Living paycheck to paycheck might not seem so bad at first. After all, you have your basic needs accounted for, even if there isn’t much left over at the end of every month.
But that’s a position with very little sovereignty, if at all. There’s no way to look ahead because you can’t afford to save money, and there’s no real security with your money today because you’re overly dependent on your job.
The good news is you don’t have to be stuck in that position. In this episode, we’ll go through a list of five things you can do to move forward if you’re living paycheck to paycheck.
- [02:59] The importance of taking a breath
- [03:44] Why examine your situation if you’re living paycheck to paycheck
- [05:41] Why you should create a plan for the short- and long-term
- [16:56] Traps to avoid if you’re living paycheck to paycheck
- [24:33] The importance of re-examining whose life you’re really living
[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.
[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. Today, I’d like to tell you about a time where I’ve just started in public accounting. It’s 2017, and I’m so excited to be spending my first days as a public accountant, having gone through grad school, quit my job as a teacher, and I’m really struggling to get myself off welfare, reinvent my life, and be able to bring more income into my family. And I’m sitting at the kitchen table and realizing that I’m barely making ends meet yet again. Now, I’m struggling because I’ve done all the things. Like I went back to school, I was a top student, I got a job at this elite firm, and I’m still right back where I started. The only thing that’s really changed is I’m working one job instead of three, which admittedly is a step up but it’s still paycheck-to-paycheck living.
[00:01:06] And ladies and gentlemen, we’re going to talk about living paycheck to paycheck and what that means and how we might be able to start addressing it. But I tell this story because when I got out of school and I got that job as a public accountant and I realized like, man, I didn’t make the colossal step forward that I thought I would, it was really hard. Now, obviously some things have changed since then and we’ll get into that here in a little bit. But if you are in a situation where I talk about savings and investing and it’s like that just seems so far away because you’re like the 60% of Americans who live paycheck to paycheck and maybe you even are a high-income earner, understand that 40% of high-income earners also live paycheck to paycheck. And it’s hard. It’s hard to look at that. It’s hard to understand that. It’s hard to think about doing or being anything else. It’s hard to understand that you could be more, that you should dream, that you could create and build something in this world when you’re just struggling to make all the ends meet at the end of every single month. It’s a position where there’s very little sovereignty because you know at any moment your job could just make your life a living hell because now you have a dependency, and that dependency is on an entity or a person who does not have your best interests at heart.
[00:02:26] And ladies and gentlemen, I get this. I spent the first half of my working life in this situation and it sucks. And there aren’t any real, easy solutions. So I don’t have a magic bullet for you. Despite what a lot of YouTube gurus will tell you, you can’t just think happy thoughts about this and try to get your way out of it. A weekend seminar on how to do a good Airbnb strategy or crypto strategy is not going to get you out of living paycheck to paycheck. It’s actually probably, in all likelihood, going to make the situation worse.
[00:02:59] So if you are like one of those 60% of Americans living paycheck to paycheck, let’s go through a list of five things that we can do to help move us forward. Number one: just take a breath. That’s it. Just take a breath. Stop for a moment and just relax. Know that you’re okay. You’ve got your basic needs are met. Yes, there isn’t as much money left over at the end of every month like you would like, but you have your basic needs accounted for; that you are making it. Even if it is precarious, even if it could be just easily derailed, even if it’s not exactly what you dreamed and hoped it would be, you are still making it. So take a breath and relax.
[00:03:44] Number two: you have to look at the issue. I’m gonna repeat that. You have to look at the issue. You have to look at this. You have to examine it. This is where I come in as a financial coach nine times out of ten is people who have realized that they need to look at the issue and they’re ready to do that, but they’re not ready to do it by themselves. It is a true statement, and people will say this all the time: “Dylan, if I’m living paycheck to paycheck, I cannot budget my way out of poverty.” And that’s true. You can’t. But budgets are not just a magic bullet; they’re a conversation. They’re a conversation with yourself, with your partner, with your past, with your future. They’re an opportunity to have the conversation. Budgets are a statement of values. Budgets are a battle plan for each and every single month. They’re not a magic bullet; they’re a tool. And like any tool, you have to be able to use it. And this is typically how you look at the issue is creating a budget and trying to live to it because if you don’t have the budget, you don’t have the conversation starter.
[00:04:54] One of the things that will come very clear when you start making a budget and you start working with it is not that, “Oh, this is my magic way out of it. Why hadn’t I thought about this before?” No. It’s you will start asking yourself, “Do I have a spending issue, or do I have an income issue?” And which one it is, I don’t know because that’s going to be individual to you. But it’s going to be one or the other. If you’re living paycheck to paycheck, you either need to increase your income, and we’ll talk about that here in a second, or you need to reduce your spending, which we should talk about now. Your spending might be out of control. You might be spending money on things that do not serve you for some unknown reason. That happens. But the more common thing is that it becomes an income issue.
[00:05:41] And this is where your budgeting and actually looking at the issue can really lead to results because number three is we create a plan for the short- and the long-term. In the short term, you’ve got to really start looking at your spending, your living situation, and getting creative. In your situation, if you’re looking at it and saying, “I’m living paycheck to paycheck. There’s nothing I can cut, Dylan,” okay, okay. Let’s look at the budget and confirm that that’s true. A lot of times what I find when we start looking at budgets is there are things that we can reduce that are not serving them, but they’ve decided they absolutely have to have it. You know, one great example is where we’re looking at it and we’re saying, “Oh, we’re paying for my kid’s college tuition.” Okay, well, they’re over 18 years old. Did you have that agreement, and why are you paying for every single bit of their living expenses? This should have been a conversation you had beforehand, and you helping them be self-sufficient is not you not supporting them. This is, again, the conversation. Or you might be at a situation where you’re looking at it and going, “Well, I’m paying for all of these extra things and classes and extra information, so I can be a good investor and I can have my real estate strategy that I’m working on.” You might not be in a position where that’s the best option. You might actually get better returns by managing your spending.
[00:06:59] When I first started doing this, the thing that I learned really, really quickly was that I thought I was eating out very infrequently and, in fact, I was eating out more than once a day on average. And that was terrifying because I had to look at it and go like, “Why am I doing this?” Which brings us to the get creative part. So I had to find ways to get creative because, you know, when I first started this process, I was a teacher, and then I was a graduate student. I didn’t have a whole lot of time. And so how do I make sure that I’m feeding myself healthy, nutritious food? How do I make sure I’m getting all my needs met and I’m also not just creating a whole bunch of arts and crafts that are going to take me a lot of time? So getting creative with this.
[00:07:35] The other thing that comes up is like date nights. When I have couples that come into the practice and they’re like, “Oh, well, we have our date night and that’s sacred.” Okay, cool. But do you have to go to the best restaurant in town, or could you just make a sack lunch and go down to a lakeside and walk hand in hand? Take some time to be with each other. Maybe pop some popcorn and watch a romantic movie after the kids go to bed. Get creative. You have permission to break patterns. You have permission to be doing things that are different.
[00:08:04] And you might look at your living situation, particularly if you’re single. And this happens to a lot of guys after divorces, where they start living single and they, you know, the accounts have been set back to zero, and now they’re like, “Well, I’m just living by myself” in their four-bedroom apartment. Now, that’s probably hyperbole. But there’s a big question of like, well, how long do you think you should be spending on that rent and living paycheck to paycheck versus getting your feet underneath you and starting growing wealth so that you could be attractive to the next person who comes into your life?
[00:08:34] In my particular situation, even though my wife and I make plenty of money, I still have a roommate. And I don’t have a roommate necessarily because I need one, but because I want one. It’s nice to have her around. It’s, you know, she’s a good friend of ours. That works out. And I’ve done that most of my life. I had roommates who’ve come in in various stages of life. It’s a communal thing. And yeah, there’s tons of horror stories about that when people move in. But my argument back to that would be to look at it and say, “Well, maybe you need to assess the people that are around you if they’re all, you know, sliding sideways on you all the time.” I don’t ever like to say to somebody, “Hey, you need to go get a roommate” or “Hey, you should reconsider this,” but if you’re living paycheck to paycheck and there’s no sovereignty, what’s worse to you? Continuing your current situation, or taking the issue into your own hands and doing what you need to do to establish the foundation on which you can build the rest of your life? To me, the answer is very simple. I’m going to take the situation into my own hands. I always have, and I think I always will.
[00:09:37] Now, in the long term, you’ve got to start thinking about this from an income side. 99 times out of 100, people come into the practice and they could always benefit from more income. So the question then is: how do we get more income? And this really just comes down to — we have talked about the money equation before. Money is equal to the time you give plus the value you add. So you either need to generate more time or you need to generate more value. One of the ways that your value can be recognized — because I’ve also pointed this out, too — you might add a ton of value, but that doesn’t mean that the money flowed to you. This is the whole thing with like the corporation that’s understaffed and they quietly hire you for half of a person’s job but you’re not getting that person’s half of pay. Yeah. What’s going on there is you’re generating more value because you rose to the occasion and the money is being generated. It’s just that they’re keeping it and you don’t get it, right? The way that you can start gleaning out the value you add when you’re in those situations is changing jobs. Like job hop. If you’re not job hopping, you’re probably underpaid. And as you sit there and you look at your current resume, you go, “Man, applying for jobs blows,” dude, totally agree. But the best time to find a new job is when you have a current job. So I always take a couple of months every year and I go kick the tires, reach out to recruiters, say, “Hey, what’s going on?” look at some job postings, maybe apply for a few positions that are interesting to me, and see what happens. And if the great job came along, I’m gone, man because I’m self interested; because I’m looking to improve my situation, and I already know that my skill set and my experience are more valuable than what the company is paying me. So job hopping is not a moral deficiency regardless of what your boomer parents will tell you. It’s actually a legitimate strategy in a market that has decided that it is no longer interested in promoting from within or rewarding you for your work and instead tries to extract from you. No company is loyal to you. I do not care what they say. I don’t care if you know the owner. No company is loyal to you ever. You should not be loyal in return.
[00:11:40] Another way to increase your income? Work on your skills. As much as I hate to tell people, “Hey, in your spare time, you need to be, you know, hustling on yourself,” you absolutely need to if you don’t have the right set of skills. For me as a teacher, I looked at it and I was like, “Okay, well, I want to be in the room where it happens, I want to increase my earning potential, and I want to have a great growth trajectory. What’s the quickest way to go from where I’m at now to where I want to be?” And that is get my CPA and be an auditor at a public accounting firm. So that’s what I did. That was the skills. I went for two and a half years through graduate school. I completed an accelerated MBA program, the equivalent of an undergraduate degree in accounting, and took the CPA exam in two and a half years. Now, when I walked out, I had all the credentials, and then I got the job at the Big Four. Why did I want to go to the Big Four? Because that’s where I was going to get the most skills, the best thing on my resume that will make me the most competitive in the market, and there are some positions that I’ve applied for recently that have required you to have Big Four experience so that if I didn’t have that, I wouldn’t even be considered for the role.
[00:12:42] Now, you might be sitting in another job and saying, “Well, what skills do I have?” That’s a great question. If you don’t know, go get some. Like start working on a credential. Start making yourself more valuable. Look around and go, “What are the jobs I want? What is the income level I need, and what do those people do?” I promise you there’s always going to be something. And so you might be saying, “Well, I’m the top performer in my programming pool at XYZ Technologies,” well, hey, then management’s your next stop or job hopping is your next stop, learning a different language, bringing in some of the AI technology, something. And when you do that — this is going to bring another point that people are not going to like — go ask for a promotion. You know, particularly if you’re already applying for jobs and you’re in the final rounds of interviews and you’re expecting a job offer, walk in your boss’s office and say, “Hey, I just want to take a moment to talk to you and make a case for why I am looking for a promotion or a raise. These are the things that I do. Here’s how I’ve grown over the last 12 months. Here’s the additional value that the company is getting from me and I wish to be renumerated for the value that I’m actually putting into it.” They might tell you no. They probably will tell you no. And that pretty much tells you which side of the fence you exist on, which makes the above two points — job hopping and skills — significantly more important.
[00:13:54] And in the long term, also paying down your debt, you know, coming up with a strategy to make sure you can get that monkey off your back is absolutely critical. So a lot of times when people are paycheck to paycheck, they also have a car loan. Like this is one thing that has always blown my mind. I’ve had people, couples, come into the practice and like, “We’re in such a terrible spot!” And I’m like, looking through the camera, it’s their house, and it’s like, wow, you’re sitting in this really nice, massively huge house. Okay, well, let’s talk about it. “Well, we wanted to have the house because we really thought that that was what we were supposed to have.” Okay. Well, is it serving you? “Well, you know, it’s our home, but I spend a lot of time cleaning it.” Well, then it sounds like it’s not serving you. Do you need to have all the bells and whistles, or is selling the house and getting in a different situation going to help you pay down your debt faster? It’s an open question, particularly in the era of McMansions. The number of people who are still in McMansions just blows my mind.
[00:14:47] But this is the other thing that comes across the practice quite a bit. If you’re living paycheck to paycheck, and I hate to say and sound like Dave Ramsey here, but look at your car payment. There are a lot of people, and I pick on this a lot, but it’s not just Ford F-150s and pickup trucks, but it applies to, you know, the Jaguar SUV or the people driving around the Porsche SUV or SUVs in general really, where they’re paying for this large vehicle but their total payment all in is like a grand a month. And that doesn’t even get into the fuel costs and insurance and everything else. Their cost of ownership for that car all in is a whole ‘nother house payment. And my question to them always is, “What are you getting for that amount? What is the value-added difference?” And I’ve talked to people before. It was like, “Well, Dylan, you drive a Sentra.” Yes. Yes. But my net income, my net worth is high and growing every single month because I asked myself, “Well, do I want to drive a car payment?” and the answer is no. I need a car to go from point A to point B. Full stop. “Well, Dylan, what if you need to haul something?” Well, if I need to haul something, I’ll go over to Home Depot and I’ll rent one of the pickup trucks for the weekend. And I do this whenever I have to haul something. “What if you want to get out in the backwoods?” Then I’ll rent a car for the weekend. The difference in cost on a day-to-day basis for renting that car or renting the truck versus just owning the truck is huge, and it’s a lot of money and it’s a lot of debt.
[00:16:13] And so I’m not telling people “Don’t have a pickup truck.” I’m saying understand and be intentional as to what you’re getting for the money you’re paying. Know what you’re getting. And if what you’re getting isn’t worth it, you need to get out of it. And a lot of times, we’re only driving those large cars because somebody told us that we were supposed to; that somehow ,they’re magically safer; and that somehow, we might someday have to haul a whole bunch of stuff into the back part of a farm field even though our pickup truck that is 10 years old has never seen a dirt trail in its life. These are things that, when you’re working play paycheck to paycheck, these questions become more critical. And where does it start? Oh, yeah. It starts when you start making a budget.
[00:16:56] Alright. Let’s look at number four: traps to avoid. When you live paycheck to paycheck, there’s low sovereignty, but there’s high stress. And when you have high stress, somebody who comes along and tells you everything you want to hear about “Here is the path out” sounds really, really good. The problem is those people are full of shit. And so I’ve seen just tons of people who have fallen into these traps trying to get out of their paycheck-to-paycheck life. But really, at the end of the day, they’re actually worse off.
[00:17:27] I got a couple of examples here. Number one: multi-level marketing schemes or MLMs. If somebody ever comes to you and is like, “Hey, do you want to be your own boss and sell a product?” your first question should be, “Would I buy that product?” And if the answer is no, then you shouldn’t be a part of it. But what’s happening — this happened a few years ago when like every person from high school that failed to launch was calling you about this great business opportunity. You can sell protein powders. You could sell candles, the tea light ceremony things, Tupperware, Mary Kay — there’s tons of these out there. But their promise is that they’re going to give you this side hustle that’s going to eventually reach your income. But eventually, it becomes, “Hey, you need to go get other people to be selling on your behalf so you don’t have to sell. That’s how you really make money.” Now, the question is, can you make money in MLMs? Yes, if you’re willing to take advantage of other people who are equally as desperate. They’re not a good business model. In fact, the average MLM owner ends up with $25,000 more in debt than when they started. They’re not really “real businesses” in the traditional sense, and in the United States, we have a bunch of legal frameworks that make them immune to being accused of being a pyramid scheme. But in all actuality, if it walks like a duck and it quacks like a duck, it’s a duck. And this one walks like a pyramid scheme and quacks like a pyramid scheme because it is a pyramid scheme. Avoid MLMs like the plague. Period.
[00:18:59] Another trap to avoid is get-rich-quick schemes, and you see these on YouTube all the time. Because I spend a lot of my time researching for the podcast and watching videos and this is a passion project for me, I enjoy doing it. But man, I have lately been inundated with advertisements on YouTube for the next big opportunity: the AI trading bot, the Forex trading bot, the AI-enabled Forex blockchain trading bot. Like none of that’s real. They’re all scams. Literally if you had developed a trading bot that was able to have the returns that they are telling you, they would never offer it to you. They would just put their own money in and hit go and walk away. Like stop and think about that. If you owned that bot, would you be going around to people being like, “My job is to liberate you from your humdrum life by offering you a chance to get in on my bot?” No, you wouldn’t do that. You would instead put your money in, hit go, and go retire to the Caymans. Full stop. Get-rich-quick schemes are huge on YouTube, and a lot of personal finance gurus will pitch them themselves. They’re all bullshit. Like and you can go over to The Plain Bagel. Richard Coffin just did a big thing with the five best TikToks and advice. He’s actually a CFP, which means that he is a fiduciary. He actually runs an investment company. He’s great. Go watch his stuff. Like it’s amazing the things that he’ll point out to you about why these aren’t going to work. Basically, at any point in every game, if somebody is offering you outsized returns that are going to beat the market consistently, you should immediately be skeptical. If they make it sound of like, “Oh, it’s so simple. You just got to keep going forever and ever, and you’re going to be fine. Eventually, you’ll get there,” that person is probably not somebody you should trust.
[00:20:48] Okay. Another trap to avoid is the Sigma Male Grindset. You know, this is a spin on the idea of having the right mindset. These are the bros on YouTube who are like, “I’m up every day, I’m grinding. I get up in the morning. If you were going where I’m going, you’d be up early, too.” These guys are just — first off, they’re fucking exhausting and annoying. And secondly, their whole thing is they want you to work really hard. Buy their course so that you can learn how to work really hard. And if you just keep grinding, someday you’re going to make a million dollars. Like these are the underpants gnomes of financial advice. Stage 1: collect underpants; stage 2: we don’t know; stage 3: profit. And nobody ever questions stage 2 because what they say is like, “You just grind your way through stage 2. You just keep grinding every day. You rise and grind.” Like, dude, first off, just breathe. And secondly, grind at what? Grind how? Into what end? Grinding inherently wears down whatever you’re grinding against. And there are seasons to life. There is a season when you have to grind shit out. That is what I did in graduate school. Two and a half years of pure grinding, and then another three years in public accounting also grinding to get me to where I wanted to be. But I knew what I was doing, and I knew for how long I was going to have to do it. There was no indefinite time horizon. There was nobody telling me, “Well, if it doesn’t work out, it’s because you didn’t think good enough thoughts for long enough. You must have done something wrong.” Like no. The Sigma Male Grindset is bullshit. Those people are selling you snake oil.
[00:22:25] A last trap to avoid is the idea that everyone needs to have a side hustle, and I say this as somebody who works a full-time job. I run a coaching practice on the side. This podcast is part of that. I put out all this information because I’m hoping that people will benefit from it. And if you benefit from it, great. And if you benefit from it and you want some extra help, hire me as a coach. That’s the whole point. But here’s the important part: finance and money, conversations and talking to people and helping manage emotions is exactly what I do in my normal career. Like my side hustle is not this separate thing. It’s just an extension of what I’m already good at. Do you see the difference? So many times people are like, “Yeah, you work your nine-to-five. You have all these skills to do this nine-to-five, and you can have the side hustles completely different. Buy my kit to help you out.” And people will say like, “Well, I drive lift on the side.” Why? And this goes back. I had a conversation with a coworker and she has her CPA and she was like, “I’m going to deliver DoorDash.” And I was like, “Why are you going to deliver DoorDash? Why do you need to have a side hustle?” And I was like, “You have a CPA. If you want a side hustle, sign up for doing some part-time bookkeeping and stay in your lane because that’s where you’re going to add the most value, and money is equal to the time you give plus the value you add. Why would you want to go to a place where you’re adding less value?”
[00:23:41] So I’m not going to say side hustles are bad necessarily, but the culture around everybody has to have a side hustle is bullshit because a lot of times those side hustles either are not profitable or they’re outside your already-established area of expertise. So they’re never going to be profitable because you’re never going to add the value that you need to actually make it work. Here in the money world, this is my jam. I have been playing this game almost my entire life. And so this is where I can add the most value, and this is where the side hustle is for me. But it’s not that I went and bought somebody’s kit. It’s not that I’m trying to establish myself to do some dropshipping. It’s not that I have a Shopify site that I have my dropshipping with the backend thing to take advantage of the crypto AI-enabled chat bot. Like no. None of that works. I stay where I can add the most value.
[00:24:33] Okay. Last but not least, number five: if you are living paycheck to paycheck, one question you really need to ask yourself is, whose life are you living, and is it yours? And that might seem really weird, but one of the things that has been really interesting to me, as I’ve done financial coaching, is talking to people who are living paycheck to paycheck because they’re subsidizing somebody else’s life, whether it’s a kid, a spouse, an ex, a girlfriend, whatever. It’s when they’re living someone else’s life that I see paycheck-to-paycheck comes up so frequently. And it’s very interesting.
[00:25:11] Luxury cars are a great example of this. People with these huge pickup trucks where they’re spending way more money than they have any right to spend on transportation. They’re not hauling anything, they work in accounting just like I do, and they just commute to work. Like dude, why do you have it? “Well, because it’s a cultural symbol.” Oh, okay. So you are paying a premium that is equal to your mortgage payment to maintain a cultural front. “Yeah, I’m a good rugged American.” Okay, cool. That’s not your life. That’s a life somebody else gave to you. That’s an impression somebody else gave to you. You don’t go outdoors. You don’t haul stuff. This isn’t the car for you. And I harp on that not because I necessarily hate them but because it just comes down to the fact that this car is not serving them and they are blowing money out the window that they could use to otherwise enjoy their life. And this applies to everything from apartments to the food we eat, to how much cooking we do, to the ZIP codes we choose to live in. Are you living the life that serves you and your goals, or are you living a life to try to keep up with the Joneses and because you’re trying to impress people that you don’t even really like? Because if it’s not your life and your goals, it’s time to change it. I’m just going to give it a second for you to consider that maybe for the first time.
[00:26:36] Alright. Those five. Number one: breathe; number two: look at the issue; number three: create a plan for the long- and short-term; number four: avoid the traps; number five: whose life are you living? The path is long. And it can be very difficult. And that’s why coaches like me exist. And I know exactly how it feels because when I was sitting at that table looking at my paycheck realizing I’m still living paycheck to paycheck, I took a second to breathe and I looked at the issue and I looked at my long-term plan. I had avoided all the traps and I was living a life that I had finally for the first time felt was aligned with me, but my long-term plan was to get into this public accounting firm and leverage the meteoric growth the public accountants get because public accounting was the elevator next to the corporate ladder and I was in there. I was on a growth trajectory and this was just a season, a stepping stone on that path. And one year later, I got a huge raise because that’s how it works in public accounting, and then I got an even bigger one the next year. And fast forward, my income was increasing by multiples as I job hopped my way to a place at a company that I enjoy working for, even though it’s still not my friend, that pays all my bills and then some, and has provided my wife and children with the life that serves us. And I want that for each and every single one of you, too.
[00:28:04] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.