I've finally reached a point where I can stop living paycheck to paycheck. What now?

Question

In the last two months or so I've finally reached the point where I can stop living paycheck to paycheck. I don't have much extra in the bank yet, but I'm at least at a point where I can pay the bills as they come in rather than waiting until my next payday. And the good thing is I don't see any reason why my position won't continue to improve every month.

So my question is what should I do now. Should I just focus on building up my bank account to the point where I have a 2-3 month cushion? Should I look at making bigger car payments? Should I start sticking money in a savings account or IRA?

I've always just managed to just get by going from paycheck to paycheck but between newly found financial discipline and a recent raise at work I'm able to myself actually having extra money each month and it feels good. I just don't know what to do next to further improve my situation.

Answer 1

CONGRATS! That is definitely a goal everyone tries to accomplish. Only through a strict plan can most succeed. Just save as much as you possibly can. Open up a savings account and use the extra money to buy high interest CDs, Bonds, or Tax Certificates. Once they come back reinvest them back into more. The more you have saved, the easier it is to handle unforeseen issues that life likes to throw at you.

Good luck!

Answer 2

Well, this is the point where you need to sit down, make a list if necessary, and sort of put all of your cards out on the table. Basically make up your mind what it is that you want to accomplish.

If you are secure in your current job and feel that it is going to last for a while, then my suggestion would be start saving a little bit of money each month. I used to have a savings account. When I got paid every two weeks, I would put either $20 or $50 into it, whichever I could afford. After a few months, you have already saved a good sum of money.

My other suggestion is good if you want to start planning on being able to buy a car or finance a house. I would get a copy of your credit report. You, as a consumer, are entitled to one free copy of your credit report each year. You can contact Experian or Equifax to get a copy. Take a look at and see what if any debts that you have. If you have any, then start contacting each one. You can usual work a deal where you can send them as little as $20 a month and they will be satisfied. I know this since I work for a credit card company.

Like I said earlier, the first thing you need to do is decide whether you want to accomplish short term or long term goals. If you are heading in the right direction, you can start making plans for the future. I hope I was able to help.

Answer 3

You mean that's supposed to stop? You know, I don't always live paycheck to paycheck, per se.... I mean, I usually have money left over for other things and I usually have a nice cushion in savings. But, I'm always worried whenever the savings gets lower or whenever we can't spend on extra things and of course, I worry whenever something out of the ordinary happens and I need that extra money. That being said, we've been broke since my husband got sick and Thank God that there were people kind enough to give us contributions because without it, we would've already went under. That money is gone now and our savings is almost gone and even though he's back to work, it's taking a while to get back to "normal". I'm in the process of speaking with a debt solutions representative, so hopefully at least my credit card debt can be taken down some and I won't have to spend so much on payments that are going nowhere. We'll see.

Answer 4

I would continue to build an emergency fund of 6 - 8 months expenses. I have suffered 3 unemployment periods ranging from 2 weeks to 9 months hence suggesting the larger emergency fund. You may want to split your extra cash 3 ways: building the emergency fund, larger car payments, and a Roth IRA (if you are already maximizing any 401K contributions where you are employed). That way you are working toward accomplishing 3 goal areas. Once your emergency fund is built, switch that portion toward the down payment on a house. When the car is paid off you could then switch the split to 50/50 -- house and retirement. Good Luck!

Answer 5

Good for you! Remember, a good plan executed now is better than a perfect plan executed later. Those are all good options. I'd say open a ROTH IRA as soon as you can. Great vehicle. And pay off that car an never finance another one. One of the worst things you could ever do. Save a little bit out of each paycheck that is for YOU. Use that to build wealth. As long as you continue to make good moves you'll be alright and you'll always be getting better. The three most important things to remember are to live below your means, stay out of debt and always save and invest a bit of everything that comes in. Congrats and best wishes for more good fortune!

Answer 6

You must already having a goal, dream in life, like buying a big house, starting a business, retirement fund etc. Save and invest in stocks. Bonds are just for Gentlemen... Avoid. Invest in assets that appreciate in value. Avoid purchasing depreciating assets which only has aspirational or snob value. eg. expensive cars. One can always buy such things later in life from income generated from investments. Look out for investment opportunities in emerging markets through your fund manager.

Happy investing...

Answer 7

You have achieved an important goal. Now do you relay wish to be rich, relatively well off, or are you just pleased with what you have.
I recently read in a book titled "Psychic Healing Book" that you are only what you have in your mind. I have tired that and found it to be true. You too can give it a try. It is worth the trial, I guarantee.

Answer 8

If i were you, id put some money in stocks and see how that goes (Technology is always the best way to go, no way to lose on that). And just live how you want to. Once you get some money, build towards a goal of some sort (bigger house, yatch, ect.) and try to accomplish it.

Answer 9

Save as much as you can.

Get out of debt.

Plan for retirement.