Getting one month ahead on bills is important. 76% of Americans, well, don’t do that. So using last month’s money to pay this month’s bills would put you in the Top 24% in that regard.
More important than percentages is the methodology of getting one month ahead. When I was writing the 9 Moves plan I didn’t include a Move for getting one month ahead. The reason being is because everyone is in a different circumstance, and with the many ways to get one month ahead, it would be too forced to say “this is when you have to do it”. Rather than saying that, I wanted to put together this guide so that people can look at all their options and see where they fit in. Also, at the end, I will tell you how we work our income and then you’ll have a good example.
This is quick budget tip #3 and we are looking at Four ways to get one month ahead:
1. Use existing savings.
This is probably the quickest way to get one month ahead. If you were to use existing savings to fund your “one month ahead goal” I would suggest that you check off Moves #1, #2, and #3, then whatever is above your 5% savings goal (Move #3) put into your one month ahead fund. Any savings above that (which is quite uncommon statistically) I would throw towards Move #4 (demolish debt).
The number to hit is simple as you are just trying to get enough saved to prime the pump, so to speak. That is to say, you only need one month of income to prime, and then the rest is all downhill. More on this later.
2. Divide over 12 months.
Let’s say your monthly net income is $2,800. Therefore, to get one month ahead, you need $2,800 put off to the side. I would suggest doing this after Move #3, while you’re paying off your debt. Provided that you have enough Flex Cash to do so. To do this, take $2,800 and divide by 12 (months). That number ($234) is what you are going to put off to the side in a separate account per month for 12 months until you hit the magic number of $2,800.
A lot of people who use this method find that they get it done faster than 12 months. Remember, though, it’s about balance. Don’t sacrifice getting through your debt faster just to get one month ahead. You want to pay as little interest as possible so make sure you have a good balance.
3. Use a bonus or tax return.
Many people receive a refund from the government and use it for terrible things. They look at it as a bonus, but really it’s money that they earned and overpaid the government. Think of it as a short-term loan you gave our government when that money could have been going into your Flex Cash pool. Priming the pump with a tax return or bonus is a good idea. Just make sure you are prioritizing the money.
Again, getting one month ahead is not a primary goal, it’s a secondary goal. Hitting your 5% savings mark and demolishing your debt is your first priority. However, if you can get one month ahead and still keep good pace on those Moves, then do it!
4. Be the chief cook and bottle washer.
This is a miscellaneous step. The utility employee is often called the “chief cook and bottle washer”, this is an option, too. It looks different for many people. For some people it involves selling things they no longer use for extra money. For others, it looks like overtime or an extra job.
My philosophy is unless it is absolutely needed do not go overboard with working crazy hours and not seeing your family. For me, time with my daughter is always worth more than whatever my hourly wage or salary is at the time. Point being though, be creative. You can start a side business or buy and sell on eBay; anything that will keep you moving forward.
Staying one month ahead is a pretty simple concept. In a normal two paycheck month (let’s say June), we let that money build in our direct deposit account for the entire month. When July 1 rolls around, we transfer that money into our primary checking and use that money for July. While July is going on, the checks we earn during that month build and then we use that money in August. Pretty simple, right?
Staying one month ahead takes away the burden of living paycheck to paycheck. It also makes budgeting a lot easier as you are no longer splitting the month into two parts. Friends, living paycheck to paycheck is really difficult but it is doable. What I think you should look to first is getting Moves #1, #2, and #3 out of the way and then looking over these suggestions as to how you should get one month ahead.
Stuck? Have a question? Don’t be afraid to ask!
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