Paycheck to Paycheck
Living paycheck to paycheck has been a major issue of mine since graduating the University of Maryland (GO TERPS!) and entering the real world. I am paid on a bi-weekly schedule and I tend to spend all of my money within five days, including funds ear-marked to pay bills. Subsequently I must tap in the savings I direct deposit each paycheck to cover my monthly expenses. This ultimately keeps my savings low and when a big or unexpected expense comes along, and they come too often, I must use a credit card. This negative cash flow cycle is sending net worth the wrong direction. I know I am not alone with this problem, it is probably the largest issue facing individual wealth today. I have been playing with a few ideas on how to escape this trap:
1) Just make more money. Not as easy to accomplish as it is to type.
2) Cut back on expenses. Very, very difficult when you are planning a New York wedding
3) Develop a better cash flow system. I need a system that will help me from raiding my
savings while covering all needed expenses, and still enjoy life.
The first will take care of itself over time. I am a dedicated and hard-working employee and I am confident my paycheck will rise in time. The key here will be to roll the extra money towards savings and eliminating debt. Also I consider myself opportunistic and I am always on the prowl for a better employment opportunity that will advance my professional aspirations and fatten the paycheck.
The second step is the most difficult. I have a lot of extra expenses right now as I am getting married. However, I have cut back where I can. No more Dunkin Donut coffee breaks or splurging on shopping sprees.
Step three, developing a cash flow or budget system that will pull everything together and make it work. I think the most important step is to pay myself first. I have set up an automatic 401(K) and a direct deposit into my savings at ING Direct. I plan to increase both over time as step one takes care of itself. In addition, I now separate all monthly expenses in half and withdrawl that amount from each paycheck, placing it into a separate ING Direct account and pull the funds when needed. As I am on a 26 paycheck a year cycle this will hopefully allow two paychecks worth of expenses to be added to my personal savings.
1) Just make more money. Not as easy to accomplish as it is to type.
2) Cut back on expenses. Very, very difficult when you are planning a New York wedding
3) Develop a better cash flow system. I need a system that will help me from raiding my
savings while covering all needed expenses, and still enjoy life.
The first will take care of itself over time. I am a dedicated and hard-working employee and I am confident my paycheck will rise in time. The key here will be to roll the extra money towards savings and eliminating debt. Also I consider myself opportunistic and I am always on the prowl for a better employment opportunity that will advance my professional aspirations and fatten the paycheck.
The second step is the most difficult. I have a lot of extra expenses right now as I am getting married. However, I have cut back where I can. No more Dunkin Donut coffee breaks or splurging on shopping sprees.
Step three, developing a cash flow or budget system that will pull everything together and make it work. I think the most important step is to pay myself first. I have set up an automatic 401(K) and a direct deposit into my savings at ING Direct. I plan to increase both over time as step one takes care of itself. In addition, I now separate all monthly expenses in half and withdrawl that amount from each paycheck, placing it into a separate ING Direct account and pull the funds when needed. As I am on a 26 paycheck a year cycle this will hopefully allow two paychecks worth of expenses to be added to my personal savings.
posted by Financial Foray @ 8:17 AM
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