Getting Off the Paycheck-to-Paycheck Carousel

It’s always fun heading to a theme park, but when you’re out of money, riding the paycheck-to-paycheck merry-go-round is frustrating.

When several financial experts make similar statements, it’s probably the truth. Dave Ramsey, Liz Weston, Jean Chatzky….what do they all have in common? They all say that if you just sock away between $500 (Weston) and $1000 (Ramsey), you can then get your entire financial life under control.

I know that when you’re balancing home commitments, your artistic career, and maybe a side job, finding extra money is difficult. That’s why most people stay on the merry-go-round. It’s easier to live paycheck to paycheck over the short term than it is to face the fact that you need to change. However, over the long term, you know it’s exhausting. Finding those few dollars to barely make a rent payment, clean up overdraft fees, or afford groceries makes it impossible to focus on the real struggle: doing what it takes to succeed as an artist.

The fact that saving an amount of money between $500 and $1000 is the key to your financial problems almost sounds too good to be true. Here’s why the $500 – $1000 is important. When you don’t have this money, you only have a few options. If you still have money left on credit cards or bank loans you can borrow. If not, you have to hit up friends, colleagues, or family for money. All of this cash has to be paid back. Then you find yourself the next month with extra money….and it has to pay for last month’s problems. You’re always solving last month’s problems, followed by any problems cropping up right now, and there’s never any time to look toward the future.

The key isn’t $500 – $1,000. It’s about buying yourself breathing room to think strategically instead of tactically.

I don’t want to get too cerebral, but tactical thinkers are stuck in the rut of “I’ll borrow this $500 and then  pay it back next month. That’ll take care of this short-term problem.” Strategic thinkers are able to sit back and say, “What’s going to benefit me the most here? Maybe I’ll focus on showcasing my work to these casting directors. Maybe I’ll meet this script writer for coffee….” See the difference? Strategic thinkers are already off the carousel, while the tactical thinker is figuring out how to ride the best looking horse on the merry-go-round.
It isn’t easy to get to $500 – $1,000, but here are some suggestions:

1) Challenge yourself to write down your expenses. It’s so, so difficult to write down what you spend, but it’s very helpful. For most of us, if we have to write it down, we might not spend the money in the first place. Do you need motivation? Some bloggers on the internet detail their expenses to hold themselves accountable. Check out GiveMeBackMyFiveBucks for a peek into someone’s life who’s always thinking about what she spends. Try to have “no spending days” as often as possible, like Krystal. Every day without money leaving your pocket is a small win!

2) Invest your tax refund. Don’t use your refund for a new television (I’m talking to someone in particular here…). The average refund is around $2,000, and that’s enough to create that reserve you need to get you on solid footing.

3) Cut extra expenses. Often people are able to limit expenses by turning off air conditioning, cutting the cable bill or the home telephone line. Dig into your financial life to see what cuts might be best for you.

4) Save your change. While you won’t get to $500 in a hurry this way, every bit helps. Pay cash for expenses and then save the change into a jar. Paying cash alone will save you money. Recent studies have shown that people who pay cash tend to spend less money than people who use a debit card.

5) Sell your junk. If you’re like me, you’ve been thinking a garage sale might be in order. I have everything from old electronics to rarely used kitchen supplies that could fetch some money. By selling stuff and depositing the money in my emergency fund, I’m completing two goals. Productivity experts say that clutter is an energy drainer. Selling stuff brings in cash and frees up your mind for the things that really matter to you!

Once you have your $500 – $1,000, you’re on the road to success. Yes, you still have plenty of miles to cover. But by making that first step, you’ve opened up your financial potential far beyond what you might imagine if you’re stuck on the month-to-month carousel.