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If you’re living paycheck to paycheck, I don’t need to tell you how it sucks. Timing your life around payday is no way to live.
Whether you’re struggling because of a low salary, or you’re drowning in debt, it’s still feels like life is passing you by.
The expenses below, are costs we were able to reduce or eliminate that saved us almost $15,000 each year.
But there’s one thing to consider before you try to trim your budget.
Probably the single most valuable lesson I learned (or stumbled on) that enabled me to stop living paycheck to paycheck, was a simple one.
And that was to have a meaningful personal goal. One that involves planning, dedication, sacrifice and money. Something that you, or you and your partner want more than anything.
Without some kind of a vision for the next few years, it’s hard to understand the why behind earning a paycheck each week. It’s also hard to wade through the options around you and figure out what you need. We can’t have it all.
If we’re working just to pay the bills, then where’s the reward?
We must be working for something, right?
Without a personal goal, it’s easy to look around your circle of friends, see all the stuff they’re acquiring and view those things as your goal.
I spent years acquiring stuff that everyone around me seemed to have.
- Instead of paying myself first with each paycheck, we’d spend weekends at the mall.
- If friends were going to the Caribbean, we did too. Even if we had to charge it.
- I bought three brand new mini vans within 10 years.
- HBO, Showtime, gym membership… Sign me up.
It’s only when we established a goal, that we had the clarity and the motivation to filter out thousands of dollars from our budget. Things that either weren’t adding any value to the life we wanted, or were actually preventing us from living it.
Here are 10 things we were able to do without and don’t even miss.
Living Paycheck to Paycheck with Car Payments
If it makes sense to buy assets that appreciate in value rather than depreciate, then financing a new car must be one of the worst things you can buy. They lose 12-13% of their value each year, and even more the minute you drive it off the lot.
Big car payments are one of the main pitfalls of getting stuck in paycheck to paycheck mode.
I remember writing monthly checks for almost $500, when I had no emergency fund, and was contributing a fraction of what I should have, to my retirement fund.
It’s nice driving a new car, but not if you don’t have the cash for repairs, and you’re unable to afford any kind of social life.
But the real cost of high car payments is the compound interest you lose by not being able to pay yourself each month.
I wish I had known Dave Ramsey’s simple car buying plan back then. To him, debt is an emergency. Here’s how he suggests buying a car:
- Save about $2000 and pay cash for a car. It’ll be a bit of a clunker, but not for long.
- Then, instead of forking over $450-$500 to a finance company each month, save it yourself for about 10 months. Then sell your clunker and combine it with your savings to buy something in the $6000 range.
- Now you have a car that’ll last awhile, and if you can keep saving that amount, you’ll set yourself up with a nice emergency fund, pay off debt, and then start accumulating savings.
- And if you want to upgrade your car then, you’ll pay cash.
Yearly Savings: $6000
Living Paycheck to Paycheck and Paying for Cable TV
I’m embarrassed to say that I procrastinated over dumping cable for YEARS. Part of it was just my hesitation to switch from something that was ‘working’ and going to something new – streaming devices.
And also, any time I called the cable company, they’d lower my bill. Not a lot, but just enough to retain me. But what I didn’t consider, was that I was still paying over $45/month to rent all their equipment. In addition to the cable charges.
It bothered me that I watched a tiny fraction of the hundreds of channels they forced me to subsidize.
I finally called them last year and said “no thanks”. We’re saving over $100/month now, and the funny thing is, we watch literally the same shows.
Here’s how you can do the same:
- You’ll need a streaming device for your TV. We have an Amazon Fire Stick, and it was literally a five-minute setup.
- The streaming device will show a menu on your TV of some of their content, and it’ll give you the option of adding services you have access to, like Amazon Prime Movies, Hulu etc.
- If you don’t have Hulu, you can signup for $8.95/month for their basic plan, or $39.95 for their Hulu Live plan.
- And the best part of all this, was boxing up my cable box, remotes, and all the other smaller boxes on each TV and dropping them at my local cable office. Good riddance to rental fees!
What I like most about dropping cable is that it represents a change in attitude about how we spend money. I grew up with cable TV, and received this 6-page, double-sided bill each month with so many different charges on it that it was hard to decipher what you’re really paying for.
It bothered me that we were paying over $45 each month to rent their equipment. The bill listed so many regulatory charges, broadcast TV charges, and the way they bundled their plans, forced us to pay for hundreds of channels we never watched.
My Hulu bill is one-sided, and includes just one charge.
I have the live option, so I can see the same CBS, NBC, ABC, CNN, Fox, NFL games, or World Cup soccer that I watched on cable.
If I want to add something like Disney+ for instance, I can just add it through the menu in a few minutes, and I know exactly what I’m paying for. I can also drop certain services.
Overall, streaming gives you much better control over the content you watch and pay for.
And isn’t that what saving money is all about? Not being cheap, but being intentional about what you pay for.
Yearly Savings: $1200.
We Stopped Buying Food Without a Plan
If you’re living paycheck to paycheck wondering why your money is disappearing so fast, food might be the black hole.
One mistake I always made, was counting money spent on groceries separate from other food – things like take-out, work lunches, restaurants or convenience stores.
That’s a big mistake, because many times, we order take-out or run to a restaurant because we don’t have the ingredients we need at home.
All food – groceries, take-out, restaurants, and work lunches should be totaled under the same category. Food.
You might be alarmed to see how much you’re spending on food. But the good news, is that with a few simple changes, this is one of the quickest ways to recover several hundred dollars a month.
How to Save Money on Groceries & Eat Healthier
Just take 15 minutes once a week and plan the meals you’ll need around your upcoming schedule. Doing this can have a dramatic effect on your monthly budget.
Here’s what making a single, planned trip to the grocery store can do:
- Eliminate several $25 take-out orders.
- Save several restaurants trips because there’s nothing in the fridge.
- Eliminate extra trips to the store for a $6 purchase where we wind up spending $36.
- Eliminate that 5PM panic attack when the family asks, “So, what’s for dinner?”.
- Plan for leftovers that can be heated for tomorrow’s lunch.
One thing we’ve done, is to spend $5 in order to save several hundred dollars. We use $5 Meal Plan, where I’ll first take a look at our weekly schedule, then select from their database of hundreds of full meals.
I’ll select quick meals or longer ones, depending on what we have going on that week.
For each meal, they’ll give me:
- The steps to make it.
- The ingredients.
- And the best thing, is that they’ll give me a combined shopping list that includes ingredients to make every meal I’ve picked.
The meals average less than $2 each, and really, just knowing what we’re having each night means less stress and better meals.
Yearly savings – $3600.00
Paying for Subscriptions While Living Paycheck to Paycheck
Sometimes we enter a certain stage, like buying a new home, having a baby, or starting a new career, where we want to soak up every bit of information about it.
So we subscribe to a few magazines or newsletters, thinking we’ll be ahead of the game.
But a year later, we have stacks of unread magazines that we can’t bear to throw away because we paid for them.
It’s nice to curl up on the couch with a new magazine, but really, don’t most health magazines just rehash the same “How to get six-pack abs” article?
Pinterest has tons of useful information on anything from children and parenting, home improvement, recipes, crafts, health, fitness and dozens of other areas.
And if you can’t find whatever else you’re looking for on Google, it probably doesn’t exist.
Yearly Savings: $50
What regular expenses do you pay for? Things like magazine subscriptions, news letters, lessons, personal care products… are they still providing enough value to you?
Buying Bottled Water
Buying bottled water started to bother me not as a money waster, but as a huge polluter.
I’ve spent dozens of weekends at my kids’ soccer tournaments where usually by noon, every trash can in sight is overflowing onto the ground with hundreds of empty plastic bottles.
The average plastic bottle takes 450 years to biodegrade, and there’s millions of them thrown away every day! It’s scary to think of some of the damage we do to make our lives a little more convenient
A reusable water bottle like a Hydro Flask is more convenient (and more earth-friendly) because it keeps your drink cold or hot for up to 24 hours.
And any Target carries water filters to put onto your faucet or in your fridge.
Yearly Savings: $100.
Most Household Cleaners
It’s crazy how much the average family spends on various cleaning supplies – usually anywhere from $300-$700 per year!.
Manufacturers encourage us to buy individual products to clean each and every surface in our home.
So you not only spend a fortune, but you’ll have an entire cabinet full of chemicals when you can really just buy a few non-toxic household ingredients at the dollar store that’ll clean just as well.
Yearly Savings: $300.
A Daily Starbucks Fix
You won’t get rich just from cutting down on Starbucks, but you’d be surprised how “small” things like a daily coffee run add up.
An office I used to work in, started leasing out space in the lobby to Starbucks. And every afternoon around 2pm, when I’d start to drag, I’d be down there like clockwork.
I’m not a frappuccino connoisseur, but just buying my grande coffee each work day for a year would total almost $500!
It’s one of those expenses you don’t think twice about. But if at the end of the year, you were to see a breakdown of everything you spent money on, $500 would definitely raise an eyebrow.
If you’re a Starbucks addict too, one way to pay for your fix is to earn Starbucks gift cards though Swagbucks.
Swagbucks is a company that conducts marketing surveys for businesses. They value the opinions of regular consumers, so they’ll pay you and I to fill out brief surveys.
You can choose be paid in Starbucks or Amazon gift cards.
Surveys aren’t something to make a career out of, but if you can devote a few minutes here and there to pay for your coffee habit, they’re a dependable option.
Yearly Savings: $500.
Membership Stores Like Costco & BJ's
What’s always bothered me about membership stores is just the fact that you have to pay to shop there. Maybe some products are cheaper, but if I have to buy six months worth of peanut butter to save $3, to me, it’s not worth it.
Their meats and their desserts seem to be good quality. But if you’re in the market for a TV or a camera, the prices don’t seem any cheaper than other places.
I think using a membership fee makes it seem more desirable, and in my case, I’d find myself making a point to go more just so I didn’t waste the fee.
Maybe you’ve had a different experience?
Yearly Savings: $300
Keeping an Expensive Cell Phone Plan
Isn’t it funny how some things that didn’t exist 20 years ago, are now things we wouldn’t leave the house without?
Cell phones can call for help when we’re stuck, give us turn by turn navigation, take photos, or access the internet from anywhere.
And the major companies like Verizon and AT&T want you to believe you should be doing it all with the latest iPhone.
But just like millions of people are discovering that cutting cable in favor of streaming can save thousands of dollars, we now have phone options available that can do the same things for a lot less money.
You don’t need to spend $80-$100 a month per phone – on top of never-ending finance payments for a $1000 phone.
Almost any smartphone can do the same basic functions – call, text, take a decent picture, write notes and surf the web.
If you’re ok with getting the same functionality and don’t need the status of an iPhone, you can save serious cash – like $100 per month by going with a company like Republic Wireless.
Their plans start at (and this isn’t a typo) $15 a month. Then you’d add on as much data as you need, at $5 per gigabyte. I can’t remember the last time I used more than 2 gig in a month, but that’s the plan I have, so I pay $25 per month. Total.
So no, I no longer use an iPhone (Republic doesn’t support them) but I use every app I’ve used before, like Google Maps, Notes, Spotify… I take pictures, email and do anything else I’m used to.
But I have an extra $100 a month in my pocket.
Yearly Savings: $1200
Paying for a Gym Membership While You're Living Paycheck to Paycheck
I love working out and at least trying to stay in shape. But if you’re trying to trim your budget, there are alternatives to paying for a gym.
And it’s not just the money to consider. There’s the opportunity cost of traveling to and from the gym, and what else you might have been able to do in the time you commute there.
In my post, How to Work Out at Home, Save Money and Finally Get in Shape, I broke down the real cost of my membership, where over the span of a year, I spent the equivalent of a full work week traveling back and forth to the gym.
For some people, the social aspect of a gym is important. But if it’s money and time you’re considering, there are dozens of free apps with hundreds of exercises you can do at home.
Since I quit paying for a gym, the only fitness equipment I own are a few sets of dumbbells, a set of pushup bars, and some running sneakers, all of which I can push under the bed when I’m not using them. So far, I’ve lost almost 20 pounds, and I credit a few of the apps here:
Yearly Savings: $600.
Buying Extended Warranties
Does anyone ever really use these? I used to purchase them, but I can’t remember one time that an extended warranty ever helped me. I’ve purchased one for a TV, one for the tires on a car I bought, a few for laptops and a few for kids video games.
I’ve never needed a single one. And it’s a good thing because if I did, I’d never have been able to find the paperwork for it.
Cashiers are usually encouraged to sell them. And they’re a huge money maker because they exclude the most common reasons you’d ever use them.
That’s probably why the Better Business Bureau says that extended warranties are a huge source of complaints.
The Bottom Line to Stop Living Paycheck to Paycheck
There’s no shame in wanting the the best for yourself or your family. But it’s easy to fall prey to the idea that you need three different products to clean the inside of your car. Or the latest app, the newest car and this season’s jacket.
It can take years to finally have that aha moment, when you see the relationship between the bills you struggle to pay, the things you can’t afford to do, and your home bursting at the seams with stuff we “needed”.
So saving money isn’t just a matter of depriving yourself.
It’s more about narrowing those few things that are most important for you and your family to achieve within the next few years.
Because once you do:
- Every day spending and lifestyle decisions are easier when you know if it aligns with your personal plan.
- You’ll find more time in your schedule.
- You’ll find simplicity in areas where there was overwhelm.
Almost 8 in 10 people currently live paycheck to paycheck. So if you’re one of them, hopefully this helps you to start turning things around.
How about you?
Have you found things you’ve been able to eliminate or combine that have helped you?
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