How to Get Off the Money Merry-Go-Round

San Diego, CA. Estimates are that 70 percent of all adult working Americans have no money left over after the monthly bills are paid. Also known as living from paycheck to paycheck, it often happens, with an expected emergency, but is also due in part because of poor spending habits and patterns. Complicating the problem further, the people affected have little or no savings. Panic decisions, often involving thousands of dollars of debt, are made by financially undisciplined people. These unwise decisions, made under what seem to be very desperate situations, result in those individuals living from paycheck to paycheck, also known as the money-merry-go-round.

If you, or someone you know, are on the money-merry-go-round, living from paycheck to paycheck or utilizing expensive payday loans, there are some immediate steps to take to reverse it and get back on a pay-as-you-go basis. The goal is to spend smarter, obtain a greater value and thereby generating additional savings to put towards paying off a payday loan and or getting back on a pay-as-you-go track. The steps are:

(1) Scrutinize everyday spending, gather receipts, and identify dangerous trends of regular convenience purchases. Also, look for other ways to achieve more value for your dollars. A good target is ten to twenty percent. Determine what you pay others for things or services you may do for yourself, such self-serve gasoline, or a car wash, lawn mowing, laundry etc.

(2) Set aside the all savings accumulated until there is enough to satisfy the payday loan or get enough ahead to pay the rent or mortgage from income received before its due, instead of utilizing en entire paycheck at the first of the month to pay rent or mortgage.

(3) Establish a written spending-plan, a/k/a budget for income and outgo.

(4) Either begin or take greater advantage of coupons and rebates for household and grocery items. Immediate impact may results because about 30 cents of every take home dollar goes to spending in this area.

If you are living from paycheck to paycheck or “rolling over” payday loans or having difficulty keeping up with your creditors, visit the ICFE's Web site at www.icfe.info and click on "Mending Spending.

To receive the same information by mail, please send a self addressed, 60 cent stamped envelope to:
ICFE "Mending Spending"
PO Box 34070 San Diego
CA 92163-4070.

©  Paul Richard, RFC and the Institute for Consumer Financial Education. All rights reserved.