Majority of Americans are struggling financially and half live paycheck to paycheck. Here’s a guide to break free of that struggle. Karl Eggerss was interviewed on CBS.
Sharon Ko: Majority of Americans are struggling big time financially. In fact, roughly half are living paycheck to paycheck. Here’s a guide to break free of that struggle. What’s the first thing someone can do to get out of the pit of living paycheck to paycheck?
Karl Eggerss: I would say, literally look how many hours are you working a week, and is there any margin in there to do something extra for some extra income? With Uber, Lyft, is that something you could do on the weekends? Is there anything else you could do, or are you good with your hands and can be doing some type of hobby that you’ve turned into some type of income in addition to your normal job? So if you’re working 40 hours, could you work an extra 10 hours a week doing something else and then taking that extra money and putting it towards savings, not towards your daily living expenses?
And start with the discipline, because the discipline of doing that as you get raises, take those, that extra amount of money, and save more. That’s where most people get it wrong, is that what they do is, as they start to get raises in life, they increase their living standards. And we all want higher living standards, but at some point, you have to take that extra amount and put it away in savings and let it grow, and don’t touch it. That’s the other part about it.
Sharon Ko: What if you have a lot of debt?.
Karl Eggerss: That’s probably more important to pay that down than to invest, and so you do have to forgive the investing for right now, and the saving. The emergency fund, though, is probably even more important than the debt. So when you look at priority, you have to have a rainy day fund for, you’re going to need new tires, air conditioner around the house goes out, something like that pops up, could be a medical emergency. That’s why you have to build that emergency fund up, but the debt’s a quick second, I mean, you have to get rid of that debt. Otherwise, it snowballs, and it’s going to start eating you alive because of the interest, and then you fall further and further behind. But I would not invest, as opposed to paying off the debt. You have to pay off the debt or get it down to a reasonable level first.
Sharon Ko: Something that’s really worked well for me has been the automatic bill pay for my student loans.
Karl Eggerss: Absolutely. That’s a good point, is nowadays, you can automate a lot of things. Automate your savings, automate your bill pay, because it really does make budgeting a lot easier. You know what’s coming out, you know what’s coming in, and when there’s some left over, that’s when you have to start figuring out, “What am I going to do?” And otherwise, it’s probably going to go to a new iPhone that you may not have needed and you could have, you had an older iPhone.
Sharon Ko: Okay, and what if you have kids? Because that is a huge expense, as we know.
Karl Eggerss: Don’t have any more. No, I’m just kidding. It is a very big expense. We’ve talked about that in prior interviews, how expensive kids are. I would say, you hear about people giving their kids allowances, and you have to put that on the back burner and actually help them contribute to the household. You know, if you look back in 100 years ago, people had seven, 10 kids, and they all helped around the house a lot. And so, we have to do that. We have to get our kids to help us do those things, because it is saving you money. And it could be, somebody that has somebody help them clean their house, have the kids do that, and don’t pay somebody to do that.
Sharon Ko: Thank you, Karl Eggerss.