You need to evaluate your spending habits, if you find yourself in a fix every month to manage your bills within a stipulated budget. You could be wondering how people around you, making the same money as yours, are able to manage their household costs so well.
So, if stretching the paycheck is your ultimate motive now, then you could use some of the financial hacks discussed here to achieve your goal.
Financial hacks to stretch your paycheck
Almost over 25 million middle-class American families now live paycheck to paycheck, as per a research conducted by Brookings Institution. So, here's your chance to turn the odds in your favor and walk away from a brewing financial crisis holding your head high:
- Prepare for the worst - If your financial health is turning from bad to worse and becomes stable back again, then you should create a two-pronged spending plan - first needs to be a regular budget and, second a disaster mitigation one, told Cookeville, Tennessee-based financial advisor and planner, Landon Vick. Through this strategy, you'd be able to check any sort of financial damage on time before it gets too late to recover. Moreover, you'd have a 'Plan B' in place that will eliminate all the extra expenses in your life.
- Manage a micro-budget - You don't have to brag around about how you've planned to spend your $600 for the entire month's groceries and $200 on gas. It is rather more important to check regularly whether you're sticking to your budget or not. Make every dollar of yours work. If you've stipulated, say for example $400 on a given month to spend on groceries, then instead of looking at your checking account's balance, make sure you've checked your grocery balance, prior to visiting a local grocery store. This is a smart way to keep track of your expenditures, which in turn will help you to stick to your budget.
- Enhance your money attitude - You could have some sort of bad money habits. But it is very likely that you aren't aware of any such habits plaguing you. For instance, you might suffer from indiscriminate shopping behavior or ignorance to follow a suitable budget. Apart from that, you could have the habit of procrastinating in paying off your monthly bills or may be you are paying late fines regularly. All these monetary activities are potential pitfalls to either land you in jail or break your bank. On top of that, these reckless spending behavior will cause collective damages to your budget. In order to treat this malice, you may, in every month, automatically set aside a definite amount of income as your retirement savings or emergency fund. the fact It is easier to get swayed in times of windfall.
If you've been living paycheck to paycheck, then you must take some remedial steps as soon as possible. Continued misuse of financial resources at your disposal will eventually bring in disastrous results like shattered credit rating, bankruptcy or lien. That said, if you are forced to file for bankruptcy, then let me tell that you it would be one of the worst things to ever happen in your life, especially when your financial stability is at stake. The challenges get doubled when you file for bankruptcy protection in your 20s. Find out how.
Effects of bankruptcy in your 20s
Apart from the social stigma, there are some more and probably, more serious adverse effects of bankruptcy on your financial health, if you file for it in your 20s:
- Loans become too costly - Due to bankruptcy, accessing fresh lines of credit (loans) will cost you far too much in terms of loan origination fees, rate of interest, etc, thus making them almost unaffordable for you. This is because bankruptcy will tank your credit score and that it'll keep showing up on your credit report for a period of at least seven to ten years, depending upon the chapter of bankruptcy you chose. Once this period is over, from then on you'll have to work toward repairing your credit.
- Could become homeless - Filing for bankruptcy will make you ineligible to buy a home for the next seven to ten years. Moreover, a bankruptcy in your credit report will prevent you from taking advantage of rental applications. A lot of landlords, nowadays, make it a point to go through your credit report and finding bankruptcy on it will be show you in poor light. Basically, landlords will consider you a risky tenant who might stop paying rent altogether in the future.
In addition to that, you could lose your employability as a result of bankruptcy. This again depends upon the type of bankruptcy you had opted for, but that doesn't lessen, in any way, the damage it would have on your job prospects. Like landlords, a lot of employers have started conducting background checks of prospective hires before offering them a position in their organizations. Having filed for bankruptcy in the past is considered a red flag, especially by employers like banks, credit card companies, insurance agencies, academic institutions, law firms and so on.