Budgeting question

[Rene']

How do you decide how much extra of your income to start throwing toward your debt?

 

I've been wanting to budget for years now and have finally been given the green light by dh. I want to set up an envelope system. Right now we are behind and in a bad situation financially, but once we are caught up and paying things on time, I want to start knocking out the credit card debt. It's just, how do I decide how much to put toward it when there are so many other things (like yearly expenses) that will need money set aside?

 

Also, dh's pay is irregular, which is one of the reasons he's resisted a budget so long. He did not see how we could budget when we never know what his pay will be from week to week.

[Erica in OR]

You might check out Dave Ramsey's stuff, since he addresses budgeting with an irregular income, uses envelopes, and is a big cheerleader on paying off debt. I like his "gazelle mentality" idea on paying down debt, which is throwing everything you can at it and assessing what you're doing that can be pared down, sold, extra jobs to pick up, etc.

 

Erica in OR

[nova147]

It's hard when your income is irregular. Ask me how I know.:D

 

Plan out your regular expenses - bills, groceries and gas, other frequent expenses. Then look at those irregular things like car registrations and curricula (yikes!). For many of those, you have to estimate. Depending on how much they are, you may want to put a little toward them each month. Or you could add a line to your budget for saving toward annual expenses. And then add a line for debt. If you figure you need $100 each month for annual expenses and you have $200 beyond your regular expenses this month, put $100 toward debt. You don't want to get in a position where you don't have money for those annual expenses.

 

The other thing that helps here is having an emergency fund. Then, if you don't have quite enough when something is due, you can borrow from it until you get more money to replace it.

 

Good luck!

[fraidycat]

After getting current on your bills, I would first budget for an emergency fund, so when those inevitable bumps in the road come along you don't add more to your debt. Then I'd get aggressive on the debt pay down.

 

Some of my favorite money advice resources are:

 

~getrichslowly.org

~youneedabudget.com (their message forums are just as phenomenal and helpful as the Hive - set yourself up with a drink and snack and just read)

~Dave Ramsey - Total Money Makeover and Financial Peace University books - check your library.

[Soror]

It's hard when your income is irregular. Ask me how I know.:D

 

Plan out your regular expenses - bills, groceries and gas, other frequent expenses. Then look at those irregular things like car registrations and curricula (yikes!). For many of those, you have to estimate. Depending on how much they are, you may want to put a little toward them each month. Or you could add a line to your budget for saving toward annual expenses. And then add a line for debt. If you figure you need $100 each month for annual expenses and you have $200 beyond your regular expenses this month, put $100 toward debt. You don't want to get in a position where you don't have money for those annual expenses.

 

The other thing that helps here is having an emergency fund. Then, if you don't have quite enough when something is due, you can borrow from it until you get more money to replace it.

 

Good luck!

 

:iagree: You need an emergency fund, because life happens and you will forget something. It is also a good idea to try and plan as much as possible for expenses that come up and start saving for those as well. Otherwise you cut the most you possibly can from everywhere else and as DR would say if you have a debt the only time you should see a restuarant is if you are working there; rice and beans-beans and rice. Anything beyond required bills and bare necessities should go towards the debt, more the better!

[Soror]

fwiw I agree w/ pp- we don't generally have greatly irregular income but I do know that Dave Ramsey has irregular income budget sheets that you might find helpful.

[SharonM]

When my dh was on commission only, we participated in a plan that his office had started. No matter what is commissions were, we got a set amount for the month. or bi monthly. And the money in the account grows in the good months and dwindles in the lean times. This prolly wont help you now if you are having difficult times, but may be something that you could set up when things are better.

When I set up my budget to get rid of the debt, I threw everything i could at it to get it gone! Only you could decide how bad it bothers you to have debt hanging over your head.