America seems to be king of living paycheck to paycheck. According to a 2007 article on CareerBuilder.com, 41% of workers in the US claim to live paycheck to paycheck. The article also says that these individuals do not save for rainy day, because they do not believe that they make enough to do it. If they could only get a better paying job, they could save more. However, a study from MetLife in 2003 says that 52% of Americans report living paycheck to paycheck. This study also negates the idea that by making more, you are less likely to live this way. According to this study, of those making more than $75000 a year, 34% report living paycheck to paycheck. Harper’s Index said in December of 2008 that 47% of Americans live paycheck to paycheck and that 21% of them report making more than $100000 a year. In his book Financial Peace Revisited, Dave Ramsey sites the U.S. Department of Commerce and says that “the typical American saves 2.2 percent of after-tax income, while NLI Research says the average Japanese saved 27.0 percent of after-tax income” (Ramsey, p. 107).
We live in one of the wealthiest countries in the world. We are blessed beyond measure. Yet we live way beyond our means and find ourselves in financial pitfalls that we could avoid if we tried.
Living paycheck to paycheck sure is stressful. I’ve done it– most of my college career to be exact. As a sophomore, our RA paychecks were unexpectedly cut (do to lack of budget planning at the university level, oops), and I went from earning $200-$400 a month to about $90. Talk about stressful. Most of my friends did not have to work because their parents provided spending money, whereas mine made it very clear when I left for college that I would have to earn any spending money I needed. Since responsibility is an overactive blessing and curse in my life, I took that charge to heart and made some financial decisions that were dumb and cost me a lot (i.e. my first credit card). That year’s pay cut, coupled with my inability to say no to my friends and ask for my parents help, has ended up costing me a lot more than the price tag on those few movies or dinners out.
Fast forward a few years to 2009.
I realized this summer that I still continue to be a poor manager of my resources. I make more than $90 a month now, but I still could not seem to shake that habit of living paycheck to paycheck. Not only do I get a decent salary, I have a paid for apartment, a meal plan, free gym membership, and free or severely discounted entrance to division one sporting events. Despite that, I still found myself, most months, waiting for the next paycheck. Despite my renewed focus on budgeting last November, I do not have much to show for it (minus a small emergency fund).
I have a job that I love. I have an apartment that I love. And, I have the chance to make some good, but tough decisions now for the future. Decisions that mean when the day comes that I have to be a big girl and pay for my apartment, utilities, etc, I can with little stress. Decisions that mean when I ring in 30 in a few years, I will ring it in with no debt.
For the last six weeks I have been taking Dave Ramsey’s Financial Peace University class. It’s a 13 week course focused not only on teaching people how to manage money, but helping break some of the strongholds years of habits have formed in peoples’ lives. The more I learn, the more I am convinced, many people are poor, and living paycheck to paycheck that do not have to be. They just routinely making choices that keep them there. Most are doing things they only way they know how, most have never learned any better. Most live broke, and will die broke.
I do not want to be like most people.
I am daily choosing to live like no one else, so that later I can LIVE like no one else!
I am now living a different kind of paycheck to paycheck. When I got paid at on September 30th, I paid off my first credit card.
That same card that I opened years ago so I could live like all my friends. That’s right, it’s history. Like the lifestyle I chose to create it in the first place.
I did some projecting that night, and realized, that with my next paycheck, on October 30th, I will pay off the next one. I have been looking forward to the next paycheck all month!! In a few months, I should have paid off the next one, and be on to knocking out my student loans.
I have a brand new perspective on what it means to live paycheck to paycheck. This perspective is WAY more fun, and WAY less stressful. The longer that I live this way, the more I am convinced that our country would be in a very different place if people chose to pay themselves first and not be a slave to debt.
I still have a long way to go, but I’m getting there– paycheck to paycheck.