Everywhere you look people are talking about paying yourself first. The ‘it’ thing is to sock some money away in savings BEFORE you pay any bills.
Well that is easy enough to say when you make more than minimum wage. Here’s a scenario:
You make $400 a month….yes $400 as a college student who can only work part time for minimum wage. You share an apartment with someone so your rent is $250. There is a monthly loan payment of $100 plus you have to buy groceries, pay the minimum on your credit cards, pay electricity and pay for a phone.
How do you pay yourself first in this case? The rent and the loan….which you must pay are already at $350 which is already 87% of your income. This leaves you with only $50 to buy food and pay the rest of your bills.
Again I ask….HOW can you pay yourself first when you are truly living paycheck to paycheck and moving credit card balances around from card to card to make the minimum payments.
maybe save $5 a month? every bit counts. Even in college we may spend money on unnecessary items such as take out or beer. There are ways to pinch corners. I recently graduated in 2005. I didn’t have much money coming in, and would definitely would’ve been considered a broke college student. Still, there were areas where I could’ve cut back a little.
On second thought, I don’t think the finance experts are talking about college students when they say pay yourself first. Yes, it would be great if you were, able to do that, but I realize it’s urealistic in most cases. They’re most likely refering solely to those who have a full time job.
yes I realize they are not speaking about the broke minimum wage workers…..but I want to know how those people can be helped.
Thanks for the comments.
I’m your employer. I tell you that I can no longer pay you $400 per month, now I’m going to pay you $350. What do you do?
You would pay your rent and you’d be left with $100. Then I guess you’d use what you absolutely need for food and divide the rest among your creditors.
Perhaps there are better choices than this? Move back in with your parents? You’d get creative. Perhaps a second job?
People will not tell you not to pay your loan or not to pay your credit cards but if you had no choice what would you do?
It is imperitive that you pay yourself first to break free of your chain of debt… if you run out of money completely, where do you get money from? Your credit card?
By the way, I work full time and am a full time graduate student. I am married with two kids.