The cold hard truth: There are only two ways to have more money - 1) Generate more income. 2) Reduce expenses. That's it! Easier said than done, I know.
The following is an incredibly condensed version. We realize that every situation is unique and results can vary dramatically.
If you're single, it's much easier - the only person you need to compromise with is yourself - unless you're receive free room and board from your parents, friends, relatives, etc.
Here's how Mary and I did it: We grabbed every invoice, monthly bill, magazine subscription, checkbook, and gathered it all at the kitchen table. Also in our arsenal: strong coffee, a pen, and a legal pad. We went through every nook and cranny of our expenses and made some tough decisions. At the time, we had about $6000.00 of (beautiful) furniture from a rent-to-own place in town. Mary suggested we give at least half of it up. Also, I recall Mary having a subscription to People magazine. We were looking at a subscription bill of over 100.00. After looking at the fine print, we had the option to cancel instead of continue. Some decisions were easy, others not so much.
The moral so far - go through all of your expenses and cut anything that's unnecessary - you can add it back later after you turn things around. But right now, you gotta get ninja on your finances or you'll always be stressed!
On the income side, make every dollar count. You must spend wisely. Cook at home, take your lunch to work, etc. Over the past few years, I've replaced my drive-thru coffee habit with a 12-ounce container of instant Folgers.
Tally up your income and expenses. If your income is higher than your expenses, you're doing better than most. See how much you have left over and make sure your saving to lay down a solid financial foundation for you and your family. If you're just breaking even, buy an inexpensive notebook and log everything you spend money on - it will be enlightening.
Lastly, do not borrow money or use credit cards, it will only stall your progress. Part of why we're living paycheck to paycheck is because of consumer debt. One of the best people for helping eliminate debt is Dave Ramsey. He has plenty of free resources on his site to help you at daveramsey.com. (Be sure to check out the debt snowball - powerful!) Could you imagine life without debt? It is possible and millions of people have made that transition.
Honestly, things were pretty tight for about four months. Then we started seeing some nice progress.
If you perform this exercise and don't have enough to pay your bills, you'll need to make arrangements with your creditors, utility companies, etc. Share your plan with them, be honest, and most will be happy to work with you.
When things stabilize, set up an amount (no matter how small) to consistently put into a savings account. This is not to be touched except for a life and death emergency.
There is light at the end of this tunnel. It will most likely not be easy, but incredibly worthwhile for your future.
Feel free to connect with me anytime at samprindle.com. Mary and I wish you the absolute best. Good luck!