Living Paycheck to Paycheck

I attended an informative, hour-long financial seminar the other day in my neighborhood. Near the end, someone asked the question "How do I know if I'm living paycheck to paycheck?"

I raised my hand, and the speaker allowed me to answer her question. In short, living paycheck to paycheck means that if you didn't get your next paycheck, or a month's worth of paychecks, you would be unable to pay your bills. You would most likely need to borrow money to pay the rent, pay the mortgage, and/or buy groceries. Living paycheck to paycheck also means that if a financial emergency occurs, such as a $500 automobile repair, you don't have the cash on hand to pay the bill.

How do you get out of the cycle of living paycheck to paycheck? Here are a few ways to break this cycle:

• Build your emergency fund
• Pay off debt
• Plan and save for for future expenses (such as auto repairs)
• Get adequate insurance

You'll find peace of mind when you have an emergency situation and you have enough money in the bank to take care of the situation.