By: Revanche

Progress: paycheck to paycheck

September 9, 2008

I’m mustering some optimism about the next couple of months. It’s not just because my August net worth managed to hold steady with a miniscule increase despite the market and my doing very little to save.

That most definitely helped, but last night I charted my expected income/expenses for September and found that if I stick with the plan through the month of October, I should be able to finally build that paycheck cushion I’ve been wanting. There are only a thousand articles about not living paycheck to paycheck, and while I’d made progress over the past two years, a few setbacks had punted me back into a check-to-check reality.

I can’t for the life of me find the blog article that I had printed out and still keep in my folder, so I can’t give credit where it’s due but there was a great post simplifying the transition from using this month’s money for this month’s bills to using last month’s money to pay this month’s bills. If anyone knows the blog post I’m talking about, I’d love to credit and link them!

That was what I originally had in mind when I instituted my current billpay system: I give myself a biweekly allowance for expenses, and that money sits in an interest bearing account while I pay bills from it. In fact, I wanted to do one better and have a two-month cushion so that I could concentrate on other savings goals, both long and short term, and be ready in case I ever needed to say “I’m outta here!” My emergency fund is more of a disaster and medical emergency fund. (With my family? Can’t be too safe.)

Back to the point.

At the end of September, assuming there aren’t any more surprise bills, and my supplemental income is paid on time, I should have approximately $900 left for expenses. Thanks to getting my insurance money back, the expense account is finally out of the red.

Second, I expect to log at least 40 hours of overtime this month, and I’m splitting all overtime income between expenses and savings, 50/50. I don’t have a dollar amount for that income, but I’ve set the total cushion goal at $3300. I won’t depend on “windfall” money to pay the actual bills in the future, it was just the weird way I get paid and the other expenses depleted the original cushion. [The flip side of that negatroid coin is that I had the funds there to use in the first place. No debt, whoo!]

Third, October is my three-paycheck month. By September’s end, I should have enough in the cushion to cover half a month’s expenses. I’ll take that entire third paycheck and split it between expenses and savings as well. But, if I hit my $20,000 emergency savings goal before October’s third check, then the entire third check can go towards the expenses fund!

If all of the above happens on schedule, without any hiccups, I can get off this paycheck to paycheck cycle by the end of October. How cool is that?

8 Responses to “Progress: paycheck to paycheck”

  1. Matt says:

    Sounds like you’re making some great progress – it’ll probably be a while before I can get off the paycheck to paycheck living but let me tell you I am looking forward to that day.

    You’ve got a plan, stick to it and keep us updated.

  2. Karen says:

    That would be an interesting article to read. I’d love to have a paycheck cushion and e-fund. Well, I could if I stopped paying more than my required student loan payment amount. 🙂

  3. Revanche says:

    matt: It didn’t occur to me that I might be ready for this until I was recently reviewing the numbers. I’m cautiously optimistic that this can happen as plotted.

    karen: I remember all kinds of random things, it’s sorta killing me that I can’t recall which blog that post came from. I’m still trying to find it, so I will post a link to it if .. no, when I find it.

    Do you not have either? I’d love to hear your story sometime, if you’d be willing to share it.

  4. Over time is beautiful, ain’t it? 🙂

    You’re making fab progress!

  5. Revanche says:

    FB: OT is great when it’s going towards a goal.

  6. Karen says:

    revanche: I hate when I recall something I read, can picture it but can’t find it!

    I do have a small emergency fund but that’s it. You have a catastrophe fund, short term savings and long term. And a paycheck cushion!

    I’ll tell ya my story…what all would you like to know? (and this is why I am a reader and not a blogger!)

  7. Revanche says:

    karen: As do I. It’s been bothering me ever since I posted about it.

    Hm, well, for starters, I’d just like to know a little bit about you: mini-bio information, if you’re comfortable sharing that, like what you do, what region you live in, stuff like that. But it’d be fun if you’d like to do an interview, I could put together a list of questions!

  8. Karen says:

    revanche: Sure, I’m willing to do an interview for you. 🙂

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