Extra Paycheck Magic
Hi again, friends! This post has been on my mind big time because this month for our family it's: EXTRA PAYCHECK MONTH!!!
Now some of you out there may be saying, "Wait a minute...how and why do you get an extra paycheck?" Well, here's how we have an "extra" paycheck. Mr. Pennies is paid biweekly- this means that he gets a paycheck 26 times in a year - so it isn't really an extra paycheck. Instead, I have worked our budget for the year to run on 24 paychecks (2 per month) so when it comes to our sinking funds and fixed expenses, we already have them covered.
It's down to the budget.
Yet again, we're hitting on that big b-word: budget. Our expenses that are budgeted with our twice-monthly paychecks are: mortgage, electric, sewer, water, cell phones, internet, gifts, insurance (life, car, homeowner's), car maintenance, subscriptions (Prime and Costco), and extras for The JuJuBe and Baby Brother. So that means that with the two May paychecks we have already received, all of these categories are covered with our sinking funds*. This frees up extra cash from our next paycheck to use at our discretion (more on this later).
So, are we able to save ALL of our paycheck? At this time, no. There are some items in our budget that I address just two weeks at a time. As a mom of one toddler and a newborn who's *almost* here, things like food, gas and our tithe are accounted for in two week increments. There are many people who make their checks stretch for all of their categories.
I have read about saving the "extra" paycheck for years and this is the first time we're saving half of it outright. It is a goal of mine at some point redo our budget to run solely on 24 paychecks and save the entire thing "extra" check. However, I'm taking this slowly and am glad of the progress we've made. This brings me to the next topic: the budget.
I write about this so, so much in this blog. Why? Because it is THAT important. I remember back to our pre-budget days when we would log in to our bank and "track" our spending that way. I thought I truly knew how and where all our money was spent. I was wrong. Even as we were doing the Dave plan, we didn't have a written down, recorded budget for the first two years. I'm amazed we were able to make the progress we did. I shake my head looking back!
Now, fast forward a few years and I find myself sitting down to reconfigure our budget every couple of months or so. I see if there are spots that need some padding or trimming and adjust accordingly. As soon as the COVID-19 shut down began, I looked it over yet again and trimmed many categories. I will do this again before school starts to see if we need to account for any additional expenses then as well. And friends, I don't say these things to pat myself on the back. I say this knowing how badly I fought budgeting. I put it off for TWO YEARS! It took three months of tweaking to make it really functional. Now, it takes me no time at all and it isn't something I dread. I love looking over the budget now. It makes me feel empowered.
Our "extra" paycheck will be used to pay extra towards our mortgage - our only outstanding debt. As my maternity leave is about to begin, I'm already excited to begin teaching again to help aggressively pay this debt off once we're officially out of stork mode!
Thanks for stopping by, friends. I will post again soon!
*Sinking funds are categories where we save a specified amount of money in our savings account. For example, our water bill averages around $25 each month so we save $13 out of our 24 paychecks and transfer the money into our checking account when the bill arrives.
Now some of you out there may be saying, "Wait a minute...how and why do you get an extra paycheck?" Well, here's how we have an "extra" paycheck. Mr. Pennies is paid biweekly- this means that he gets a paycheck 26 times in a year - so it isn't really an extra paycheck. Instead, I have worked our budget for the year to run on 24 paychecks (2 per month) so when it comes to our sinking funds and fixed expenses, we already have them covered.
It's down to the budget.
Yet again, we're hitting on that big b-word: budget. Our expenses that are budgeted with our twice-monthly paychecks are: mortgage, electric, sewer, water, cell phones, internet, gifts, insurance (life, car, homeowner's), car maintenance, subscriptions (Prime and Costco), and extras for The JuJuBe and Baby Brother. So that means that with the two May paychecks we have already received, all of these categories are covered with our sinking funds*. This frees up extra cash from our next paycheck to use at our discretion (more on this later).
So, are we able to save ALL of our paycheck? At this time, no. There are some items in our budget that I address just two weeks at a time. As a mom of one toddler and a newborn who's *almost* here, things like food, gas and our tithe are accounted for in two week increments. There are many people who make their checks stretch for all of their categories.
I have read about saving the "extra" paycheck for years and this is the first time we're saving half of it outright. It is a goal of mine at some point redo our budget to run solely on 24 paychecks and save the entire thing "extra" check. However, I'm taking this slowly and am glad of the progress we've made. This brings me to the next topic: the budget.
I write about this so, so much in this blog. Why? Because it is THAT important. I remember back to our pre-budget days when we would log in to our bank and "track" our spending that way. I thought I truly knew how and where all our money was spent. I was wrong. Even as we were doing the Dave plan, we didn't have a written down, recorded budget for the first two years. I'm amazed we were able to make the progress we did. I shake my head looking back!
Now, fast forward a few years and I find myself sitting down to reconfigure our budget every couple of months or so. I see if there are spots that need some padding or trimming and adjust accordingly. As soon as the COVID-19 shut down began, I looked it over yet again and trimmed many categories. I will do this again before school starts to see if we need to account for any additional expenses then as well. And friends, I don't say these things to pat myself on the back. I say this knowing how badly I fought budgeting. I put it off for TWO YEARS! It took three months of tweaking to make it really functional. Now, it takes me no time at all and it isn't something I dread. I love looking over the budget now. It makes me feel empowered.
Our "extra" paycheck will be used to pay extra towards our mortgage - our only outstanding debt. As my maternity leave is about to begin, I'm already excited to begin teaching again to help aggressively pay this debt off once we're officially out of stork mode!
Thanks for stopping by, friends. I will post again soon!
*Sinking funds are categories where we save a specified amount of money in our savings account. For example, our water bill averages around $25 each month so we save $13 out of our 24 paychecks and transfer the money into our checking account when the bill arrives.
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