What income would you use to base your budget?

**Libby** · 05-16-2010, 11:07 PM

Scenario:
Hubby is on salary yet works a lot of OT. So much OT that its basically guaranteed. It's been this way for the past 6 yrs.

Thinking back to a convo had this weekend while friends were visiting...made me wonder this: how would you base your budget? Would you base it on your salary and consider OT hours gravy OR would you base it on the salary incl the guaranteed OT?

**kazey901** · 05-16-2010, 11:15 PM

My DH isn't guaranteed the OT unless he works it (it's there if he wants it pretty much) so we base budget on reg. hours and use OT monies to pay off debt.

HTH.

**Mom2-3** · 05-16-2010, 11:50 PM

Budget "normal" hours and use OT for paying off debt or building the EF.

I understand about guaranteed OT, but it may go away. I come from experience. Our budget is based on normal hours. OT (after 12 years) was cut drastically at DH's work. Now his employees are coming to him asking for any OT because they can't pay all their bills. They were used to having an endless supply of OT.

**Michelle68** · 05-17-2010, 12:16 AM

I agree with Mom2-3- I would consider the OT "gravy" and use it for extra payments on debt or for savings.

**frugalfranny** · 05-17-2010, 02:59 AM

Originally Posted by Mom2-3

Budget "normal" hours and use OT for paying off debt or building the EF.

I understand about guaranteed OT, but it may go away. I come from experience. Our budget is based on normal hours. OT (after 12 years) was cut drastically at DH's work. Now his employees are coming to him asking for any OT because they can't pay all their bills. They were used to having an endless supply of OT.

Yep.........I agree. It can go away at any time......don't count on it!

**Preston** · 05-17-2010, 06:24 AM

*ALWAYS* underbudget your income and overestimate your expenses and you will always be clear.

I wouldn't budget for OT. Too many things could happen, and worst case scenario is you get OT and things get paid off faster. Or you get no OT and then you stick to your plan.

I budget for us both to be working 35 hours a week, we get at least 38 a piece, but often times we'll get OT or holiday pay and that just kicks everything into overdrive.

**monkeywrangler71** · 05-17-2010, 08:53 AM

My husband doesn't get OT, but he gets a performance incentive at the end of the year. I never include it in our financial plans until I see it sitting in our account, then it gets allocated to extras (savings, mortgage payment, buying major items, etc.). The rest of the year I refuse to count on ever seeing another.

**Greebo** · 05-17-2010, 09:03 AM

OT is NEVER guaranteed.

**mek42** · 05-17-2010, 09:22 AM

Agree with everyone else. Budget for 40 hours and just have a loose plan what to do with the OT, but consider it found money or extra money, something like that.

**nodmicks** · 05-17-2010, 10:00 AM

We do not budget with OT. I budget with the minimum to be safe.

**mombottoo** · 05-17-2010, 10:51 AM

Regular salary without the overtime...no matter how guaranteed overtime may seem it can disappear at less than a moments notice...even if it has been 6 years.

I know too many people who based their expenses on their overtime & ended up losing their hindends when the overtime disappeared.

**jas** · 05-17-2010, 11:04 AM

My dh is salary and no OT. He does some freelance work on the side, but that is hit or miss. We can not count on it. We have to work the budget without it. If it comes then it is great if not we have not counted on it.

One year it was very good and it is easy to think it will go on forever. The next was not near as good.

**MomToTwoBoys** · 05-17-2010, 11:09 AM

Since OT is never a permanent thing, I would base the income on his base pay. DH is like that; he gets lots of OT but it's not all of the time. It's sort of guaranteed when he does get it, though.

So if DH's base pay is $1100 without any OT, I just consider the extra to be the gravy.

I always budget with the low end of the income bracket. For example, my pension is $475 per month. If the dollar is weak in Canada and I get more for my money, I put that extra amount in savings and use the $475 for bills.

**Libby** · 05-17-2010, 04:47 PM

Originally Posted by mombottoo

I know too many people who based their expenses on their overtime & ended up losing their hindends when the overtime disappeared.

^^^^
Sadly this is where my friends are right now...beginning the panic.

This is exactly what is going on with my friend whom I visited with this past weekend. I found out nonchalantly during our convo's and my eyes must've bulged outta my head. She felt bad after saying it.

That wasn't my intention but now I know why they're under financial scrutiny. She's always saying how 'things were tight' and they 'have to watch their budget' etc but they've managed to take mini wknd getaways, go out for expensive meals and buy 'new' things (ie paid full retail price).

My friend(s) are actually freaking out financially. I think they're about 2 steps away from going under...they're still able to make mortgage payments and maintain their one slowly dying old old car but are griping while in line for their Starbucks coffee on their way to the mega expensive fancy-pooh grocery store. 'How are we going to afford this' or 'Now we can't go on our get away next month'. Oy. Sometimes I wonder why they still don't get it. It just totally took me off guard that they were basing their budget on the OT hours.

Of course I knew all of the fellow villagers would agree with my thought logic ie - OT = gravy. Thanks all for confirming it though

**Luckybustert** · 05-17-2010, 04:59 PM

I would not include the OT because it's not guaranteed.....it could go away at any time. Also, by not including it you are learning to live on less now and that could prove useful if and when it is cut. I wouldn't count it as "gravy" or extra to be spent, though....I'd take the money made working OT and use it to pad my EF.