Thursday, December 30, 2010

Living on Two Pay Days

January is a couple days away. Eeek!
Is your money plan ready? You're starting a new and fresh budget, right?

Keep this in mind... For those of you who are paid bi-weekly, set your budgets up so you are living on two paychecks per month.

"Well, duh, Adhis."

Stay with me. For those of you who are paid bi-weekly, you have two months in the year in which you receive THREE checks. Most people don't plan for this in advance and the extra money somehow disappears with nary a nod welcoming it home. Or they treat it like play money without first setting themselves up for long-term success.

Here's the schedule:
* If your next pay day is tomorrow (December 31st), in the next year, you will receive you an "extra" paycheck in July and in December.

* If you get paid next week (January 7th), your "extra" check will come in April and in September.

The best way to set yourself up to take advantage of this "extra" money is by adjusting your lifestyle to two paychecks per month.

When you are living on two paychecks a month, the 3rd paycheck is a bonus to financial peace!
* If you don't yet have an emergency fund, this 3rd check provides your beginner emergency fund.
* If you have debts, it pays off a big chunk of debt.
* If you are already out of debt and are growing your 3-to-6-month emergency fund, one of the extra checks immediately adds at least ½ month to your fund! Throw both checks in, and you've got a full extra month in your emergency fund!
* If you are debt-free and have your big emergency fund in place, this money infuses your retirement funds!

Get the idea?

Decide now what you will do with these "extra" checks. If you are married, decide this with your spouse. Keep each other accountable. You can always change the plan when the money arrives, but for now, decide on the best course of action.

Make a plan for your money! Tell it to grow for you. Tell it to free you from bondage. Tell it where to go instead of wondering where it went. You've won the lottery. What wisdom will you bring in to play when the checks arrive?

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