Stop Living Paycheck To Paycheck

Tired of living paycheck to paycheck? Here’s some advice on getting your money situation together.

Write down everything you buy
Saving and handcopying receipts can be a bitch, so we prefer to put everything on our credit/debit card, giving us a line item for every purchase, which we then drop from the online system into our budget software.

Set goals
If you’re just getting started out, here’s a good one: save at least 10% of all your earnings, with the goal of building a 3-month emergency fund (all the money you would need to pay for rent, food and necessary expenses if you say, got fired).

Spend less
It doesn’t mean you can’t have fun, it’s all about killing those unnecessary drags on your wallet. Find deals, lower your cable bill, lower your credit card APR, bag your lunch, bring a thermos instead of going for Starbucks, etc. Do you have a special talent or hobby, like taking photographs? Try bartering it with your friends for their goods and services.

Make more money
Sell stuff you don’t need on ebay or craigslist or hold a yard sale. Pick up a second job. Your savings account is probably earning something paltry like 1.something%. Open a high-yield online savings account and move that money in there.

What are your tips for breaking the cycle of splurge and scrounge? — BEN POPKEN


Edit Your Comment

  1. humphrmi says:

    If you’re a homeowner, always look for ways to reduce those expenses:

    – Depending on your state, county, municipality, etc. you might be able to challenge your property tax assessment. In some places (like Northeastern Illinois, where I live) property assessment attorneys take these cases on contingency, meaning you pay them nothing unless they actually reduce your taxes, and then you only pay a percentage of the reduction. You sign some POA papers, the attorney does all the work, you pay a one-time attorneys fee, and then your taxes go down for the remainder of the assessment period (3 years, here in Chicago).

    – Make a list of every insurance coverage you have, and then bid them out every year. Depending on your situation, combining home and car insurance under one carrier can save you money. But don’t stop there, use your purchasing power to get better rates. Make a list of all your policies, and send out your coverage requirements to various insurance agencies and companies and ask them to bid on your business. Then, after running their ratings through Moody’s, pick the best rated company with the lowest rates.

    These techniques can help lower bills for some of those things that you usually take for granted or figure you can’t change.

  2. zolielo says:

    The opportunity cost of writing down all the transactions seemingly is the way to go to achieve a reduction in spending. Coupled with the statistics that such a list can enlighten.

    It is far to abstract and a bit too easy to use a credit or debt card…

  3. theWolf says:


    I also live in Chicago. I was able to successfully appeal my last assessment, but as a condo association we discussed the possibility of hiring an attorney to handle our building on a class action (for lack of a better term) basis. Do you know if it is possible to do so? Or would we be better served to continue handling our properties individually?

  4. thrillhouse says:

    Pretty good advice – kudos, Consumerist

    Under the “Spend Less” Category, add:
    Reduce the amount of your income going out in monthly payments. Pay off your debt. Sell your financed car and buy one for cash. Getting rid of payments from debt will make you feel like you got a pay raise.

    Average car payment in America is ~$378 per month. On the flip-side, you can fund your child’s college fund for around ~$100 per month. The point: If you constantly buy new cars, you don’t have to wonder why Jr’s ESA isn’t funded.

  5. BillyMumphry says:

    I will never understand why people think it’s a good idea to finance a depreciating asset. For those scoring at home that means anything other than a home.

    If you can’t pay cash, you cannot and should not, afford it.

  6. iMike says:

    Buy one less of something every week/month or whatever period makes sense. You won’t miss it nearly as much as cutting something out altogether.

    E.g. figure out how to use one less:

    *tank of gas per month by combining trips, car pooling, etc. Savings: $40-100/month

    *round of golf (or tennis lesson, or personal training session, or yoga class, etc) per month. Savings: $20-100/month

    *night out at the bar/movies/show, etc. Savings: $50-200/month

    And so on.

  7. iMike says:

    Original post munched by the intarweb.

    Buy one less of something every month. You won’t miss it nearly as much as if you cut that spend out altogether.


    Buy one less tank of gas by carpooling, combining trips, working from home, etc. Savings: $40-100/mo.

    Dine out one time less. Savings: $20-100/mo.

    Go out to a bar/movie/show, etc one time less. Savings: $20-200/mo.


  8. Type-E says:

    @BillyMumphry: I can’t agree more. A lot of American has been conditioned to believe, what they have is what is available for them to borrow. If their loan allows them to buy a $40k SUV, they will max the loan and finance their new car.

    I personally started with a beat-up used car that I paid cash for. After a while, I have enough cash to buy a better one and I paid cash for it as well.

  9. DCKiwi says:

    Under Earn More Money:

    Have your credit card company pay you, not the other way around.

    Last year I earned $650 cash by using my American Express Blue Cash card, and paid $0 in interest/fees.

    I also picked up goodies like 25% off coupons for Best Buy and Amazon (very rare) in the bi-annual American Express Wishlist promotion.

    Sign up for a cash back card like this (Blue Cash is the best one around, with no annual limits and up to 5% cash back) and then charge EVERYTHING you already purchase on it, including utility bills, car insurance, etc., then kick back and watch the $$$ pile up.

    If only I could charge my mortgage…..

  10. Type-E says:

    @iMike: I think non fixed expense are hard to get rid of. I can hardly carpool or have less dine outs. However, I think they doesn’t hurt as much as the fixed ones. For example:

    $40 cell phone plan , may be + $20 on data plans
    $10 netflix or Tivo fee
    $60 digital cable
    $40 internet
    $30 phone line with long distance
    $15 Satellite radio

    I saved by doing these:
    cellphone: $1000 1000 minute prepaid card for the year, add more when I needed more: avg $10 a month
    Movies: I can rent it when I need to see a movie, there are only 2 or so that is worth watching a month, sometimes none.
    TV: I have OTA HD, free. I missed some channels but I can live with it.
    Internet: AT&T DSL $20 a month
    Phone: No long distance $15 a month
    Long distance: Use mostly 2 to 5 cents a minute.
    Radio: AM/FM/HD Radio free

  11. nequam says:

    I have gotten to the point where keeping control of my spending is effortless, but I started out using simple techniques like writing down every purchase. At this point, I have Quicken records of every transaction I’ve made going back 7 years. It takes a few minutes a week to download debit/credit card transactions — and I’m constantly monitoring my progress.

    One of the most helpful techniques I have used is the envelope budget. After determining your monthly expenses (by writing them down for a full month), you find where adjustments can be made and you set yourself a budget for each catergory (i.e., groceries, dining out, clothing, etc.). Then you label an envelope for each category. On the first day of every month, withdraw the total amount of your budget from the bank and place the amount for each category in its corresponding envelope. (It will also cut down on your ATM transactions)

    Bring the envelope with you, say, to the grocery store and you can see in a dramatic way how much you have available to spend that month. If you have extra left over, you can remove it into a savings account or simply leave it in the envelope. When we used to do this, we would just allow our dining-out money to accumulate if we didn’t use it. After a couple of months, we had enough to splurge on an extra fancy dinner (and without needing a special occasion).

    In fact, this method will show you that you don’t need to become reclusive in order to save money: If at the end of the month you have money left over in your dining-out or movie envelope, it may signal that you and your spouse need to go on more dates.

    Most importantly, the method will help you develop good spending habits so you won’t need the envelopes after a while.

  12. cmac says:

    I cut around a $100/mo off my grocery expenses by using grocery store websites to create my shopping list before I go. The online tool generates your shopping list from the weekly store ad. I cross-check that list with what’s already in my pantry to avoid unnecessary purchases. Also, whenever buying pre-packaged groceries sold by weight (ie, hamburger, cheicken, etc), select the lightest packages. You will never notice that .15 lbs you didn’t purchase and consume. You’ll not only save cash, but you’ll also avoid those extra calories.

  13. nequam says:

    Also… you might institute a 24-hour rule. Set an amount (try $50 or $100) and make a rule that you will not spend more than that amount on any single item until you’ve had 24 hours to think about it. It helps cut out a lot of impulse purchases.

    Also… stay off of ebay if you’ve been drinking.

  14. myth90045 says:


    i like that envelope method. I will have to try that out. I was recently let go and found a job that pays less then what i was making. from now on, I have to watch what I spend, since I dont want to be in debt like i was before..thanks for the advice!!

  15. etinterrapax says:

    Learn to cook and how to manage a household frugally. A good cook can buy enough without waste, prepare food well the first time, plan meals from leftovers, find creative use for what’s on hand in the house, deal with whatever comes in (in-season vegetables, leftovers sent home after holiday meals), and work the supermarket system to advantage. It’s really just maximizing available resources and reducing waste.

  16. acambras says:


    The only fault I find with a system like this is that by putting cash into envelopes at the beginning of the month, a person deprives him/herself of possible benefits (cash back, points or miles rewards if the stuff had been put on a card, or interest if it sits in an interest-bearing account).

    Mine is a modified system. Since dining out is a vice for me (and it’s too easy to forget how much I’m spending when I put it on plastic), I withdraw the cash for the month, and when it’s gone, it’s gone. I also withdraw a small amount monthly for “petty cash.” But the rest of my envelopes are virtual — money for regular expenses (like groceries) lives in my checking account until my rewards card statement comes in. And money being saved for big-ticket items and occasional purchases lives in my ING Savings account, which gets a nice rate.

    It does take a fair amount of self-discipline to make “virtual” envelopes work, though, so using all paper envelopes and cash is probably a good idea for beginners.

  17. acambras says:


    So true! And what cmac said about using grocery store websites — my grocery store’s website has been a great tool for me.

    Learn to cook and how to manage a household frugally.

    Both your wallet and your body will thank you for it.

  18. jamesdenver says:

    I’ve had CC debt up and down all through my early 20s. I’d get it down, rack it up, paid it back. I’ve been living debt free for five years and there’s no more liberating feeling than not owing anybody any money, (except for my equity filled house).

    I’ve read many “get out of CC guides out there” but i think they’re missing one point: they tell you to cut back on things, cut out little expenses like $20-30 a month things, watch how much you eat out, etc. that’s smart, but it won’t happen without a fundamental life philosophy change regarding your goals, need, and wants. If you still like going to the mall to BUY stuff to make yourself happy, it won’t happen. I believe spending is like an addiction, and eventually you’ll relapse. If you hang out with friends who don’t see a good time as anything else than spending $100 on dinner and martini, it’s a tough call and you may see less of them. on the other hand you may find friends that enjoy things like drinking coffee at a diner, or practicing spanish together.

    I noticed that when i had $4,000 in debt it’s a lot easier to justify spending 40-60 bucks on something. it’s barely a dent in what you owe. now with a clean slate, i watch my purchases even MORE carefully than when i had a few grand on the cards.

    Also you can then using cards to MAKE you money. some cards offer 1-5% cash back on purchases, and i have a UAL miles card – so even though i prefer cash, i use mine for groceries, gas, etc.. and as soon as i walk in the door make an online payment from my checking account for $40-50 or whatever i spent.

    oh i think ebay and craigslist are excellent tools for our culture. i find clothes, tools, books, gifts, and lots of new stuff too. i hope craigslist stays exactly the way it is and never sells out to registrations, ads, etc

  19. thrillhouse says:


    The fault I find with your system is the tendency to spend more on plastic. Fast food, for example, found that you’ll spend 10%+ extra when paying with plastic. Thats why they all started accepting them 5 or 6 years ago. Otherwise the fees they pay wouldn’t make sense. Amplify that by the land of impulse that is the grocery store and it can get quite out of hand. So getting 1-5% back isn’t so hot if you overspend by 10% or 6% or 8%…

    Also, there’s no need to sweat interest rates on money thats going out before the end of the month. Its not an investment, its expenses.

    I can attest to the envelope system (physical, not virtual). It takes no time at all and you know exactly where you stand on food/dinning out/clothes… and when the money is gone, its gone. Overspending becomes a thing of the past. Its not hip, and you might get some weird looks from the clerk when you whip out your envelope full of cash, but since broke is normal, I’d rather be weird.

  20. acambras says:


    Like I said, it’s all about knowing oneself. I don’t use plastic for dining (whether it’s fast food, Dunkin Donuts, or a fine restaurant) because I know I’m apt to overspend in that category.

    I have remarkable self-restraint in grocery stores. Send my boyfriend grocery shopping, however, and he’ll come back with Double Stuff Oreos, Red Bull, and Marshmallow Peeps. For me, plastic works at the grocery store (especially since I get 3% cash back while managing not to overspend); the boyfriend would do better with the envelope full of cash.

    Know thyself — IMHO, it’s an essential part of financial management — you have to know yourself (and your habits and vices) before you can expect to change any of them.

  21. mac-phisto says:

    @acambras: PEEPS!

  22. acambras says:


    Yep, my boyfriend was hanging with his peeps this past weekend. His marshmallow peeps…

  23. joemono says:

    Staying off ebay while drinking is my favorite piece of advice in this thread so far. And remember, friends don’t let friends drink and bid.

  24. nequam says:

    @acambras: Excellent. What I described is not what I do anymore, but i needed it in order to break bad habits. I now use a credit card to take advantage of a points program. I am very disciplined with it, so it works. My expenses really aren’t different using plastic than with cash (and i can verify this because I check my balances nearly every day and I am organized to the extreme), but I realize the same is not true for many people.

    For cash, I have a separate checking account (no fee) and every monday, a set small amount transfers from my main account (where my paycheck direct deposits) to the spending money account. That’s all I get to spend for the week. If money accumulates in that account, I transfer to an ING account once it reaches a certain threshold. I do the same thing as you with the ING account (I’ve named it “special purpose account”).

    There is a lot of good advice in everybody’s comments.

  25. Raachie says:

    I dont even have to be drunk to impulse spend on ebay. I just have to stop going on that site! Anyway, I love this article and the other advice you all have been making. Im an (almost) 20 year old college student. Right now, I currently have no job, but I am a caregiver for my mom and should soon be getting income from the state for being so.

    Thanks for all the advice everyone! If anyone has any words of wisdom for me, please feel free to send a message my way!

  26. Raachie says:

    Oh, Does anyone know of any bank that doesnt transfer funds from your checking to savings? I had WaMu for a while, and while it was okayyy, I didnt like that they “make” us transfer $25.00 from Checking to Savings every month. I know it would be useful if I werent *Gulp* Broke, but well the sad truth is that I am.. Also, Im a little naive so maybe I just didnt realize I couldve opted out of that?

  27. acambras says:


    Maybe that was a special type of account? Meaning that as a condition to having the account (free checking, for example) you had to have a savings account connected to it and do an auto-transfer every month?

    In any case, there are plenty of free checking accounts out there that don’t have such strings attached. Some require direct deposit — since my employer doesn’t offer DD, I’m SOL on that one. But my bank (Wachovia) doesn’t require direct deposit.

    Shop around — if you do a little research, you should be able to find a bank or credit union that offers free checking, along with the convenience and perks that work for you.

    Oh, and stay off e-Bay! ;-)

  28. hellinmyeyes says:

    For a number of years, if I have come up short in my checking account at the end of the month, I’ll float a necessary expense on my credit card (tank of gas, small trip to the grocer) to make it to the next payday. I never really realized until I started crunching the numbers that I haven’t been paying off those floating expenses.

    A friend of mine was telling me about his bout of credit card debt he encountered when he lost his job and his good-for-nothing spouse also was unemployed. After a while, he said, he decided that he wouldn’t charge anything on his credit card that was not something he could find around his house years later. That is, he wouldn’t buy groceries, alcohol, gasoline, etc.; he would do it only if it was a tangible, durable purchase like electronics, books, or furnishings.

    I decided that was a system I’d take on also, but regardless of the rule that was there for my purchases, it took me until that conversation to realize how much will power is involved anyway. Now, if I just can get him to quit smoking…