penniesIf you’re living paycheck to paycheck, you may find it difficult to get ahead. With so many bills and other life expenses, it can be hard to break the cycle of living paycheck to paycheck. Fortunately, there are things you can do to break the cycle and get out of debt. First, you’ll need to acknowledge the situation you’re in. Then you can follow the steps in this article to get out of debt when you live paycheck to paycheck.

Be Honest About Your Circumstances

The first step in getting out of debt when you live paycheck to paycheck is being honest about circumstances. It’s time to acknowledge the fact that your debt may be holding you back from reaching other financial goals and spending as comfortably as you’d like. Once you acknowledge this, you’re ready to take the steps necessary to get out of debt.

You’ll need to be clear about how much debt you have. Write down each lender you owe money to and how much you owe. Then write down the interest rate next to the remaining balance. If your debt has any terms – such as a car loan for 36 months – write that down as well.

You can organize this information in a spreadsheet or just save it on paper. Keep this information handy because you’ll want to update it each month as you pay off your balances.

Having this document that lists all of your debts will be useful in keeping yourself accountable to your goal of getting out of debt.

Save Wherever Possible

The next step to get out of debt when you live paycheck to paycheck is to save wherever possible. If your money is tight, finding those places where you can save a little will go a long way. Here are 40 ways to save money on housing, healthcare, transportation, and food:

  1. Don’t live in more space than you need.
  2. Find and plug in air leaks.
  3. Turn off lights when you leave the room.
  4. Unplug appliances when not in use.
  5. Downgrade your cable, phone, and Internet plan.
  6. Line dry your clothes after washing.
  7. Don’t use your dishwasher’s heat dry function.
  8. Wash your laundry in cold water.
  9. Put your toilet on low-flow.
  10. Insulate your windows.
  11. Quit smoking if you smoke.
  12. Drink less alcohol.
  13. Opt for generic versions of your prescriptions.
  14. Take advantage of your medical and dental coverage.
  15. Enroll in a Flexible Spending Account or Health Savings Account.
  16. Walk instead of driving when possible.
  17. Bike instead of driving when possible.
  18. Grow a garden.
  19. Try home remedies for common ailments.
  20. Shop around when you have to have an expensive procedure done.
  21. Stay up-to-date with maintenance on your car.
  22. Find the cheapest gas station in your neighborhood.
  23. Carpool to work.
  24. Use public transportation.
  25. Shop around for the cheapest auto insurance.
  26. Drop collision insurance if your car is worth less than $3,000.
  27. Increase your auto insurance deductible to lower your monthly payments.
  28. Use a credit card that offers rewards for gas purchases.
  29. Improve gas mileage by driving the speed limit.
  30. Get all your insurance policies with the same carrier for discounts.
  31. Make a grocery list before shopping and stick to it.
  32. Shop based on the grocery store’s weekly deals.
  33. Buy generic food brands.
  34. Buy non-perishable items in bulk.
  35. Repurpose leftovers instead of tossing them.
  36. Bring your own lunch to work.
  37. Drink water for free.
  38. Cook more meals at home instead of takeout or dining out.
  39. Clean out your pantry before buying more food.
  40. Use loyalty cards.

Make More Money

Now that you’ve identified areas where you can save money, it’s time to focus on the other side of the equation: making more money. Saving money can only get you so far. There comes a point when you’ve saved in all areas you can save. At this point, making more money is exactly what you need to do.

Here are some ideas on how you can make more money:

  • Ask for a raise at your day job.
  • Go for a promotion at your day job.
  • Do overtime at your day job if available.
  • Take on a part-time job.
  • Take online surveys.
  • Sell crafts online, at fairs, and trade shows.
  • Do freelance work using one of your skills.

Use All Extra Money To Pay Off Debt

The last step after you’ve acknowledged your debt, saved money wherever possible, and made more money is to use all extra money to pay off debt. Remember that list you made of all your debts – the balances, interest rates, and terms? Now’s the time to revisit that list and plan a course of action.

There are two main approaches to paying off debt: the debt snowball method and the debt avalanche method. The debt snowball method involves paying off your smallest balance first and then working your way up to the largest balance. The debt avalanche method involves paying off the debt with the highest interest first and then working your way down to the one with the lowest interest.

Which method you choose will depend on your personal preference. The important thing is that you are using all the extra money you saved and made to pay off debt and not for anything else.

Final Thoughts

If you’re living paycheck to paycheck, it can be difficult to figure out how to get out of debt. The first step is being honest about your circumstances and acknowledging how much debt you have. The next step is to save wherever possible by identifying opportunities where you can cut back. Next, you’ll want to find ways to make more money at your day job, by getting a second job, or creating additional income on the side. Lastly, using all extra money to pay off debt will only help you become debt-free even faster.

How do you continue saving when money is tight? Tell us below!

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