Living paycheque to paycheque means you run out of money on your next payday. In other words, you cannot set aside even a small chunk of money. Although living paycheque to paycheque can be nerve-racking, many people do not give a hang until they come across an emergency. You are surely not badly off as you are able to cover all of your expenses from your pay, but life is unpredictable.
Emergencies will never send you an invitation before knocking off your door. You must have enough money stashed away, so you do not panic at that time. Online lending has made it easier for people to borrow money; just put in the application and then get money directly in your account. When you come across unexpected expenses, you take out guaranteed loans with direct lenders in the UK. This sounds like the most convenient way of borrowing because you can turf it out after paying it back once and for all. It brings forth the question if it is actually a convenient method.
Does it actually make sense to borrow when you use up the whole of your money by the next payday?
It is not that easy to answer this question. You will have to understand it by example. Suppose your monthly earnings are £350, and you use up the whole of it by your next payday. One day you got a short circuit, and you had to call an electrician, and it charged £100. You thought of borrowing money from an online lender, and you promised to pay back £115 after two weeks.
This sounds so affordable because interest is not more than £15, just a kind of nominal fee. As the due date falls, you settle your debt. Congratulations, you have broken the back of the beast. However, your pay is yet to come after a couple of days or a week or two. The problem begins as you are near the end of the month. You eventually find you fall short of cash.
Now you do not even have money to meet your regular expenses. You stretch your money, but eventually, you give up the ghost. As a result, you take out a new loan and again and again keep applying for a loan. This cycle continues, and sooner or later, you find yourself in an endless circle of debt.
Though online lenders may easily sign off on your payday application, the ball is in your court whether you want to sign the agreement or not. Experts suggest you avoid taking out a loan while living paycheque to paycheque, thereby hangs a tale.
How can you manage without borrowing money
Emergencies never hit you for any particular reasons, nor do they see if you have deep pockets. You will need money when you come across them, and since you know they can crop up any time, you are suggested to have some money stowed away. Here is how you lay aside money for a rainy day:
Cut back on your expenses
You will have to carefully peruse your budget to see how much money is going out and where. Taking stock of outgoings is the first move to be made to take up the tight reigns of money.
- Get the bank statement of previous six months to get an idea of your outgoings.
- Grab a paper and pen and jot down all of your expenses under two categories: essential and discretionary.
(The former includes rent, food, utility expenses, and the latter includes dining out, bar and nightclub visits, and the like.)
Because your savings are completely zero, you should cut back on all of your discretionary expenses. It is not a forever move as it exists unless you manage to build a significant emergency corpus. The next thing to look at is essential expenses.
- Find if a service provider offers utilities at more affordable prices than your current one. If so, just switch to that dealer.
- To save money on groceries, you should buy from a thrift store. You can buy some items in bulk, provided they do not go off before you consume them.
These tricks will certainly help you stay in control of your expenses.
These tricks will certainly help you stay in control of your expenses.
Pay yourself first
After perusing your bank statement, you can see where you can save and how much and then set aside that small amount as immediately as you get your pay. Paying yourself first will ensure you will manage to cover all of your monthly expenses from what is available to you.
Use a budgeting app, so it sends you a reminder when you are on the verge of complete exhaustion of your money before the end of the month. It will take time to get it in your stride. You may dip into your savings, or you may forget to put money into an emergency cushion. Do not panic if it happens. Just stick to your goal. You will eventually find yourself on track.
What if you have already racked up debt?
It is likely that you have already taken on debt. Do not worry, as you can get rid of it. You should consider debt consolidation loans for bad credit with no guarantor. Consolidating will help pay off the whole of the debt once and for all, and then you will be paying one large loan in fixed monthly instalments.
This will put less burden on your pocket and hence fewer chances of falling behind repayments. If you pay off without missing any instalment, your credit score will go up, making it easier for you to borrow money at competitive interest rates down the line.
The final comment
If you borrow money when you are living paycheque to paycheque, you are just digging your own grave. Borrowing money every time reflects your financially irresponsible behaviour, which is beyond the pale. Instead of hinging on a loan, you should prepare a budget, whittle down your expenses, track your spending, and pay yourself first.
Jessica Rodz is the Senior Content Writer at Cashfacts. She has a long career in the field of content writing and editing. Jessica has the expertise in the UK lending marketplace where she has worked with 7 different lending organisations and acquired many responsibilities from preparing loan deals and writing blogs for their websites.
At Cashfacts, Jessica is managing a team of experienced loan experts and doing a major contribution in guiding the loan seekers via well-researched blogs. She has done graduation in Business (Finance) and now currently doing research papers on the UK financial sector.
