Wednesday, September 19, 2012

How We Budget Our Paychecks

Mr.CCF gets two paychecks a month on the 1st and the 15th. They are virtually equal.

I first pay all bills and investments that are due during that time frame. Many of these are automatic, but I record them all in the checkbook on payday.

Second, I mentally pull $900 from the remaining checkbook balance. This $900 is for auto fuel and groceries. We use it to pay clothing, kids lunches...whatever comes up during that pay period. Sometimes this isn't enough. I'll explain that later.

Finally, the remaining amount after bills, investments, funding for irregular bills and our $900 is the amount I should have available to allocate to any debt or goal I might be focusing on at the time. Currently, we are focusing on paying off the loan on our truck. The extra does vary between the two payperiods within a couple hundred dollars.

This is the basic plan each pay period.

We have a second checking account that holds our escrow funds, which I will explain in a seperate post, and a small cushion of cash. Generally, this cushion is relatively small, $200-$300. If the $900 runs out we attempt to curb spending or dip into the cushion in our second checking account. We also can dip further into our emergency fund for large car repairs or medical bill. If we do borrow from the EF it gets paid back with the extra funds we get the following pay period, or as many pay periods as it takes. This is instead of putting money on the truck goal if necessary.

I hope it helps someone out there. It works for us. Please feel free to ask questions in the comments, and I will respond as best I can!

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