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The recent government shutdown was the longest in United States history. The 35-day-deadlock put a lot of government workers in financial peril. Understandably so, that’s a long time to go without a paycheck.
But the shutdown shines a spotlight on a more important aspect of life in the U.S. in that most U.S. workers wouldn’t last a week of a government shutdown. That’s because a staggering 78 percent of employees live paycheck to paycheck.
If you’re barely making ends meet and one sickness or job loss away from rock bottom, take these four strides to start living each week differently.
Make Progress on Bad Debt
Many factors contribute to a person living paycheck to paycheck. Some are circumstance and take extra time to work through while others are behavioral. They can change sooner than we think.
In either case, leaving the paycheck-to-paycheck life behind isn’t possible when carrying bad debt. Monthly interest rates eat into essential spending categories and lower our quality of life. If an unexpected expense arises, we lose progress on our balance and are back to where we started.
Commit to a repayment strategy like the debt snowball, avalanche, or snowflake method to stop treating debt like a job and more like a sickness you desperately want to cure.
At the same time, it’s prudent to know when a balance has surpassed a manageable level. Savvy repayment strategies and debt consolidation loans won’t help if balances far outweigh income. Instead, consider the pros and cons of declaring bankruptcy or undergoing debt settlement by researching reviews of providers like Freedom Debt Relief.
Create a Buffer
Life is many things, and expensive is one of them. But what makes life even more costly than it needs to be is not having any savings to cover emergencies. When a car breaks down and we don’t have the money to repair it, our commute to work and ability to earn money might be impacted.
When we get sick for more than a few days, we don’t have the option of taking time off to rest. When we need to purchase essential things like food and clothing, but we only have what’s remaining of the previous check, we have to buy lower-quality items, which is far more expensive in the long-term. Building a buffer and no longer using every dollar earned to pay for something allows us to start putting money away for retirement.
Increase Your Income and Slash Any Unnecessary Expenses
There are no two ways around it. If you want to shed your paycheck-to-paycheck existence, you’ll need to widen the gap between what you earn and what you spend.
After all, it’s not uncommon for high income-earners to live beyond their means, eager for the next payday. It’s also no anomaly to live paycheck-to-paycheck because not enough money is being generated. For increasing your earnings, look into developing or improving an existing skill set that you can use to form a side income or leverage into a better full-time job. When looking at the budget sheet, use the KonMari method and highlight every non-essential purchase over the last month that didn’t spark joy for you. Then avoid repeating the same mistakes the next month.
A less-talked-about but crucial area of building wealth and personal economic stability is to have various types (and adequate coverages) of insurance. From health coverage and auto insurance to homeowners or renter’s insurance, paying premiums ensures you never have to start from scratch.
Health insurance can be expensive even for basic care, but you’ll still be protected from serious issues that would have left you buried in debt. Insuring your car, in addition to being required in most states, keeps you mobile to fulfill your daily obligations. Insuring your living space protects your valuables, like a computer that can up your skill set, or providing financial assistance if your residence were to become unlivable for a period of time. These things aren’t common, but they do happen.
It’s draining wondering where the money will come from each week. However, nothing will change with inaction. Gaining a financial foothold takes multiple steps, but you can get there when you tackle debt, build a buffer in your budget, widen your earning-to-spending ratio, and take out essential insurance coverages that protect your bottom line.