Does anyone else roll the "snowball" forward?

[Thevail]

I came up with a wierd budgetary theory, and it's working really well!

I call it rolling the snowball forward, or the 5th week theory.

I set my budget up on a 4 weeks in a month basis, since Dh gets paid every week and the bills roll in once a month, and most months have 4 weekly paydays.

But that only accounts for 48 paydays a year, when in reality there are 51 paydays a year. (there are 52 weeks, but honestly no one really works a full week at Christmas)

That means there are three whole checks a year completely unaccounted for in the budget!

I paid off all debt except the mortgage. Then I had this extra money every month, about $250/month. So I started putting it in savings. But then I got wierd about ever taking it out of savings.

Soon it all felt really stagnant. (yes, I realize some people call that feeling security, but for me it felt stagnant.)
So I was sitting around playing with the budget numbers trying to figure out what to change to even further optimize the magical budget. That's when the 5th week thing jumped out at me.

So, I had a full paycheck plus the now extra $250. So I paid my $37/mo garbage bill up for the whole year.

Next month I had $287 extra (I put it in savings)... until the next time I had a "fifth week" when I took the extra $287 plus the whole check, and paid up my cable/phone/internet bill for 6 months.

For each of those six months I then had an extra $416 ( straight to savings) until...ha ha, another 5th week! So I paid the cell phone bill up for 6 months!

Does anyone else do this? I'm finding it amazingly useful!

In theory, at some point... when a bill comes in, I'll be able to start just "chunking" them 6 months at a time.

[ladytoysdream]

I try

Hubby gets paid every 2 weeks. I base our monthly budget on 2 paychecks. In theory this means when he gets a 3rd paycheck in a month ( happens 2 months a year ), the extra should be able to go into a cushion. Then the cushion could go to paying a bill in a bigger lump sum. Like if I could pay the vehicle insurance every 6 months, it would save us the service fee each month. Same if I could pay the fire insurance in one lump sum, it would save the $ 6 a month service fee.
He has a extra paycheck coming up real soon, that I want to add into the balance, and then subtract it back out on the next line, and call it cushion. Add it back in when it's needed.
In theory this should work....problem is that things can come up.

Our only bills are a small mortgage, and one truck payment. And the utilities, and property taxes. Everything gets paid on time, but having a tight budget, so far, has left nothing extra for a snowball.

[jmd5294]

I wish I could do something fun like that!

DH gets paid twice a month, so it never ever changes.

[elphie]

We do something similar to this. I have it written in our budget the months that have 5 Fridays (four months per year) and I have specific plans for those paychecks. We buy our beef with one, pork with another (both of these come from local farms and last us for a year), Christmas with the one closest to December (this year will be October), and the fourth is when we plan our vacation- hubby can take a week off from work and still get four paychecks that month.

Budgeting "experts" tell you to plan your monthly budget based on 4.33 weeks but this works better for us.

[_kit]

I get paid twice a month, not every two weeks, so I can't really do something like that. Even if I did get paid every two weeks I don't think I'd prepay my bills like you are unless there was some incentive (like not having to pay a service fee on the car insurance payment for them billing me monthly). I don't see any reason why the cell phone company should have my money to draw interest from when I could have it sitting in savings drawing interest for me. Plus, if some unexpected bill came due or some other emergency happened, the extra money could come in handy and if I'd pre-paid my bills I wouldn't have it available.

[Thevail]

I just find that, practically speaking, I'm going to have to pay those bills each month anyway. So when you zoom out to the yearly budget level, that money is already gone. It can't really go into savings anyway.

But, by paying the bills (which will come regardless of layoff, or any other sort of emergency) I free up much more cash per month if I need it.

Ex. Since my cell bill is paid up..I have an extra $200 a month to use for any other emergency, or put in savings.

I've found that eliminating a normal bill is one of the few ways that I can "find" money to save on a regular basis.

Because I save the extra when there isn't a 5th week.

[elphie]

I think you've found a system that works for you and that others may find it also works for them, I appreciate the post even though I'm already doing a modified version of this myself. We all have to find what works for us and I think this is a good example of that.

[Greebo]

If it works for you, great - but personally, I would *not* pre-pay for "utilities" (if cell phones are a utility). If you pre-pay, you're missing an opportunity to earn interest on the money that went to the utility.

Pretty much the only reason I wouldn't do it though.

[justpeachy92]

We have always used the extra paychecks for summer vacation, christmas shopping, and back to school shopping.

[ritabelle]

If you pre-pay, you're missing an opportunity to earn interest on the money that went to the utility.

Normally I'd totally agree with this sentiment, but with interest rates in the toilet right now I think it's a fabulous idea to prepay -- then if (gd forbid) something did happen to the cash flow, finding money for utilities is not even on the worry-meter.

[monkeywrangler71]

We are paid twice a month and our mortgage is every two weeks. So, unfortunately those extra weeks put us behind instead of ahead. It's an interesting idea for people who get an extra cheque though.

[Tai]

I have our budget on a "4 checks per month" mentality. The "extra" paycheck months get split between the EF, paying extra on debt, and on car maintenance supplies (I change our own oil and filters, except in the winter).

[Calimeddy]

My DH gets paid every week and our bills total only 900 per month. I use the first and last checks of the month to pay the entire months bills. The second week's check I put entirely towards debt reduction and the 3rd week's check goes entirely to savings. If we hit a 5 week month, I use the 5th week's check for debt reduction also. Once we are debt free, that check will be for savings. We have tried TONS of different budget plans and so far this has worked best for us.

[mommy4ever]

If dh ever goes back to bi weekly paydays, I'll have to remember this! Great idea. Dh is paid weekly, we pay the mortgage weekly. And budget for groceries and gas weekly. At the end of the week if there is anything left(usually $100 or so) I put it in savings to build our EF. I get paid monthly. I pay all our bills at once when I get paid. And do a lump deposit into our EF.

This is all new though..lol. Just have the mortgage as debt, but occasionally I put too much and have to use a CC, but pay it off with in 7 days.(next pay day)

[IndigoMom]

The only thing like that I've done is pay our house insurance for the year, and the security monotoring is paid for the year. But for both of those, it saves us a service charge every month - and it's 2 less bills to track every month.