Many of you wrote last week to say that I was too harsh on my friend Gillian, the woman with the “I can’t” attitude. Perhaps you’re right — I may have given up too early. I used to live like she does, and if I can turn it around, anyone can.

For a decade I was a deficit spender. I spent more than I earned. I used credit cards to fund a lifestyle that was beyond my means. Eventually I wised up — I destroyed my credit cards and cancelled my accounts, but my worries weren’t over yet. I wasn’t digging any deeper, but I was still stuck at the bottom of a hole: I was living paycheck-to-paycheck.

Twice a month I would deposit my paycheck, pay my bills, and then look to see how much was left. Whether the surplus was $20 or $200, I made plans for it: comic books, video games, clothes, whatever. I used to joke that I was an expert at spending every penny I had. Except that it was no joke. Late at night, when I couldn’t sleep, I would wonder why I could never get ahead.

I lived like this for years. You can maintain a paycheck-to-paycheck lifestyle for a long time if you’re not taking on new debt (and if disaster doesn’t strike). Here’s another way to look at it:

  • If you spend more than you earn, you are acquiring debt.
  • If you spend about what you earn, you are living paycheck-to-paycheck.
  • If you spend less than you earn, you are acquiring wealth.

I don’t know about you, but my goal is the latter. Escaping the paycheck-to-paycheck lifestyle means building positive cash flow, getting ahead of your expenses. Instead of spending exactly what you earn, you need to save something every month; even $25 or $50 can make a difference. Once you start, this amount has a tendency to snowball. For me, a $25 surplus grew into a $100 surplus, which grew into $300 per month and more!

But how do you start generating this surplus? How do you escape from the paycheck-to-paycheck pit? Here are some ideas that worked for me — one or more of them may work for Gillian. Or for you.

  • Start a savings account. For years I resisted the idea of opening a savings account. “Why should I?” I said. “I don’t have money to save. I barely have anything in my checking account!” But when I finally did open a savings account three years ago, a funny thing happened. I started finding money to stash there. It wasn’t much at first — $20 here, $75 there — but in time, it made a difference. Before long I had developed the savings habit.
  • Pay yourself first. The best way to begin your escape is to save first, before you do anything else with your paycheck. I know this can be difficult. You worry that you won’t have enough for your bills, for gas, for food. But the danger is that if you don’t set the money aside first, you’ll just spend it. Have a small amount — $25? $50? — automatically deducted from your paycheck and placed into savings. Chances are you won’t even miss the money.
  • Spend with purpose. You may want to consider a budget. Budgets aren’t scary, and they’re not difficult. Some people find them liberating. There are a variety of computer budgeting tools available, including:

    A budget can be handy, but even if you can’t bring yourself to use one, you should know where your money needs to go.

  • Draft a spending plan. I don’t keep a budget, but I do create a financial plan every few months. It’s nothing more than a quick financial snapshot showing my income and expenses. I also list upcoming major outlays. This helps me keep my financial goals in mind as I go about my daily life. It’s easier for me to decide not to buy the latest Spider-Man comic when I remember that I’m saving for a trip to Europe.
  • Attack your debt. These methods are great, but if you really want to free up cash, pay off a debt. I recommend using a debt snowball to tackle your obligations one after the other. But if your goal is to ease financial pressure ASAP, you may want to try a slightly different approach. Pay off your debt with the smallest balance, but instead of rolling the freed cash flow into the next debt, use it to establish a savings buffer.
  • Cut costs. This one’s obvious, but can be difficult. My friend Gillian views cutting costs as deprivation. If you’re willing to look behind the immediate sacrifices to the long-term gains, cutting costs is an excellent, quick way to free up cash. There are a million little things you can do to save money now.
  • Boost your income. Many people have suggestions for how to cut costs, but few remember there’s a second side to the wealth equation. Earning extra money helps just as much as practicing frugality, and sometimes hurts less. But how do you get extra cash? Find a part-time job for a few months. Sell some of the stuff you’ve acquired over the years. Ask your boss for a raise. Find a way to make money from your hobbies.
  • Avoid lifestyle inflation. A final way to escape the paycheck-to-paycheck purgatory is to opt out of lifestyle inflation. When you get a raise, don’t adjust your standard of living to match. Use part of this new money to pay off debt, and another part to accelerate your savings. When your friends show you their new iPhones, ooh and aah, but resist the urge to get one yourself. Learn to love what you already have.

When I became serious about my finances, I realized that living paycheck-to-paycheck was dangerous. I was always one disaster away from returning to the credit bandwagon. I made a resolution to stop living on the edge and to start saving. It was difficult at first. Old habits die hard. But with time and persistence — and with the habits above — I made the switch. Now, a couple years further on, I’m just beginning to profit from my hard work. I have a monthly cash surplus. I have escaped from the paycheck-to-paycheck lifestyle.