This one is seriously giving me a headache, like trying to split the check at a restaurant.
My wife and I each get paid every other Friday, regardless of the calendar month. And because of the way this month (May 2008) is structured, there’s 3 paydays for us: the 2nd, 16th, and 30th.
Meanwhile, like most people I imagine, our budget is calculated monthly and based on two paydays in the month.
So, is this third paycheck, like, extra money? Next month has two paydays, as did last month. Where did this extra cash come from? I obviously understand how a quirk of the calendar led me to get paid three times, but my brain hurts trying to figure out how it applies to our budget.
Can we go spend tomorrow’s paycheck like drunken sailors and still end up how we started? Can you explain this to me somehow?
There are 26 pay periods in a year when you are paid bi-weekly. Because of that, two months will have a third pay period. It’s not “extra money”, it’s just how the calendar falls.
You are budgeting for 24 paychecks, but actually receiving 26. It’s not extra money, it’s just that you are budgeted for a different schedule then you actually get paid for.
If you operate based on two pays a month, but get paid 26 times a year, the other two pays are indeed ‘extra’ money.
What usually happens with me is that it sort of works the other way around; I start anticipating the third pay before it arrives, and instead of being extra, it’s very necessary.
There are 52 weeks in a year. If you get paid every two weeks, then you get 26 paychecks a year. There are 12 months in a year. If you pay bills every month, you pay bills 12 times a year, and normally you pay that with two paychecks, so you’re budgeted for 24 paychecks a year. Except, twice a year you’re going to get a month with an extra paycheck.
This isn’t free money. But it does mean that if you’re able to pay your bills on 24 paychecks a year, you’ve got two paychecks a year surplus. If
If you don’t want the extra paycheck, feel free to send it to me.
If you are getting paid every two weeks, you are getting 26 paychecks a year. Since there are only 12 months to a year, two months in the year will have three paydays.
I get paid bi-weekly (26 checks) every other Friday.
My wife gets paid twice a month (24 checks) on the 15th and the last day of the month.
If we had identical salaries her checks would be larger than mine.
My monthly budget is calculated based on 2 paychecks for how much I actually take home every month. If I was making a “true” budget, I would divide my annual income by 12. Then I would come in low for 10 months of the year, and substantially higher for the other 2. This month is one of those 2.
So in other words, the way my budgeting system works, I can totally blow tomorrow’s paycheck on titties and beer. Woooooooooo!
~ wife glares at me ~
sniffle okay, I’ll send it to the mortgage company. ~ kicks rock ~
Here’s the weird thing: I’m on the opposite every-other-week payment schedule from the OP, so one of my three-paycheck months this year was February. Of all the months you don’t expect to have 5 Fridays …
I have 3 bank accounts. Every paycheck, half my car payment, insurance, and cell phone go into one account; half my rent goes into another, and the remainder goes into my main account. This January and July, I get an extra half cycle in my first two accounts. Food and fuel still cost the same every two weeks, so I only have an extra half car and rent payment to spend on hookers and blow in each of those months.
When you’re talking about titties, one in the bush is worth two in the hand.
I pay my mortgage every pay day: 26 times a year. I still need groceries and gas and general living funds. There’s no such thing as free money for me. It used to work out a lot better when I was young and only paid monthly rent. Ahh, the good old days…
I’m on the same schedule as you, although my 3rd paycheck twice a year never seemed to be ‘extra.’ There was always something that needed it.
Last year I changed my mortgage payment schedule so that now instead of 12 monthly payments we make 26 half-payments, each on a payday. Which comes to an extra payment per year; plus prevents our mortgage being due on a week that’s not a payday.
Its worth pointing out that about once a decade or so you have 27 pay periods in a year, thus three months of three paychecks. The reason is because the year – depending on whether it is a leap year or not – is actually one or two days longer than 26 weeks, so over time you slowly accumulate a few more days. The paychecks move one or two days earlier each year, until you get a situation such as when the first paycheck is issued on January 1st, and the 27th on Dec. 30th or 31st, depending on whether it is a leap-year or not.
Don’t blow the whole thing in titties and beer. Its an ‘extra’ paycheck in that it doesn’t need to go toward your mortgage and other monthly bills, but that is still money you would have been spending on your normal day to day expenses for the next two weeks like food and… well titties and beer.
