Tuesday, May 15, 2012

Payment Cycles

The professor made a comment a couple of weeks ago that has stuck with me for some time.  To paraphrase because I don't remember it exactly, "my first paycheck goes to credit card debt and my second is saving for a car!".  Now, generally, I'm excited that she recognizes the value in saving for a car she wants and being able to pay it off.  However, something else about the comment has bothered me.

That every paycheck has a purpose before it is even earned!  Debt.

It got me thinking about my payment cycle and how things get paid.  Almost all of our payments come due either the last week of the month or the first week of the following month.  So, there is a two week flurry in which we see massive debt paydown and bank transactions going on.  It is got me thinking though because it basically means (based upon my bi-weekly payment cycle) that my first paycheck each month goes to the credit card bill and utilities and my second goes to mortgage and student loans.  As the professor has already said, her first goes to Home Depot and her second goes to a car payment (future).

That sucks.  We work hard and make decent money.  It's kind of depressing to know a month in advance where my dollar are going and there's nothing I can do about it.  Perhaps I've mentioned it before and I know we could reduce our credit card bill and get some relief, but we've already done that and this past month there were extenuating circumstances (Charity donation, Medical Deductibles, Car tires). 

Ultimately, it goes back to the goal of being debt free.  We could free up $2,500 a month without any debt.  That's more money for a bigger house, bigger retirement, and bigger giving!!

It's probably also my fault that I refuse to touch our investments or other savings.  We could wipe-out all our debts right now if we chose to, but don't need to.  So, we're living paycheck-to-paycheck (in a manner of speaking).

June is a 3 paycheck month!!!  Booya!  The little things.  Life's a journey and building that paycheck is the drive I need. 

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