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Main site > Forums > Essential Money > Debt-Free Wannabe > Beware the December pay trap!
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      EssexHebridean
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    • By EssexHebridean 17th Dec 18, 10:02 PM
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    EssexHebridean
    Beware the December pay trap!
    • #1
    • 17th Dec 18, 10:02 PM
    Beware the December pay trap! 17th Dec 18 at 10:02 PM
    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!
    MORTGAGE FREE 30/09/2016
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      Farmer Johnson
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    • By Farmer Johnson 17th Dec 18, 10:27 PM
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      What's this?

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    • #2
    • 17th Dec 18, 10:27 PM
    • #2
    • 17th Dec 18, 10:27 PM
    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?

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      EssexHebridean
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    • By EssexHebridean 18th Dec 18, 9:57 AM
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    • #3
    • 18th Dec 18, 9:57 AM
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    • 18th Dec 18, 9:57 AM
    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 30/09/2016
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    • By enthusiasticsaver 18th Dec 18, 10:29 AM
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    • #4
    • 18th Dec 18, 10:29 AM
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    • 18th Dec 18, 10:29 AM
    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?
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com

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    • By ash28 18th Dec 18, 10:48 AM
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    • #5
    • 18th Dec 18, 10:48 AM
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    • 18th Dec 18, 10:48 AM
    “
    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?
    Originally posted by enthusiasticsaver ”

    My company pension was paid on 14th December instead of 31st !! It's also when the annual increase gets paid - if there is one.

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    • By enthusiasticsaver 18th Dec 18, 11:04 AM
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    • 18th Dec 18, 11:04 AM
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    • 18th Dec 18, 11:04 AM
    “
    My company pension was paid on 14th December instead of 31st !! It's also when the annual increase gets paid - if there is one.
    Originally posted by ash28 ”
    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.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com

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    • By heartbreak_star 18th Dec 18, 12:43 PM
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    • #7
    • 18th Dec 18, 12:43 PM
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    • 18th Dec 18, 12:43 PM
    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."

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    • By Onebrokelady 18th Dec 18, 12:44 PM
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    • #8
    • 18th Dec 18, 12:44 PM
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    • 18th Dec 18, 12:44 PM
    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
    Original Debt Owed Jan 18 = £17,630 Paid To Date = £2,309 Total Now Owed = £15,321
    Emergency Fund = £1000 Xmas savings = £400

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    • By datlex 18th Dec 18, 12:45 PM
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    • #9
    • 18th Dec 18, 12:45 PM
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    • 18th Dec 18, 12:45 PM
    It's times like this I am particularly glad I get paid weekly. Next four weeks, I get paid tomorrow, 27th, 3rd, 9th.

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    • By Onebrokelady 18th Dec 18, 12:53 PM
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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?
    Originally posted by Farmer Johnson ”
    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 to
    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
    Original Debt Owed Jan 18 = £17,630 Paid To Date = £2,309 Total Now Owed = £15,321
    Emergency Fund = £1000 Xmas savings = £400

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    • By SallyDucati 18th Dec 18, 12:54 PM
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    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.

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    • By ash28 18th Dec 18, 12:59 PM
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    “
    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.
    Originally posted by enthusiasticsaver ”

    My partner's company pension is paid at the normal time - 31st of the month but my December payment is always early.


    I usually get a letter with a breakdown of any increases that are to be applied and the date for December's payment.....

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    • By tizerbelle 18th Dec 18, 1:30 PM
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    We get paid early every December - usually the Friday before Christmas instead of the 31st. It's done because certain employees clamour for it and so the MD thinks he's helping by paying early. I have countered that Christmas is not a surprise/unexpected event and it comes around every year at the same time so people have plenty of time to save/plan for it without stealing from themselves by being paid early.

    Those same people that clamour for it to be paid early are then the ones that will be heard in the New Year bemoaning the fact that January is such a long month. Nope, it's not. It's still just 31 days but because they wanted to be paid early in December they have to wait 41 days for their next wage. So the price for a little gain in December is more pain in January.

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    • By debtfreeme2015 18th Dec 18, 1:51 PM
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    debtfreeme2015
    In my job we get paid on the 15th every month. Ive only been here four months and struggle as all my bills go out on the 1st. I always think im rich but have to remember not to spend any off it
    consolidation loan 8.7.19 £9,988.53
    £8,980.00 Current. 32 payments left

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    • By Choccygirl123 18th Dec 18, 3:30 PM
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    Great advice Essex.

    I have fallen into once and never again! I think there is so much commercial pressure of people to have the 'perfect' Christmas. This year I've been off work a long time and ssp is tough going. It's been the best wake up call ever. Never before have we budgeted so hard, brave shifted and made Xmas presents on close family we'd normally doevdc£20/£25 each -£300. This year they've all got token gifts and some homemade sweets and fudge and we've spent £75 on everyone.

    It's the memories you make with children, the board game fallouts and the yummy baking you gorge on that counts.
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    • By engineer amy 18th Dec 18, 3:53 PM
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    “
    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?
    Originally posted by enthusiasticsaver ”
    All companies have different rules. We run a weekly payroll for our temps, and monthly for our salaried employees, monthly wages being paid on the last Friday of the month. We only process the bank wages 3 days before it hits the employees account as the worker might end up being off sick or taking unpaid leave. The short timeframe for processing avoids them being overpaid and having to claw this back in the following month.
    we are paying Decembers salaries on Friday 21st as most employees have asked for it then so they can finish their xmas shopping at the weekend.
    Those of us who budgeted for our xmas pressies over the last 11 months tend to do what the OP has suggested and keep the money separate until it would normally be due.
    Mortgage = £113,495 (May 2009) £67462.74 Jun 2019

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    • By Finchy2018 18th Dec 18, 5:53 PM
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    Finchy2018
    I have never experienced this. Everywhere I have worked pays as normal on the last working day of the month.

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    • By BlackCoffeeNoSugar 18th Dec 18, 6:26 PM
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    BlackCoffeeNoSugar
    This is a very timely reminder, thank you EssexHebridean! I've put a reminder in my phone to transfer to my savings account on Friday. I'm always aware that I shouldn't be spending it, but never considered the simple act of moving it out of my current account. So simple, and so effective. Thanks again
    Debt at Nov 2017: £8,619 Debt at Dec 2018: £4,161 Debt at Nov 2019: £0
    Pay ALL your debt off by Xmas 2019 #04 - £4,161 / £4,161

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    • By GothicStirling 18th Dec 18, 8:53 PM
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    GothicStirling
    One of the benefits of working for the NHS, is that in January they pay us slightly earlier again to bridge the gap. I'm all set for Christmas, so my pay goes on nothing but my usual outgoings. I'm off for a short break to London next month, so that's my motivation to be a good girl.

    My sister and I have this tradition of going to our local Sainsbury's for a coffee on Christmas Eve, the cafe overlooks the tills, and we watch gobsmacked at the amount of food and drink going into their trolleys. I imagine they are the same people causing the queues at the ATM in January, because they're staring at their balances. I swear one day, I'll yell "it ain't going to change, you spent it all before payday!'

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    • By fatrab 19th Dec 18, 9:05 AM
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    fatrab
    I got paid today, we're normally paid on 25th so it does feel very early.

    But I've budgeted accordingly, and my wages won't be touched as Xmas is already accounted for.

    All the best everyone
    You can have results or excuses, but not both.
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