Sunday, January 25, 2009

Moneywell impressions, part 2 - square pegs and round holes

Continuing with my posts on Moneywell...

One of the complications I have with my envelope system is based on the fact that I get bi-weekly paychecks.  (There was an effort a few years ago to move to paychecks on the 1st and 15th of every month, but the union membership shot it down. It seems obvious to me that nobody in the union budgeted their money -- twice-monthly paychecks work sooooo much better).

This bi-weekly paycheck thing complicates my budgeting. Moneywell has a very nifty little spending plan setup to help automate the allocation of salary into buckets, but it doesn't work well for us bi-weekly check folks working in a monthly billing universe.  A small example will demonstrate this:

Let's say you've got a bill that runs $100/month.  Over a year, you're spending $1200.  Us bi-weekly payday folks get 26 paychecks a year.  In theory, I should be setting aside $1200/26 = $46.15 per paycheck to pay this bill. (That is, in fact, what Moneywell will say).

But here's where theory comes crashing into reality.  Let's say I get paid on January 6th and 20th, and the bill's due on January 27th. If I put away my $46.15 after Jan 6 and 20, I only have $92.30 set aside for my $100 bill -- I'm $7.70 short when the bill comes due.  Sure, it'll all work out eventually, but here in the short term I'm hosed.

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