Living on Last Month’s Income

The concept of living on last month’s income was recently made popular by the folks at You Need A Budget (YNAB), and I learned of it from Stephanie over at Six Figures Under. While Stephanie convinced me of the benefits of living on last month’s income as she chronicled her and Mike’s journey out of six figures of student loan debt (most of which is breaking the cycle of living paycheck to paycheck), I was never willing to forgo making an additional debt payment to save for the following month. And for the most part, that was okay. Because University B pays on the last day of the month for that month (e.g. pay for January is disbursed on January 31st), I would use that income for the following month. Technically, I was living on last month’s income…but not really. I was still living on income from my most recent paycheck.

Organization C, unlike University B, does not pay monthly and instead pays on a biweekly paycheck cycle. Having worked at University B for almost three years, I have come to enjoy budgeting and paying all of my bills at the beginning of the month. Initially, I thought that biweekly paychecks with Organization C meant that I would no longer be able to pay my bills monthly. However, I realized that if I actually committed to living on last month’s income, my employer’s paycheck cycle would no longer matter. Beginning in March, I will actually begin living on last month’s income. This transition was made a bit easier because of the slight overlap in full-time paychecks from University B and Organization C. I was paid by University B on 1/31 and used that money to pay February’s bills. I will get paid by Organization C on 2/15 and 2/28 and use that income to budget and pay bills on March 1st.

I am excited about this transition, the continued simplicity, and the additional security it will lend my financial life.

Lunar Do-Over Day 3: February 3rd

1. How much did I spend today? – $0.00 – Today was my last day of travel for Organization C and I was able to expense my meal and travel. I just got home and my fridge is empty so I will have to do some shopping and meal planning.

February Variable (food, gas, misc.) Budget Initial Balance: $463.77
February Variable (food, gas, misc.) Budget Remaining Balance: $420.61

2. What financial information have I learned to help me when I’m debt-free? – See living on last month’s income above. I think this will significantly improve how I plan and budget forever.

3. How have I lived abundantly? – I’m sitting on my bed, 5 minutes to midnight, eating black cherry sorbet, and chatting with someone I really shouldn’t be. I may regret both of these things in the morning but at the moment…it feels good.

9 thoughts on “Living on Last Month’s Income

  1. Im so interested in the concept of living on last month’s income now that I’ve heard you mention it! I accepted a position at a new company after having been in the same job for 23 years. Today is my last day, and I start my new position on February 14. I’m used to being paid monthly on the 15th, and like you, I enjoyed paying my bills in one fell swoop. The new company pays biweekly, and I’ve been mildly bummed about that. I’m going to check out these links. Thank you AP!

    Liked by 1 person

    • CONGRATULATIONS, Ellen!!! 23 years?!?!? What caused the move? Are you excited? Were you recruited? Was this something you sought out? Details!!! I am so excited you will have a least a bit of break and time to reflect and rest. I can’t imagine what it means to leave somewhere after 23 years.

      I could have done a better job link to specifically where Stephanie talks about it but she talks about it all the time if you read her payoff story.


  2. Catching up 🙂 I think living on last month’s income is especially great if you freelance or otherwise have variable income. I’m…not doing it right now, but mostly because pretty much every penny coming in is going to the next house project. When things stabilize more I definitely plan to go back to it. It’s a very sane way of handling the ups and downs of variable income, in particular.

    Also, I wanted to say I think your plan to really reduce the student loan debt this year is great! There were a lot of good options, so other choices would also have been good. But choosing the student loan debt will get you so far along the road to ditching that albatross.

    Liked by 1 person

    • Agreed! It would have helped me so much at earlier points in my life when I was working hourly jobs but the challenge is always getting that “first pot of gold” as my Chinese friends would say. That makes sense…very much looking forward to hearing more about the house updates.

      I think so. I think there were perhaps “better” choices to be made from a purely mathematical perspective but I think the best choice is ultimately the one that you can stick to (like dieting). And given where I am right now in terms of my headspace, I think this was the right choice. Thank you so much for the support C.


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