Dealing with Weekly or Bi-Weekly Payments

Not all of your debts have a simple “due date” associated with them. Bi-weekly or bi-monthly payments, for example, can be difficult to track without a little manual intervention. This post details how I handle my bi-weekly 401k loan. I get paid every other week and the payment is automatically taken out of my check. I’m not concerned as much with “due dates” because the payment is automatic and there is no way for it to be late.

401k loan details

401k loan details

The terms of the loan are for monthly installments of approximately $110. Since I get paid every other week, each check gets $55 deducted. I set the due date of the loan to be the last day of the current month, although you could choose the date of your last paycheck of the month if you wanted to. Then I set the monthly payment to $110. Lastly, each time I get paid during the month, I just enter a $55 payment for the month. Since the payment is less than the minimum monthly payment, your “next due date” should not get bumped up to the next month. Remember, you can have multiple payments for a billing month. After the last paycheck of the month, you may have to manually adjust your “next due date” to the next month.

401k payment procedure

401k payment procedure

 

The screen above shows how the account looks on the Debt Dashboard after one of the two payments has been recorded. Note the asterisk next to the amount in the “payment amount” field; this tells you that one or more payments has already been made and this is your scheduled remaining amount due. Also notice that the due date has not changed from the end of the current month.

401k payment history

401k payment history

Of course if you get paid bi-weekly, then you’ll have an extra two loan payments each year. I don’t bother adjusting the minimum payment for the debt for the month, I just add the payment normally and not worry about it.

This setup makes the Payment Manager on the Debt Dashboard look nice and clean. If you do it this way, these debt payments should never show “in the red” as being late.

updated: July 10, 2018

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6 Responses

  1. Tim says:

    I really like the features of the tool. However, I would really like to see an option for bi-weekly payroll and payments incorporated site wide. This is a very common form of payroll payment. As such, many people like myself setup their bills to be paid on a bi-weekly schedule. For a snowball calculator, this should be a crucial feature as sticking to a bi-weekly payment schedule results in greatly reduced repayment terms and interest. As matter of fact, you should be encouraging people to pay bi-weekly as it makes one full extra payment per year without even thinking about it.

    Trying to work around monthly payments just doesn’t work as well and doesn’t give an accurate reflection of what is actually occurring. Add that extra feature and I am a paying customer.

  2. Jeff says:

    How do you envision this working? Would you have “pay period #1,2,3” buckets instead of “week 1,2,3”?

  3. Tim says:

    Not sure I follow the “pay period” vs “monthly buckets”. Currently, everything is configured and displayed on a “monthly basis”.

    I’d think the easiest way would be to have an option in the dashboard “Payoff Method” for bi-weekly. For that setting, have all the computations and results configured for every two weeks instead of monthly. All data inputs for budget, snowball and minimum payments would be entered for bi-week amount instead of monthly amount.

    Obviously not perfect because some bills will not allow biweekly payments, but it would automatically capture the extra payment made each year.

    Ultimately, I believe people likely set their payments and pay bills based on the type of payroll period they are on. Some are monthly payroll while others are twice monthly or bi-weekly. If users could choose the type of periods they receive payroll it would give the user a more accurate plan to work with.

    With all that said, thank you for the great tool you’ve developed. It is obvious a lot of time and work went into the product. Thanks for the opportunity to make suggestions.

  4. Derek B says:

    I agree with @Tim

  5. S/M says:

    Using a monthly payment for mortgages also makes a huge difference in interest paid. Can there not be an option for payment frequency?

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