I’m going to try an experiment with my April paycheck and see how it goes. Currently, my paycheck goes like this: Amount I see = gross pay – income taxes – medicare tax – social security tax – dental and medical premiums – FSA contributions – 401(k) contributions and that full amount goes into my checking account. I then have an automatic transfer set up of $250 to my car replacement fund and I do a manual transfer to the down payment fund each month. I’m going to experiment starting with my April paycheck and split up my direct deposit as follows:
- $3,800 (my estimated month’s spending plan) to my checking account
- everything else to my down payment savings account
I will still calculate how much “extra” is in my checking account at the end of each month and manually send that to the down payment savings account or something similar, but I will set the normal savings amounts on real auto-pay. Splitting my paycheck up seems a lot less complicated than my current system of some manual and some automatic savings transfers for AFTER the paycheck is deposited.
If my rent goes up, then I can adjust how much goes to my checking account. Once I’ve maxed out my 401(k) for the year (with part of November’s paycheck) or I’ve hit the Social Security tax maximum, more money will magically go to the down payment savings account. (When I buy a condo, I will reset the direct deposit experiment.)
I’m really excited to see my down payment savings account go up faster with the raise I’m getting starting this month!
Readers, does your employer let you split your paycheck? If so, do you? How do you split up your paycheck?