‘I basically went from living a modest life to now living paycheck to paycheck’: My expenses have increased by $1000/month. How can I save money and get back on track?

Hi Money Minder,

I just started a new job making $81k a year. I used to get double taxed working in a different state, but now I work and live in the same state. My paycheck went up, but my employer was only withholding enough taxes to cover what I owed. Now I owe the government 8k, paid off 3k, and am on a payment plan for the rest.

On top of that, my house payment jumped from $1080 to $1400 due to taxes. I’m also saving for a wedding without any help from our parents. Now, I’m living paycheck to paycheck, left with only $120 after getting paid $2400 for two weeks.

I’ve cut out all dining out, stick to sandwiches for lunch, and only do free or under $10 activities. Our grocery budget is $30-$40 a week at Aldi’s.

Despite all this, I’m struggling to save for retirement and keep up with bills.

Any advice on saving more money or tips to help us out?

Sincerely, Financially Struggling

Response from THE MONEY MINDER:
Hello There,

Congratulations on your new job and increase in pay! It’s great that you no longer have to deal with double taxes, but I understand the frustration of unexpectedly owing the government money. It sounds like you are really stretched thin financially with the increased house payment and wedding expenses, in addition to struggling to save for retirement and making late bill payments.

To help improve your financial situation, it’s important to create a detailed budget to track your expenses and see where you can cut back further. Since you are already being very frugal, consider looking for any additional ways to reduce costs, such as negotiating bills, carpooling to save on gas, or finding side gigs for extra income.

It’s also crucial to prioritize paying off any high-interest debt, like credit card balances, to free up more money for savings and retirement. Start with the debt that has the highest interest rate and work towards paying it off completely. This will help you avoid accumulating more interest and fees over time.

In terms of wedding savings, consider setting a realistic budget and finding ways to cut costs, such as DIY decorations, choosing a less expensive venue, or having a smaller guest list. Communicate openly with your fiancee about your financial situation and see if there are any areas where you can save together.

Lastly, consider seeking advice from a financial advisor or counselor who can provide personalized guidance on managing your finances and setting achievable financial goals. Remember, small changes can add up over time, and with dedication and planning, you can improve your financial situation. All the best from THE MONEY MINDER.