What are the danger signs for personal bankruptcy? One of the most worrisome is living paycheck to paycheck. A 2008 survey by the American Payroll Association revealed that 71% of American workers are living paycheck to paycheck.
What can be done? See if one or more of the following seven strategies could help get out of debt and build personal wealth.
This article focuses on getting out of debt:
- Spend less than the paycheck!
- Make more money.
- Get on the same page with spouse or partner.
To get serious about getting out of debt, read the keystone article on creating a budget that works.
A companion article focuses on three more strategies to stay out of debt and build personal wealth.
- Elect Plastic Surgery: Cut up the credit cards.
- Build up an emergency fund.
- Focus on wealth rather than debt.
Spend Less Than the Paycheck!
That’s the nut of it, isn’t it? Spend less and/or earn more. Look for ways to reduce expenses – the greater the reduction, the more money can pay toward debt and the faster one can become debt free. It doesn't mean living like a monk; look for expenses to reduce or eliminate (even if only temporarily) to get out of debt faster.
EXAMPLES:
- Avoid eating out. Cook meals at home, except on very special occasions.
- Become an expert on free or cheap. In many areas, the summer season of free concerts in the parks is just starting. Libraries have fee arts and crafts classes. Check out local events calendars. Be a tourist in your own town and region.
- Think before the purchase. Break the paycheck into hourly net earnings.Convert the price of any purchase to the time it takes to earn that price. For example, is that 60″ high definition flat screen television you’re thinking of purchasing worth 20 or 30 hours of work?
Make More Money.
Sometimes current income can only be stretched so far. Many people find the only way to catch up is to take a second job, temporarily at least. If that’s the only way, so be it. But control expenses so that the second job is temporary. For instance, set a goal that the second job only lasts until credit card XX is paid off.
Explore other ways to make more money? Is there a promotion within reach? Consider starting an online business without spending a lot of money. Sell items on Ebay? Look for a better job?
Get on the Same Page as Spouse or Partner.
Whatever strategies are chosen, decide on them together. Talking about money problems is uncomfortable for most people, but it is crucial for partners to agree on the strategies that will work for both.
Competing interests are financial and often marital suicide. Financial differences ranks as the number one cause of divorce. A spouse or partner that is contributing to the debt can be a big challenge. Don’t engage in the blame game. Be wiling to change spending habits first. Above all, avoid relationship problems by keeping open communication regarding finances.
In addition to the companion articles noted above, How to Get Out of Debt, Stay Out of Debt, and Live Prosperously by Jerrold Mundis has great information.
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