Aging my money creatively
My wife brings in a paycheck twice a month and mine is biweekly. I am 24 days old on my money right now. I am trying to figure out how to get my mortage category complete before its due. Due on day 1, wife's check comes in on day 5 to complete the rest of the savings and I pay it.
The thing is I have holding funds for taxes and gifts set aside right now and I feel I should be able to use those funds to get ahead on my mortgage category since that money is needed NOW but the gift money and taxes money will not be need for a few months. Any advice or tips?
This isn't about aging your money (which is a silly concept). This is about having the money in your category when you need it. If you raid the gifts or taxes money, how will you replenish it?
You can't borrow the money temporarily to change the cycle, it has to be permanent. So you must have extra money available to replenish those categories going forward each month so that they are back at the target when you need them.
No matter what you do, the answer is that you need to live below your means. And that means:
1) You can budget for everything out of your monthly income including True Expenses
2) have an adequate income replacement fund
3) Have some money leftover each month (which can then be used for debt reduction, retirement savings or wealth building)
I'm in a similar situation:
- Paychecks on the 15th, 25th, and last day of each month.
- In last month's budget, I used last month's income to pay for last month's expenses —nothing leftover from that last-day paycheck to get me started on this month. (I'm not "buffered" yet, in YNAB terms.)
- I have a lump sum sitting in a "Refinancing" category that we plan to use in the next few months, but not right now.
So right now, on November 1st, I have $0 TBB, but plenty of expenses to budget for between now and the 15th. The way I see it, I can do one of two things:
- Budget the next paycheck ahead of time. This means:
- My TBB value will be red until the 15th.
- Anytime I spend from checking or make payments on my credit cards, I'm technically borrowing from the Refinancing category since that's where my "real" money actually is. But the category in YNAB remains fully funded. This is dishonest but will be rectified once my next paycheck replenishes TBB.
- Move money out of the Refinancing category into TBB, with the intention of moving the same amount back into it once I receive my check on the 15th. This means:
- I'm budgeting real money honestly.
- I risk forgetting to move the money back into Refinancing later. I can use a Goal to help represent this, but it won't be obvious amongst all the other regular monthly goals I'm trying to fund, so there's still a risk.
In both cases, I can rest assured I'm going to have to deal with the same problem again on December 1st. AND, once we finally use the Refinancing money, I will have to come up with a new strategy because there will be no more buffer.
I know everyone around here will tell me to do #2 because it's an honest representation of the actual risk I'm taking by budgeting against my future (but currently very secure) paycheck. I just wish it were easier to guarantee I was going to pay it back, and ultimately to guarantee I could do it with savings rather than just plugging in the next check.