Changing Paycheck Cycles

At the worst possible time, my company has decided to change from a 24/year paycheck cycle to a 26/year paycheck cycle.

24 paycheck cycle
yay: bigger paychecks
boo: only paid twice a month, bigger time period between paychecks

26 paycheck cycle
yay: paid more often, get 3 paychecks two months out of the year
boo: smaller paychecks

*For example purposes, Based on a $50,000 salary, someone who gets 24 paychecks would get $2,083 every paycheck, vs. $1923 for someone who gets 26 paychecks. *

So now that we’re all caught up, let me explain why this sucks for my situation.

Eric’s not working, we need every penny we can get. And now, my salary will be distributed across 26 paychecks rather than 24. This may not sound like that big of a deal, but we’re talking about a few to several hundred dollars a month. Crucial, crucial dollars in our situation.

Right now, I only get two paychecks a month and each one is allocated for something–to the dollar. The first paycheck pays all our bills and covers our grocery and gas budget. The second paycheck pays our rent and with the little that’s left over, saves us from charging stuff to our credit card. By the end of the month, Eric and I are always on lockdown mode until I get my next paycheck.

And now, I have to eliminate a few hundred dollars from our already strict budget. It’s enough to make me want to do this:

But I don’t.

Instead, I do this:

And I start crunching numbers. And this is what I have come up with: Our new monthly budget.

Isn’t it beautiful?

The Bills are the non-negotiables. It’s what has to be paid every month just so we can survive–and yes that includes our cell phone bills. Because I don’t know about you, but my phone helps me breathe. This category also includes rent, student loans, car loans, and internet. I cannot wait until Aug. 2012 when my car loan will be paid off…hopefully sooner depending on Eric’s job situation.

Gas and Groceries are negotiable. Depending on how much we drive, and how much we eat–we can really stretch our budget here.

Savings. This is a toughie. Are people in one-income situations allowed to not save? Even when I was working as a journalist and making a pauper’s salary, I still saved. Because even though I considered myself poor, it could always be worse. Eric and I are on a tight budget, but we’re not destitute, and yes, there could always be an emergency and that’s what our savings account is for. To be honest, this savings is for Costa Rica. I’m doing everything in my power to save as much money as possible into a separate Travel savings account. As long as I keep our emergency fund at $5,000, I feel comfortable putting the rest into our travel fund.

Other: This is everything else. Everything else nowadays includes dry cleaning for Eric’s uniforms, anything Bentley-related (our happy little dog), dining out, our allowances ($40 each/monthly) and that’s pretty much all we’re spending money on right now.

I may have to dip into the savings every now and then to cover the “other” but for now, this is just what we’re going to have to do. I keep telling myself that it’s only til January–but it’s not like Eric has a job lined up. We could be living this way for a while. But for my sanity, I like to think that all will be well by February. Because starting in January, my monthly income is going down by $500. I’ll explain that in a later post.

Do you get paid bi-weekly or bi-monthly and which do you prefer?

images from here and here

20 thoughts on “Changing Paycheck Cycles

  1. October 26, 2011 at 8:24 am

    My husband gets paid weekly, in addition to his daily take-home of tips with which the LORD has blessed us. I get paid bi-weekly. I love having his paycheck weekly, because usually the last paycheck (and deposit of tips) of the month gets devoted to savings. My paycheck pays for nothing but his tuition, so it doesn’t really matter when it comes in.

  2. October 23, 2011 at 10:22 am

    I get paid monthly, which I love. I plan for the whole month and don’t worry about when anything’s due. It used to suck when I had no money management skills, but now I really like it.

  3. October 20, 2011 at 11:12 am

    Girl! We just became a one-income household, and I love to see how you guys are doing it! We’re totally new at this, so I’m curious to see how this budgeting goes down!

  4. Christy
    October 19, 2011 at 4:33 pm

    I used to get paid twice a month – but only during the school year. Like an earlier commenter we got a lump sum for the summer. It was not ideal. As of last September we moved to year round pay, getting paid bi-weekly. I like this much better but I don’t seem to be able to save that “extra” cheque as I tend to budget in two week increments. (Our mortgage goes out weekly.) My DH gets paid weekly.

  5. Kellie
    October 19, 2011 at 7:34 am

    I get paid bi-weekly and so does my husband. It actually works out that we get paid weekly (since we are off cycles) so its nice to have money each week but it takes a lot of planning to have multiple smaller paychecks.. I feel like i am constantly budgeting and paying bills… But, he gets paid Thursdays and I on Fridays… so the week where I get paid on a Friday and I know he is getting paid on the next Thursday is so excitng since its only 6 more days away! 🙂

  6. October 19, 2011 at 12:31 am

    I get paid bi-weekly and I think I’ve just become so used to it that I love it. My bills work out per paycheck and then the months I get three paychecks, I get all excited like I had an extra paycheck or something. I find when I stay on top of my bills it works out better and that extra paycheck can be used to pad the savings or pay off something.

  7. October 19, 2011 at 12:14 am

    I started getting paid monthly when i started my new job in June. But that wasn’t a huge issue – going from weekly to fortnightly a couple of years ago was a much bigger change for me.

  8. Kristin
    October 18, 2011 at 10:09 pm

    I get paid bi-weekly, so every other Thursday is payday. It gives me a little happy jolt on Tuesdays every other week when I get my statement via email and am like, hey, this is payday week! I think it’s OK because it means I get rewarded for my effort closer to when I put it in. I am technically salaried, but because of my line of work, they do pay us straight time (not time and a half) if we work over 40 hrs/wk. So if I put in extra, I see it sooner. The paychecks are also generally equal – if you’re paid monthly, do the checks depend on the # of workdays in the month?

    Interest rates are so low on savings accounts, it’s not worth moving things around a lot. I’m not paying down any debt, so I just keep a good cushion in my checking account and I don’t have to worry about when the paycheck falls and when bills are due, since they’re all over the place anyway.

  9. October 18, 2011 at 7:41 pm

    It is super weird to me that your company decided to change this now. You would think they would have to wait until January when the new year starts. In any case, I have never, in my whole life, saved any money (literally, I have $26 in my savings at the moment). I know this is absolutely awful, but my point is that you have been saving for your whole life. If you need to not save for a few months to give your budget some wiggle room, I don’t think that is a bad thing.
    Hang in there!

  10. Sonya
    October 18, 2011 at 5:51 pm

    I think most of my jobs have had the 26 pay periods. I’m used to it I guess. It used to work out really well when my husband was still working and he had the 24 pay periods. Usually we were getting one paycheck a week which was great. I have certain bills that I pay at each paycheck during the month and that has worked for me. The only other option I have would only pay during the school year so I like having paychecks spread out over the whole year.

    One district I taught in had the 26 pay periods, however, when the fiscal year ended on June 30th, they paid you your last 6 paychecks all within 6 days before the end of the fiscal year. THAT was really annoying!

  11. October 18, 2011 at 9:57 am

    Ooo, great topic! In my last job, we were bi-weekly. My new job is bi-monthly. To be honest, I think I preferred bi-weekly. Even though it was less money, I appreciated the more frequent pay cycles.

    Now, I feel like I’m really stretching with every pay. Most of my pay goes directly to bills (credit card/utilities on one check; rent on the other) and when I was bi-weekly, I felt like that wasn’t the case, even though it was still usually only 2 checks/month. I guess I felt like I had a little bit more of a cushion once the bills were paid because money was coming in more frequently.

    I also took a slight cut, so maybe that’s why I’m feeling the pinch!

  12. October 18, 2011 at 8:43 am

    I hear you. We get a biweekly paycheck (26) and it always drives me nuts because my rent, utility bills and credit card payments all need to paid on x day of the month not every other week. I hate it and I wish they they moved to paying us on the 15th and 30th instead! I usually try to keep one paycheck for rent and the other for car payments etc. Good luck!

    • kim
      October 18, 2011 at 9:05 am

      Hear, hear – you can’t schedule automatic payments with biweekly pay! So you have to plan every. single. pay period. because it’s all a moving target. And keep looking up the due dates of bills (I created a bill calendar in Google).

      Okay here’s the [lone] good thing – every 6 months you end up with 3 paychecks in a month – bank!!!

      • kim
        October 18, 2011 at 9:06 am

        I must rephrase – you can set up automatic payments, but you have to keep a large cushion in your checking. And what use is that?! That’s just temptation to dip into for me.

  13. October 18, 2011 at 6:33 am

    I get paid bi-weekly and the BF gets paid every week.

  14. October 18, 2011 at 6:13 am

    Oh man, what craptastic timing for that switch! I LIKE getting paid every other week vs. twice a month (used to be the reverse) but in your situation, where you have calculated every penny, I can totally see how much that would suck, a lot of redoing to do! As for saving…I would do this on a case by case each month, if it gets to be too much, and you are too tight. Rather use the extra for things than charge it, right? And if you have the extra to save, save. You are doing awesome, you definitely save more than me, I can just tell! I need to be better about it now that M and I aren’t paying double rent (October was the last month yay!)

  15. October 18, 2011 at 6:08 am

    I hate when you get used to something, budget around something, and then it changes. Unfortunately that happens a lot for me, in my internships.

    I prefer bi-weekly. I used to be paid weekly and it was awesome to always have the cash but it seemed so little.

  16. October 18, 2011 at 5:39 am

    As a freelancer, I started off getting paid every week. Small checks, but for my situation it was perfect.

    Now, I’m still freelancing with the same company… but since they want to do direct deposits, I’m stuck on their system… which is a 24 check system.
    I’ve been on this one before. I hate it.

    Bi-weekly (ever other week) is my preferred and to me the one that makes the most sense. While sometimes checks fall awkwardly with how my rent or other bills are due, the money is consistent.

    With the 24 system, it’s only the on the 1st and 15th. I hate the time between paychecks. I really don’t care that they’ll be “bigger” because I’m still earning the same amount. I just have to wait longer for it. And the first time I was on it, if the 15th was a Friday, we sometimes wouldn’t get our checks until the 17th or later. There were only 5-8 employees, so there was no excuse for why the boss couldn’t get these done on time. Hopefully with the direct deposit it won’t be so bad… but I still hate that I will have put in over 3 full weeks of work before I get my first check via deposit.

  17. Carol
    October 18, 2011 at 5:00 am

    I actually get paid monthly. It was an adjustment. Do you know when it will switch over?

  18. Bronwen
    October 18, 2011 at 4:58 am

    I used to get paid weekly, which sounds awesome but really isn’t. You get teeny tiny paychecks, but there is always money coming in. I always felt like I was saving up expenses until Friday, and then my bank balance was low again by Tuesday.

    My company then switched to bi-monthly, which meant that we went 1 week without paychecks during the transition. It was hard, and I feel like it took me FOREVER to recover from that/get back into my savings/bill paying routines. It’s hard when anything changes, I’m afraid, but you’ll eventually get back in the groove!

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