Living paycheck-to-paycheck is a disaster – why you need to escape the cycle NOW!

It’s estimated that ~78% of workers are living paycheck-to-paycheck. Scary, but not surprising. People from all walks of life are scraping by and struggling through life – regardless of gender, education or income levels.

PwC’s 8th annual Employee Financial Wellness Survey, 2019, also notes that more and more people experiencing financial difficulties:

  • 49% of all employees say they find it difficult to meet household expense on time each month
  • Only 31% would be able to meet their basic expenses if they were out of work for an extended period of time
  • 59% consistently carry balances on their credit cards, with 37% finding it difficult to make their minimum payments each month
  • 35% of Millennials and 30% of Gen X employees are using their credit cards to pay for monthly necessities which they could otherwise not afford

Most worryingly of all is that 45% of people surveyed have less than $1,000 saved for unexpected expense. Unfortunately this situation is worse for women, with 51% not having this relatively small amount of money put aside vs. 38% of men.

The situation is dire and getting worse. It’s time to do something about it, because living paycheck-to-paycheck is a disaster not only for your immediate finances but also your general wellbeing, happiness and future living standards.

There is a better way to live, than paycheck-to-paycheck
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Ways to combat overspending on impulse buys and save more money

I’m an aspiring frugal minimalist, working towards Financial Independence. Given that, saving should be second nature and easy for me, right? Well normally we are are pretty good and put money away like clockwork, but this week was a reality check as my monthly budget went up in flames. The budget collapse wasn’t due to any unforeseen disaster, medical emergency, or car problems. I simply overspent and purchased what could be classified as an unnecessary, luxury item.

So what went wrong and how do I avoid overspending in the future?

There goes the budget….

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Change is hard and I worry that I am being a cheapskate

We have only just started on our journey towards financial independence (see my previous post for a quick overview of FIRE) so we haven’t yet built good and lasting habits or found a sustainable level when it comes to balancing saving and spending.

Reflecting on last month it feels like we often took one step forward and two steps back. It’s been a struggle at times. It’s also been exciting as we saw the impact of our decisions.

Overall though I think we made great progress in April and are off to a great start.

April highlights

  • Moved to a smaller home, which will hopefully cost less to heat, cool and maintain
  • Changed banks and received a $500 signup bonus in the process
  • Cancelled our cable subscription and home phone line
  • Reviewed our auto insurance, changed insurers and saved ~50% in the process

As a result of lowering our expenses we’ve now set a new baseline for living costs and will be able to save more each month going forward. The pleasing thing is that we’ve stopped drifting through life and now are much more intentional about our finances.

The savings jar
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