Living paycheck to paycheck is the pits. And most of us have been there—I know my husband and I have. It feels unescapable. You feel completely trapped in a life without purpose. You feel defined by fear, debt, and consumerism. My husband, Miguel, and I have, however, been able to escape that cycle, even though we still have a lot of work to do. I would like to share some of our story and how we started saving little by little, while paying off debt at the same time.
My husband owns a body shop, where he works solo, and I am a teacher. We rent our house, and we have three kids ages three and under. While Miguel loves owning his own business, it can be hard at times with the feast-or-famine cycle. That’s why it helps that right now I am working and that my salary is always the same. One of the reasons that I started this blog was to generate a new income for us, so that eventually I could be at home with our kids. However, even with just our two incomes, we have been able little by little break out of living paycheck to paycheck, and we believe that over time, if we stay on the path that we are on, that we will accomplish our goals.
Right now, we are saving a few hundred dollars a month, and we are putting almost half of my paycheck towards paying off debt. How did we get there, when not too long ago we had no money left over after paying all our monthly bills? If you are in a situation where you fear the unknown, because your credit cards are maxed out and you have little to no savings, you are not alone, and there are changes that you can make. It will not be an easy fix, however. I would like to share with you what we have done that has helped us.
Trim Down Your Grocery Budget
This was one of the biggest things that has helped us. We are a family of five, and we even still have to buy diapers and wipes for two of our kids. Two of our kids also have food allergies. However, I have been able to cut our grocery budget down to less than $500 a month. There are a lot of small things that you can do to trim down your grocery budget:
1.) Plan your meals ahead of time.
Not only is this a healthier option, it will also save you a lot of money. Start planning your meals by looking at what is already in your pantry and your fridge. Find recipes that use simple ingredients. Use the sales papers to plan what you will cook based on what is on sale that week.
2.) Shop discount grocery stores.
I try to buy everything I can at Aldi, and what I can’t find there, I go to Walmart. There are lots of other options to find cheaper prices on groceries as well, depending on where you live.
3.) Cook your food in bulk.
This is another idea that I love, because not only does it save money, it also saves time. Who can’t use more time? Plan a freezer cooking day—there are tons of ideas featured on Pinterest on how to plan, prepare, and have a freezer cooking day on a budget. There are recipes out there for almost anything.
4.) Negotiate with companies for better rates on your services.
There may be a special discount with your car insurance or with your cell phone provider that you did not know about, that you qualify for. Or, you may be paying for a service that you don’t need. It can really pay off to pay close attention to these types of monthly bills to make sure that you are not overpaying.
5.) Use the envelope system for areas of your budget that can fluctuate from month to month.
Examples of the areas in which this principle would apply would be groceries, eating out, gas, entertainment, clothing, and blow money. Set a limit for each of these areas, and when you get paid, withdraw the cash money for each of those items, and put them in the appropriate envelope. That is exactly how much money you have to spend on that particular thing for the whole month. This well help prevent splurging or going over budget.
6.) Use the snowball system to pay off debt.
Write down all of your debts, including the name of the creditor, the balance, and the monthly payments. Work on paying off the smallest debt first (while you are making at least minimum payments on all the other debts.) Then, when you pay off the smallest debt, apply that amount that you were paying each month to the next smallest debt. After you have paid off that debt, then apply those two amounts to the next smallest debt, and so on. This really is the fastest way to pay off debt. I use the I Was Broke, Now I’m Not app to keep track of my budget and my debt snowball.
7.) Keep track of your spending for three months, and look at what you can cut out.
Keep your receipts and pay attention to them. Go through them and see what you don’t really need. This will free up even more money for you every month to put towards things that you care about more, such as paying off debt, saving for retirement, paying for your child’s extracurricular activities, saving for a vacation, etc.
The bottom line of all of this is, you want to be in control of your money, not your money controlling you. But getting there takes time. The good news is that these baby steps are doable. So let’s get started living frugally right now so that we can have what we truly desire later!