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03. paycheck-to-paycheck

“We are paycheck-to-paycheck employees, living in apartments owned by paycheck-to-paycheck landlords, working for paycheck-to-paycheck companies. Who’s idea was this?”

This coronavirus is really showing us what a house of cards we live in.

It is Monday! Glorious, sweet start to the work week except now that I am unemployed, it is just the start of the week, or was that Sunday?

It is funny how much of your time is structured around work. In conversation this weekend, I was brainstorming on how to take advantage of this unexpected interruption of normal life and instead use it as a product pause.

Why a pause?

A pause is a temporary stop in action, and it is implied that further motion will resume eventually.

For our purposes, a pause is a gift of time and a productive pause is to be mindful of what you do with that gift.

“A pause is a gift of time and a productive pause is to be mindful of what you do with that gift.”

It is too easy to assume that our working hours are productive simply because someone is paying us for our time. But what is the value of a paycheck?

Obviously the value of a paycheck are the things you can exchange money for – food, shelter, clothes, entertainment, an internet connection, and other comforts. In exchange for these things, we work. We give our efforts, energy, attention, and most importantly, our time in exchange for a paycheck, and another one, and another one. We sign agreements with companies that in exchange for our time, we get in return, a paycheck. And thus life isn’t lived on time but rather life runs paycheck-to-paycheck instead.

“We sign agreements with companies that in exchange for our time, we get in return, a paycheck.”

Since I will receive my last paycheck for hours exchanged tomorrow, I now have to digest the new reality that I won’t have another paycheck of monies to exchange for things.

Fortunately because of the self quarantine mandate, I have consciously purchased extra provisions (aka food) and because I live in a first world city, I have plenty of other stuff too (i.e. clothing, electronics, furniture, etc). I am not a person starting from zero. When you are let go, you are a person starting from exactly where you are. A productive pause is wherever you are in that moment, with the resources (good) and liabilities (bad) that you have.

I am also fortunate that I have the habit of tracking my spending and being minimalist in my fixed expenses. Fixed expenses are the recurring costs of living, such as rent, utilities, transportation, WiFi, phone bill, and any subscription services (Spotify, I’m looking at you!). My total fixed expenses a month are $1750.

That’s not to say I don’t spend more than $1750 a month, I absolutely do! The extra fancy groceries, birthdays, coffee, lunch or dinners, snacks, transportation, and other miscellaneous spending I do each month means my average spending per month is closer to $2700. This is if I pay all my credit cards in the same month of the purchase. That’s a ~$950 difference! And that $950 is what I will have to manage in my new reality.

Many people don’t know what their fixed expenses are. I want to be encouraging and say that is perfectly okay, but it isn’t. Knowing exactly what your fixed living costs are or your minimum living costs, is the difference between knowing if the ground you stand on is stable or if it’s actually quicksand and you need to find some new ground to stand on ASAP. This is the base number of how expensive your life is, and we haven’t even thrown on top all of your variable expenses (things you don’t NEED but WANT, like entertainment, clothes, shoes, gadgets, services, etc.).

When you figure out your fixed expense number, you will be able to see exactly what you are exchanging your time for. Sometimes people realize they are spending much more than their paycheck would allow, and are only able to do so by getting into debt!

If a paycheck is exchanging your past time for future money. Debt is exchanging future time for past money. Think about it.

“If a paycheck is exchanging your past time for future money. Debt is exchanging your future time for past money.”

Debt is truly being paycheck-to-paycheck, meaning you don’t have any margin for error. Not receiving that next paycheck, aka getting let go, would be devastating for your life. Scary? It should be!

But there is a silverlining in this, living paycheck-to-paycheck just means you are like the many millions of other people. Getting let go during the coronavirus means I joined the other 3 Million people who also were let go.

Only difference is that I know how much my lifestyle costs me, and that will help on the next steps in this journey. I want you to have that advantage too.

Take a productive pause – How much is your lifestyle? What does living paycheck-to-paycheck mean for you?

To find out your fixed expenses and how much you are living paycheck-to-paycheck, click the productive pause button for a worksheet.

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