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Different studies have shown that between half and two thirds of people live paycheck to paycheck. That’s a pretty alarming statistic! This can be explained in part by the results of the current economy, our own attitudes about money and the lack of adaptation to a changing world.

change your attitude

The place to start is with your mindset. When it comes to life from paycheck to paycheck, you may well think “that’s the way it is” or “everyone does it,” which are false. Maintaining these attitudes will ensure that you will never improve your situation.

Take some time to think about what brought you to your current situation. In a Celebrating Financial Freedom article titled “4 Steps to Escape the Paycheck to Paycheck Life for Good,” the author identifies the following mental and behavioral impediments detrimental to financial health.

• You’ve come to the realization that debt is just a part of life: Contrary to what some may think, you don’t have to be in debt to survive in today’s world. You must decide to make paying off your liabilities your number one priority!
• Luxuries have become necessities: Certain luxuries, such as cable television, an expensive car, and eating out, have often gone from extras to necessities. These extras will bleed your budget.
• You’re not earning enough: You may be underemployed and putting too little effort into maximizing your employment status.
• You’re spending too much: You could also be spending more than you earn, a common trap for some people. This needs to be controlled.
• You have no plan – you basically spend your money until it runs out with no idea where it’s going. You really need a plan.
• Money is so easy to spend – Those credit cards feel so easy to swipe and sign — it doesn’t feel like cash. However, it is, and then comes the interest.
• You have a problem with spending: You have no self-control when it comes to spending, and may even be a shopaholic.
• The labor market has changed: Certainly, the labor market has changed and continues to change. You must learn to deal with those changes. On this topic, the author recommends a book by Dan Miller titled “48 Days to the Work You Love: Preparing for the New Normal.”

With a greater awareness of how you got to where you are, are you ready to begin your journey to financial health? Here are some specific steps to follow along with some helpful links.

Get out of debt

You must realize that debt is a choice. Interest and fees depleted the money you’ve earned. Eliminating your debt is the best place to start to turn your situation around.

Here are some areas where you can save money.

1) Food: Reduce the number of times you eat at restaurants. Pick up some healthy ingredients at a market and pack your lunch. This can result in significant savings for you. More food saving tips for you. Use coupons.
2) Car: another category of expensive expenses. If you can, download your car payment. Maybe even trade it in for a used car. Other ways to cut care costs include changing your oil less often, signing up for the Automobile Club for roadside assistance, researching repair costs, and delaying your car trade-in. Consider carpooling to work. Evaluate your auto insurance needs. If you have an old car that’s paid off, consider foregoing comprehensive and collision insurance. Maintain a clean driving record and be aware of low mileage discounts, bundling multiple lines with other types of insurance, and group auto insurance plans from employers, professionals, alumni, and other groups.
3) Entertainment: Consider ditching your cable TV for Netflix or Hulu. Here are some fun things to do for free. Go to the library for books and DVDs. Take advantage of free music and museums.
4) Clothes: You don’t need fancy clothes if you’re in debt, buy on sale, go to thrift stores and discount racks, buy second hand, order clothes for gifts, take care of the clothes you have, and sell clothes you don’t wear any longer.
5) Eliminate credit card debt: Start by calling your credit card companies to see if they’ll lower your interest rate. The average interest rate for credit cards is around 15 percent, but some can be as high as 30 percent. A study was done in 2002 that found that half of the participants who asked for a lower interest rate received one. Consider transferring that debt to a lower-interest account or taking out a loan to consolidate your debt. If these options aren’t feasible, prioritize your debts to pay off those with the highest interest rates first.
6) Medical Debt – You can start by offering to pay cash, if you have it, while you are still in the hospital or doctor’s office. This can save you 5, 10, or 25 percent up front. If you end up paying more than the full bill, you’ll get a refund. If it is less, you will be responsible for the rest. When you get a bill in the mail: The part of your bill that says you “may (should not) owe” can be negotiated. Compare what the bill says your insurance didn’t cover with what your insurer’s policy says it does cover. If there is a discrepancy, call the doctor’s office to have it resolved. Your provider may also put your bill on hold for 30 to 60 days to prevent you from going to a collection agency. Notify your provider of any secondary insurance you may have. If you already have medical debt, ask about any partial forgiveness programs or request a payment plan with 0 percent interest. Sometimes you can get a payment plan for a year or more.
7) Student Loans: There is a Public Service Loan Forgiveness Program that can allow those in the military, teachers, nonprofits, or public service jobs to get full forgiveness on their loans. There are other programs, such as Income-Based Pay, that will allow you to pay less than your regular payment if you don’t earn enough income. If you want to pay off your balance faster, start making biweekly payments.
8) Mortgage and IRS debt: Reduce your mortgage debt with biweekly payments. For IRS debt, try to arrange an installment plan with them.
In an article titled “The #1 Way to Stop Living Paycheck to Paycheck” by Alex Thomas Sadler, he offers three helpful apps for getting out of debt. They are Pay Off Debt, Ready For Zero, and DebtTracker Pro.

Increase your income

Even with cutting your expenses as much as possible, you still may not be able to cover everything. Now you need to change your focus to earn more money. Think about improving your current situation and income at your current job, getting a part-time job or an additional job, or some combination of these. Take some job-related classes and possibly earn a certificate to increase your income. Your job will often finance your tuition and books. Some other ideas for you: You can do freelance work (and that doesn’t include just writing), become a virtual assistant, bookkeeping, design, and more. You might enjoy being tutored in a subject that you enjoy. Sell ​​items you don’t need on eBay and Craigslist. Some more ideas to earn money for you.

Prepare and stick to a monthly budget

By preparing a monthly budget, you can keep track of where money is coming in and going out. Start by looking at your expenses from the previous month for necessary items like your mortgage or rent, car insurance, groceries, gas, etc. Then calculate how much you want to spend each month. Post that number somewhere, pay cash whenever you can, and even consider starting automatic deposits from your paycheck that will go directly to reducing your debt. Do this so you won’t be tempted to buy unnecessary luxury items.

The following is a link to more valuable budgeting articles: http://www.cfinancialfreedom.com/budgeting-budget-excuses-overcome/

Here are five apps that can help you create a budget and track your spending/savings goals.

• Level Money tracks your spending and gives you an idea of ​​how you’re doing. It’s free and will probably work best for those who have relatively simple and linear financial lives.
• Mint is a very popular app that helps you create a budget and then tracks your spending, monitors your credit score and stays up to date on potential fraud by automatically downloading transactions from bank accounts, credit cards and investment. The service allows you to combine all your finances in one place, giving you a constant overview of your financial status. You can also set up alerts and automatic bill payment.
• Budget Boss is a highly visual application that uses graphs and charts to track your budget and goals. It also calculates your future account balances, based on your current spending habits.
• HomeBudget (iPhone only) is an application that allows you to manage account balances, budgets, and bills. You can set up credit and debit accounts and keep track of balances, and it syncs data with other iPhone users and can export it to a desktop computer. Users can take a photo of the receipt and associate it with a “family sync” feature that allows household members to exchange information and work together within a single budget.
• Wally is a tool that shows you what comes in, what goes out, what you have saved and what you have budgeted. Wally helps you gain a better understanding of exactly where your money is going and then helps you set, track and achieve various financial goals.

Make a plan

In addition to making a budget, come up with a more macro-level plan for how you can stop living paycheck to paycheck. Find out what your top priorities are for your short-term and long-term future. These might include buying a house or car, taking a big vacation, creating an emergency savings fund, or saving for retirement. Remember that paying down debt will improve your credit score for those larger purchases. Stop spending money on the little things you don’t need so you can buy the bigger things you need later. Make your goals realistic so you don’t get discouraged. Spend time with similar people, people with a prudent and responsible mindset; spendthrifts can put you off. Finally, celebrate your successes in eliminating your debt!