Beware the December pay trap!

enthusiasticsaver

My pension has hit our bank account a week early but no more spending now to come out until next Tuesday for our online shop and there is still £300 left in the account for this month so that will easily cover that. Our money shuffle will take place next Friday when DHs pension is in and our normal budget reset day. 

kimwp

EssexHebridean said:

Both MrEH and I have now been paid. We’re both fully aware of the fact, so for us the money will be left sitting in the accounts it gets paid into but untouched, and ai will do the money shuffle to the right place for January DD’s some time between now and the 31st. For us this month pay was just about a week earlier than usual. 

The idea of manually moving money to pay dd's makes me nervous - if I forgot to move it or the DD amount got changed then the bills wouldn't get paid - why do you do it this way round?

pelirocco

kimwp said:

EssexHebridean said:

Both MrEH and I have now been paid. We’re both fully aware of the fact, so for us the money will be left sitting in the accounts it gets paid into but untouched, and ai will do the money shuffle to the right place for January DD’s some time between now and the 31st. For us this month pay was just about a week earlier than usual. 

The idea of manually moving money to pay dd's makes me nervous - if I forgot to move it or the DD amount got changed then the bills wouldn't get paid - why do you do it this way round?

Have 2 accounts ,the account you get paid into pays all your bills and another account that you transfer money in to cover your other spends
So no need to " protect" early pay 

kimwp

pelirocco said:

kimwp said:

EssexHebridean said:

Both MrEH and I have now been paid. We’re both fully aware of the fact, so for us the money will be left sitting in the accounts it gets paid into but untouched, and ai will do the money shuffle to the right place for January DD’s some time between now and the 31st. For us this month pay was just about a week earlier than usual. 

The idea of manually moving money to pay dd's makes me nervous - if I forgot to move it or the DD amount got changed then the bills wouldn't get paid - why do you do it this way round?

Have 2 accounts ,the account you get paid into pays all your bills and another account that you transfer money in to cover your other spends
So no need to " protect" early pay 

This is effectively what I do - the account my pay goes into pays bills and SOs. I use my credit card for any other spend (which then becomes a bill on the main account the month after). I was just wondering the advantage of doing it the other way round.

Sanctioned_Parts_List

kimwp said:

This is effectively what I do - the account my pay goes into pays bills and SOs. I use my credit card for any other spend (which then becomes a bill on the main account the month after). I was just wondering the advantage of doing it the other way round.

It's a "horses for courses" argument - if you manage your money by having a "bills" account and a "spending" account and it's working for you, then there's no advantage to do anything different.

For those people that live in their current accounts and move savings into and out of it, then there is a risk that the high balance at an unusual time of month will tempt them into spending the rent early. If this is a risk, moving the money temporarily into a savings account to make it clear what belongs to December and what belongs to January is an effective approach. The whole reason for this thread, though, is that spending January's bills on Christmas is such a widespread problem that it deserves an explicit reminder.

enthusiasticsaver

kimwp said:

EssexHebridean said:

Both MrEH and I have now been paid. We’re both fully aware of the fact, so for us the money will be left sitting in the accounts it gets paid into but untouched, and ai will do the money shuffle to the right place for January DD’s some time between now and the 31st. For us this month pay was just about a week earlier than usual. 

The idea of manually moving money to pay dd's makes me nervous - if I forgot to move it or the DD amount got changed then the bills wouldn't get paid - why do you do it this way round?

We do it the other way round.  Our pensions go into the account all direct debits and standing orders come out of and the credit card bill is paid for the months previous fuel and food spend. Money is shuffled around on payday to our personal accounts and savings pots but we leave a buffer in the current account for the odd additional spend.  For some though having a payday early may tempt them into spending half of Januarys pay before the end of the month leaving them short next month. 

kimwp

enthusiasticsaver said:

kimwp said:

EssexHebridean said:

Both MrEH and I have now been paid. We’re both fully aware of the fact, so for us the money will be left sitting in the accounts it gets paid into but untouched, and ai will do the money shuffle to the right place for January DD’s some time between now and the 31st. For us this month pay was just about a week earlier than usual. 

The idea of manually moving money to pay dd's makes me nervous - if I forgot to move it or the DD amount got changed then the bills wouldn't get paid - why do you do it this way round?

We do it the other way round.  Our pensions go into the account all direct debits and standing orders come out of and the credit card bill is paid for the months previous fuel and food spend. Money is shuffled around on payday to our personal accounts and savings pots but we leave a buffer in the current account for the odd additional spend.  For some though having a payday early may tempt them into spending half of Januarys pay before the end of the month leaving them short next month. 

Thanks and same for me, more or less. To do it the other way round means breaking the automation, which (to my mind) is the point of a DD or SO, so I was interested if there was a benefit, doesn't sound like it though.

2Scratters

Well I actually moved my December wages over and moved them back today. Seemed a bit weird. (I had actually saved for Xmas). A big chunk will be saved and my pension is due early 30th December (January payment due on the bank holiday). I seem to have a lot of money about.
 Need to get this doing some work for me getting it into a reasonably easy to get at just in case Have already got enough saved for our funerals.
 Question is should I get them paid off in advance? Not intending spending big bucks just to get us disposed of
2Scratters x

pelirocco

Sanctioned_Parts_List said:

kimwp said:

This is effectively what I do - the account my pay goes into pays bills and SOs. I use my credit card for any other spend (which then becomes a bill on the main account the month after). I was just wondering the advantage of doing it the other way round.

It's a "horses for courses" argument - if you manage your money by having a "bills" account and a "spending" account and it's working for you, then there's no advantage to do anything different.

For those people that live in their current accounts and move savings into and out of it, then there is a risk that the high balance at an unusual time of month will tempt them into spending the rent early. If this is a risk, moving the money temporarily into a savings account to make it clear what belongs to December and what belongs to January is an effective approach. The whole reason for this thread, though, is that spending January's bills on Christmas is such a widespread problem that it deserves an explicit reminder.

I agree
Thats why I pointed out the advantages  of having two accounts 

FiscalPickle

I followed the advice in this thread for the last couple of years, January payday is on Tuesday and for the first time in years I have spare money sitting in my account. I've sent this to pay a bill that's not quite due, so when my pay lands I'll have a zero balance and a full months' salary to enjoy