3 Steps to Stop Living Paycheck to Paycheck

I know a lot of people, especially the junior enlisted, are quite literally living paycheck to paycheck.  After all their bills are paid, they almost have no money for anything else.  Any entertainment or unplanned expenses go on credit cards and starts the path to bankruptcy, depression and/or divorce.  Every day that passes like this makes it harder to recover from.  Their only option is to start today and get out of the negative cycle.  Here are 3 steps to stop living paycheck to paycheck:

1. Get back to zero.  The first and most important step is to get back to zero.  Track what you spend everyday and see if there are small changes you can make to get back to zero.  If you make $2K a month ensure that you only spend $2K a month.  If you are using your credit cards to supplement your income, then you will never get out of your situation.  The interest on your credit card will slowly keep increasing and your minimum payments will keep increasing.  This negative feedback loop will eventually bankrupt you the second you don't have access to new credit.  Mathematically, you can't do anything else until you get back to zero.
2. Micro-invest.  The next step is to start getting out of debt.  You can either pay the minimum payment until a credit card is paid off and wait for months or years for that to happen.  Once the credit card is paid off, you will eventually have a little more flexibility to stop living paycheck to paycheck.  A better option is to track everything you spend for 30 days and, I can almost guarantee, you can find $25 a month in places you can cut.  Put this extra $25 with your minimum payment and the math behind the compounding interest will be in your favor.  You can cut off months from paying off that credit card and finally have some flexibility from living paycheck to paycheck.  Moving small amounts of money is called micro-investing and can be very powerful for those not making a lot of money.
3. Focus fire.  Make sure you aren't rounding up on all your payments.  For example, someone has a $246 car payment and they put $250 a month towards it; a $56 minimum credit card payment and they put $60; etc.  It's better to tally up all those extra cents and dollars and focus them on paying down a credit card.  It's a mathematical principle why it's important to focus fire on your money.  Start by paying off the smallest balance and keep rolling those minimum payments to the next smallest balance.

If you are beyond the help of these tips, it's best to see your First Sergeant to see if they can help. Self identifying a problem is a courageous act.  If you're a civilian, try seeking help from your local church, friends or family members or a professional money manager.