Living paycheck to paycheck can cost you dearly. Nearly two-thirds of the workforce lives this way. As a result, most have a reduced credit score and pay more for many things.
Higher Interest Rates
Lenders frown upon those with poor credit. They view them as irresponsible and a greater risk with regard to borrowing money. This could mean higher interest rates, which could add up to thousands over the course of a sizable loan. Or, they may simply deny the application. If you are able to secure a loan, the higher interest may make it difficult to make your monthly payments. This will result in added late fees and possible foreclosure or repossession.
Credit cards are convenient. They allow you to pay for things without using your cash. However, if you have too many with high balances, making even the minimum payment each month can become difficult. Securing a loan with excessive debt is also hard. Obtaining an installment loan is easy. Simply go online and conduct a search for “available loans Raymondville, TX “or “available loans Eugene, OR.” This will allow you to consolidate your credit card debt into one affordable lower monthly payment.
Losing a Job Opportunity
Unfortunately, the application process for finding a job is evolving. Today, many companies also look at your credit score. If you have a low credit score, they use it as an indicator of possible theft with the business. This can end up costing you a good-paying job that’s a good fit for you.
You may need to rent an apartment or a home now or in the future. With a poor credit score, this may not be possible. You may still, however, be able to get into a home rented exclusively by the owner. Additionally, to add insult to injury, having the utilities put in your name will come with a hefty deposit.
Limited Insurance Choices
A poor credit score will also reduce your chances of securing an insurance policy with a reputable company. Many companies initially look at your credit score prior to filling out an application. If your score is low, they will quickly deny your insurance application. That’s because they view a bad score as a reckless person who will have an accident or speeding ticket in the future.
Ending the Paycheck to Paycheck Lifestyle
Living paycheck to paycheck doesn’t have to be a way of life. There are several ways to end the cycle and improve your credit score. The first step is establishing a budget. As painstaking as it may be, you need to find out exactly what you owe out and to whom. Once you have everything listed, add in other monthly expenses like food, gas, and essentials. Once you have the list completed, subtract the amount from your net income for the month. The money remaining is what you’ll use to begin the slow process of reducing your debt and establishing a savings account. If the number is more than the net figure, you will need to find ways to reduce your expenses or bring in additional money.
Living paycheck to paycheck can cause you stress, lost opportunities, and additional money. It’s up to you to end this way of life.