During our Adult Gap Year, can elect to be paid in one of three ways:
- In one lump sum
- In two lump sums, six months apart
- Fortnightly, as our pay usually comes in
One lump sum, would allow us to pay off our mortgage – and then we’d have nothing to eat. Lol. We could control the funds and earn the interest. The reality is interest rates are so low, we’d earn nothing. So that makes it pointless. It won’t affect our tax, as we’ve already paid tax on the income.
We don’t need a big sum to pay for our planned travels, except the campervan but we have that covered in other ways.
The real question is: as fortnightly wage earners all our lives, are we ready to self manage? I know we wouldn’t go overboard. We are not going to blow the amount on some luxury. In fact we don’t see this as a windfall – it’s our year’s pay.
Two lump sums: half the amount is attractive. We could pay some big bills with the campervan with the first lump sum and know there’s more coming in six months.
Fortnightly pay: this will make it more like our regular pay and budgeting approach. I use the term budgeting loosely – we live within our means but don’t really track or budget, except to save for big things we want or need.
Our regular bills are monthly (mortgage and insurance), quarterly (water rates and utilities), yearly (land rates and car registration) or weekly (food). With or without travel, these things will remain largely unchanged.
Regular pay helps with our cash flow budgeting.
So which would you choose to be paid?
I would go for the two lump sums and find the best investment possible for some of it whilst waiting to use it. Not an easy decision is it. Do whatever you feel most comfortable with to avoid a heap of stress.
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I did think of that. But interest is so low. And no stress is our goal.
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Now that I’ve retired I’m pulling out 2 lump sums from my investments.
Maybe fortnightly would be better in your situation though.
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Yeah, fortnightly is easier. When we’re drawing our super, I think lump sums may be the way to go. But while we still have a mortgage, fortnightly works. I would have liked monthly, but it wasn’t an option.
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Will electronic banking always be available to you during your travels? If it might be iffy in remote places, you might need to pre-pay some bills?
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Australians are the masters of tap and go. It’s practically everywhere. I do like to pre-pay for some things nonetheless. And we’ll still have some cash handy for some places.
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