Updated on 01.17.08

How To Get Off The Paycheck-To-Paycheck Treadmill In Just Six Months

Trent Hamm

It’s scary: according to Money Magazine, 65% of Americans are in a financial situation where they are less than one paycheck away from financial meltdown. In other words, the majority of Americans are currently living paycheck to paycheck and would be approaching a major crisis in less than a month if one of the family members were suddenly unemployed or injured or a major financial crisis struck.

I used to be on this treadmill, and it was scary (to say the least). I went to work each day with a bit of fear in my stomach, a feeling that if I received a pink slip at work my entire life would sink into an unmitigated disaster. I sat down one day and realized that in order to live and to dream, I needed to find a way to get off this treadmill, but I was addicted to spending.

Yet, after just a few months, I found the treadmill slowing down and I felt myself stepping off of it. Now, I honestly feel as though I could walk away from my job without any serious regrets and be able to leisurely find another position if I so chose. It’s a wonderful feeling that has not only made me personally happier, but also made it much easier to focus on the things that are really important in my life. My stress level has fallen substantially and my family seems a lot happier, too.

Here’s a guide to getting off that treadmill and living a free life again – in just six months.

First of all, set a tangible goal. You are off the treadmill when you are spending less than you bring in and you have at least a weekly paycheck worth of money in a savings account. Eventually, it’s good to have half a year’s worth of salary saved up in a nice emergency fund, but for now, let’s set a goal that can be attained by someone on the paycheck treadmill in a reasonable amount of time.

How can you spend less than you bring in? You can start by putting a little bit each week automatically into a “locked box.” It’s pretty easy: just sign up for an online savings account at HSBC Direct (5.05% APY interest rate) or ING Direct (4.5% APY interest rate, awesome interface, great customer service). Set it up to withdraw a small amount from your checking account each week and forget about it for several months. Depending on how much your weekly withdrawals are, you could suddenly have a very nice buffer against emergencies.

Another technique is to use the ten second rule. Every time you make a purchase of any kind, stop for ten seconds and ask yourself if it’s really worth buying. Quite often, you’ll find yourself putting the item back on the shelf. For some people, a “24 hour rule” works better, but the concept is the same: think before you buy.

Just doing these two things is enough to set you in the right direction. If you’re ready to take another step, try out the one month challenge as a way to really take a fresh look at what you’re buying. Spend that month carefully considering each item you buy and recording all expenditures, then look through the results and ask yourself whether this stuff is worth the stress of barely staying on the paycheck-to-paycheck treadmill.

Give it six months and see where you’re at in that lock box. You’ll probably find more than you think in there; even better, you’ll find ways you never thought of to get yourself on the right financial track.

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  1. moneymonk says:

    Good advice Trent! Automatic savings is the key.
    Sooner or later you will not miss that money and it will force you to live/budget on the amount that is left.

  2. Katie says:

    An off-site coworker called in a panic yesterday. His paycheck hadn’t come in the mail, and he desperately needed the money.

    I didn’t realize the panic that so many people experience on this “treadmill”. Thank you for writing on a topic that became so timely for me. I will remember your thoughts as I prepare my next blog entry–

  3. CJ says:

    I just could not ever imagine living paycheque to paycheque and nothing saved.
    That is just not good money management at all.

  4. David says:

    Trent…those who live by the “Dollar” and want to have their “Cake” and eat it too… will wake up one day to the cold hard fact, that if you want to live your life, learn how to live with the “Dollars” that you earn from each pay check and not let your “Pay Check” have control over your life… People don’t work to “Exist” and just get by…People please do work to “Live” and enjoy the fruits of your labor…

    Mr.& Mrs. John Doe, Does your pay check control and tell you what you can and can not do??? or do you decide to have control over your pay check and decide what, when, where and how you will do what you want with your pay check???

    Does your pay check work for you??? or do you work for your pay check???

    If you want to be a “Slave” to the “Dollar” and always be in “Debt” never living “Debt Free” then continue your out of control spending!!! You will never know the joy of being “Debt Free” and you will always be a “Slave” to the “Dollar” I would hope and pray that you would look around you and seek help to get your finances under control and get yourself some good financial advice, so that you can get out of your “Financial
    Nightmare” I do believe that God wants us to be
    living a better life, then just having to work to “Exist”…that is no way to “Live”

  5. Sheila says:

    Giving up smoking got me off the paycheck to paycheck treadmill! I am saving over $2,000 a year!

    Thank you for the most terrific, informative, down to earth website I’ve found in ages!

  6. Sheila says:

    Giving up smoking got me off the paycheck to paycheck treadmill! I am saving over $2,000 a year!

    Thank you for the most terrific, informative, down to earth website I’ve found in ages!

  7. AJB says:

    This works if you are spending money on items that are not needed (items beyond the basic needs). If your take home pay does not cover your rent or mortgage and homeowner’s insurance, any vehicle payments and insurance, utilities and groceries (while shopping at Aldi’s), this advice is pretty useless.

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