Episode 95: Ending The Paycheck To Paycheck Loop

We share a clear path to break the paycheck to paycheck grind, even for high earners, by creating space, timing cash flow, and separating bills from daily spending. We connect every tactic to your why so peace, freedom, and security become daily habits, not distant goals.

• defining paycheck to paycheck beyond low income
• how timing and margins drive stress even with high pay
• invisible drains from convenience costs and lifestyle creep
• the danger of “I can afford the payment” thinking
• building a small buffer before big goals
• two-account system for bills and spending
• stop spending future paychecks on credit
• linking actions to your personal why
• progress over perfection and long-term momentum

Go to the show notes and sign up to work with me

Danielle is a money coach helping those who have been trying to figure out their finances FINALLY create a clear plan so they don’t have to worry about waiting to refill their bank account the next payday.

She is the founder of The Financial Freedom Society on Facebook and her signature money coaching program, The Better Budgeting Playbook. You can sign up for her newsletter by clicking here.

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Chapters

• 0:00 Welcome And Series Context
• 1:20 Defining Paycheck To Paycheck Reality
• 3:15 Why Good Income Still Feels Tight
• 5:40 The Invisible Drain: Creep And Convenience
• 8:20 First Shift: Build Space Before Big Goals
• 10:05 Practical Steps: Buffer And Two-Account System
• 12:10 Tie Money Moves To Your Why
• 14:10 Change Takes Time: Coaching And Momentum

Transcript

SPEAKER_00: 0:07

Hello and welcome to the Better Budgeting Podcast. I'm your host, Danielle Reese. I'm a money coach and the founder of the Better Budgeting Playbook, and this is my one-on-one coaching program for women and couples who have been trying to figure out their finances, finally create a clear plan so they don't have to worry about waiting on payday anymore. I became a money coach in 2020 after paying off over$60,000 in debt, rekindling my marriage, becoming financially free, and wanting others to experience the same. If you'd like to work with me, you can check out the link in the show notes there. Also, we have the Financial Freedom Society on Facebook. It's a free Facebook community focusing on debt payoff, saving strategies, budgeting, and money mindset. You can find the link to that community in the show notes as well. Hey, welcome back to this week's episode of the Better Budgeting Podcast. I'm happy to have you here. Um, this is episode four of a five-part series. So go back, listen to episode 92, 93, and 94. This is episode 95. And then next week, episode 96 is going to come out. And this is just like a little series that I'm putting out right now, which is really fun to do because they all go together and it's really been helping a lot of people. So I hope you are enjoying them. Today we are going to talk about breaking the paycheck to paycheck cycle. That's even when you're making good money, honey. Okay. And there's this stigma around living paycheck to paycheck that sometimes people believe that it's only for people that are poor, I guess, right? That's a terrible word, poor, but it means lower income for a lot of people. And let me tell you how many people I talk to that make really awesome income, but are still living that paycheck to paycheck life. They're still waiting on that next paycheck to hit. They're like moving money around, they're pulling money from savings, they're trying to figure out what we can use for afterpay or Klarna or a firm and what can we put on the credit card? What can, you know, like that? That's a real thing, even if you're making in a household over 100K a year. So today we're going to talk about how that works. And then also how do we break that? Because I know that's really what you're here for is how do I break that paycheck to paycheck cycle? So, first off, let's paint a picture of what paycheck to paycheck life is like, barely scraping by, counting change, constant overdrafts. Okay. Also, it can look like good income, full calendar, paid bills, barely, okay? Uh, no breathing room and constant mental math, like moving things around in your brain all the time. Um, I remember talking to somebody that became a client and that first meeting, it's an assessment meeting. Everyone goes through it. I want to know who you are. I want to know how I can help you and all these other things, right? And I remember him telling me, like, oh, it's all up here, pointing to his brain. And I'm like, okay, but like, it's not working. It's not working, my man. It's not working. We gotta, we gotta put these numbers on paper, right? So if you're constantly doing this mental math and things aren't working out in your favor, man, we're living that paycheck to paycheck life. Okay. Money goes in, money goes out, and there's nothing left to catch you if something shifts, right? That's paycheck to paycheck. What we talked about in our last episode is about income, right? And how income doesn't necessarily always shift our paycheck to paycheck life, okay? It's about timing and margins. Okay. When your bills, your lifestyle, and your commitments are built around an expected income instead of available money, you're always reacting and you're not necessarily being proactive. Okay. Reacting is what keeps you stuck. And without margin, every unexpected expense feels like a freaking crisis every single time, even when you're making really good money. So the question becomes like, how does this happen? Because you know you're in the paycheck to paycheck cycle, but you're like, how did this, how did this even come about? How did this even happen? Right. And it comes from unplanned spending, right? Like those target trips, the eating out, the convenience um store trips, like even convenience cost, right? Paying for something that maybe you could do yourself. There's also the lifestyle creep. I mean, how many times do you get a raise every year and you think like, okay, we can go on vacation, we can we can buy that new car, we can get a new payment plan on, you know, whatever around the house, we can, you know, all these things. That's lifestyle creep. It happens naturally when we are out of balance with our finances, okay? And then payments that felt small individually but are heavy together. So think about a car payment, right? Um, when we were buying a car a couple of years ago, my husband is a notorious. If I can afford the payment, I can afford the the thing. That was a big argument between the two of us because I'm like, the vehicle is still fifty thousand dollars. I don't care if we can afford the payment. It is fifty thousand dollars. It's not that's not what I'm trying to do here, brother. I'm not trying to go in debt 50,000. So we we worked out a compromise to buy a vehicle, but man, so many times we think like if I can afford the payment, I can afford it, right? I can have it. Um, but one little small shift, like losing a job, topples the whole thing over. And going back to a couple episodes, clear priorities. That's what we need. Clear priorities for me in that conversation about the vehicle. Like my priority was staying out of as much debt as possible for a vehicle. I don't love it. I love the idea of just being able to get from A to B. Am I safe? Can because I want the AC to work and I want the heat to work. And that's really it for me, right? I don't, I don't really care what the car looks like. I really don't. Um, just I used to. I mean, I remember when I was really, really young and I got my first big girl job and I made$28,000 a year and I went and I bought a$36,000 vehicle like I was somebody important. Oh my gosh, it was terrible. But I could afford the payment, guys. So easily lifestyle creep and then the payments. My priority was not payments. My priority was can we actually afford it if everything goes sideways? If I lose my job, if my husband can't work, all of these things. My job. My job is this, by the way. If I never sign a client ever again, can we make all these payments? And if no, then you know, I want peace of mind over it. So that's the invisible drain that people don't really realize. It's the unplanned spending, the convenience costs, that lifestyle creep, the payments that are small, but you know, that's really big actually when you when you do a 30,000-foot video. That's the invisible drain that people don't really notice. Okay. So let's make our first shift, and that's building space before saving big, okay? And most people think breaking the cycle means paying off debt, saving thousands, making drastic cuts. Now, this is all really, really important stuff, but the real first step is creating space. So this is space in your checking account, space between paychecks, space to make decisions instead of reacting. Okay. Even a small buffer changes how money feels. I'll tell you all the time when clients they have their emergency fund in place. Yeah, it still sucks to have to go and use your emergency fund for a car repair or something around the house. But man, it feels really different when you just have the money sitting around and you don't have to figure out, oh my gosh, how am I gonna do that? What am I gonna do with this? What am I, how am I gonna do all right? I gotta shift this around and stuff. Oh, well, that is gonna have to be late. And then all of these things are going to be happening, right? It's very different when money is in the bank, okay? It turns panic into pause, and that's really important. So let's talk about practical first steps. Stop spending future paychecks before they arrive. Woo! Please stop doing it. And some of y'all are using your credit card for it. Think about it. It is Wednesday, you're gonna get paid on Friday. You're like, all right, well, I'll just go to the grocery store now, I'll get paid on Friday, I'll use the credit card and I'll make that payment back. No, you won't. You haven't been.

unknown: 8:41

Okay.

SPEAKER_00: 8:42

So we need to stop that. We need to stop spending future paychecks before they arrive. Build a small cushion, all right? Even if it is 250 bucks, start small. When clients come to me and they have no money at all in savings, that's our starting point, is$250. How fast can we get that? Can we get that in one paycheck? Can we get that in two paychecks? How fast can you guys get$250 put in that bank account? And then we're gonna go to$500, then$750, then$1,000. And then from there, we start having conversation. All right, do we shift to pay debt payoff or do we keep going? Then we're also going to separate bill money from spending money. I've talked about this multiple times in many different episodes. All of my clients, we've got a bill account and we've got a spend account. Bill money has only bill money. We are not to touch our bill money. That is for our bills. And our spending account has our spend money. This is your fuel, this is your groceries, this is your fund, this is, you know, all of the stuff that you're gonna have multiple transactions throughout the week or two weeks or a month or whatever, that goes over there. Bill money is for utilities, mortgage, or rent, the things that have just basically one transaction a month. I think of those three, stop spending future paychecks before they arrive, building a small cushion, and then separating the bill and the spending money. I think separating the bill and the spending money uh is like the biggest one of all. I will say that as soon as clients do that, there is a huge shift in understanding of the organization of your finances. It's a lot easier to be like, oh, I have$500 over the next two weeks to spend on whatever the heck I want. I've got$200, I've got$100 or whatever, especially when you're already feeling like super duper tight and that you never have money, to have$100 freed up of being like, I gotta spend this on whatever I want, that feels so good. That's a quick, easy win for anybody. And that's why I'm telling you like these are really great first steps. Now let's connect this back to our why. All right, a couple episodes ago, we talked about our why. And this is where it matters the most. If your why is peace, you need margin. Margin is gonna support that, all right. If your why is freedom, flexibility, all right. You want to be able to be flexible with your money. You can change it here and go there and do this, and you know, all these other things. You're gonna want flexibility. If your why is security, a buffer is going to support that. That's where your savings comes in. Breaking the cycle isn't just financial, all right. This is emotional, and that's why I started with the why a couple of episodes ago. And because it's emotional, this is going to take time. This cycle that you've been in did not just form after one paycheck, it didn't form overnight, it took some time, so it's not going to break overnight either. The nice famous saying, Rome wasn't built in a day, same thing. Okay. Every intentional decision creates momentum though. Just do the next right thing. Doesn't Ana or Elsa say that and frozen? Maybe one or two. I don't know. My kids broke my heart a couple weeks ago, and I was like, Oh, let's watch Frozen. They're like, No, that's for babies. I'm like, what? And we've watched that movie 10,000 times. Okay. But just do the next right thing. Every buffer that's built is a win. Every month with less stress is progress. Okay. You're learning, so give yourself some grace, but you can change this. It's just not gonna happen overnight. And I'll tell you, whenever people work with me, we do a minimum of four months together. And from the gate, when I meet with them for the very first time, before they've even signed on, I'm like, hey, this is four months long, but really, this is a lifetime transformation. You're gonna be working through this for the rest of your life. There's going to be moments where you're just gonna want to spend money that you don't have or you're gonna want to do something that you shouldn't be doing. It's gonna be a constant thing, but I'm gonna teach you the tools to help you combat that so that you can make the next right decision. And I will tell you, actually, I was looking at my roster the other day. Most of the people that are on my roster currently have been with me well over a year. It's crazy. Um, I've got clients that have been with me almost six years at this point, and I've got ones that have been with me well over a year, but initially everyone has started with those four months. I think partly it's because I'm so much fun, but you know, I'm just kidding. Well, maybe, maybe not. I don't know. But we've got a lot of transformation in four months. And I say it like this, you know, when you're going and you're riding a roller coaster and you get to the very top, like that transcend to the top. That that's the four months. Okay. Going over the hill is continuing to work together. And guess what happens with a roller coaster? You don't just go downhill and then you're done. You more than likely go up and then we ride over that hill. And then guess what? You're gonna go up another hill. There's gonna be some difficulty, there's gonna be some roads that you're not sure how to navigate. And that's what's so great about coaching is like we're working together through all of it. So go to the show notes and sign up to work with me. We're gonna start with a meeting. It's all fact-finding for me. I wanna know all about you, what you're struggling with, how I can help you. And then we'll discuss, you know, like what's that look like? What do you need to do in order to get to there? And how can I help you? And it's really just fact-finding. By the way, I am not a salesperson at all. Um, I've done sales before in my life, terrible at it, by the way. But for you here, my thing is I want this to be the right decision for you. And if you need convincing, more than likely, it's not for you. I don't want people that I have to convince. I want people that are like, I need to change my life completely right now. And I know that what I've heard from this episode or multiple episodes, or you know, from my Facebook or my website or Instagram or whatever, I know that this is the next right thing for me to do. And if you want the support and you want encouragement and all those, all those really great things, this is the place to be, girlfriend. This is the place. I say girlfriend, but there's many men that listen to this too. So know it for you too. Okay. This week's action step for you. Okay. I want you to look at your last two paychecks and I want you to ask yourself, where did this money go before I even had a chance to choose? Well, that's different for you, right? Before you even had a chance to choose, where did that money go? You might be surprised how much is tied up into previous decisions. They're not even future decisions. You don't even get to choose your future decisions because they're all tied up. All your money is tied up from past decisions. So, where did your money go before you even had a chance to choose?

unknown: 15:32

Okay.

SPEAKER_00: 15:32

All right, thanks so much for listening to this week's episode, and I'll talk to you again soon. Bye bye.