Every year, more than 1 million people in the U.S. file for personal bankruptcy. Most American homes have ten credit cards. People are spending more than they can afford. Americans have so much debt that they are drowning, and the problem is getting worse. Many people are losing their homes to foreclosure, which means they will have to live on the street because they owe so much money.
A lot of Americans spend all of their money on the day they get paid or within a week. The American dream is to have a nice home, a nice yard, and a nice car. Most Americans can't afford to live that dream, but they still try to make it come true.
Here are five ways to improve your financial situation if you live from paycheck to paycheck:
- The school. Go back to school to learn more or take training classes at your current job to improve your skills. This will make it easier for you to get a raise or a promotion at work. That money can be used to start a savings account, plan for retirement, pay down debts, or pay for necessary expenses.
- Budget. If you have debt, stop using credit cards and pay cash for everything. If you don't have enough money to pay for things like food, clothes, a place to live, or medical care, make a budget to figure out how much you spend and how much you make each month. Rethink how you spend your money, cut your costs and plans, or cancel them (cable, phone, cell phone, Internet, etc.). You can get extra money to pay down debt by shopping at discount stores or outlets, using coupons, carpooling, etc.
- Direct deposit. If your job doesn't offer direct deposit, you should sign up right away. On average, it costs anywhere from 1% to 5% of the amount of the check to cash it at a check-cashing store. If you do this every time you get paid, you will lose money. You can save some money by using direct deposit, which is free.
- Seek Help. Don't feel like you are alone. Talk to friends, family members, or neighbours who have been in the same situation. Go to the library or search online for different ways to save money, learn new skills, and shop on a budget. http://www.budgetdial.com and http://www.stretcher.com are two great websites. A lot of grocery stores also offer classes on how to shop on a tight budget.
- Savings. You should have enough money saved to pay your bills for 3 to 6 months. Right now, banks have very low interest rates. Try opening an online savings account with a high interest rate, such as one at http://www.emigrantdirect.com or http://www.ing.com, which gives you an average of 4% to 5% interest on your money. Then you can set long-term savings goals, like saving for retirement, college, buying a home, etc.
Nothing ever stays the same. If you want to stop living from paycheck to paycheck, you have to change your way of thinking, take a leap of faith, and focus on your financial goals. You can also watch financial shows on TV or get books from the library about personal finance, getting control of your money, and other topics.
