there, by building up an emergency fund. setting money aside, saving up the money to buy the things you want. That make sure that things your need are always covered, and always paid for on a timely basis. I'll be back in one moment with my final thoughts. If you're listening to this podcast through an app, please find the rate and review and rate and review reduce debt increase Well, I really appreciate you taking the time to do so. If you know anybody that may benefit, please refer them to reduce debt, increase wealth.com be confined it in any app or on Facebook, they can start looking at the different episodes and maybe learn something about their personal finances and improve their personal finances the right way, instead of struggling from paycheck to paycheck. living paycheck to paycheck is a struggle. And it can be stressful at times, especially if you have creditors calling you just about every night and bothering you pay this bill, pay that bill. And it's just not fun. How do you get out of this situation? Well, the first thing you need to do is identified the problem that got you in that situation? Was it a lack of income? Is your income too low? Can you get a second job? Can you get a better job? Or maybe your spending habits are bad? Are you just spending more money on once and then not covering your needs, you need to look at that you need to solve this problem and start focusing on making sure your needs are covered. And you have the money to cover your wants. I have a motorcycle. I've been riding motorcycles since I was in my mid 20s I never bought them or a cycle unless I had the money to pay cash for it. That cuz it was a want and not necessary a need. So I made sure I paid cash for my once. So the step one is start tracking your spending, tracking the spending from your checking account and all the credit cards you're using. Step two, it quit creating new debt. This is part of the debt reduction plan. Quit using credit. Start paying all your bills through your checking account. Whether you use a debit card, or you use cash. It really doesn't matter that you your checking account and only you spend the money that you have coming in every payday that should also So include paying all your current bills. So if you're quit creating new debt here and you're using cash to pay for all your bills for the current period, you got to make the minimum payment on all your credit cards, you got to set up an emergency fund, ie a savings account, first thing and build it up to $1,000. So that you have a little bit of money available in case something bad would happen, you have some of the money to cover it, so that you don't have to create new debt. Once you've got that tracking done for at least a 30 day period, do yourself a report by category. This is when you start your budgeting process. You set up your budget, and I have a spreadsheet you can request and I will email it to you. If you would send me through Facebook, reduce debt, increase wealth.com A instant message with your email and say I want your spreadsheet, here's my email, I will email it to you. So you can have a template for a budget has three columns has the budgeted amount, as actual as the difference. The budgeted amount is what you're where you start, you do your tracking, you do a report by category. For all the places you're spending money, you're checking in your credit cards, you put that in for your first budgeted amount. And then once a week, you do for the current month. So that was month a or month B now. So after the first week and month B, you do a report from the beginning of the month to the current date, by category, you plug it in actual data, the second week, you do the beginning of month to the current date, and you update the actual to the new total amounts. And you do that all month all month long. Because you want to see where you're spending your money. And how early in the month you're spending money on a certain category. And then if you keep spending money, and that category, was that first month budget, enough to cover it for the second month? Or was it too low Are you spending more than you did 30 days ago, maybe you're spending less, maybe that now that you realize you're spending way too much money dining out at restaurants, you quit doing it. That's good. So then the start of the third month, you look at your actuals for the previous month. And if there's a significant change, you change your budget amount to the new actual, and you keep doing that month after month. And I call that fine tune in your budget. Is there anything in there that you're paying for every month that you no longer use? If so, cancel it and quit paying for it. It's common sense to look for things you no longer use, cancel it, look for things you can live without. And you can cancel it such as a gym membership. Maybe you quit going to the gym. Or maybe you're doing workouts at home now, or exercising outside because it's good whether if he can get rid of that gym membership, do it. You're trying to save as much money as possible. Because you're no longer a spender. Now you're becoming a saver. And as a saver, you only spend money on one first, what you need. And then too when you have enough money on what you want. The rest of it is going in your savings. You're building up your emergency fund and your savings account. Once you get three to 4000 in there, you have the anything in excess of $1,000 you can take out of your savings, apply it to a credit card or some debt you're trying to get out from under make a lump sum payment. And when you do that, the month that you do that you still make the minimum payment. So what I always done at the beginning of the month when it was due, I made all my monthly payments the minimum than if I had enough, say two weeks later, I had an extra $3,000 I applied that$3,000 to one of those credit cards, but the next month when it was due, I made the main minimum payment. Again, even though the credit card company said I didn't owe it, I paid it again. So every month, the minimum payment with the inmate, and every two or three months, and lump sum amount was applied. And before you know it, the first one is paid off. Don't close the account, keep it open, because if you close an account, it could hurt your credit score. Then you go to the next credit card, you start with the lowest balance first, which is the snowball method. Then after the first credit card is paid off, then you start paying off based on the highest rate of interest second, known as the Avalanche Method, and you keep doing it. And over time, this process speeds up faster and faster and faster. And before you know it, you have credit cards paid off, you'll have a car payment paid off, you'll be in much better shape, and you'll be happy that you did so