We make enough income, but we're broke for two pay cycles.

Hey all!

I'm sure the answer to this is staring me right in the face but for some reason I can't figure out the best way to handle this. 

Combined, my husband and I bring home $5946.98 per month across four paychecks. Our total monthly fixed expenses are $3843.85, leaving us an extra $2103.13 for true expenses. The realistic goals I've set for our true expense goals equals $1463.00 per month, which even then leaves ~$640.00 to spare. This feels awesome on paper! 馃帀

My issue is that our fixed monthly expenses get really heavy in the middle of the month and I can't seem to figure out how to make sure we have enough money to eat and buy any necessities for two paychecks (the 5th and the 15th of the month). I've broken down each one below to help make more sense.

  • Paycheck #1 (1st of the month) - $1654.29
    • Fixed expenses until next check - $536.18
  • Paycheck #2 (5th) - $1319.20
    • Fixed expenses until next check - $1042.67
  • Paycheck #3 (15th) - $1654.29
    • Fixed expenses until next check - $1421.54
  • Paycheck #4 (20th) - $1319.20
    • Fixed expenses until next check - $843.46

Does anyone have any recommendations on how to to either balance out the expenses and make them more manageable OR budget accordingly? Side note: I've gone through each charge and lowered them as much as I can with each company. 馃檪

 

Thanks!

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  • Your fixed expenses with Paycheck #1 iare not $536 but 1/4 of $3843 (actually $5326 when you include TEs.).  So your fixed expenses with each check is at least $961.  You need to be budgeting at least that much per check to fixed expenses to even the inflow and outflow. 

    • You might budget evenly: 1/4 of each fixed expense with each check. This will require some finagleing early on. 
    • You might budget evenly but across expenses: each check, you budget $960 toward fixed expenses but fund them in order of due date fully. 

    Ultimately, if you are timing expenses to pay events, the best solution is to build the ability to fund next month fully with this month's income as soon as possible 

    Like 5
  • You're trying to budget the largest block of things like groceries/gas/etc. AND a pretty big chunk of the fixed expenses with the smaller of the checks. So yes, it's no surprise you're struggling. The answer is you can't do that. You have to use some of the first check toward expenses you currently pay from the second (and probably some of the 3rd to cover the 4th).

    The long-term solution is to get to where you can budget the entire month at once. Until then, I would urge you to apply the True Expense concept on a paycheck basis. This ELIMINATES the timing issue entirely. Having two income streams complicates the calculations slightly, but do it once and you'll be good to go. Details to follow...

    Like 2
      • dakinemaui
      • dakinemaui
      • 7 days ago
      • Reported - view

      If you want to eliminate the timing, you're going to have to partially budget to ALL categories from each check -- in other words, split all expenses across all checks. (Currently, you're trying to find a check-specific subset of categories to fully fund, and that's going to be difficult with your income arrival times.) Startup is a little tricky since you typically can't spread everything across all 4 checks (because of the timing). AFTER you pay for something, though, you should then spread it across all 4. 

      Consider the easy case first when you can split. For example, a $120 monthly expense spread across those 4 checks. The larger checks on the 1st and 15th are each 27.82% of your total income, the others are 22.18%. You would therefore budget $33.38 from your larger checks and $26.62 from your smaller checks. Write these amounts in the category name for reference. For discretionary things like Groceries, split the monthly total the same way.

      Sorry, interrupted again, I'll describe the startup phase (the less-than-easy case) in a bit. The idea is you have to split across fewer checks, which means you'll have to prioritize. When the check's allocated, stop. This means the lesser important things have to wait. You'll be able to make them up after you start splitting the more important things across all 4 checks -- The reduced contributions mean those checks will go further down the priority list. More in a bit...

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    • dakinemaui This is super helpful! I saw this part after I replied, so I'll check back in tomorrow for the full report. 馃槃

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  • Oof, sorry, I guess I should have clarified. Those true expenses are broken out per paycheck so the true expenses would be 1/4 of $1463. And dakinemaui you're right! I have to move some out of the first and last checks. Thank you!

    But yes, that definitely makes sense WordTenor about budgeting evenly. I just got a full month ahead on everything, but I'm still budgeting each expense for the following month, based on the due date. I like the suggestion of budgeting 1/4 of each fixed expense with each check. I'll test this out!

    Thanks again!

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  • Cadet Blue Cheetah said:
    I like the suggestion of budgeting 1/4 of each fixed expense with each check

    I'd do it proportionally according to your check size.

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  • Cadet Blue Cheetah said:
    I just got a full month ahead on everything, but

    I'm confused. If you're a month ahead, why are you budgeting by paycheck at all? Just wait until you receive all 4 checks and budget the lump sum. (Tip: temporarily stash then in a holding category.)

    Like 3
      • SgtBatten
      • SgtBatten
      • 7 days ago
      • 2
      • Reported - view

      dakinemaui exactly this. All 4 paychecks for the month can be budgeted ahead without worrying about what gets funded first, just too to bottom because its next month, not right now. 

       

      I prefer to put all paychecks into a buffer category personally then budget at the start of the month. Then spend the rest of the month crying and rolling with more lunches than you can handle

      Like 2
    • SgtBatten I'm imagining what "rolling with lunches" is!

      Like 4
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 days ago
      • 4
      • Reported - view

      Periwinkle Flute It's what happens when you go out for lunch on workdays instead of packing a lunch, and then you wonder where all your money went. 馃槀

      Like 4
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