Thursday, September 22, 2011

My Two Favorite Months

It's about time I actually blog about something that more closely fits the original intention of this blog!

For the last 5+ years I have come to love two months out of the year more than any other. These two months aren't the same year to year but they occur twice a year about 5 months apart. This year my favorite months happen to be March and September. You want to know why? It's all about the payroll:-)

I remember when we first got our contract for our internship year. We were excited to finally have a salary, that is something to be exuberant about! In trying to work out our budget for the upcoming day when that salary would be in our bank account we naively took the total and divided by 12 for our monthly gross salary. My previous job paid my salary semi-monthly on the 1st and the 15th. Each month's total was the same. My husbands student loan disbursements happened quarterly. We were used to working with sums of money that were consistent from month to month.

I don't remember if his contract actually stated the frequency in which they would disburse his salary, but the truth of the matter is getting paid every two weeks isn't the same as getting paid semi-monthly or even monthly. Surprise! When you get paid every two weeks you have 26 pay periods. For 10 months of the year you have 2 paychecks. For 2 months of the year you have 3 paychecks. This payroll cycle wrecks havoc on my budget for 10 months and spoils me for the other 2. Not technically spoils, but at least I know for those two months there will be some surplus in my budget whereas the other 10 are cutting it close! Too close.

You might say it shouldn't make a difference, but I tell you it does. When you get those contracts be sure to look at (or ask) how frequently they issue payroll! I can't help but give an example for illustrative purposes.

A $45,000 annual salary paid monthly in 12 installments or semi-monthly on the 1st and the 15th would be $3,750 gross (before taxes/deductions/etc) each and every month. I love predictability.

A $45,000 annual salary paid bi-weekly would pay the recipient $3,461gross (before taxes/deductions/etc) for 10 months, and a whopping $5,192 for two months. That is quite a difference.

When you are trying to establish a household budget on a salary of $45,000 you really have to use what you get during most months. That means using the figure of $3,461 to calculate your expenses not the $3,750 unless you are 200% confident that you could take those extra 2 paychecks and save them. Let's be honest, who has that much discipline.

So we live on considerably less for 10 months of the year and put off as many expenses as we can for those other two months when we feel rich:-) This month is one of our favorite months and that also means our medical bills will get paid. Perfect timing. But I would much rather have the same number to work with month in and month out. On the other hand, if you don't have many unexpected expenses the two months you get extra will feel like Christmas! Happy Budgeting:-)


    I feel like a rockstar this month - where usually I would be crying on the phone to my mom about how I was going to make ends meet.
    Slowly but surely things are coming together, and I am starting to be able to save - but I TOTALLY know the feeling of stretching those pretty pennies!
    (And seriously, residents need to make more money! Brutal)

    Oh and to answer your question on my blog.
    The mister went to med school for three years before deciding to switch into podiatry - specializing in surgery. So he was a DPM when he graduated. Well he HATED foot and ankle surgery. Hated hated hated and of course he wasn't an MD so he couldn't just try for a different residency. So he made the crazy jump to go back to school (and of course they would give him no credit for what he's already done) and had to start again. He isn't exactly sure what he wants to do - but is leaning towards IM or Family/Emergency Med. We shall see!


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