Saturday, March 15, 2008

Stop living paycheck to paycheck with one simple change.

Normally on Saturday I do a round up. But this week I came across a post that deserves special attention. So instead of doing a round up I’m going to feature this one article.

No Debt Plan wrote about the concept that changed his financial life. He told us how he lives off last month’s income. I was shocked when I read this post because my husband and I do the same thing. I thought we were the only ones in the world who budgeted that way.

I started using this system when I first moved out of my parent’s house. I’d never had real bills to pay and I didn’t know how to make a budget. Luckily, I have always been a saver so I had money to get me started. I took one month’s income and put it in the bank. I paid all my bills on the first of the month and then I knew I could spend the rest without having to worry about being short. In the meantime, I tucked away the checks I was receiving. Once I received the last check of the month I would take all four checks and deposit them. I could then pay all my bills for the next month and repeat the process.

Twelve years later I’m still using the same method. It helps immensely when it comes to making our budget. At the end of each month my husband and I sit down and set up the budget for the upcoming month. We know exactly how much we have to spend. It works out especially nice since my husband’s income can vary quite a bit. If it was a good month we move the leftover to our short-term savings, if it was a bad month we take what we need from that very same account.

I really can’t imagine doing it any other way and highly recommend it to everyone. You don’t have to live paycheck to paycheck. This will change your life.

Now go on over to No Debt Plan and read his thoughts on the subject.

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