As I said this morning, November will be a three paycheck month for my spouse. He is paid biweekly which means that two months out of the year, he gets paid three times instead of the normal two. In the past, that money has somehow gotten frittered away on things, the winter one on Christmas related stuff and the summer one on, well, who knows what. This time it is different. I have a plan and a strategy and I am hoping it works.
First off, I need to let go of the idea that it is completely an “extra” paycheck. Although none of our bills are based upon using it, our everyday expenses (gasoline and food primarily) will continue to go on, and a portion of every paycheck is earmarked for the two weeks of expenses it is supposed to cover. I think one of the problems I’ve had in the past is I was a bit too ambitious – I saw the money as “extra” money completely and then when I needed to use some of it just to pay for groceries or gasoline or other “normal” expenses in that two week period, I got discouraged. I used to be an “all or nothing” type of thinker, and so if some was being used, might as well just use it all and try again with the next “extra” paycheck. Not this time.
Basically, after taxes, 401K, health insurance, etc is taken out, my spouse’s “take-home” paycheck every two week is around $1350. I am splitting that into three parts. The first part is the “$350″ part. That is going to be snowflaked directly to the credit card debt. Boom!
The remaining $1000 will be all put into our emergency fund savings account. However it has two purposes. $500 of it is for Christmas presents and other Christmas-related expenses that can’t be absorbed into our budget (mostly travel, we travel by car about 2000 miles round trip over the course of the Christmas holiday to be with family). The other $500 is reserved for paying any “normal” budgetary expenses that come up if needed (hoping not to have to touch that at all). At the end of December (when all Christmas-related stuff is done and paid for) anything remaining from this original $1000 will be snowflaked directly to debt. Even if it is only $1.75. Hopefully it will be considerably more than that. I am waiting until after Christmas for the entire amount in case my $500 for Christmas turns up being not enough and I need to use part of that other $500 for that. We usually spend more than that on Christmas all told but I am hopeful.
If I do have to dip into the emergency fund in October (still hoping for not), bringing the emergency fund back up to $1000 will be the first priority with any leftover funds, and then the remainder from that will be snowflaked to debt.
The only question that remains is which paycheck I treat as the “extra” one. I am going with paycheck #1. That means that we’ll have to get to November 16th (paycheck #2) to pay most of the monthly bills, which should work out okay. But if we are in a significant shortfall situation in October as may be the case, I can change this and paycheck #2 will become the “extra” one. As long as I decide before November actually starts it should be okay either way. Treating paycheck #1 as the “extra” one just works better for adjusting in future months since the first paycheck will come closer to the middle of the month then and slowly adjust back towards the beginning.
So I have a plan. Have I thought of everything? I hope so.