Pay yourself last

I know, the good, sound advice is to pay yourself first. Take the money out of your check before you see it! Short-term savings! Day one of the month!

This month’s test of You Need a Budget has me realizing that I need to be doing something else, though, too: paying myself last.

For years (decades?), I’ve paid myself first, and if it weren’t for that, I’d have nothing in retirement. However. For years, I’ve also gotten to the end of the month with nothing left over, so when the oil change comes in on February 25, it goes onto the credit card. I’ve spent so much time trying to attack debt at all costs that I found myself digging new holes by the end of each month.

But money is (even though it doesn’t feel like it) a zero-sum game. You can’t pay more on your debts than you have, no matter how much the internet makes you feel like it’s imperative.

I’ve gone through a mindset shift since I got YNAB, or maybe several: first, that everything counts, even a $2 Google storage subscription fee; second, that if I’m budgeting for “surprise” costs like auto insurance, they aren’t a surprise anymore; and third, that I need to be paying myself last.

Last month was the first month where, at the end of the month, I was able to transfer money from my checking account into my short-term savings. It was the first month where my checking accounts didn’t dip to overdraft danger zones, and where I paid off every cent of my revolving credit line without having to add to a different card.

This is huge for me. It means that my solar panel loans aren’t going to get paid off as fast as I want, sure. Hardly anything extra on the mortgage. But the relief is palpable. Even an extra $50 gives me a bit of a cushion for next month, and there is a MASSIVE difference between starting out with a cushion and starting out with a hole.

Concretely, it means I started this month paying for some bills with checks that I would normally put on a credit card. I’m not psychic, but it seems likely that this will relieve even more pressure at the end of this month.

My new goal is this: pay myself first, as I always have. And then, do whatever it takes to pay myself last, too.

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