DH's 2 free paychecks: DH is paid every other week, which works out to 2 extra paychecks per year. Not sure how others find that 100% of those paychecks are free money. We've only been able to take about 60% as free money, and the remaining 40% goes towards regular budget b/c those months are usually long. (More days you need to cover at least food and gas.) I'll put a portion of June's paycheck towards patio furniture, and grill. Nov.'s will go towards Christmas.
sorry this is so long. I'm not good at condensing or getting to the point quickly. (so say my kids. lol)
Dh and I both work and get paid biweekly & opposite each other so we get 4 "extra" paychecks per year.
Since every week is payday for us, I allot $200/week as a checking account cushion. Since we put 99.99% of our spending on our rewards cc, we rarely use cash. Dh uses cash more than I do because they have a coffee club at work (Maxwell House with a drip coffeemaker) and he occasionally joins in the football pool, buys GS cookies, etc.
I try not to let our account drop below $100. Not that we get a fee for doing so but just in case something comes up. This happening is such a rarity. That is our real cushion. The other hundred is for "optional" ATM taps, dinner with friends, etc. A more fluid cushion. He usually taps $20 of that cushion per week which is not a lot imho. I can't even remember the last time I kept a debit card in my purse or cash in my wallet, probably years. Whatever is leftover the day before payday besides the main $100 cushion goes to the debt snowball (or whatever that current goal may be). I do this even if it's only $5 leftover. So every pay day starts with the hundred cushion and ends with $200 new cushion again. All bills assigned to that paycheck are scheduled to be paid either that day or the day before, even if it's early. (Obviously, if it would be late, it gets listed under a different paycheck.) My point is that rarely is there bill money still laying around the checking account when we go to sleep on pay day. The money only sits in checking for a few hours until I put it to work.
Each payday has a list of bills that go with that check. I keep this list as a word document but do whatever works. Some are not really bills but forced/budgeted savings for non-monthly bills too. Capital One 360 makes this really easy; they allow 30-something savings accounts under one log in. For example, our sewer is billed quarterly from our county and annually from our town. Odd bills would always throw me off. It works out to $9/week. (A bargain really; the ability to flush is priceless!) So each payday $9 is on recurring bill pay to our CO360 savings nicknamed Sewer. Car ins is $92 biweekly so the weeks that are my pay, I have recurring bill pay to our CO360 savings acct named Car Insurance. When those non-monthly bills are due it's a simple transfer from its respective savings account to pay them. No more stress over that.
With all of our spending going onto one cc that gets paid off monthly, it's easy to see what we spend and where. Since some paychecks have more expensive bills than others, (think mortgage) the amount leftover that goes to the cc varies. Some weeks I can only pay $400 to the cc, others are more like $900. Basically it's whatever is remaining after all the monthly bills assigned to that week got paid. Our monthly cc is usually around $2200-2800. So there's some wiggle room for those "longer" months. As long as it's all paid by the due date they don't care that some weeks I could only send $200.
If for some reason we have a higher than normal cc bill, I funnel from our debt snowball so that I don't have to tap our emergency fund. I will be doing that in a few weeks to pay for the $680 repair bill for dh's truck. It is not common that we do that. Maybe 1-2x per year. If car repairs were more common for us, I would budget regularly for it like I do for car insurance but my car is 12 yrs old and besides usual maintenance for things that wear down, like brakes & tires, I've only needed 2-3 repairs done. It's infrequent enough that I'd rather keep hammering out the debt and funnel if necessary.
Either way, I never ever say "That extra check is going toward ____" and name a specific item. It goes toward whatever my snowball goal is at the time.
On "The Plan", for those extra paychecks, I deduct the usual $200 cushion, and really try to leave the rest to just become part of my debt snowball. So if that particular week, all is going as planned, it's a mega snowball. This really boosts my motivation!
If for whatever reason I had to funnel our snowball to some Other Thing than debt temporarily, I know that big check will help get rid of the Other Thing faster so I can return to my dumping debt/snowball goal asap.
If we had to buy something like a grill, I would try to buy it right after our cc billing cycle begins and then be extra frugal that billing cycle so that our cc isn't beyond what our regular pay can handle. We wouldn't buy anything that isn't an absolute need, wouldn't go out to dinner, order take out, etc. It would be a tight month because I hate having to funnel the snowball away from debt dumping/snowball goal. To me that means we have overspent. I already funnel from the snowball every summer to save $5k for Christmas. Whatever is not used goes back to the snowball goal. I really try not to have to funnel more than that.
Most of our debt is gone so we have a pretty large snowball. I still have goals for it; like right now I'm saving for a new car. The less often I have to funnel from our snowball, the sooner I reach our goal.
After I save up $10k for the car down payment, it will be time to save for Christmas. The next goal after that is to build up a nest egg of 6 months living expenses. I already have $10k toward that but I'd like it to be more like $30-40k.
Then after that we'll be attacking our mortgage. I'd looooove to see that gone.
