The promotion I received a few months back has been a definite game changer. I am no longer living paycheck to paycheck. I can’t believe how hard it is to live in DC on a $65K salary! But when you consider that the average apartment rent is $2,200 in the city, it makes sense. According to this article, one needs to make $83,104 annually to live comfortably in DC versus $53,897 in nearby Baltimore. I’m now pretty close to that “comfortable” threshold and I can totally feel the difference!

The interesting thing is my paychecks are actually smaller this year than last. This is because of my new goal to max out my 401K. I am still more at ease because I now have an emergency fund, and I know I can cut back on my 401K contributions at any time if necessary. Now that I’m more comfortable with where I stand, I changed how I plan to allocate my paychecks.

The Friday before I am paid, I have money from my main checking account distributed to my other accounts. This gives me a false sense of never seeing the money coming out of my checking account. The following is transfers occur:

• +$195 – Roth IRA
• +$65 – Savings Bonds
• +$50 – Short Term Savings

Then on that Monday my paycheck is deposited. The remainder of my paycheck goes towards my monthly expenses and there is some left over to act as a cash buffer in  case I go over budget.

My plan is not to let my checking account/cash buffer get too high. So any time  my checking account gets to be over $2,500, I’ll be transferring the excess over to another account.