For those who don’t have this problem, or who have a savings cushion to fall back on, imagine getting almost your entire month’s worth of income on one day and having to make it last for the entire month. That takes quite a lot of discipline. As a result, a huge number of people with little savings as a cushion find themselves financially strapped by the end of the month.
One way to handle that cash flow problem is to time your mandatory payments with the date your Social Security payment shows up in your bank account.
Social security payments are deposited into your account on set schedule: generally on a Wednesday, and either the second, third, or fourth Wednesday in the month. Your particular date depends on when your birthday is. Since my birthday is on the 13th, I get my social security on the 3rd Wednesday, and that can be anywhere from the 14th to the 20th of the month. That works out pretty well for me since my mortgage payment, the largest regular bill I have, is due on the first. My wife and I are both still working part time so we also get income on the 30th of the month.
But sometimes we have a large credit card bill because of a major expense we incurred. For years our credit card bill was due at the end of the month, a few days before our work income showed up. We’d have enough for the credit card payment—the social security payment was there for us—but not necessarily enough for the mortgage, which was due just a week or so later. That meant we had to tap into our savings or be extra vigilant to make sure we had enough in the bank to cover both payments.
But then came a simple fix: change the date when the credit card payment was due to after we got our end of month earnings. We called the bank that issued our credit card and asked them to change the due date. They did so quite willingly, and voila, our cash flow problem was solved.
Yes, it’s that easy. Almost every credit card issuer will work with you to change the due date and all you have to do is call and ask. The first month may mean having the bill reflect 5 or 6 weeks worth of charges instead of the usual 4 weeks. But it could also mean you only pay for a week or two worth that first time. If you plan for it the first payment shouldn’t be a problem and then you’re on the regular, better schedule for you.
You know, there’s also no reason that other payments can’t be made at other times of the month. There’s nothing magical about the first. Its just tradition (and their own cash flow concerns) that landlords want their rent on the first.
So figure out when the best time for you to make all your regular payments, given your social security and earnings income, and change the payment due dates accordingly. You’ll wonder why you didn’t do this long ago.