I’ve always been open and honest about my debt free journey. It’s one of the reasons I enjoy this site so much. I can air my thoughts and grievances and not have any fear about what people think. It’s been ten years since I started getting into credit card/consumer loan debt and three years since I paid off that monster. The majority of my debt was from my e-commerce business, which I shut down in 2009. Add in the debt I had from auto loans and that stupid (oh, so stupid) Jetski loan. I wanted to share another reason my debt spiraled out of control and it was how I was getting paid from my job.
One Paycheck Per Month = Ouch!
See, I had a great job opportunity right out of college. It was for a company that I interned for during the summer of my junior year. If you have a chance to do an internship, I recommend it. That’s the best way to learn about what to expect when you get out of college. You learn more there than you might in a few years of college.
OK, let’s get back on track here. The job I had paid me well for a starting position, but it was one paycheck per month. This means I got my full month’s upfront each month. Now, how could this be a problem? Let me show you the ways!
While in college, I had a few jobs being paid every two weeks. I was used to that payment schedule. It became such a routine that I knew the day my paycheck would be ready for me to get. I based my college poor budget off those consistent two week paychecks.
Moving to the post-college professional world and I was making much more. Since my spending was already out of control, having that lump sum money hit my account on the first of the month was like sugar to a kid. I was excited. I thought I was rolling in the dough. Cue Scrooge McDuck here! If I had a pool, I would fill it with coins.
The Lump Sum Messed with My Money Mentality
I have to admit that getting that monthly payment really did mess up my money mentality. I didn’t know how to properly budget back then and going from someone who was making less than poverty level per year to one who was making good money, it was not good for me.
I still had the mentality that I was going to be paid once every two weeks. So, my mind was telling me I was getting paid double than what I was actually earning. For someone who had a spending problem, this was a huge issue. I mean, within the first month of my new job, I bought that Jetski. I bought it based on a radio ad for a low-monthly payment. I thought I could easily afford it because of my skewed mentality.
I’m not going to blame the once a month paycheck on my debt problems. I’m blaming myself here. I didn’t take the time to work on shifting my mentality of only being paid once a month. I didn’t reign in my outlandish spending to account for the one paycheck. Going from a broke college student to someone earning good money every paycheck had a profound effect on my debt. Profound as in it amplified my spending and money issues.
You Better Make a Budget When Paid Monthly
OK, you should probably have a budget for any method of income, but if you’ve gone from bi-weekly, bi-monthly, or any other to monthly, you need to sit down immediately and get it together.
I wish I had known about Mint.com or better yet, Personal Capital before I got my job. Mint did help me get control of my debt and help me during my debt payoff time. I’m a fan of technology, so these cool budgeting apps are my thing. I don’t like using pen and paper much if I don’t have to.
I wish I could change that year I got paid monthly, in regards to how I handled my money, but it was a big lesson. My spending was out of control the entire time I was at that job. It didn’t shift until I got my current job and was paid twice a month. Just remember, I blame no one or anything but myself and my actions. I was trying to hard to keep up with the Joneses.
I’m just glad I moved on and learned a valuable lesson while doing it. Just remember that debt is many times a result of our mentality. Once you figure it out, your finances will change for the better!
Do You Know Your Credit Score?
Even if you don’t plan on getting a loan, a good credit score can affect your ability to get a job, a place to live, and will save you money whenever you need to borrow. If you don’t know your credit score, you can get yours free at Credit Sesame. It’s 100% free with no credit card required to signup. I’ve been using it for years to monitor my credit score.