How to Align Due Dates With Pay Days

Kathy is the Nerd, and she's trying to reconcile the on-paper budget with what's going on in their bank account. Dave reminds Kathy that the budget is supposed to tell her what to do.

QUESTION: Kathy in Idaho and her husband are in Baby Step 2. Kathy is the Nerd, and she’s trying to reconcile the on-paper budget with what’s going on in their bank account. Most of their bills are due during the first half of the month, but their income comes in during the second half. Dave reminds Kathy that the budget is supposed to tell her what to do.

ANSWER: That won’t happen. If you wait to write the check in the second half of the month, you would not overdraft. If you want to pay extra on the debt, you can do that later—you don’t have to do that on the due date. What you are describing is just a cash-flow bind if you are actually living on the budget.

You are in charge of your budget until it’s on paper. Once it’s on paper, it has to represent reality. In your reality, that means a cash-flow strain on the first check and all this extra money on the second check. You have to figure out how you’re going to do that in reality.

You can’t fix it in one month, but the long term way you do that is by moving some of that second-half check into the first half of the next month. In other words, you determine a certain amount of money and move it from the second half of a month into the first half of the next month, so then you’re ahead. When you do that, you go from running first to first to running fifteenth to fifteenth. Then you can stay ahead and not be pinched by that.

The second part of this is that you are in charge of your budget. The budget is not the boss of you until you get it done. When it’s all written out and you and your husband look at it, now it becomes the boss of you. Neither one of you can spend money unless you first consult that piece of paper. It’s your out-of-bounds marker; the referee is going to blow the whistle if you step out of line.

It does become the boss of you once you’ve written it down and have both agreed to it. You look to see if you’ve got enough money in the clothing budget. If you don’t, then it doesn’t matter if the shirt is on sale; you don’t have the money for it. That’s the budget telling you what to do. But first, you told it what you wanted it to do.

You can’t come home with a new shirt and hope it fits into the plan. The plan has to become the boss; the plumb line by which you build it square and straight and true. Both of you have to agree to do that. That’s why it’s important that you both have a vote in the formation of the original budget each month as it begins.

It sounds like you really need to go 15 to 15 instead of one to one on your dates to turn this thing around.