So You Blew Your Paycheck — Now What?

Bills pilling up and no money to pay them stock photo
Ziga Plahutar /

When yet another bill arrives after you’ve already spent your paycheck, it can leave you feeling like a hopeless passenger in a car that is spinning out of control. However, taking a few steps to seize control of your finances can put you back in the driver’s seat.

You can’t always influence whether you receive a raise or how big a bonus you get each year. But you can decide what to do with the money you already make. Read on to determine how you can stop living paycheck to paycheck and start saving the money you need for things that are important to you.

Implement a Spending Freeze

If you’ve spent all your money and can’t pay your bills, stop spending ASAP. First, make sure you’ve taken care of your must-haves like housing and food. If it’s just for a few weeks, you can delay other less important expenses.

The extent of the freeze can vary depending on how short on cash you are and how long you have until the next paycheck arrives. “It can have varying degrees of subzero temperatures, depending on the seriousness of the situation,” said Galen Bargerstock, founder of Government & Civil Employee Services in Lucerne Mines, Pa., which offers professional retirement and benefit services to state and federal employees.

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“You can put yourself or your family on a spending freeze anytime that you are in need of making some extra money and/or trying to make your dollars last a little longer,” Bargerstock said. “If you are just trying to casually get caught up on your bills, a spending freeze will allow you to only spend money on necessities like your mortgage, utilities and — at the absolute least — your minimum credit card payments.”

Try the Debt Snowball Method

Bader Chowdry, the founder and CEO of Insight Accounting, advises that you should immediately implement the debt snowball method.

“While the debt avalanche method — paying off high-interest debts first — is well-known, the debt snowball method offers a psychological advantage,” he said.

“Start by paying off your smallest debt, regardless of interest rate. As you eliminate smaller debts, you gain a sense of accomplishment and momentum, which can motivate you to tackle larger debts more aggressively.”

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Chowdry adds that this approach is particularly effective for those who find motivation in quick wins and progress.

Seek Accountability

Having someone hold you accountable for spending can help motivate you to avoid frivolous purchases.

“If you want to have an accountability partner, the first person you should look towards is your spouse or significant other,” Bargerstock said. “With your accountability partner, you should be able to discuss things like financial goals and what bills you think are a necessity. An accountability partner is someone that you can trust, who you know has self-control.”

Everyone has triggers that make it tough for them to avoid spending money. These triggers differ from person to person.

“Triggers can be anything as obvious as going out drinking with friends all night, to a $500 online shopping spree for an entirely new wardrobe,” Bargerstock said. “Planning around them is simple when you keep your financial goals in mind, and you have a partner to keep you accountable.”

Negotiate, Negotiate, Negotiate

Rikin Shah, who holds a MBA from The Stanford Graduate School of Business, says negotiating with creditors can help alleviate your costs in the short term.

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“Before you scoff at the notion, remember [many requests to] lower credit card APR were approved over the past year,” he said.

Begin by assessing your financial situation, including debts, income, and expenses. Initiate direct communication with your creditors, explaining your circumstances candidly and proposing a reasonable repayment plan that aligns with your current financial capabilities. Express your commitment to settling your debts and emphasize any financial hardships you’re facing.

You can request reduced interest rates, waived fees, or even propose lump-sum settlements if your situation requires it. Ensure all agreements are documented in writing and maintain a polite and persistent approach throughout the negotiation process.

Professional help is an option if negotiations become overwhelming. Remember, successful negotiations, along with a solid plan to manage your finances, can pave the way to debt relief and financial stability — especially if you just blew your paycheck.

Clarify the Issue and Your Goals

From time to time, you might encounter unexpected expenses that make it feel like your paycheck just disappeared, and you have nothing to show for your hard work.

However, if you find this happening on a regular basis, adjusting your attitude can be the most important change you make, said Divam N. Mehta, a certified financial planner and CEO of Mehta Financial Group in Glen Allen, Virginia.

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“Once the issue of overspending has been identified, then the individual can take gradual steps to improve,” Mehta said.

When you’re ready to make changes, clearly identify your goals, said Michelle Panzo, manager of the Orange, Connecticut branch of Connex Credit Union. If you just want to stop blowing your paycheck, it’s hard to measure your success. And success can look different for each person based on long-term goals.

“Regardless of how big or small, setting a goal (or goals) is imperative to your financial improvements,” Panzo said. “Whether you want to save $100 extra each month or pay off two credit cards by December, having a focused approach will provide the motivation necessary to adhere to your financial resolutions.”

Review Spending To See Where You Messed Up

If you don’t know where your money goes, it’s hard to figure out what you need to change.

“Before you can set a budget, you need to have a better understanding of your spending,” said James Capolongo, TD Bank’s head of consumer deposit products.

Capolongo suggested you track frequent expenses and create a budget for the things that are most important to you.

“For example, you can budget a certain spending amount each pay period for groceries, clothing or personal items, entertainment, eating out, and — of course — savings,” he said.

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Capolongo also said to include the cost of monthly services. Besides utilities, you might also have a gym membership, streaming video or home delivery subscriptions.

If you use credit cards or debit cards to make purchases, a range of apps can help you review where your money is going without having to use a pencil and paper or save all receipts. Some of these apps are free, so it won’t be another expense to add to your budget.

As you track expenditures over time, calculate an average of what you spend each month. This will help you even out the ebbs and flows of spending.

Evaluate Your Monthly Expenses

Now that you’ve figured out where money is going, evaluate how necessary each of those expenses is, said Dennis McNamara, a fee-only financial planner at wHealth Advisors.

This doesn’t mean you have to suck the enjoyment out of your budget completely. Instead, learn how to budget properly so you maximize dollars instead of wasting them.

Shah shares that it’s incredibly important to master your budget.0

“[Many] Americans claim they don’t need a budget to get by every month, yet overspending is a universal occurrence in 2023,” he said. “If your budget shows that the spending is higher than earnings, you must make some difficult decisions–change jobs, adjust housing expenses, or move to a cheaper place, among others.”

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To budget, allocate specific amounts to each category to ensure your expenses don’t surpass your income. Take advantage of budgeting apps like Mint, YNAB (You Need A Budget) and PocketGuard, which aid in tracking expenses, setting spending limits, and gaining insights into your financial behaviors.

Another method is the envelope system, where you allocate cash to various spending categories and place them in labeled envelopes; when an envelope is empty, it signifies you’ve reached your limit for that category. The 50/30/20 rule suggests assigning 50% of your income to necessities, 30% to discretionary wants like entertainment and dining out, and dedicating 20% to savings and debt repayment.

Alternatively, explore zero-based budgeting, which involves assigning every dollar a purpose, ensuring no money remains unallocated and allowing each dollar to contribute to bills, savings, or debt.

Quit an Unhealthy Habit

Many unhealthy habits are damaging to your wallet as well as your mind or body.

“Make 2023 the year you drop expensive habits like smoking cigarettes or consuming large amounts of soda,” Panzo said. “While this may not be easy at first, a slow and steady reduction will not only benefit your wallet but can improve your health as well.”

The savings you generate by reducing your unhealthy spending and reducing future medical bills can be put toward paying down debt and saving for retirement.

Or you can spend the money you save on other things that are more enjoyable, such as signing up for a gym membership that introduces you to a community of fellow healthy-minded members.

Generate Extra Income

Look around to find ways to make extra money before you receive your next paycheck. For example, selling things you don’t use can generate quick income.

“Instead of sitting at home surrounded by all of your impulse purchases with no money, take a day with your accountability partner and try selling goods online,” Bargerstock suggested.

There are plenty of side hustles to consider. You can try freelance writing, where you write articles or blog posts to earn money through your writing abilities. Alternatively, rideshare driving with companies like Uber or Lyft lets you make extra cash by providing rides to people. If you’re knowledgeable in a subject, online tutoring allows you to tutor students online and share your expertise while earning money. Graphic design is another option, enabling you to create logos and designs for businesses on a freelance basis.

Additionally, you could care for pets by offering dog walking or pet sitting services, earning money while providing valuable care. Exploring platforms like Etsy to sell handmade crafts or artwork is also a viable route. Delivering food or packages through services like DoorDash or Amazon Flex, or providing virtual assistance remotely, are even more ways to make extra income. Furthermore, renting out extra space through platforms like Airbnb or offering photography services for events and portraits can help supplement your earnings.

Whether it’s fitness coaching, language tutoring, social media management, consulting, gig economy tasks, equipment rental, baking, car detailing, music lessons, or event planning, there’s a side hustle suitable for your skills and preferences.

Automate Your Finances

The more you can automate your finances, the less human nature can sneak in and sabotage your goals.

This type of sabotage can take a variety of forms, from spending money you had planned to save to accidentally forgetting to pay a bill. If you set things up to automatically pay your bills each month, you won’t get dinged with late fees, penalties or interest if the payments slip your mind.

McNamara suggested setting up a system so that when your paycheck arrives, money automatically is transferred from your checking account to a separate savings account at a separate bank.

“Seeing a lump dollar figure in a single checking account is too nebulous — we convince ourselves we have enough for whatever that next purchase is,” he said. “Once you have automated your savings plan, silos are established, and you force yourself to work towards larger goals.”

Mehta suggested making automatic monthly contributions to an IRA. “This is a great way to create a disciplined savings program that not only allows for retirement savings, but also curbs the desire to spend what is not available.”

Don’t Stop!

Once you stop living paycheck to paycheck, don’t turn back! Even the best financial plan is only effective if you put it into practice.

“Lack of focus and commitment is a common pitfall for those looking to restructure their financial situation,” Panzo said. “Spend five minutes each month reviewing your budget and confirming it is still actively helping you achieve your financial goals. This process affords you the opportunity to make any appropriate adjustments and ensure you remain on track.”

Mehta said extra expenses will always arise, but added that it is important to try to remain within the budget whenever possible.

“If the budget is surpassed in any particular month, consider delaying making a nondiscretionary purchase in the coming months,” he said.

Sticking with your plan will eventually pay off in more discretionary income as you pay off debt and reduce the portion of your paycheck that goes toward interest.

Taking five minutes to review your finances will remind you of the progress you’re making toward not living paycheck to paycheck any longer.

Michael Keenan contributed to the reporting for this article.

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