How to deal with irregular income?

[stm4him]

My husband is a realtor in our state and a broker in our previous state. He was very successful before the economy tanked. Things are not going as well yet in the market where we live but a big part of that has been his helping at home because of our health issues, which has drastically cut his work hours.

 

Anyway, we have never been good at managing money so that we are covered all the way through the slower seasons and have held our breath way too many times the last three years or so. I have listened to Dave Ramsey on irregular income but his model doesn't make sense to me if you don't know when you are getting paid again. Sometimes we count on a closing that doesn't happen. Everything is a guessing game. I hate it. My husband won't consider any other career and we really need the flexible schedule he has anyway. We just need to know how to manage our money better. What resources should we look into?

 

Thanks!

[stm4him]

Bump

[elegantlion]

My ex was self-employed for many years and we lived like that. It was hard. Leaving out the emotional turmoil of the instability, I'd say you need a budget. I would look at the software, You Need a Budget (YNAB) and make sure you develop a yearly type of budget. I just bought the program and it would have been helpful when I was married. Crown financial classes were also good when I looked at them several years ago. 

 

However, you have to be disciplined to save when you have good months. If he's filing self-employed taxes you have to be diligent and pay those, preferably quarterly. It also works best when you work at as a team, meaning you know exactly where you are financially and what you have to work with each month or week. 

 

I read your other thread on writing and I did that for a while, but it didn't pay enough to do more than give me pocket change. It was a time suck and I have one child. I agree that looking at some small income stream for yourself would be helpful, but you have to be realistic about the time time:income ratio. 

 

And I don't know where you are located, but where I live you posted at 2 am and bumped at 4 am. I have insomnia and will sometimes get online to read but not reply in the middle of the night. If this situation is keeping you up,  :grouphug: , btdt. 

[Ottakee]

I think you need to have an emergency fund but also a "living fund".  I would try to cut back as much as you can until you have 2-6 months of living expenses in your "living fund" and then just weekly, biweekly or monthly pay yourself out of that and put any income into that fund.  Some months you might put in only 1/2 months income, other months maybe 2 months worth but just keep living on that monthtly amount you budgeted.

[5of5]

I agree with Ottakee.

 

I don’t  have any direct experience with this so my thoughts are just theoretical.  However, I would figure out your budget very carefully, and, as PP said, have a “living fundâ€.  When your income was above average, the “excess†would go into the living fund account.  Then, only when the living fund that sufficient money to cover your historical worst-case dry periods would I move money to a, say, “discretionary†fund for spending on things that aren’t absolutely needed.

[momee]

I so highly recommend YNAB.

 

I actually just got a young gal set up on it and she texted me that it literally could change her life and will be something she will be grateful for way into the future.

 

Here is a link to their help page regarding working with variable income.  

http://www.youneedabudget.com/support/article/variable-income

 

As you use it, you will get better at setting aside rainy day funds and have money put away for planned and unplanned expenses.  You will also learn to predict what will happen money wise so that you aren't spending every penny you have based on your checking account but based on a budgeted amount.  This will hopefully leave you with funds so that expenses aren't a shock, but provided for and paid without anxiety.

 

I can't say enough about how YNAB changed my decisions as the financial manager of our home.  I would spend everything we had and then spend anxious nights worrying about what was coming.  I would create mental scenarios and stress over them 2 days after a weekend of movies, eating out and clothes shopping.  Now I budget for those things - we still get to do them - as long as the money is there for that and needs are accounted for.

 

BIG change in my family tree, I swear.  The biggest help - looking at the specific category budget amount (say groceries) to make a spending decision verses looking at my bank balance.

Hope this helps.  I HATE money worries.  You can do something about it...yet we so often think we're stuck.  Not true.

[stm4him]

I don't think it is actually the situation that kept me up.  I went to bed at like 9pm (early for me) and then woke up around 2:30 I think and was up for a few hours before I could fall asleep again.  Then I squeezed in a few more hours before getting up for the day.  This has happened a few times recently.  When I wake up (or get woken up by one of my kiddos), my mind starts going and then I can't shut down.  It could be pregnancy related insomnia or it could be my adrenals according to a friend of mine.

 

I like the idea Ottakee mentioned.  I think we are getting some pretty large commissions in April and maybe we can try it then.  I will talk to him about a budget again using what we pay ourselves.  He is aware of that method, but it can be hard to figure out what to pay yourself if you don't know what your yearly income will be.  I guess you can just go off of the previous year or something.  I am the budgeter and he is not so I just end up asking him if it is ok for me to spend money and if he says yes I do and if he says no I don't.  He gives me general updates as I ask or as things change so it is not that I am completely clueless, but it gets tiring to keep asking sometimes because things just change so quickly in real estate.  Once I offered to take over our money situation and he was ok with it but when I went to pay the bills and such he would tell me about how unsure various money coming in was and it was all so shifty and shaky that I was scared and it was too complicated.  I have made so many proposed budgets over the nine years we've been married and they never happen.  He is a wonderful husband in all other ways and has never been oppressive to me with money.  When he honestly thinks I can spend the money on something (usually for school or clothing on consignment or whatever) he lets me and at times when I overspent he has been very gracious.  

 

We have a lot of debt from medical bills, student loans, two pieces of land we bought before the economy tanked that we are stuck with for now, small credit card amounts, etc. and I hate it.  Part of it is the economy and part of it is the medical issues, but the part of it we can control I want to control as best we can.  It is always a juggling game as to what we can afford to pay for different bills.  Our grocery bills are astronomical, but other than that we live pretty frugally, buying most things used from Craigslist or consignment stores.  We do buy supplements for my health and my daughter's health because our health gets worse when we are not taking them and that affects the whole family.  I buy makeup like once a year, get the cheapest haircuts we can get every few months, buy shoes that we can't find used at the cheapest shoe store, etc.  We make birthdays very small.  We do a lot of frugal things like that compared to most families.  But we still struggle.  

 

I will keep reading replies and see if I can get my husband on board this time.....

[5of5]

 

I like the idea Ottakee mentioned.  I think we are getting some pretty large commissions in April and maybe we can try it then.  I will talk to him about a budget again using what we pay ourselves.  He is aware of that method, but it can be hard to figure out what to pay yourself if you don't know what your yearly income will be.  I guess you can just go off of the previous year or something.

 

Sorry if I am not following, but this doesn't sound like the right approach to me.  I assume that the YNAB mentioned earlier addresses this --- you need to figure out your budget first.  Guessing at your income sounds extremely problematic to me.  With a sound (and absolute minimum) budget, you can then save "excess" income until you have enough held in order to do other things, such as pay off debts, etc.  If you have big interest payments, though, I assume that YNAB might push you towards paying those debts down ASAP.

[EmseB]

Sorry if I am not following, but this doesn't sound like the right approach to me. I assume that the YNAB mentioned earlier addresses this --- you need to figure out your budget first. Guessing at your income sounds extremely problematic to me. With a sound (and absolute minimum) budget, you can then save "excess" income until you have enough held in order to do other things, such as pay off debts, etc. If you have big interest payments, though, I assume that YNAB might push you towards paying those debts down ASAP.

Exactly. OP, you figure out your expenses first. So write down your essentials like mortgage, utilities, food, school stuff, gas, insurance, savings, minimum debt payments and see how much you need to be paid every month to meet those obligations. Then figure in categories for non necessities -- eating out, entertainment, Starbucks etc.

 

A good way to do this is for one month write down every purchase you make and how much it is. This can help you become very aware of where your money is going, but it requires discipline from you and DH.

 

You will quickly see what you need each month, where you need to cut back (if you need to cut back), and you create your living fund based on this information.

 

If you come at it the other way, you end up trying to max out your spending based on what you think he'll earn. You have to be realistic about what you already are spending and see if your income supports it or if you need to cut back.

[Wildcat]

Dave Ramsey addresses this in one of his books and has a form, I believe, to get you started on a budget. And, yes, a budget is what you need.

 

Maybe someone who is familiar with his publications will come along and point you to the correct book. I listen to his show but I'm not acquainted with the specific points or I would tell you exactly where to look.

[fairfarmhand]

Make a list of monthly expenses. This is your baseline "have to pay for" stuff. Basic food, health stuff, bills, gas. No extras like vacation, "cute" clothes just for fun (wardrobe basics to keep your family non-naked must be bought so that's not optional)

 

In other words, the stuff you have to have must be written down.

 

Now look at your income. Whatever comes in after that big monthly must-have number goes into a special account. This account will be your "fall back" plan if cash doesn't come in that month. Perhaps you need an extra checkbook for this "fall back" account. After you have 6 months v(or whatever amount of time you will feel most comfortable with) of your monthly must have dollars in this account, you will have some extra for some fun stuff.

 

This plan means that you live pretty frugally with no extras for six months or however long it takes to build up that fall back account.

 

After you've built up your fall back account, you can add in a few extras to your budget. This is when you can plan a vacation, or buy some cute shoes. Additionally, you may want to have a different savings account (different from the fall-back plan) for other expenses like a new car, major home repairs, etc. The key is to know that the fall back account is for basic living expenses in lean times and you need to also look ahead to any potential large expenses and also be planning to save for them.

 

By building these accounts separately, you will know what you have. I can't have a huge blob of money in a savings account somewhere. I need to see "This account is for our roof repair or other large expenses" "This account is for farm expenses" "This account is for saving for lean times." I forget what all needs to be planned/saved for.

[plansrme]

Is the issue really that the income is irregular or that it is insufficient?  Those are two completely separate questions.  If it is both, however, I would suggest that one of you pick up a part-time job that is flexible-but-regular:  substitute teaching, waiting tables (tipped employees can make a lot more than you would think), delivering pizzas, etc.  If the part-time job pays enough to cover your bare minimum expenses, even more perfect.  The part-time job doesn't have to be dad's; moms can work, too.  I, for one, would welcome the chance to turn over nine kids to dad once in a while and go off to deliver pizzas!

 

 

[Liz CA]

No specific info but Crown Financial is another website / place for resources to check out.

[Artichoke]

We have a " fall back" account like Fair Farmhand describes, and we built it in much the same way. It's set up as a seperate account which has no debit card and is not linked to our online banking. We have to physically go to the bank to access the account so we don't dip into it unless it's truly needed. Having a "fall back " account made irregular income manageable for us.

[Lady Marmalade]

Hugs to you, I deal with irregular income, as my DH works in the infrastructure construction industry in a state with six months of winter.  Which means he gets laid off when it's cold and we rely on him picking up odd jobs as a handyman.

 

Honestly, it sounds like your biggest challenge is going to be getting your DH on board with any kind of budgeting program.  I think you've been given some great suggestions for programs to look into, but I wonder if simply keeping track of expenses for a month or two will be enlightening to him?  My DH sounds similar.  He can spend several weeks earning money and depositing it in the bank account, and then when I ask when he'll be bringing another check home so I can pay something I get the deer in the headlights response.  In his head, he's been adding up all his deposits he's been making, but he hasn't been subtracting anything since I'm the one who pays the bills.  He thinks we have a loaded bank account when the reality is we're about to dip in the red if he doesn't bring home a check.  And THAT means that he's spending when he shouldn't be as well. 

 

  It was very eye opening for him the year I decided to use a free computer program to track expenses.  I made him use it also- he always entered his own expenses and could look at where we were.  It made him more thoughtful before he stopped for gas and then also went inside and bought a snack and/or a soda once he saw how those small $5 purchases added up through the month.   It also made me more thoughtful because he would see what I would spend on, say, a run to Target.  He would know we needed socks, milk, and a small birthday gift, but that should come to less than $40.  When we wander about the store and end up spending well over $100 on stuff we really didn't need... well, I had some 'splainin to do and it overall made me stop buying so much junk, which I am forever grateful for.

 

Every year we look forward to his return to work because things are getting really slim by the time he goes back to work.  In years past, we'd get to that point, and his first several real paychecks would be gone before we actually got them.  As soon as the money was deposited we were spending it to re-fill the pantry and freezer, replacing worn out shoes, outerwear or household items.  Any bills that we had gotten a bit behind on were taken care of first, but after that we spent, spent, spent.  And as such, we never really felt like we got out of the hole.  The end of summer/fall would arrive and I would be chastising myself because he was nearing the end of the work season, and here we were again without a nice nest egg to get us through the winter.

 

SO we changed how we approached things.  And boy, was it REALLY hard to do, but it has been worth it.  Really, it's quite simple.  We stopped the spending frenzy when he went back to work.  We budgeted for the bills and bare basics, but we declared that first month of regular paychecks as a no-spend month.  This in itself has revolutionized our spending and saving habits.  Because when we get to the end of that first month and see how much we've already set aside by simply not spending beyond the basics, We get excited and decide to do it for a second month.   We set the money aside FIRST for the lean times, and then we allow ourselves the freedom to start replacing a few things if needed.  But I'll tell you, our family has gotten spectacular about using something until it's beyond usable.  It's also amazing the things you decide you can truly live without.  We had to get the whole family on board by declaring it a "no spend month" and almost making a game out it.  And then, when our designated time was over, we'd be more thoughtful about spending.  DD wanted/needed a new pair of shoes?  It was her job to watch the sales flyers in the Sunday paper and watch for a great deal and/or coupon. 

 

Anyway, just some thoughts about how we've made irregular income work for our family.  You say you should have some nice commission checks coming in soon.  I would challenge you to pay your bills first, and then set money aside for savings before ANY other spending.   Get the whole family involved in a no-spend month and see how clever and creative they get about re-purposing something or doing without.  It could be fun, AND it could be wonderful for your budget. 

[5of5]

At the risk of sounding like a broken record – or should that be a download glitch? :P â€“ without forming a fully realistic budget, getting a second job may not be the answer.  It would be too easy for the additional income to be spent routinely, and not saved when times are flush.

[prairiewindmomma]

It sounds like you have three different issues:

1. irregular income

2. inadequate income

3. spouses not on the same page with regard to finances

 

Are you sitting down and looking at actual numbers together on a regular basis? 

 

With 7 kids and 1 on the way + your chronic illness + a kid with cancer I get that you guys are totally already stretched for time and emotional reserve. (I say this as a woman with a chronic illness who has had back to back pregnancies as well as a mother of a child who lost her battle with cancer.)  Sometimes in all of the chaos of living with so much going on, it's hard to sit down and look at actual numbers. The actual numbers are a reality check.  I keep everything posted on the fridge.....our budget with categories allotted, with expenditures out of those funds written below those.  I have a list of outstanding bills with amounts on the side of the sheet along with dates due and any notes as to what I need to do. (Dealing with insurance EOBs and bills with errors is a huge part of my life.)  We have other accounts that I don't have listed on that sheet.... My dh experiences money differently when thinking about it electronically (i.e.--an app read-off) versus seeing it on paper with receipts, etc. in front of him.

 

In living with chronic illness for a while, I also understand that there are times when there just isn't total buy-in to the budget. You want to pick up a pizza because you are hungry and exhausted and you just want a little joy in your life.  Or, it's easier to just pay a plumber than fix the sink yourself or whatever. Look at your expenditures and see if those are a big part of your life.

 

Those are the areas where you most likely can change things right now.  It sounds like you're going to need to be creative if you want to add another income stream---maybe doing home inspections or property management in addition to real estate? Or tutoring for something high end like Barton? Music lessons? Something that is going to earn a fair amount of money as compared to time investment......

 

As far as the irregular income goes, that is going to be the easiest to manage.  You already know you need a financial reserve, a monthly budget, and financial discipline. Use your data for previous years as a baseline, but I suspect you are going to have to tighten your budget categories in order to build a reserve and to cover irregular expenses.

[Anne in CA]

I have found that the key to managing money is to be realistic. Making a budget based off another year is not realistic. Carefully figuring out all the expenses that you cannot change no matter what and knowing how much money you need each month allows you to "save" in flush months, knowing you will need it later, if you don't bring in that amount on a certain month and you don't have anything saved you need to be realistic about what can be put off and what cannot. Medical bills can be put off, mortgage payments cannot.

 

Medical bill collectors are often dishonest (don't ask me how I know). The most important thing to be aware of when dealing with lots of medical bills is how much sneaky interest they can try to add. You do have legal recourse if they do that, you don't have to just pay what they say. They don't want to go to court and be caught out. My older children were denied a decent standard of living while dh and I scraped to make payments that turned out to be padded with services that were never needed/ received and were bulked up with illegal interest.

 

If you have a lot of on going medical expenses the most important money saving part time job you should have is to read all statements with a fine tooth comb and argue, argue, argue and have the name of a sharp lawyer in your pocket. You will probably save more money than you could have made working part time by a long shot.

[Calm37]

We have the exact same story, OP, as my husband sells cars. The recession is still going for us. I did finally download YNAB a few months ago. You can try it free for a month or so. It seriously changed the way I had been doing things. I didn't want to spend the $60 to buy it, so I was able to set up an Excel spreadsheet in the same format. 

The neat thing about YNAB is you are budgeting money that you HAVE, not money you "might" have. So, if you have $350 in the checkbook, you allocate that as best you can. The game changer for me was that I could clearly see that I had nothing. It helped us to hit the brakes on every single thing that wasn't a real necessity, whether it was ice cream at the grocery store or coffee with a friend. How often I had heard that every dollar counts, but now I could see it plainly right on the screen.

 

As we started getting a few extra dollars, rather than thinking I could eat out, I started putting that toward next months bills. After just 5 months of this, we have paid off all credit card debt and all bills for this month were set aside, including a writing workshop expense for my youngest that we saved up for a little at a time.

 

We still have no extra! But it was exciting to have the money set aside for our life insurance that gets paid every 3 months. Little victories. I would at least try YNAB and see what you can learn from it.

 

 

[Arcadia]

I have plenty of friends who are paid a little basic pay and mostly commission. My ex-company is notorious for paying commission late because the person-in-charge just sit on it.

 

First you need to know your budget for essentials (food, utilities, medication, loan payments ..,). Then put whatever excess per paycheck into emergency funds until at least 6 months of essential budget is saved up. After that pay down debt with the excess from the paycheck.

 

First of all you need to know your baseline budget though that would cover all the needs.

 

ETA:

My bank officers said that it can be very difficult to get a loan when you need one so better to build up a minimal emergency fund if possible first than pay down debt.

[Minerva]

Hugs. Money stress is the pitts. 

[stm4him]

Ok, thanks everyone for the advice (and I will continue to listen to additional comments and resources).  Here are a few thoughts so far:

 

Dave Ramsey:  I already know his system for irregular income and it wouldn't work for us because he says to spend every dollar of your paycheck on paper.  We can't do that since we don't know when the next check is coming and it may be that we need to hold back money to eat and pay utilities vs. paying off a debt.

 

Working outside the home:  I wouldn't mind if my husband got another part-time job but he would never agree to that because he thinks his time is better spent working on his business because the checks he gets for real estate are far greater than any part-time job.  I could not work outside the home because of my health issues and needing to homeschool.  (Our public schools here are horrible so not an option.)  I do not have time to tutor and I don't want to sell anything, but I am open to other options that are online and can be done in the evening.  I brought up writing for pay in another post but haven't got any good feedback about that yet.  Perhaps it doesn't pay well enough to be worth my time.  Anything I did do I would need to be able to do from my bed if necessary because I am about to have a baby.  Also, mornings are bad for me and I often am in bed.  I usually use that time to work with one child at a time on schoolwork, but I could switch it to computer work if necessary.  Also, any time that I am working, my husband would need to be watching the kids if they are awake (or at least in earshot and available as needed.)  This also distracts from focused working time.  No matter what I do, I could not compare with his income level.

 

Budget: Bare minimum expenses to me look like food, bare minimum clothing expenses, utilities, mortgage of our house, gas, van payment, and probably our health supplements.  Life insurance, car insurance, and health insurance would also be musts for us.  Once we start calculating debt payments (including our other mortgages, student loans, credit cards, medical bills, etc.), it starts adding up really quickly.  We do have to pay my co-pays for the OB.  My son's costs all get billed to us.  Every once in a blue moon there is another co-pay for someone to go to the doctor besides me and my son.  Food is my husband's department now so while the meals he buys are usually pretty cheap and simple, we also eat out more often when he gets tired of cooking (or should I say, he brings food home....we rarely go to a sit-down restaurant).  I don't blame him for this.  I am happy he is feeding us.  My daughter also cooks and she tells him what to buy.  My husband is not handy AT ALL and neither am I, so we have to pay for all home repairs.  We hold out as long as we can for those.  I know for sure our HVAC and septic system may need attention within the year so we need to set aside money for this.  

 

What came first, the chicken or the egg?  Or, what comes first, budget or income?:  This has always been a question.  I would like to figure it out budget first and I am sure that it would be good to get a baseline of the above mentioned "musts" to make sure we at least have adequate income for those.  But we also can't/shouldn't spend what we don't have and if my husband had a regular paycheck for any other career, we would have to live within the means he provided somehow or another or be forced to get another job.  So I think that we need to do both to double check for adequacy, but for actual paying ourselves we need to go by a good estimate of what he makes rather than what we think our living expenses are because we could change that any number of desired ways that really aren't within our means.   

 

I probably have more to say but I want to read the new replies.  So far I like the "divide by 62 weeks" idea.  I am not sure how to get the bank to do that or if my husband would agree to that, but it is definitely an interesting idea.

 

 

[5of5]

 

So I think that we need to do both to double check for adequacy, but for actual paying ourselves we need to go by a good estimate of what he makes rather than what we think our living expenses are because we could change that any number of desired ways that really aren't within our means.   

 

I'm not quite following you here.

 

It is your income that is highly variable and difficult to estimate.

 

Your living expenses, on the other hand, aren't what you just THINK they are --- they are what they are.  The only reason you may not know what they are is because you don't have a budget.

 

It's true that if you compare your minimum budget to your average income you may learn that there is a shortfall, in which case you may need to tighten expenses, unless your DH can ramp up his hours.

[goldberry]

.   It also made me more thoughtful because he would see what I would spend on, say, a run to Target.  He would know we needed socks, milk, and a small birthday gift, but that should come to less than $40.  When we wander about the store and end up spending well over $100 on stuff we really didn't need... 

 

OMG I do this exact same thing... I love/hate Target...

 

Every year we look forward to his return to work because things are getting really slim by the time he goes back to work.  In years past, we'd get to that point, and his first several real paychecks would be gone before we actually got them.  As soon as the money was deposited we were spending it to re-fill the pantry and freezer, replacing worn out shoes, outerwear or household items.  Any bills that we had gotten a bit behind on were taken care of first, but after that we spent, spent, spent.  And as such, we never really felt like we got out of the hole.  The end of summer/fall would arrive and I would be chastising myself because he was nearing the end of the work season, and here we were again without a nice nest egg to get us through the winter.

 

SO we changed how we approached things.  And boy, was it REALLY hard to do, but it has been worth it.  Really, it's quite simple.  We stopped the spending frenzy when he went back to work.  We budgeted for the bills and bare basics, but we declared that first month of regular paychecks as a no-spend month.  This in itself has revolutionized our spending and saving habits.  Because when we get to the end of that first month and see how much we've already set aside by simply not spending beyond the basics, We get excited and decide to do it for a second month.   We set the money aside FIRST for the lean times, and then we allow ourselves the freedom to start replacing a few things if needed.  But I'll tell you, our family has gotten spectacular about using something until it's beyond usable.  It's also amazing the things you decide you can truly live without.  We had to get the whole family on board by declaring it a "no spend month" and almost making a game out it.  And then, when our designated time was over, we'd be more thoughtful about spending.  DD wanted/needed a new pair of shoes?  It was her job to watch the sales flyers in the Sunday paper and watch for a great deal and/or coupon. 

 

 

 

This is exactly the rut we are in!  By the time DH starts working in the spring, we have been "putting off" "scrimping" "delaying purchases" etc.  It is always what you describe - a spending frenzy.  But you're right, if we could even wait one more month, that's not really that big of a stretch.  I could see how it would change our attitude.

[plansrme]

 

 

I wouldn't mind if my husband got another part-time job but he would never agree to that because he thinks his time is better spent working on his business because the checks he gets for real estate are far greater than any part-time job.

. . .

 

Anything I did do I would need to be able to do from bed. . ..

 

So, just gettin' this straight.  Your income in apparently inadequate; your husband is out there chasing his dream 24/7 so that he can't ever care for or homeschool the kids; you have eight kids and health issues that mean you can't get out of bed regularly; yet, you are the one looking for a part-time job?  

 

I am going out on a limb here and suggesting that maybe this is not a budgeting issue.

[stm4him]

Because we could make a maximum budget with payments to all our debt and then make up whatever we want for "educational" expenses and food expenses, etc.  But what we would like to spend or what we even think is reasonable to spend may not be the amount we actually HAVE to spend.  Unless the last two years have been drastically different (which I don't think they have), it is a pretty reliable amount to go on as a starter. 

[EmseB]

Because we could make a maximum budget with payments to all our debt and then make up whatever we want for "educational" expenses and food expenses, etc. But what we would like to spend or what we even think is reasonable to spend may not be the amount we actually HAVE to spend. Unless the last two years have been drastically different (which I don't think they have), it is a pretty reliable amount to go on as a starter.

Before you do any of this, you need to figure out what you are actually spending each month. You need to see where your money is going each month and see if your income (yearly income divided by 12 months) is covering those expenses. Even if it is coming in in irregular spurts, you need to see if you are currently spending too much based on what you're making.

 

For example, you may be "ok" with eating takeout often, but your income may not allow it, or you may have to trim elsewhere in order to afford it. You can't see that unless you lay out a basic income vs. expenses as they stand right now.

[stm4him]

He is not just chasing his dream.  He makes a good amount of money on paper.  But we also have incredibly high expenses to pay three mortagages (adding up to $3000 per month), medical bills, food for 7 children, etc.  He does help care for the kids WAY more than ANY father I have ever seen in my life or heard of unless that dad's only job is to care for the kids.  I can get out of bed almost every single day, but I do have to wait for pain and stiffness to wear off in the morning, which sometimes can take hours.  After I am up I can do most things, but I can't overdo it and whenever I go somewhere outside the house it does drain my energy pretty quickly.  I would like to see if there is a way I can bring in extra income on the side to help.  There may not be a way, but I am open to considering it.  

 

Don't judge my husband.  You have absolutely no idea what our situation is like or what kind of husband and father he is.  He is under an enormous amount of stress.  Yes, he needs to work on the area of finances and budgeting.  That is far less of a problem than what many women deal with on a day to day basis with their husbands and I know this VERY personally from my previous marriage and the marriages of friends...even some who were married to pastors.  Until you have a wife and daughter with health issues and a son with cancer and are trying to run a business in a bad economy, don't judge him.  Also, he is a VERY ambitious man who has laid aside that ambition to care for his family hands-on rather than abandoning us to just deal.  

[stm4him]

Yes, a current account of our expenses over the last few months would be very helpful.  I agree.

 

[Lady Marmalade]

This is exactly the rut we are in!  By the time DH starts working in the spring, we have been "putting off" "scrimping" "delaying purchases" etc.  It is always what you describe - a spending frenzy.  But you're right, if we could even wait one more month, that's not really that big of a stretch.  I could see how it would change our attitude.

 

Obviously, if there's something truly necessary to purchase, we do that.  But so often our winter conversations include the phrase "when Daddy goes back to work we'll..."   While some of those things are necessary- like my kids both need bicycles that fit them this year.  Most are in line with things not necessary for living.  Video games, books, DVD's we've been wanting.  Cellphones that we'd like to upgrade with a better version, a new set of bookshelves that I've decided is essential, things like that.

 

Our new method also has the added bonus that because he is in construction and the paychecks fluctuate drastically, it's those first few months where he is usually compensated the nicest.  So we're saving from the cream of the crop instead of the dregs at the end of the season when their five day work week is cut down to four.  

 

I won't lie.  It's hard, really hard.  My DH goes back to work next week and I've been dying for some simple things like ordering in Chinese, refilling my Starbucks card and picking up some meats to put in the freezer for grill season.   But I will behave and wait this year.   Last year was SO much less stressful for us, and I am thrilled to be able to continue and not have to lose so much sleep worrying about how to pay bills next winter.

[NicksMama-Zack's Mama Too]

When dh worked on commission, January through March were the "no extra spending" months. It wasn't as hard to be thrifty after Christmas and during months that we didn't do much venturing out due to weather.

[MomatHWTK]

The best thing I can do to supplement our "income" is to make sure our budget is known, monitored and under control.  If you can get yourself set up to create and follow a plan and manage the income, then you can make a real difference.  I use Quicken and pay bills online.  I know what every incominng bill is and have an estimated amount based on a 12 month average.  Everything that can be automatically paid montly via my bank is and is automatically entered into Quicken.  I check to make sure we have adequate funds to cover the bills, make sure they all were sent (checking online) and put in estimates for upcoming known expenses.  If something comes up once a year, regularly set aside money for that in a separate account (either a 2nd checking or a saving account). 

 

But yes, step one IMO would be to get a budget figured out.  You need to know every fixed expense and figure out how to pay for it.  :grouphug:

[plansrme]

He is not just chasing his dream.  He makes a good amount of money on paper.  But we also have incredibly high expenses to pay three mortagages (adding up to $3000 per month), medical bills, food for 7 children, etc.  He does help care for the kids WAY more than ANY father I have ever seen in my life or heard of unless that dad's only job is to care for the kids.  I can get out of bed almost every single day, but I do have to wait for pain and stiffness to wear off in the morning, which sometimes can take hours.  After I am up I can do most things, but I can't overdo it and whenever I go somewhere outside the house it does drain my energy pretty quickly.  I would like to see if there is a way I can bring in extra income on the side to help.  There may not be a way, but I am open to considering it.  

 

Don't judge my husband.  You have absolutely no idea what our situation is like or what kind of husband and father he is.  He is under an enormous amount of stress.  Yes, he needs to work on the area of finances and budgeting.  That is far less of a problem than what many women deal with on a day to day basis with their husbands and I know this VERY personally from my previous marriage and the marriages of friends...even some who were married to pastors.  Until you have a wife and daughter with health issues and a son with cancer and are trying to run a business in a bad economy, don't judge him.  Also, he is a VERY ambitious man who has laid aside that ambition to care for his family hands-on rather than abandoning us to just deal.  

 

Ahh, well, I misunderstood, then.  Glad it's all good.

[Artichoke]

The best thing I can do to supplement our "income" is to make sure our budget is known, monitored and under control. If you can get yourself set up to create and follow a plan and manage the income, then you can make a real difference.:

Absolutely, yes to this! It takes time to manage our household well, but it is time well spent with substantial savings. Everything from menu planning to researching investments to staying out of Target ( yes, I have that problem ) all add to our family's financial well-being.

[MomOfABunch]

Is the issue really that the income is irregular or that it is insufficient? Those are two completely separate questions. If it is both, however, I would suggest that one of you pick up a part-time job that is flexible-but-regular: substitute teaching, waiting tables (tipped employees can make a lot more than you would think), delivering pizzas, etc. If the part-time job pays enough to cover your bare minimum expenses, even more perfect. The part-time job doesn't have to be dad's; moms can work, too. I, for one, would welcome the chance to turn over nine kids to dad once in a while and go off to deliver pizzas!

This is exactly why I work! DH gets a taste of what staying home is like and is now much more helpful and understanding.

 

About budgeting, this is how I do it. All our income goes into one account. Bills get paid from this account. Based on our minimum budget, I "get paid" to cover normal expenses (groceries, gas, etc.). I prefer to do this on a monthly basis, but that's just me. You may do better weekly. DH and I have separate accounts from the one our income goes into for this, but you could also use a cash envelope system. When this money is gone, it's gone. You have to wait until the next "payday" unless it's a real emergency.

 

Expenses above and beyond normal expenses get a predetermined budget, and in some cases their own account (ie vacation fund). Any income earned above the minimum budget goes into savings to cover seasons of less income or emergencies that come up.

 

I track all the accounts using mint.com. Seeing things nicely graphed and organized really helps me.

[stm4him]

But if I assign money to categories without knowing when we will be paid again or how much I may spend vital money to pay bills that aren't absolutely necessary while neglecting to hold back money for vital things like food if we have too much of a gap between checks.

 

There is a possibility that I can work outside the home in a few years when my oldest can help watch the kids or if I work at night or something like that.  Right now, it is absolutely not feasible.  I would also have to make sure that working didn't steal all my energy to homeschool my kids and be their Mom, so my health would have to be in a better place (which I am working toward right now).

 

I will look into YNAB, but I still don't see how we can delegate money until we know when we are getting paid again.  

[prairiewindmomma]

You mention that you have a high grocery budget + little time/energy due to family issues.....

 

Have you looked into OAMC or other meal strategies for managing bad medical days?  Several years ago I came to the conclusion that I needed to cook for the life I was living...iow, healthy, low cost/easy/15 min or less of active prep time.  I spent a bit of time figuring out what that needed to look like for our budget and family size.  I also realized that I needed a deep freeze to stash the easy meals.

 

I always keep a lasagna, some frozen pasta, and a few frozen pizzas in the deep freeze.

I bulk buy my meat, and do some easy prep.....right now I have frozen chicken bags in different kinds of marinades/spices in the freezer ready to thaw and dump into the crockpot, into a 9x13 for baking, or onto the grill.

I have a bunch of peppers and onions sliced and frozen paired with bags of fajita meat, pre-seasoned, ready to go on the grill.

 

If I know that I can have any child aged 6+ throw together a simple meal, then I am much likely to send out an emergency text to dh asking him to bring home dinner. With my family size, even pizza or $1 burgers from Wendy's make for a $20 meal.  Doing that just once a week adds $75-100/month to the budget.

 

Once I crunched the numbers, I invested into a bigger crockpot, a rice maker, and a few freezer cooking books.

 

When I have seasons when I am feeling well, I prep a lot of meals for the freezer.  During seasons where life is utter chaos, I have any child age 6+ prep a bunch of meals under my direction. 

 

I have a standing crisis menu + shopping list for Costco.  We've used it for long enough now that my older kids now how many of what item to buy when we stock up twice a month.

 

Perhaps you've got some options in bringing the grocery budget under control.....figuring out cost per meal + tallying what we were going through in terms of food volume helped me quite a bit. 

 

 

 

[MomatHWTK]

In your budget, set a minimum amount for food.  Then set the known amounts for bills that have to be paid- shelter, utilities.  Then set the amount for bills that can be put off.  Buy the minimum food first, pay the absolute bills next, then pay minimums on bills that don't have to be paid off in full, then put whatever is left in an emergency fund.  You need at least one month of funds saved- two or more is better.  You cannot function with zero in the account- that has to end. 

 

Will your DH consider selling one of the houses?  If they aren't covering their income, then they should be on the chopping block IMO. 

 

You've been dealing with a chronic illness for two years now.  It may be that the plans you and your DH made before the illness aren't the right plans for you now.  Everything needs to be on the table as far as what changes you will make going forward.  Life brings change and we can either bend with it or break.  :grouphug:

[5of5]

I will look into YNAB, but I still don't see how we can delegate money until we know when we are getting paid again.  

 

It isn’t so much a matter of delegating money as it is finding out exactly what your absolute minimum expenses are.

 

Apart from the process itself helping (e.g., suggesting places where cuts might be made), knowing the required outlay tells you what you must save when you are in flush times.

 

I don’t know if the example given below will help or not, but here goes…

 

Suppose that you’ve determined that your absolute must-do expenses amount to $1,000 per month.  Let’s just pretend that January through March, you made, on average, $1,000, so you are just eking by.  Now, in April, you suddenly make $2,000.  If you have no savings, and forgetting about high-interest debt for now, the $1,000 should all be saved.

 

In the next five months you also make $2,000, and now have accumulated $6,000 in savings.  Great!  Finally, now, you have a six-month nest egg!   If, say, you make another $2,000 in the next month, you can NOW apply $1,000 to additional expenses.

 

Your actual situation is more complex because you have debt, and if any of these debts have high interest, you’ll want to pay that down before, say, spending on anything that isn’t really needed.  I also haven’t addressed funding an emergency fund (such as for unexpected repairs), nor am I saying that the main fund has to be six months (though others suggested this).

[elegantlion]

Just a note, YNAB is sometimes available on Steam. I got it on sale for 15.00 recently. 

 

 

When I started, I did a bare bones budget so I could look at what I needed each month to, say, leave the lights on. Then I started adding from there. When things are seriously tight, I know where to cut back. Also, I know if I have an overage where I need to save it for later. I have a debit card with a set aside amount if I need it. 

 

Carrying a small notebook and writing down all expenses for 30 days was the beginning years ago. It helped to see how much we really spent each month. 

 

We also set aside one special event, for us it was eating out, and would do that only when he finished a big job. Sometimes eating out was Olive Garden, sometimes is was Mexican takeout. 

 

The challenge can be in changing a mindset if necessary. I know ex understood I needed so much money for homeschooling each year generaly broken down by month. Well if we had to wait a few more weeks or months, that budget item had snowballed to more. So instead of 30 dollars it was now 60, just for example. 

 

If the gap between paychecks is too much, sometime you have to go back and back-pay line items or realize that expense will be coming due again sooner than if you'd had the money to pay it on time. 

[EmseB]

But if I assign money to categories without knowing when we will be paid again or how much I may spend vital money to pay bills that aren't absolutely necessary while neglecting to hold back money for vital things like food if we have too much of a gap between checks.

 

There is a possibility that I can work outside the home in a few years when my oldest can help watch the kids or if I work at night or something like that. Right now, it is absolutely not feasible. I would also have to make sure that working didn't steal all my energy to homeschool my kids and be their Mom, so my health would have to be in a better place (which I am working toward right now).

 

I will look into YNAB, but I still don't see how we can delegate money until we know when we are getting paid again.

You need to first look over your past spending and income before you think about starting to delegate budget categories for the future. You need to make an honest assessment of where you are before you can make a budget going forward.

 

List all if your fixed expenses. Look at the last two or three months and figure out what you spent on things like food, school, clothing entertainment and extras.

 

Use this month to start to keep a notebook of all your purchases. Get a handle on what you're actually spending before you start trying to limit yourself or delegate your money out to categories. That way you at least have an idea of what you need to live each month. Then contrast it with what your dh is actually pulling in on a yearly basis. When he gets a check that is more than your monthly expenses, save the rest. Then you will have an account to pull from so that you can pay yourself ig he brings in less during certain times of the year.

 

If you do all of that and find that you are always spending more than he brings in, then you can clearly see where adjustments and trimming can be made. Or, conversely you can see where how much extra you can throw at debt. But you have to get a clear picture of the actual situation as it stands before you can move forward.

[Sherry in OH]

You do need to figure out your current necessary expenses – mortgage, utilities, food, car fuel and maintenance, insurance, anticipated medical co-pays, minimum payments on other bills, etc.

 

Have two bank accounts – checking and savings.  Deposit ALL income in the savings account.  At the beginning of each month, transfer the funds needed to cover a month’s worth of necessary expenses to the checking account.  Every cent you transfer should be allocated to a specific budget category.  When your savings account has a reasonable cushion in it (at least 3 months basic expenses), begin making extra payments on debt.   

 

While you are doing this, try to find ways to lower your necessary expenses.  Lower the thermostat in winter, raise it in summer.  Hamburger Helper, ramen noodles, and freezer-aisle entrees may not be the healthiest, but they are quick and no worse for you than take-out food.  They are also much easier on the budget, especially if you take advantage of sales.  Find simple recipes your children can make.  It is okay to have oatmeal for dinner.  See if your public library has a copy of the Tightwad Gazette.  It is an older publication and some suggestions are outdated, but the basics still apply.

[MaeFlowers]

My dh is an agent/broker. I feel your pain.If someone has never lived off commission as their sole source of income, they are just not going to understand. Dave Ramsey has much to offer but his type of budgeting is based on a regular income, aka, pay check. When your income is commission based, you have to budget backwards. You have no idea what is going to come in and income can vary ridiculously from month to month. Budgets dont work in our house. It's hard and I hate it, too. The past three years have been so different than before. But, the holidays are still the slowest time of year for us. That hasn't changed. This is what I am doing.

 

1. I added up my fixed, must pay each month expenses. House, car, utlities (I took an average), groceries, etc. Those things that don't change. I don't add in entertainment or starbucks or any of that stuff. Pretend this is $2K/month.

2. I multiplied that times three. Things typically slow down here mid November and pick up again in January. The dead period.So I need $6K in savings just to survive and not rack up debt to get by.

3. I figured out I have 7 months to get there. So, I divided $6K by 7. So, I need to save $860 a month to be prepared.

 

Now, I have a plan. I know what I need and how to get there. I also know that some months I might not be able to put $860 in the bank because I won't have it after paying my have-tos. Which means that if I can put $1K in the bank this month, I will. Remember, this only covers the fixed expenses. It doesn't cover Christmas gifts or emergencies or anything else. Adding an extra month (another $2K in this example) would give me some cushion. Still, I focus on the $6K. I can worry about the other $2k later and maybe get some sleep. Obviously, this isn't something you want to have to start over each year but sometimes you just have to. It's a good starting place, though. I hope it helps.

 

[simplemom]

nm

[Artichoke]

But if I assign money to categories without knowing when we will be paid again or how much I may spend vital money to pay bills that aren't absolutely necessary while neglecting to hold back money for vital things like food if we have too much of a gap between checks.

 

There is a possibility that I can work outside the home in a few years when my oldest can help watch the kids or if I work at night or something like that. Right now, it is absolutely not feasible. I would also have to make sure that working didn't steal all my energy to homeschool my kids and be their Mom, so my health would have to be in a better place (which I am working toward right now).

 

I will look into YNAB, but I still don't see how we can delegate money until we know when we are getting paid again.

Basically, follow the advice given to find out what you're bare bones budget is. Start with food, lights, shelter, and then add in minimum payments on other items. Those are the categories you'll fund in your budget. Create a budget category marked " fall back account" and place whatever money is left over into that account. You'll be spending every dollar on paper. Continue this during your good months. Finally, when you come to the lean months where you can't meet your basic budget items, pay yourself from the "fall back account". Your "fall back account " will be your paycheck in lean times. Doing this will allow you to have what amounts to a regular paycheck. Hope this explanation helps.

[fairfarmhand]

But if I assign money to categories without knowing when we will be paid again or how much I may spend vital money to pay bills that aren't absolutely necessary while neglecting to hold back money for vital things like food if we have too much of a gap between checks.

 

There is a possibility that I can work outside the home in a few years when my oldest can help watch the kids or if I work at night or something like that.  Right now, it is absolutely not feasible.  I would also have to make sure that working didn't steal all my energy to homeschool my kids and be their Mom, so my health would have to be in a better place (which I am working toward right now).

 

I will look into YNAB, but I still don't see how we can delegate money until we know when we are getting paid again.  

 

Try this...Make a list of essential life and death budget items...water. electric. food. mortgage. gas. non-naked clothing and non-barefoot shoes.

 

Make another list of minimum payments for your non-mortgage debt bills. These are just the minimums that you have to pay to keep the debt collectors happy. This probably will take some phone calls to your medical providers to set up payment plans. Tell them "I can afford 100 a month right now. I am working a debt plan and you are part of it, but there's lots of bills so you just have to wait your turn."

 

Once you know the minimums that you have to pay to keep the bill collectors from calling you every day, add that total to your "minimum spending plan" number. This gives you the minimum number that you HAVE TO HAVE every month to keep things rolling in the household.

 

Knowing these numbers tells you two things: How much you need to stay alive and how much you need to stay alive+keep bill collectors happy. Worst case scenario, you scale back to essential life and death dollar amount if the accounts are totally empty. 

 

After you know your total life and death amount+minimum payments, then you pile a 6 month mound of cash (these minimums) into the bank. This is your backup plan for when your dh's work isn't what you'd like it to be.

 

So that means that however much money over your minimum comes in for however long it takes to make your 6 months goes into your "I don't know when the paycheck's coming fund" Sounds weird to do that when you have debt piled up, but you really need to know that you can buy groceries when a commission check is nowhere to be found.

 

After the 6 month fall back fund is established, you then start piling extras on debt. Don't take money from your fall back fund to pay those debts back. That fund is to pay your bills when you don't get a paycheck.

 

 

So by looking at expenses, you can pay SOME bills right now, keep the essentials going, and make sure there's enough for a slim money month in the future.

 

[justasque]

But if I assign money to categories without knowing when we will be paid again or how much I may spend vital money to pay bills that aren't absolutely necessary while neglecting to hold back money for vital things like food if we have too much of a gap between checks.

 

 

The very exercise of assigning the money you have to categories forces you to look at your upcoming expenses and plan how to use the money you currently have.  Doing the exercise helps you to see when and where you will need "keep the lights on" money, and where you may be able to be a bit more flexible.  But it's OK if you move the money around a bit, as your circumstances change throughout the month - the key is that if you have an unexpected bill, or decide to spend more in a particular category, then you are forced to decide where that money is going to come from - what you are going to do without or not pay in order to pay for the unexpected item.  It could come from a current category (deciding to eat more beans and rice this week) or from a fund for future expenses - reducing the amount saved for next month's mortgage payment.  Knowing the full picture can help.

[fairfarmhand]

BTW, in my experience with medical bills, the mere act of paying a small amount on the bill, no matter how insignificant it may seem in comparison to the whole debt, keeps medical billing departments very happy and out of my hair.

[simplemom]

BTW, in my experience with medical bills, the mere act of paying a small amount on the bill, no matter how insignificant it may seem in comparison to the whole debt, keeps medical billing departments very happy and out of my hair.

I may be wrong on this, I don't think interest accrues on medical bills if you work out a payment plan. So if you have to choose between paying extra on a credit card debt beyond miminum payments and paying extra on a medical bill minimum payment, pay off the credit card 1st so you can eventually get to the point you can pay extra on the medical payment.

[goldberry]

Several people have mentioned having an account that you can't get into easily that you put the money in and only pay yourself a "paycheck" out of.  How does that work?

 

We have a business account, but we have to be able to transfer money out of that account into our personal spending accounts.  I transfer some to spending and some to savings, but it is then too easy to transfer from savings when the inclination strikes.  Also, I always see that savings sitting there whenever I am online.