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In my house, we just celebrated a huge milestone. We made our final payment towards our daughter’s daycare. That’s $660 per month back into our budget. Or is it?

Due to our precarious financial situation over the last few years, my husband and I have fallen behind in some specific areas; namely, retirement savings, increasing our emergency fund and saving money for our daughter to go to college. Now that we have this money that’s not obligated towards a service, the logical step seems to be to divide that extra money into those areas (which would increase our current contributions made with money previously reserved for debt repayment). We’re already used to the money being spent so it’s not like we’d miss having it every month. But the more I think about it, the more I think that maybe that money could have some other uses.

Here are a few ways I think we can spend that money:

School. Even though she’s no longer in daycare, my daughter will be in school. And along with school comes expenses. Clothes, class pictures, field trips, book fairs, teacher gifts, school supplies…a whole list of items to pay for. Perhaps it would be a good idea to set some of that $660 aside every month for these types of quasi-surprises. That way the money is there and we don’t have to scramble.
Extracurricular activities. I am a huge supporter of extracurricular activities. I think they give kids a chance to enrich their education, meet kids from different schools, and apply their skills in other areas. As a result, my daughter is usually enrolled in 1-2 activities. Because we do most of them through our YMCA, they’re a lot less expensive. However, less expensive doesn’t mean free. Maybe some of that extra money can go towards paying for these activities and whatever “equipment” might come with them.
Student loans. My husband still has student loans to pay off. Like a lot of student loans to pay off. We have a plan to pay them off before we turn 40 (we’re 34 and 35) but putting this money towards his loans would make the payoff that much quicker. This is probably the only debt we have that I resent (it’s a long, sordid tale) so the sooner we can get rid of it, the better.
Add it into our monthly budget to pay bills. Right now, I’m on leave from my job and we’re not sure if I’m going to go back. If I don’t, we’re going to take a huge financial hit by losing my salary. Having that $660 per month in our budget to cover expenses will ease that burden and give us peace of mind.
Do nothing and wait to see where we need it the most. This is probably what makes the most amount of sense to do but I am so crazy with allocating my money that to leave it there, without a purpose, makes me twitch. I feel like if it sits there, we’re going to spend it frivolously and then when we do need it, it’ll be gone. Which is a terrible, horrible, awful, no good, very bad feeling.

Then there’s the matter of private school tuition. Although we’ve signed Erica up for private school, we’re still debating if it’s the right choice, mainly due to financial reasons. Our feeder school isn’t as bad as it used to be and provided all goes well with selling our house, she’d only be there for one year. However, if we can opt for private school, that money we’re saving by not having daycare will most likely go towards tuition.

So. Many. Choices.

Since I’m a planner, I like to have every situation mapped out before I make a commitment to one thing. Figuring out what to do with this money is going to mean my husband and I need to have a long talk. And although we don’t fight about money, I’m a little nervous for this discussion (because we have completely different opinions on the whole school issue).

I’ll let you know how it turns out.

In my house, I am the one responsible for paying bills. The bills come to my email address. I keep track of how much is due and when, and on payday, I’m the one that logs in, makes the payments and then balances the checkbook. I figure out how much we’re going to need for cash expenses each pay period. I pay daycare. I submit the dependent care reimbursement form. I track our savings and, when we were deep in debt, I tracked our payoff schedule. I call the bank when something is off. In short, when it comes to our day-to-day finances, it’s my job.

My husband is fully aware of everything that happens (despite all that is going on, our finances are still intertwined. More about that situation on Friday). He knows how much all the bills are, what expenses we have coming up, how much cash we need–nothing is a secret. He just chooses not to participate beyond having “budget meetings” with me. This is actually a blessing for two reasons–1) his method of balancing finances makes absolutely no sense to me and 2) I have control issues so me being in charge is comforting. He is also extremely disorganized and, while I know all bills would get paid, I don’t fully trust that everything will get paid on time. So, having me manage our money makes total sense.

Except I’m exhausted from keeping up with everything. Having to manage and remember 12 different passwords and making sure everything gets paid on time and that all the bills make sense and balancing the checkbook and making sure all the EFT payments process correctly is tiring. And with the ever increasing amount of responsibilities I’ve been assuming, I’m starting to get a little forgetful (fortunately, nothing is late but I have forgotten to write down a bill or two and luckily caught it in time). Given all of this, I’ve been trying to think of a way to streamline the process and I just keep coming back to one method. Using a credit card.

I’ve heard that there are people who can use a credit card responsibly. I’ve heard that there are people who use it and–gasp–pay it off every month. I’ve heard that there are people who earn rewards from credit cards. I’ve heard that, contrary to popular opinion, credit cards are not inherently evil. I’ve always been a bit leery of these people (since I have a proven track record of not being one of them) but, being involved in the personal finance world, I’m learning that they’re not that scary after all. In fact, they’re quite smart. And they clearly know something I don’t.

So I’m starting to think that maybe automating my bills that are not already scheduled for EFT via a credit card may be a good thing to do. Here’s my plan:

Track my bills so I know how much I’m spending per month
Pay those bills with a credit card
Set the money for the bills aside so that when the credit card statement comes, I can pay it in full
See my stress decrease

That’s it. That’s the plan. It would simplify things in that I’d only have one main bill to pay every month. I learned the hard way what happens when you don’t pay off your credit card every month and I have no interest (pun not intended) in ever doing that again. There are certain expenses, like clothes, groceries, daycare, toiletries, and pet food, that I would pay for in cash (because I cannot be trusted with a credit card around those items. Also, I refuse to pay the extra 3.5% for using a credit card to pay for daycare) but my utility bills and car payments would be paid via credit card.

I like this idea because it’s a lot less remembering for me. On payday, I’ll have to set aside the total amount paid on the bills to ensure that there’s enough money for the credit card payment but I won’t have to remember anything else like due dates or passwords. The downfalls, of course, are failing to pay the credit card off and/or potentially overusing it. I know myself well enough to know that I won’t do that but you never know.

I am not a fan of change. I’ve been paying bills the same way for years. But I’m frustrated with feeling like I’m always dealing with day-to-day finances. It’s a tough call.

What do you think? Do you use a credit card in this way? Am I a fool for contemplating it?

Daycare is done…let the financial stress begin!

Automating with a credit card?

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