5 Ways to Stop Living Paycheck to Paycheck

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 More than 12 million American households in lower-income brackets are living paycheck to paycheck, according to a CNN report. But what may perhaps be more surprising is that more than 25 million middle-class households are doing the same.

If you're one of these households, here are 5 ways you can start to break the cycle.

The first step to maximizing your money is to figure out how much is coming in and going out each month. Look back over the past 3 months' bank account, credit card and debit card statements or your check register pages. Document how you much you're spending each month across all categories (mortgage/rent, groceries, utilities, etc.). This will give you a baseline for understanding where your money's been going in the past.

The next step is to decide where you want your money to go in the future. This involves taking a long, hard look at how much you've been spending in each category and asking yourself if there are places you can cut back.

The more you can trim each category, the more money you'll have left over at the end of the month, so develop a budget that's realistic but also disciplined. If you can manage to live lean now, it can help you build your financial foothold and enjoy more security in the future.

When money is tight, a sudden unexpected expense can be catastrophic. So make sure your new budget has a line in it for savings. You should ideally have 3-6 months' income saved up for emergencies, but to start, aim simply to save up $1,000.

Consumer debt is a handcuff on your financial freedom. Every dollar you carry in debt, you'll wind up paying several times over with interest, so paying down any existing debt should be one of your highest priorities.

Until you've got an emergency fund in the bank and your debt paid down, you may need to take extra measures to bring in more income. This could mean temporarily taking a second job, starting a side business from your home or working extra hours at your current job. It won't be easy, but remember that the ultimate goal is to free yourself from the paycheck-to-paycheck cycle. In the end, this freedom will be more than worth it.