The Day before Payday savings plan

[Virgderon]

I basically use one paycheck to pay the mortgage and the other to pay literally everything else.

99 % of the time I have something left the day before payday- sometimes a good amount, sometimes not so much. I thought it might be an interesting challenge to hit reset every payday and see if I could do without that little cushion that carries over from check to check.

I always wonder if I am wasting too much money just because I have some.

 

[KateKat23]

So I have been a saver since I was really young so I say it is in my blood to save. My husband on the other hand when we started dating 16 years ago was a HUGE spender. It took years of our marriage but now my husband knows the value of a dollar literally. I am actually glad I learned about the 52 week savings plan. I started beginning of last year (this is in addition to my regular savings) and finished not 1 but 2 boards and was able to pay for Christmas and the other board was just extra money that I still haven't spent. It is nice we get paid every Wednesday from one of our jobs so I get excited to get up balance my checkbook (yes I still balance to the penny) and transfer money into my 52 week savings (I have 3 boards going this year), trip savings and our regular savings after I have paid our bills plus left a cushion in our checking to pay for daily expenses.
Another piece of advice I can give is I know a ton of people who don't balance their checkbook I do. I have realized that balancing my checkbook to the penny makes me see what we are spending our money on and what we can cut out plus I know exactly where we are at at all times. I agree savings really is change of habits but I can tell you anyone can do it. My husband did it!! It also makes you think before you spend.

 

[disykat]

I actually think the "day before payday" is a good plan, and one good savers instinctually use. I like to keep a certain minimum in my checking account. After I've paid all the bills, if I have above that I automatically move it to savings.

 

[MikL99]

I also do the spreadsheet method. I budget my entire pay for the 2 weeks. When i started this spreadsheet i was always broke. I was always having a hard time paying bills when they were due. The spreadsheet was the reason i was able to save money and go to Disney World for the first time last year. We are a family of 4 and i was able to pay for Disney myself without my wife paying for any of it. The spreadsheet works. And my works great because i found ti was easier to pay half the bills every pay. By splitting my bills every pay i was never hit with a huge bill on pay day. I could always handle it.

So far i have been able to pay off 3 credit cards doing this. I have 1 left and i plan on paying that off in 6 months. Now its not easy and i can say my pay has gone up and up each year but with my budget i'm still "paying myself" the same as i was 2 years ago. This allows me to continue to pay stuff off with the extra money.

I budge my gas, half the bill if it is not due that pay, savings money (if i can), and then if i spend money i just insert it into the spreadsheet for that pay. Its so much better to see where you money is going. before the spreadsheet i was a mess and now after it i always know how much money i can spend.

I know this is realistic for everyone who has 0 extra money to pay stuff off, but it will help you organize your money and then you might be able to start saving. The biggest advise i have is setting half the bill money aside every pay.

Also with my spreadsheet i'm now looking to stay at AOA in 2016 instead of POP. nothing wrong with POP, just want to try AOA and now i'll be able to afford it.

 

[threeboysmom]

I thought it might be an interesting challenge to hit reset every payday and see if I could do without that little cushion that carries over from check to check.

I always wonder if I am wasting too much money just because I have some.

That's similar to what I do.

I have a separate checking account that I pay bills from (and my paycheck gets deposited to). I do keep $1000 in it as a cushion at ALL TIMES, but at the end of the month, anything over $1000 gets immediately routed to my savings account, and I start fresh again for the new month.

I'm amazed at how easy it is to save this way.

 

[Minnesota!]

Living paycheck to paycheck is not the same as having a zero-balance budget.

People who live paycheck to paycheck have nothing in savings. They spend every dime that they make and sometimes more than that. They panic when back-to-school shopping starts or if they need new tires for the car. They go on a spending spree when the paycheck hits their bank account (if they have one) and then worry about putting gas in the car a week later because they spent their last $5 on milk and bread for the kids. There's no safety net in place for emergencies and they are constantly borrowing from friends and family when a crisis arises.

Agreed in theory. But, we consider it pay to pay simply because the money ISN'T there after payday. It's in a savings account where temptation cannot easily access it We have also lived through the true payday to payday...I much prefer how we live, now!

I get where Minnesota is coming from……..one could say that everyone lives paycheck to paycheck because the money is simply not in your account until it is! We too joke that we live paycheck to paycheck with the zero-based budget but realize that is bad form. We are certainly not deciding between heat, food, or medicine in our budgeting decisions. If you have an entertainment, vacation, or savings category in your regular budget, then you are not paycheck to paycheck.

Sometimes I look around my house and wonder why I stress about money so much. We have everything we need and then some. Just the fact that we own a house; we snapped our fingers and got a mortgage. I mean, that came from years of being responsible with money, thereby protecting our credit. Sorry, a little off topic, but you know what I mean?

And I agree with the poster above that many people’s mortgage is more than one paycheck in its entirety, so that plan would not work for everyone. But whatever method works for an individual in getting them to start and stick to a savings plan - I’m all for that!

Thankfully, my mortgage is less than 1/2 of 1 of my checks. It's the tuition that gets me! Only 3 more years of both of my kids being enrolled there....