The Danger Of Living Paycheck To Paycheck And What To Do If You Are
Believe it or not, nearly 61% of Americans today are living paycheck to paycheck. That translates to about 157 million people who make just enough each month to get by. While living paycheck to paycheck may seem inescapable, it’s a dangerous approach to finances and spending that can easily crumble, threatening the well-being of you and your family.
If you’re one of the many Americans living paycheck to paycheck, here’s a look at why that’s a disaster waiting to happen — and how you can take steps to get out from under the living paycheck-to-paycheck cloud.
The 3 Things That Might Happen If You’re Living Paycheck To Paycheck
1. You May Accumulate Your Debt
Accumulating debt is a major financial issue and those who are living paycheck to paycheck fall deeper into a financial hole that makes it nearly impossible to get out of debt. When living paycheck to paycheck, you aren’t able to gather savings at the same time or even think about ways to pay off your debt.
2. You’ll Have No Funds For Emergencies
It also makes it difficult to cover an emergency, such as treatment at an emergency room or pressing home repairs. Another sad fact: When you are living paycheck to paycheck, you’re likely hurting your credit score or have no room for it to improve.
3. Your Credit Score Will Fall And Keep You Down
When you live paycheck to paycheck and don’t take care of debt repayment, your debt accumulates which lowers your credit score. A low credit score means it’s nearly impossible to upgrade your living conditions, your car, or in some cases, even get the job you like. Bad credit can be impacting your quality of life for many years.
How To Avoid Dangers Of Living Paycheck To Paycheck
Overspending is usually a huge factor in living paycheck to paycheck. Take the time to create or reevaluate your budget. Where are you spending the most money and are there areas where you can cut back? Committing to a budget, especially one that includes launching a savings plan, can go a long way to achieving an improved financial status.
Look For Additional Income Streams
It’s not the most surprising approach to getting out of living paycheck to paycheck but adding additional streams may be easier than you think. Side hustles such as food delivery, pet sitting, and selling handmade items can add significantly to your monthly cash flow.
Ask For A Raise
Employees have a lot of power right now, thanks to more people leaving their jobs or working from home during the pandemic. It may be the right time to either ask for a raise (be sure to prove why you should get one) or see if your employer may be inclined to offer new perks, such as on-site daycare or more time off.
Take A Break From Your Credit Card
Credit card usage often goes hand in hand with living paycheck to paycheck. If you’re financially insecure, you’re more likely to use a credit card to make the purchases, you need — and that leads to high balances each month. Consider freezing your credit card for a while to avoid making large or unnecessary purchases.
Get Financial Advice
While it may be beneficial to share your financial issues with trusted family, friends, or a partner, talking about money to those you are most close with can be difficult. Consider a financial adviser instead.
Financial advisers, often found in banks or working independently, can take a look at your monthly spending, pinpoint areas for improvement, or even develop a plan to get you out of the living paycheck to paycheck shadow.
Start Paying Down Debt
Yes, even thinking about addressing your debt is difficult when you are financially vulnerable, but it’s a key way to move away from living paycheck to paycheck. Consider paying off your smallest debt amount first and then moving up from there. Or, if possible, pay off the largest amount and then go down from there.
Consider Alternative Ways To Cover Emergencies
If you’re facing a financial emergency while living paycheck to paycheck, it can seem like an impossible task to address such unexpected expenses. Online title loans are designed to address such emergencies as hospital bills and last-minute travel by using your vehicle’s title as collateral. If you qualify, Auto Cash USA can connect you with a lender who can give you up to $15,000.
Online title loans are easy to qualify for — and the process can take as little as 30 minutes. Simply begin online. Fill out the online title loans form on our homepage. We’ll give you a quick call to discuss the required items for our online title loans, answer your questions, and guide you through the final steps. Once you are approved, you’ll get the cash you deserve either the same day or the following business day.
Get Started Today
If you’re living paycheck to paycheck, there are several different ways to see light at the end of the financial tunnel. Online title loans may help. Fill out our title loans form on our homepage, call us, or visit us today.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.