Today is Pay Day. I find it hilarious that within one day of receiving my paycheck direct deposit, it is gone. Part of it goes towards paying for things I bought in the past. Yes, credit card debt. Some of it goes towards paying upcoming bills. Technically, that isn't spent yet. And, part of it goes into crypto and savings, which are practically the same thing.
With respect to credit card debt, I've brought that under control. I have a Crypto.com debit card that rewards me with 3% cash back on all purchases paid in MCO. Thus, I have shifted the majority of my spending to that card. A side effect of that is that I am forced to spend within the budget. This is good in theory. The drawback is that surprise expenses throw off the budget, which leaves me scrambling to put money back on the card to cover scheduled expenses. Otherwise, I'd have to lean on the credit cards again. Starting this paycheck, I have added a savings budget item that should allow me to deal with unexpected expenses. As I pay off the credit cards, this savings padding should grow larger and larger, which should help reduce reliance on credit cards altogether.
There is not much to say about scheduled payments. If I am going to spend on phone service, utilities, and other monthly living expenses, I figured that I should get something back. Thus, the MCO rewards. Every paycheck, I make sure that there is enough money on the card to handle upcoming charges in the next few days. Part of that should include budget items for savings and investing. Readers of The Richest Man in Babylon by George Clason will know the lesson that a part of what you earn is yours to keep. That's such a difficult lesson to put into practice because of its simplicity. But, savings and investment have to be budgeted expenses as well. Otherwise, you'll never have anything to show for your years of labor.
Finally, this brings us to crypto and savings. In the past, I have dabbled in the stock market. I still buy shares in REITs as their dividends can be listed on my Schedule D tax form to offset business expenses. As long as they pay dividends, I'm OK with it. We don't necessarily need capital gains, just dividends. Crypto, on the other hand, currently offers interest income at much better rates than any bank will offer on your savings. To be clear, my crypto purchases include speculative buys like BTC, which can be deposited to earn interest. However, my savings are held in stablecoin, which earn interest at Crypto.com's Earn service. More importantly, the extra "cash" in stablecoin will be available if I have one of those unexpected expenses. This way, I won't have to scramble to reload the card. I am now budgeting a buffer in addition to savings.
The only inconvenience of all of this is that the sums of money I use to load up Crypto.com often trigger fraud alerts, which requires a call to the bank for them to allow the transaction. This will be remedied in future by having that buffer balance, which will allow me time to transfer via ACH.
Budgeting has been a learning process, which often gets adapted as circumstances change. One trick I employ is to be a little fast and loose with the amounts. I often budget a few dollars more than the actual expense or transfer. I found that budgeting down to the penny leaves no wiggle room. You can't so much as buy a soda without bringing down the whole house of cards. So, I'll round up to the next five or zero. I've also learned the necessity of looking ahead a couple of paychecks. Payment dates don't often mesh cleanly with pay days. So, you may need to set money aside a paycheck early in order to make the next cycle work, primarily because ACH takes so long to transfer money.
I can comfortably say that I have spent all my paycheck on payday and on future paydays for the rest of the year. I have a good idea of where my money will go. It has taken a few iterations to figure out how to account for unexpected expenses, which will undoubtedly be beneficial once the last of my credit cards are paid off. One lesson remaining is what to do with the extra cash that isn't going towards expenses and debt? I'll cross that bridge when I get to it.
Posted Using LeoFinance