When I looked at my finances at the end of April, I realised that my savings would not be able to cover the loss of a single paycheque. I've often heard numbers thrown around about how many North Americans are "less than a paycheque away from living on the street", but it was shocking to say the least to find myself in that position.
Trent at The Simple Dollar has a great post on getting off the paycheque-to-paycheque treadmill. The gist is that, when you have at least one paycheque saved in the bank, and are spending less than you make, you are "off the treadmill", and no longer living paycheque-to-paycheque. I really like this post, because although the goal he describes would not exactly make one financially independent, it represents a huge step in the right direction. I've found that that first step, from doing nothing to doing something, makes all the difference.
I'm not yet at the point that Trent describes, but I am spending less than I make, and I have several hundred saved in my Emergency Fund. I'm on the right track. However, I still find myself "riding out" the last few days before my next paycheque, and counting the pennies until that next influx. Although I have a positive savings rate, I still feel like I'm living paycheque-to-paycheque, and I'm wondering whether this feeling will ever actually go away.
I think the problem is as follows: with every paycheque, I first transfer my savings to ING, and then earmark the money that needs to go to bills and debt repayment. Good so far. Then, with what's left over, I cover my expenses for the next two weeks. In this "other expenses" category, however, I always spend every dollar, so there's never anything left over, and I'm always counting down the days until my next paycheque. I'm technically following the rules, but I still feel as if I'm spinning away on that treadmill.
I believe that, as I get more and more practice with frugality, and as my savings grow and my debts shrink, I'll feel this pressure lift, as the habits become more ingrained. I just hope I'll recognise the feeling when I get there.
What's been your experience? Have you lost that paycheque-to-paycheque feeling, or have you just learned to manage it better?