[gregsully]

By that she has said that since we have monthly bills, there is no extra cash on the two times a year when a month has three paychecks. Everyone I have consulted says that we could have the opportunity to use a paycheck twice a year for other things rather than daily or monthly expenses.

I simply want to use that extra income to reduce credit card debt but am being told that we cannot as "that is the way things fall every month."

Any help would be greatly appreciated. Thank you.

[Fr_Chuck]

A written budget, but remember there are 2 weeks still on each cycle, there is food, gasoline and the such always in those weeks. They are not merely free paydays.

[ebaines]

You get paid bi-weekly, but bills come monthly, which means either (a) for 10 out of 12 months you are short of cash and make it up in the 2 months when you get a third paycheck, or (b) for 10 out of 12 months you make ends meet just fine and for the remaining 2 months you get a windfall of an extra paycheck. You need to figure out which it is.

[kp2171]

the short answer is that it isn't there if you don't plan on it being there... meaning a well thought out, realistic budget.

now for the long, winding answer...

the more organized you are around your money, the less it runs you. It can take some time to be able to "recapture" that extra check from the perception that its just not available. It requires a solid budget that is reasonable... and that requires data... and that requires organization.

we have, for ex, an entire years worth of spending charted out on an excel spreadsheet. We have two bank accounts, one for fixed expenses and one for variable.

fixed is all monthy bills, such as mortgage, insurance, utilities, childcare/school, credit debt, etc... anything you know you are going to get every month... also in that category we have accrued expenses. We pay life insurance once a year to get a discount, but we need to accrue for it monthly... so even though its not a monthy expense we write a check for, itd better be coming from someplace. Likewise, even though utilities can fluctuate, I know the average mo bill for all utilities. This account practically runs itself... as most are automatic payments. No question as to whether the bills are getting paid. If the deposit is more than the bills for the month, it sits in the account and is NOT touched.

variable is all else. Food, gas, entertainment, etc. you can still, if organized, get rough averages for these... so even though they are "variable" I know roughly how much I spend on food, on average.

we track everything in quicken and at years end we look to see if there are changes in averages. For ex, this last year I knew I was underfunding gas for the cars. With jump in prices, I found out I needed to allot an extra 20 per check on average.

anyway, after doing all of this and seeing how things fell, one thing was apparent. We were "losing" that extra check by spending it all over the place. It wasn't until I looked at an entire year mapped out in excel that I saw it absolutely should be there. But it never was.

now I know, in my fixed expenses account, that those two checks can fund a full extra payment against my mortgage... effectively cutting my mortgage back by nearly a dozen years. We pay an extra 20 a month against another debt... and it just adds up.

so how should you approach it? Well... we got to this place gradually. First using quicken to map things. Then excel for monthy budgets. Then we made the big leap to the yearly planning.

probably the easiest thing to do, to start, is to setup an automatic withdrawl into a savings account. This was one of the first things we did. It was an account that we swore not to touch. This wasn't for vacations, fixing the car, etc.

also, take some baby steps. There is nothing so frustrating as an unrealistic budget (unless it's the money you burn by not having a budget). So I would suggest just start getting your arms around what you are doing right now. It isn't about catching someone wasting money. Its about knowing what you are choosing to spend it on.

once you start to see where its going, and where its absolutely needed (fixed), then you can start to make decisions on how to draw that money back into debt reduction.

I also think, if you don't have some extra money to pad the accounts a little, that its easiest to start budgets in the spring... the utility bills are lower, the holidays are over, and it just "feels" like there's more room. We starting looking out over three months at a time, then six, now a year...

the key for us was when we began forcing accrual. My energy bill was 250 this mo, but my monthy deposit was 325 into the bank account. This "extra" money is NOT touched. Come jan or feb, when the bill is twice this mo's amount... the money will be there.

likewise, we started reducing debt by paying a little extra each month. It adds up little by little.

sorry this isn't any clearer. We've spent a lot of time thinking and planning. I'm sure we blew thousands of dollars early in the marriage by just not being organized.

your wife's point about that money not being there isn't a lie. It isn't there... if you don't plan on it being there it won't be... and planning requires discipline and effort. I was in the opposite situation as you... my wife said there should be "extra" money and I told her "no way" it was there. Now, after a few years work, we are in a powerful place... but it took time and work. And some frustrations. We had one budget that was just too tight and unrealistic. You need to be willing to try and modify.

glad to hear you are thinking about this. It's the first step. Next goal is to find a way to make a budget that reigns in unnecessary spending without her feeling like she's poor or under an unreasonable budget. It absolutely takes communication and teamwork. Early on my wife "ruined" a monthy budget with a trip to the nail salon and hair products. Well... really it was just bad communication between us. Now I know she spends X amount on hair and nails monthy and its always there for her. She doesn't have to "beg" and I'm not resentful.

repost or pm if there are questions. I know this was too long and convoluted.