Stop Living Paycheck To Paycheck

We all know how to stop living pay check to pay check and get out of debt. Its simple really. “Spend less then you earn” Simple. But, what does that look in real life? Australians are currently spending approximately 190% of there income, and this is projected to reach close to 230% over the next 5 years. When we all know the basic idea of spending less, how is this possible? This is just as simple. We don’t do it.

The reason we don’t follow this rule could be almost anything. There are many reasons why one would get a personal loan, or a credit card. An unexpected bill, a car braking down, or an emergency hospital bill.

Did you know the average Australian family is just $1000 away from bankruptcy? We have more debt then ever before, and one of the biggest is credit card debt. Now I’m not saying all credit cards are bad, Their are people that use credit cards correctly ( more on how to use credit cards in a future post) but unfortunately they are few and far between. One of the biggest reasons for using a credit card? To help cover bills that where either not budgeted for or unforeseen.

So, how do we get to the stage of spending less then we earn? Or living within our means? The rules sound simple, but they can be tough when first starting out.

Below I’ve written my top 6 steps to help you stop living pay check to pay check.

1)The first step, and probably the toughest, is admitting that this was your doing, and realising that only you can get yourself out of it.

2)Do a budget, a realistic one. There is a budget planner template available in the Designher Wealth group. For this, I recommend creating 2 separate budgets, one for everyday recurring expenses such as the phone bill, rent etc, and another listing all of your debts. This is probably the most important one as this will give you an idea as to what your monthly expenses are and help you prepare for them in the future

3)Once you have your budgets in place, stick to them. Creating a new habits can be hard and scary at first, but will quickly become the new norm, and can help relieve a lot of stress once you start to see where your money has been and will be going. Another great thing to do here is to carefully go over your budgets. Does everything ad up? If need be, look closely at your expenses. Are there anything you could cut out, even temporarily to help create a little wiggle room?

4)Once you have your budgets in place, the fun really starts. This is a great time to make a list of all of your financial goals, big or small. It can be anything from starting a savings fund, to paying off the house, to a year long around the world holiday. It doesn’t matter what you write here, there is no judgement and no right or wrong answer here. For example, I have written on my list that I would love to be able to pay cash for my dream home within 10 years. The point is to write things that will help motivate and inspire you.

5). Another tough one is, consider selling your home or car and downsizing if possible. This obviously isn’t for everyone and will depend on several things including if this is a possibility, any possible costs involved vs possible return and how much debt you are trying to clear. If you have say $5000 worth of debt. Selling your family home might not be the best move, where as downsizing your car might be a more better suited option.

6. Review your goals constantly – look to tweak & improve. A common misconception is that once you have done a budget, its done for good. That simply isn’t true. A budget.,along with your goals, should be revisited and tweaked often. Constantly reviewing your goals and budget help you get a better idea of where all your money is going, and helps to keep you motivated.

If you are under financial stress or need any advice on these steps, or anything else finance related, I encourage you to follow this link and join my free Facebook community.  

Heather

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