It can be difficult to stay afloat when you face financial challenges while living paycheck to paycheck. When bills pile up and overwhelm your budget, it makes it impossible to save. As a result, any unexpected expense can sink you.
The good news is that there are strategies that can help you keep your head above water and get your finances on solid ground. Even if you have limited income and face financial challenges, you can follow this advice to achieve stability.
Why are so many Americans drowning?
The median household income before taxes in the U.S. is $78.635, but average annual expenses are $61,224. The average family owes $136,335 in debt, including mortgages, with an average credit card balance of $6,849.
As a result, Americans owe over $4 trillion to lenders and creditors, including over $1 trillion in revolving debt, such as credit cards. We also owe over $1.5 trillion in student loan debt, which averages out to roughly $30,000 per borrower.
When you add all of that up, it’s no wonder that over half of Americans say that they live paycheck-to-paycheck.
How to get your head above water when you’re drowning in bills
This can seem like a no-win situation. How can you possibly get ahead when every dollar is already accounted for in your budget?
The key is to understand which bills give you the most trouble, so you can get them under control. Hint: The culprit is usually your debts, particularly when it comes to credit cards!
Once you develop a strategy for getting debt payments under control, you can set a budget that makes it easier to cover bills and other necessary expenses.
Step 1: Understand your debts and other bills
The first step to take control of your finances is to understand how different types of debt and other bills work. This helps you gain a better perspective on why certain bills cause challenges within your budget. Then you can build a budget that will help you start to get ahead.
Step 2: Craft a strategy to keep credit card bills in check
Once you construct a basic budget, the next step is to find the right strategy to get your credit card bills under control. Reducing your balances and setting a goal to become debt-free is a big first step to getting on solid financial ground. Even better, with the right tools, you may not need any extra cash to start reducing your balances.
Step 3: Achieving a high credit score to help you stay afloat
Once you get your head above water financially, the final step is to establish good credit. A clean credit report and high score make it easier to qualify for low interest rates and competitive terms that will help lower your monthly debt payments. This helps you stay on solid financial ground long-term.