8 Reasons Why You Are Living Pay to Pay

If you are living pay to pay, you’re in good company. Some studies report that 50 % of Australians live pay to pay and it’s worse if you’re in the USA where 75% of people do this. In fact, most people cannot deal with a $500 unexpected expense without borrowing the money or dipping into savings. All these facts are simply to let you know that you’re not alone.

Most people live pay to pay. However, it doesn’t have to be that way. You can break the pay to pay struggle once you identify the problem, set a budget, and learn how to spend less on what you need and what you want. It’s all about living within your means, while also identifying the things that will make your life a little bit easier and happier without breaking the bank.

This blog is part of a series about taking control of your finances and how to stop living on the short term reliance of your pay coming in.

Identifying the Scope of the Problem

The very first thing to do if you want to fix your struggle is to identify the scope of the problem. There could be one or more major reasons that you’re struggling to live pay to pay. Not everyone is struggling due to a lack of funds. Some people struggle due to a lack of planning and simply overspending. When you figure out your issue, you can correct it. Here are some common reasons for struggling.

1. Lack of Income – In many cases, money problems do not come from overspending but instead from lack of income. If you’re underemployed, or you simply are not making enough money to live the way you need or want to live, you’ll need to figure out a plan to remedy that situation. You can get a part-time job, freelance part time, or sell off some assets to pay down bills to fix this problem.
2. Overspending – Some people have enough money on paper, but due to not paying attention to a budget at all they overspend. If you have credit card debt, you may belong to this category. Credit cards are great tools but not if you keep any balance on them long term.
3. Credit Card Debt – Most credit cards now have standard double-digit interest rates, which makes them horrible deals. What’s worse is that some cards have fees too. A family with an income of just $40K a year can often end up with thousands of dollars in credit card debt over the years, with no way to ever pay them off. $30K's worth of credit debt on various cards can easily add up to over $1K a month in minimum payments if you’re not careful. Add it all up so you know where you stand. Check your interest rates too.
4. Too Much House – Did you buy more house than you can afford? When interest rates were low many people rushed to upgrade their homes. Banks often approve you for far more than you can really pay (despite Responsible Lending Rules). People often focus on the mortgage repayments but they forget the other expenses such as insurance, taxes, and upkeep.
5. Lack of Savings – Not having savings is expensive. It can cause one to borrow money even from payday lenders, which is a trap better avoided. Lack of savings can cost you so much money. You won’t be able to take advantage of deals that come along if you have no savings, nor deal with a minor unexpected expense such as a vehicle breakdown.
6. Illness – If you have a lot of medical expenses and this is the reason you are living pay to pay, that is hard. You cannot just magically make yourself better or skip the doctor. It is one reason people are in debt to start with. In fact, not all medicines are covered by government subsidies, and not all treatments are covered by Medicare. As we know private health insurance only goes so far and has become so costly.
7. Poor Credit – You can have poor credit even if you did nothing wrong. Having a low income, no credit cards, or low income and high credit cards even if you pay them religiously each month, can still result in low credit numbers. When you have poor credit, everything costs more - from interest and fees on home loans.
8. No Plan – Many people who struggle to make it between pay s often have no plan at all. The main reason for this is simply overwhelm. It’s just emotional and difficult to put into words how emotionally damaging money issues can be. For this reason, you need a plan.

Once you realise what your issues are, you can set up a plan to combat those problems. Until you know, you can’t do anything. It will take complete and utter honesty from you to yourself and anyone you are relying on to help you to overcome the situation. But you can overcome it if you plan to.

If you're interested in learning more about how I can help you reach your life and wealth goals and help you take a first step to overcoming the pay to pay struggles, I'm offering a FREE 30-minute Goal Breakthrough coaching call where we'll create your custom game plan to set you up for success in 2023.

I will be doing these calls on a first-come, first-served basis so if you're interested, please click https://calendly.com/abundeco/goalbreakthrough to schedule your call now.