Beware the December pay trap!
EssexHebridean
Posts: 21,360 Forumite
Yep - here we are again, time for the annual warning thread,,,
I'm talking about the "December pay trap" - you know the one, rather than being paid on the last day of the month, or the 28th, "because it's Christmas" your company set up the pay run early - anything from 10 days early. The money lands in your bank account, and you start spending....regardless of the fact that usually, you'd manage for another week on the previous month's pay. And then, come mid January, the money has run out. Sound familiar?
Rather than thinking "Oh good, I've got paid early" let this be the year that you pick up that pay, and ditch it into a savings account. One that you don't have a debit card for. And then ignore it, until 31st December (or whatever your usual pay date would be), when you can transfer it back to your current account to meet your commitments for the month. Remember, nobody will be taking Direct Debits early - if anything they go out slightly late, and come January you will still NEED that money just as you do every other month, so put it out of temptation's way.
To put things into perspective - if you get paid on the 22nd, rather than the 30th, and you start dipping into it immediately - that "month's" pay then has to stretch nearly 6 weeks. And we all know that's not going to happen, which is when the credit cards come out again.
Over the last few years on this forum we have seen SO many people in a panic in January for this very reason. Don't let yourself be one of them.
As ever Merry Christmas DFW'ers - have a wonderful christmas, remember that happiness comes from love and caring, not from spending money! :santa2::xmastree::xmassign:
I'm talking about the "December pay trap" - you know the one, rather than being paid on the last day of the month, or the 28th, "because it's Christmas" your company set up the pay run early - anything from 10 days early. The money lands in your bank account, and you start spending....regardless of the fact that usually, you'd manage for another week on the previous month's pay. And then, come mid January, the money has run out. Sound familiar?
Rather than thinking "Oh good, I've got paid early" let this be the year that you pick up that pay, and ditch it into a savings account. One that you don't have a debit card for. And then ignore it, until 31st December (or whatever your usual pay date would be), when you can transfer it back to your current account to meet your commitments for the month. Remember, nobody will be taking Direct Debits early - if anything they go out slightly late, and come January you will still NEED that money just as you do every other month, so put it out of temptation's way.
To put things into perspective - if you get paid on the 22nd, rather than the 30th, and you start dipping into it immediately - that "month's" pay then has to stretch nearly 6 weeks. And we all know that's not going to happen, which is when the credit cards come out again.
Over the last few years on this forum we have seen SO many people in a panic in January for this very reason. Don't let yourself be one of them.
As ever Merry Christmas DFW'ers - have a wonderful christmas, remember that happiness comes from love and caring, not from spending money! :santa2::xmastree::xmassign:
🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00
Balance as at 31/12/23 = £112,000.00
Balance as at 01/09/23 = £115,000.00
Balance as at 31/12/23 = £112,000.00
SOA CALCULATOR (for DFW newbies): SOA Calculator
she/her
35
Comments
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It’s good advice, but it boggles the mind that any adult needs this pointing out.
I know that they do, but what are they thinking?2 -
Pressures of christmas expectations lead to people overspending, as a result they are already pushing the limits by the time the pay lands, and the easiest thing to do is to take the pressure off in the immediate by using "just a bit" of that money to clear stuff off....without thinking ahead to the new year and "what then". All too easily done, and can also to a degree be that people forget that money has gone in so just see a bank balance in the black and don't think any further about it - hence the reason I suggest just removing it from the current account altogether until the "real" pay date.
I don't think it's so much "what are they thinking" but more that in a lot of cases they're not thinking as much as perhaps would be ideal, with a lot of other stuff going on as well. Either way, a reminder never does any harm.🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00
Balance as at 31/12/23 = £112,000.00SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her7 -
Good reminder and advice. Strangely I don't think pensions get paid early (ours isn't anyway) so why salaries need to be done 10 days early is a mystery to me. Most companies shut off their payroll by about 7th or 8th anyway for salaries paid around end of the month so why in December they need to pay on 18th instead of 28th or 30th I don't know. Maybe some one who works in payroll could elaborate?I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
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enthusiasticsaver wrote: »Good reminder and advice. Strangely I don't think pensions get paid early (ours isn't anyway) so why salaries need to be done 10 days early is a mystery to me. Most companies shut off their payroll by about 7th or 8th anyway for salaries paid around end of the month so why in December they need to pay on 18th instead of 28th or 30th I don't know. Maybe some one who works in payroll could elaborate?
My company pension was paid on 14th December instead of 31st !! It's also when the annual increase gets paid - if there is one.1 -
My company pension was paid on 14th December instead of 31st !! It's also when the annual increase gets paid - if there is one.
Really? Neither mine (LGPS) nor my husbands (company pension scheme) have been paid and we have been told normal dates which is 31st for me and 1st for him which will be paid on 31st as normal bank working day.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0 -
As ever, good advice EssexHebridean, and thank you.
A Merry Moneysaving Christmas to all
HBS x"I believe in ordinary acts of bravery, in the courage that drives one person to stand up for another."
"It's easy to know what you're against, quite another to know what you're for."
#Bremainer1 -
We always get paid early in December,out normal paydate is the 27th but we are being paid on the 20th this month,I was just going to ignore mine for as long as possible but I do like the idea of transferring it into my savings account as extra safety,I've already spent it in my head so will be following your timely advice,I dont have a credit card to fall back on so this months money has got to last,it will also be lower then normal due to not enough unsocial hours pay so some careful budgeting is required
This is my first Christmas as a Debt Free Wannabee and I am determined it's coming in on budget and I'm not dipping into Decembers wages to pay for any of it
Thanks for the timely reminder:beer:Original Debt Owed Jan 18 = £17,630 Paid To Date = £6,080.1 Owed = £11,549.93 -
It's times like this I am particularly glad I get paid weekly. Next four weeks, I get paid tomorrow, 27th, 3rd, 9th.Paid off the last of my unsecured debts in 2016. Then saved up and bought a property. Current aim is to pay off my mortgage as early as possible. Currently over paying every month. Mortgage due to be paid off in 2036 hoping to get it paid off much earlier. Set up my own bespoke spreadsheet to manage my money.1
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In mine and a lot of people I know it's just the time of year,everyone at work has been asking when Decembers paydate is and they are hoping it's early enough to be able to finish their Christmas shopping even if it's just the food,money is so tight at the moment so people are short, in the past this would have been me,I was still out on Christmas Eve last year doing my shopping because I had to wait for pay day,this year I have learnt my lesson and saved so should be ok but it didn't stop me thinking that I could use some of Decembers wages if I absolutely needed toFarmer_Johnson wrote: »It’s good advice, but it boggles the mind that any adult needs this pointing out.
I know that they do, but what are they thinking?
I'm going to move it into my savings as although I know it won't stay there i like the thought of having that amount in my savings account even if it's just for a week:rotfl:Original Debt Owed Jan 18 = £17,630 Paid To Date = £6,080.1 Owed = £11,549.91 -
My organisation doesn't pay early, and neither did the last place I worked. I've always been pleased that I don't have to plan around it. I think at this time of year it can be just to easy to spend too much.0
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