Paycheck to Paycheck by Jim Stovall
Recent government and industry statistics show that 70 percent of Americans are living paycheck to paycheck. This means that these individuals are literally less than a month from going into default on their obligations, and bankruptcy is not far behind. When you study the individuals who make up this 70 percent segment of our population, there are some interesting factors that I believe can teach us all some valuable lessons.
The majority of the population who is living paycheck to paycheck have received several raises over the past five years. When you track their earning vs. spending, these raises make little or no long-term difference. In fact, in many cases, these paycheck to paycheck individuals are actually worse off financially several months after receiving an increase in income. This is because they use their increased income to secure more consumer debt.
This consumer debt, quite often, is used to purchase things that are decreasing in value. Any time you are involved in an economic model that involves borrowing money, paying a high rate of interest, and acquiring assets that are not worth the amount of the obligation while they continue to go down in value, you are in a never-ending losing cycle.
If you are one of these paycheck to paycheck individuals who makes up 70 percent of our population, let’s look at some steps you can take to break the cycle.
Stop all consumer debt going forward. If you find yourself in a hole, literally or figuratively, the first step toward getting out of the hole is to stop digging. Cut up your credit cards and vow to never again buy anything involving consumer debt.
Give your household a thorough financial checkup. Figure out how much money is coming in and where it is all going. You will be amazed at the amount of money you spend on things you had never really considered. I’m not telling you how you should spend your money, I’m simply saying it should be a conscious decision on your part. You work hard for your money, and it should work hard for you in the areas where you want to spend your income.
Get on a budget. A budget is nothing more or less than you taking control and ordering your money to do what you want it to do. Your budget is not a confining, inflexible document. Instead, it is there to help you save your sinking financial ship.
If you will follow these three simple steps, you will find yourself in the upper 30 percent of people in our society and well on your way to financial independence.
As you go through your day today, remember you’re going to have to change your financial pattern if you’re going to change your financial results.
Today’s the day!
This is an excerpt from Wisdom for Winners Volume 2, which is now available to listen to on Audible. Jim Stovall is the president of Narrative Television Network as well as a published author of many books, including most recently Will to Win. He is also a columnist and motivational speaker. Follow him on Twitter (@stovallauthor) or Facebook (@jimstovallauthor).