Making Finances Simple. Changing Lives.
Below is an extremely effective strategy for accomplishing major financial goals, and one that is easy to work into your budget.....
As you might guess, we're big fans of operating your family finances on a budget.
However, not all budgets are created equally. We believe budgets that have consistent figures from month-to-month are easiest to manage. In other words, it's easier to budget using a "smoothed" out income figure, than a different figure every month. Similarly, it's easier to budget $300/month for medical expenses than it is to fork out $2,000 for an emergency room visit.
So in the case of irregular income, we like to see our clients average out their pay into a consistent number each month, one that can be relied on for a consistent budget.
For instance, those folks who are paid bi-weekly actually have two months during the year when they get three paychecks in a month. Rather than budget more income in those two months with that extra paycheck, we suggest folks keep those monthly budgets using the two paycheck figure. Then, that 3rd paycheck can be used to accomplish your next major money move.
If paying down your mortgage is the next priority on your financial "hit list", then you can use this 3rd paycheck to make a lump-sum payment on your home loan. Doing this twice per year can have a dramatic impact on your loan payback time.
For instance, if that 3rd paycheck is $3,000 and you use two of those paychecks (the 3rd ones in two different months) to pay down a $300,000 loan, you could chop over 13 years off your loan payback term!!
If you'd like to look at a custom scenario for your situation, feel free to contact us. We're always happy to help!