In my most popular article, How to Get a Month Ahead on Little Income, I shared with you the reasons why it’s a good idea to get a month ahead. I even shared strategic steps on how you could do so without working with much income.
Well, recently I was asked whether or not you should get a month ahead while paying on debt? You may encounter varying opinions on whether you should or not, but I thought I would go over the reasons why it’s a good idea to do this despite your lingering debt.
In fact, it might be one of the best decisions. There’s a certain confidence you may gain when handling your finances if you decide to make sure all of your bills are taking care of each month before tackling debt. With that said, let’s go over the why’s and the how’s about how you can achieve the goal of paying on debt and getting a month ahead.
What Does It Mean to Be a Month Ahead?
Being a month ahead means that all of your bills are paid using last month’s income. You would add up all of your fixed expenses (not your income) for each month.
These expenses would include things like your mortgage, rent, debt repayment, utilities, etc.
For example, if your total is $2,600, this is the number you should focus on getting a month ahead.
On the first of the month, your goal would be to have $2,600 already set aside in another account (I call it my household account) so you can pay all of your current month’s bills.
I know it can be intimidating to think about saving an amount that large while you’re in debt, but there are many reasons why this could be beneficial to you.
What Are The Benefits of Being a Month Ahead While In Debt?
If you’re a month ahead of your expenses, you won’t be worried if your paycheck is a day or two late because all of your bills will be paid using last month’s earnings.
But the thing is, most people don’t budget this way. Most people create budgets based on what they are going to earn in the upcoming month. Budgeting this way can be stressful especially if you have variable income or your paycheck doesn’t show up when it’s supposed to.
Here are the clear benefits of being a month ahead while in debt:
- You can budget better because you have the exact amount you need on hand to take care of this month.
- Any additional money you earn can be thrown towards debt.
- You can easily utilize auto-pay to pay your debt and bills on time because the money is in the account when it needs to be.
- You can avoid over-drafting your account.
Likewise, if you’re not a month ahead, auto-paying your bills may be a little tricky if your bill provider takes out money on a different schedule as planned. It also creates a risk of too many bills coming out before your paycheck has hit the bank which may result in overdraft fees.
How to Get a Month Ahead While In Debt
Of course, some wouldn’t recommend getting a month ahead. They would recommend saving $1,000 and then focus on throwing everything you can at your debt.
My rebuttal for that theory is simply to do what’s best for you. It’s called personal finance for a reason and if getting a month ahead of your bills is going to help you sleep well at night and stay focused as you pursue debt freedom, by all means, do it!
There are some simple strategies you can employ as you do this that won’t have you struggling to keep up with your debt repayment plans. Here are a few:
- Gather all of your expenses so you will know how much you need to save.
- Create a budget you can stick with.
- Eliminate any unnecessary expenses.
- Have no spend days where you can focus on savings versus consuming.
- Declutter and sell stuff around your home.
- Use windfalls like tax refunds, bonuses, raises, etc.
- Set up an auto-savings draft from your paycheck to be deposited into a separate bank.
For a more comprehensive list of things to do to get a month ahead of your expenses, check out this article.
Wrapping Thangs Up
Getting a month ahead of your expenses can literally save your budget. When you’re able to budget based on last month’s income, it makes your budget more predictable and you’re more likely to stay on top of unexpected events.
So, don’t allow the fact you’re in debt, stop you from pursuing peace of mind. Saving $1,000 in a baby emergency fund is great, but take it a step further and get ahead of your expenses if it feels right to you. Then pick right up where you left off and continue to kill your debt out.
Are you currently a month ahead of your expenses? If not, what’s stopping you?
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