Frugal Village Forums banner

1 - 7 of 7 Posts

·
Registered
Joined
·
35 Posts
Discussion Starter #1
DH and I are both self-employed and our income varies from $0!! to $10k(at which point lots of bills are piled up) per month(anywhere from 30k-50k per year). A few months ago I saved 1k e-fund and paid off 2 cc bills totaling another 1k and then had to use all that money in the e-fund to pay bills after I ran out of money. Basically we went 7 months this year waiting on pay then getting just enough to cover and back to waiting again. I now have the e-fund built back up and desperately need to control budget categories(groceries, misc, household, clothing, kids activities, and DH lunches), But I never know if I can take out wads of cash. We are not good at this. At. All. Help! I have some money in the bank now, but I am basically having to choose 2 bills to pay and let the rest wait. I don't have any late right now, but I just try to get everything for the month paid up asap and then start on the next month. Sometimes I have bills paid up 2 months out, but may not get paid more money for 3 more months. I have no idea if any money is "extra", you know? Usually I just spend whatever on whatever I need, having a vague idea of what I can spend. How can I allocate a few hundred dollars to a certain category?? I really really want to make this work. I love to have a plan, boundaries, rules...which I can't have if I have NO CLUE when we will be paid again or how much that will be.
 

·
Registered
Joined
·
419 Posts
I think first off that you should remember that Food, shelter, utilities and transportation should be covered first. That means those two bills you have waiting for the next funds transfer may have to wait so you can get groceries especially if they aren't power, heat or mortgage/rent, car payment.

Dave Ramsey does have a variable income budget where you take care of those four things first, then list ALL other bills in order of importance. I THINK there are two ways of doing the next bit. Somebody with more knowledge correct me if I'm wrong. You either pay minimums going down the list until you run out of money, or you figure out percentages and pay that amount to that bill. I can't remember how the percentages work out.

Check out his website and the budget calculators on the free side for more information. Plus he has articles describing it and it is is The Total Money Makeover book (TMMO).

It can be done but will probably take a few months of figuring things out and working at it to get into a routine of doing it before you are feeling comfortable.

Not sure if this exactly answers your question, but realize it can be done. I haven't had to do it myself but others here have. Somebody will be able to give you details on how they did it.
 

·
Registered
Joined
·
13 Posts
I work as a freelancer. :)

Figure out the minimal you need every month to run your household.

I know that my half of the rent (SO has a full time job, I pay half of all bills) is $450. Internet is $45. Phone is $27. My half of the utilities usually comes to $100, and I roll anything that's lower over to the next month just in case it goes over that amount.

Similarly, I know I'll spend around $50 a week on food (half our budget, we split this, too.)

When I add it all up, giving $25 a month extra as 'leeway money', it's around $842.

That's the minimum I have to have every month. Some of those expenses can be broken down, but to be comfortable, that's what I need.

I'm paid anywhere between $1200 a month and $1600 a month, depending on the work. But I know for sure that I need that near $900 every month. That is put away, even in slimmer months, beyond any other financial contribution.

That said, I have goals to save $100 a month, invest $100 and give myself $100 in "self spending". Obviously in some months, I can't afford this, so I make sure spending is dismissed first, followed by investments, followed by savings if needed for something.

Anyway, the point being that when you get paid in large chunks of money, you have to figure out your monthly bills. When you get the large chunks, you count how many months until the next paycheck, and then save for that amount plus two more months if possible. Tuck it away into a savings account. It'll grow in interest and you can transfer whenever you need to pay bills. Anything left over from lean months (say you usually get $100 electric bills and one month it is $75) that savings sits in there still to cover later months.

The leftovers are what you have to be flexible with for savings and retirement, etc.

For budgets, like food, use the envelope system. Take out your budgeted amount that week. Take a calculator with you and spend time in the store calculating what you can afford and how you can incorporate the inexpensive items in the store into a meal. I don't tend to shop with a list. I buy keeping in mind that meat (or tofu or salad) will be the main course and I can spend $20 and usually get two weeks worth of meat, when portioned right and spread out. Then I can spend on inexpensive potatoes and garlic that last a while. Rice fills stomachs. Apples are sweet and inexpensive, etc. Whatever you can get away with. Remembering that milk and juice are expensive luxuries. Unless there's room in the budget, it's better to stick to staples and water. Only buy if you're going to cook with it if you need to cut back some.

Stockpile when possible. Strive to coupon if you can (I don't, could never get the hang of it. :) )

But if you don't know how much you spend, you won't know how much to budget. Figure out all of your bills every month, create the average and then plan accordingly. :)
 

·
Registered
Joined
·
2,372 Posts
Baby Step 1: $1000/$1000 DONE!
Baby Step 2:
CC 1: $2117
CC 2: $1935
CC 3: $1484
CC 4: $733
CC's 5, 6, 7 & 8 PAID OFF!!
Medical from 08: $640 (down from $1500!!)
Vehicle(one paid in full): $13,800

Savings/ Goals:
Vacation(fall 2012) $265/ $1500
New Couch: $51/ $800
6mo EF: $350/ $17,000
We are self employed with wildly varying income, so the 6mo fund is getting funded asap along with paying off debt.
I can't help with the flexible income, but if you are wanting to do the DR plan, I don't think you should be budgeting the sofa or the trip until the other stuff is taken care of. I know you want to save for things but if you are struggling for the monthly bills with the unpredictable income then socking money into too many categories is going to make it even more difficult. Just a thought.
 

·
Registered
Joined
·
352 Posts
We have a flexible income and also would find this challenging. We get buy during lean months and then catch up during the ones where more money comes in. It works for us. No set budget, but I know basically what I can spend on groceries. I put things off until we have money for non- necessities.
 

·
Registered
Joined
·
8 Posts
Do you have any idea what your average annual income is? Or at least what you can guarantee you'll make? (ie minimum 40K) or whatever the number is, arrive at that number and divide it out by 12 months. Essentially your figuring out what your own salary is and paying yourself out monthly. This way it'll be easier for you to allot your monthly income to bills etc and be able to make a budget.

Since both of you do not have a stable income, it might be wise to leave a float of at least 1 months expenses sitting in the account at all times. This is what I did for my DH who is also self employed. Every first of the month, i transfer the set amount into the household account.

So basically I have two accounts, 1 is the business account so all the pay goes in there, than the 2 account is the household account. Account 1 pays a monthly salary to account 2, and each month i only use the money from account 2.

Account 2 covers everything from bills, mortgage, food, savings and all debt (minimum payments at least). I pretend Account 1 doesn't exist.

I don't know if you guys pay taxes on your income already or not? If not than you should probably put some money aside for that.

This is what I do, of course the logistics of what happens to the extra money that you make that sits in account 1 is up to you, whether it's leave a float of 1-2 months expenses and everything above that goes towards the debt snowball etc.

your budget would be made from your salary so that will help you figure out what you can allot to which category.

I hope this helps and wasn't too confusing.
 

·
Registered
Joined
·
35 Posts
I agree with the previous poster with most of that advise. My dh is self employed and our income can vary up or down $3000 from month to month. We've figured out what our average monthly income is and how much we really HAVE to have. I budget based on that. We also have 2 accounts: business account that all money gets deposited into and a personal account. Money gets transferred to the personal account for use as needed. I have a hard time paying extra on a bill when extra money comes in because I'm usually saving it aside in case the next month is a lean one.

We're still figuring out how to use the envelope system with our income honestly. When we do have money come in, it doesn't come in all at once. It can trickle in a little every day, then nothing for 2 weeks, then a big check, etc. No pattern or method to that madness. We never go more than 2 weeks without pay, which is super nice. Right now, we're going to have to start sending out some late notices to people because we've been very patient, but some of these accounts are like 6 months old without payment. Most of our clients are large companies, so I'm not sure what the deal is there.
 
1 - 7 of 7 Posts
Top