When you get paid bi-weekly, it can be tricky to squeak from the first paycheck to the second. It always feels like a case of feast or famine.
That’s because most bills, especially your largest like your mortgage or rent, are due at the beginning of the month. If you’re living on one-income, like my family is it gets particularly tricky to keep it all balanced.
Here are some tips that have helped us avoid using credit cards to bridge the gap between bi-weekly paychecks.
1. Check What’s Pending – The first thing I do is check my budget which is a simple Excel spreadsheet I created a few years ago and check what bills still need to be paid before payday. Usually we’re low on cash after all of our beginning of the month bills have been paid. It’s a great idea to put due dates next to recurring bills on your budget so you can easily see what still needs to be paid.
As I get close to the due dates, I highlight the payments that are pending, along with any check amounts that haven’t been cashed by the recipients yet. Am I the only one that totally HATES when someone sits on a check you’ve given them? Once the bill is drafted out of my account, I remove the highlighting from its payment box so that I know it’s been paid. If I have more money about to go out than what’s currently in my account I have to transfer funds from my savings account stat.
2. Set Up Online Banking & Bill Pay – Online banking and paying bills online has been a lifesaver for my family. I can transfer money from my savings account into my checking account within minutes. I also pay most of our bills online so I can pay closer to the due dates (and did I mention I hate when I have outstanding checks that people haven’t cashed yet?). If one of my service providers doesn’t have the option to pay online, I usually call and pay over the phone with my debit card.
If you don’t already have direct deposit for your paychecks I’d sign up for it ASAP. It reduces wait time and you still get paid on time even if it’s a holiday or you’re out sick. Some banks will even give you a bonus of $100 or more just for signing up for a new checking account with direct deposits or without if you keep a certain balance in the account although that’s usually a high amount and I’m guessing that if you’re squeaking by till next payday you don’t exactly have an extra $15,000 just socked away.
3. Institute A Spending Freeze – When our funds are running low, I put our checking account on lock down. That means no funds escape unless it’s for gas or groceries. Notice I didn’t say “food” because I’ll admit my family has a fast food problem. Though we’ve really cut down on fast food spending over the years we’ve been living on one-income we do still eat on the go sometimes.
It’s important to make sure both spouses are on the same page with the spending freeze. I take care of the bills in my household so if I didn’t immediately let my husband know about the freeze, he might still go on purchasing things we don’t have the funds for. It’s awesome if both partners know what’s in the bank account all the time, but I that’s not the case for all families.
Checkout this great article by And The Kitchen Sink on how to prepare for your first spending freeze.
4. Stash Cash When You Have It – While it takes some stretching to make it to the second paycheck of the month, once we hit that payday it’s usually easier to stash some cash into our savings account. It’s critical that we do this so that we can borrow from our savings during the beginning of the following month if we need too.
If you get 52 paychecks a year, it means that you’ll also have a few months where you get an extra paycheck. I’m not going to tell you to bank the whole thing and pretend that it really is extra. You still need the same amount of money from that paycheck to cover your bills. But for our family at least, my husband’s medical and dental insurance aren’t taken out of that third paycheck so we end up with a little extra money to stash into our savings account as long as we didn’t run into any house or car repairs that month. The same goes for bonuses, raises, overtime or any extra pay you get.
5. Get Out of Debt – Okay, this isn’t something you can just snap your fingers and do, but it’s a good goal to work towards. The less debt you have, whether its credit cards, car loans, mortgages or anything else, the more money you have to pay your other bills and to put into savings.
What really helped us pay off over $20,000 in credit card debt was a debt consolidation loan. Our interest rate was lower than the majority of the credit card APRs. We took a five-year loan with our current credit union and paid it off in four. We used tax refunds to get out of debt faster, even if that meant sacrificing vacations and extras for those four years.
Get more great information on getting out of debt, saving money and living the life you want for less in my book “So, You’re Broke?: 18 Drama-Free Steps To A Richer Life.”
6. Change Your Withholding – Speaking of tax refunds… If you’re getting a large refund at the end of the year talk to your accountant about changing your withholding on your W-2 so that you get more money per paycheck and less of a refund at the end of the year without owing any money to the IRS. If you’re bridging the gap between paychecks with credit cards, this is definitely something worth doing rather than going deeper into debt every single month.
7. Consider Paying Some Bills Yearly – Car insurance and some other bills actually cost less if you opt for one yearly payment instead of monthly payments. We pay our phone bill once a year. Not only do you save money on the overall cost, but that frees up that payment for other bills, groceries or gas.
8. Switch Your Due Dates – You’d be surprised at how easy it is just to switch your due dates to later in the month, alleviating some of the strain of all the bills coming out in the beginning. I asked my credit union to move the due dates on our debt consolidation loan (now paid off) and two other loans to the end of the month. I signed a form and it was as easy as that. Course having access to my bank account means they know they can take the money if I don’t make the payment myself so they really aren’t risking anything by changing the due date.
Call some of your service providers, the worse they can say is no and you’ve lost nothing for trying. If they won’t switch the due date, ask them how you can lower your bills. Read how I’ve lowered my bills with a few simple phone calls.
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