Living Paycheck to Paycheck
Is it a bad thing to live paycheck to paycheck? I think it’s quite common that most people have a fixed income with variable expenses and debt. Lifestyle also needs to be a variable expense to balance out when expenses go up, plus income could feel tight for a bit. If there is a case where the expenses exceed the income after lifestyle has been cut down to nothing, I would consider that an emergency. An emergency fund can help get through the problem instead of doing what many people do, run it up on a credit card.
There are some priorities when it comes to what to do with the income. Our income at the beginning of the month handles the mortgage payment, which takes out half of it. The rest is allocated between fixed expenses like regular bills due before the 15th and the rest is for variable expenses. The mid-month paycheck goes towards the bulk of our monthly bills like utilities and payments towards debt. When the money comes in it is a good idea to have a plan of where it is going instead of wondering where it went.
I’ve also pondered what things will be like without having to pay for a single debt. If our income remained the same and we had absolutely no debt, outside of the mortgage, one pay period would cover expenses for the entire month. We would be able to save the entire second pay period in full. If there was no mortgage, we could save or invest the mortgage payment on top of the second pay period. There are people who live like this, and someday I want to be one of them. If we hit that point we would no longer be living from paycheck to paycheck, but rather focusing on living without worrying too much about the paycheck.
I too wonder what things will be like without having any debt, and that’s what keeps me going. I don’t have a mortgage — just the credit cards now. But my goal is to have that debt gone by December 2010. It’ll be a thrill to know that I can start considering other life options without having to factor in those bills.
It’s exciting to know that it will happen. We will be like those other people who already live like this. Hang in there!
I am always dreaming of what it would be like to be debt free. Even if only my credit cards were paid off, I would be better off. The first thing I would do, is build a strong emergency fund. Then I would probably dump most of it into a couple different retirement plans. I am at the age where I should already have retirement investments but I am fighting debt instead.
Forget about not having debt, I constantly wonder what life would be like with enough money to live comfortably - not just 10,000 s.f. mansion and 3 vacation homes types of money - but just enough for me to live comfortably with my modest lifestyle. Now that would be nice!
Hang in there Jim, we will be debt free within foreseeable time. My opinion,CC debt is emotionally the most drainning one. Somehow we justify car loan, student loan, mortgage but not CC debt. Once we are done with CCs I believe we will feel much better.
We live paycheck to paycheck too and I’m so tired of it. I’ll be seeing a light at the end of this long debt tunnel though in about three years (I hope).
Have you looked into getting a low or ZERO interest credit card and transferring some balances? Or have you tried calling Capital One and asking if they’d lower your interest rate? 19.90% seems excessive to me.
Hang in there!
I’m not worried about the interest on the credit card debt as much as I am trying to pay off the balance. Just because there’s an interest rate, it doesn’t make any difference regarding the balance. We have looked at surfing the balances to other cards, but at the same time they must be paid in full before the intro period expires, otherwise a lot of interest gets tacked on defeating the purpose. I’m looking for a consistent pattern to getting out of the payments that drains the paycheck every month. Without having debt there are no payments, which results in having more money.
I agree but at the same time 19% interest rate is too high. Wells fargo has some good offers like 3.9% until pay off. I just transfered $6000 to wf for 0% until nov after 5.9% for a year.
We have become the nation of debt. One thing I worry about with not only paycheck to paycheck, but the idea of separate accounts is the ongoing rift it causes. At least with one account my wife and I both see the damage our debt has done.
I have a mortgage and $17k in student loans for my DH’s MBA which is deferred since he’s still in school. Right now it looks like we’ll clear that before he even graduates.
Anyway though, it’s still paycheck to paycheck for us, even without debt. We have so much savings to do like paying for his degree and just expenses. It never feels like enough.