How to deal with irregular income?

[Anne in CA]

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.

That is how it SHOULD work, but many, many hospitals add "fees" and interest anyway, even after you have worked out payment plans. Always, always read bills very carefully and deny anything in question. Make them prove you owe it if you aren't sure. Never believe someone who just tells you that you just need to suck it up and pay now even if you are not 100% sure you owe the money in question. Someone who threatens you with a lawsuit unless you hurry up and pay something you are not sure you owe is scamming you, even if they work for a hospital. I have been lied to by three hospitals, although Sisters of Providence in Portland NEVER put anything questionable on my statement and was always above board. 

 

I have a child who has a lot of medical things and have been through the ringer with lies billing departments tell.

[simplemom]

That is how it SHOULD work, but many, many hospitals add "fees" and interest anyway, even after you have worked out payment plans. Always, always read bills very carefully and deny anything in question. Make them prove you owe it if you aren't sure. Never believe someone who just tells you that you just need to suck it up and pay now even if you are not 100% sure you owe the money in question. Someone who threatens you with a lawsuit unless you hurry up and pay something you are not sure you owe is scamming you, even if they work for a hospital. I have been lied to by three hospitals, although Sisters of Providence in Portland NEVER put anything questionable on my statement and was always above board.

 

I have a child who has a lot of medical things and have been through the ringer with lies billing departments tell.

Thanks for giving the real deal info. I hate hospital billing!

[EmseB]

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.

Well, not to sound sanctimonious, but that's going to be a question of discipline mostly. I don't spend from savings because that's not what it's for. I have had to learn not to spend or transfer whenever the inclination strikes. To me, that's just part of growing up and learning to manage money. Spending like you describe can be a real problem for the family unless there's just a ton of disposable income.

 

ETA: logistically, we used to have an ING savings account where transfers took a couple business days. It was more for the higher interest rate, but it might cut down on impulse transfers. I don't think ING exists anymore though.

[Sherry in OH]

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. 

 

If you have trouble ignoring the savings account, hide it.  Ask the bank to remove it from your debit/ATM card.  If that isn’t enough, use a different bank for the savings account.  That way you won’t see it when paying your regular bills.  Only access the online banking service for the account when you NEED to make a transaction.  

 

It also helps to think of the money as already having been spent.  If car insurance is $600 every six months, then every month $100 of savings is earmarked for car insurance.  In the sixth month, $600 is transferred to checking and the bill is paid.  We have just one savings account and use an Excel spreadsheet to keep track of the funds in each category.  Some people prefer to have multiple savings accounts - one for each category of savings.

[MomOfABunch]

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.

I have done this before. I opened a savings account at a bank that was inconvenient to get to. I specifically asked for no ATM card and no online banking, only deposit slips. Every month or so I made a deposit. To get the money out, I had to physically walk into the bank and show my ID, which is inconvenient. I didn't do it very often.

[stm4him]

prairiewindmomma,

 

What is OAMC?  I need to do a better job of the meal planning thing with my daughter.....I am finally feeling better about how homeschooling is going and that will make it easier to work on things like meal planning.....

 

Now to go back and read more posts....

[Artichoke]

too much detail 

 

Edited June 13, 2017 by Artichoke

[stm4him]

We don't have multiple houses.  We have one house.  But we have two extra pieces of land that we would love to sell, but we are upside down on them.  Otherwise we would get rid of them immediately!  

[Lady Marmalade]

prairiewindmomma,

 

What is OAMC?  I need to do a better job of the meal planning thing with my daughter.....I am finally feeling better about how homeschooling is going and that will make it easier to work on things like meal planning.....

 

Now to go back and read more posts....

OAMC is Once A Month Cooking.  You gather a month's worth of groceries and assemble meals that you freeze and pull out as needed.  I think that most people who do OAMC use the concept, but don't go whole hog and do a full month's worth of cooking at one time.

 

Here's a good overview of the basics. 

 

If you hunt around online you can find a lot of FREE resources, recipes and plans for OAMC-style cooking.  

[stm4him]

Oh, Once a month cooking....I see.  Yes, I used to cook 26 meals in one day but I could never pull that off now.  I COULD perhaps cook 10 servings of ONE meal and freeze the rest for later or something of that nature.  

 

 

I really appreciated hearing from the Mom who is living in a similar situation.  I KNOW that in theory, it sounds so simple.  Believe me, I have tried so many times to do something like what many are suggesting on here.  If you have never had to live with an irregular income then it is hard to understand the logistics of it.  It is like telling someone to just make a schedule with 15 minute increments and follow it every day until you can do it perfectly.  For most people, that just doesn't play out.  There are good ideas out there, but they mostly have to come from people LIVING it successfully for me to see that it is doable.  

 

One big missing piece is that in order to make some of this work I would have to get my husband to agree to write down every penny he spends.  Most likely that isn't going to happen.  He would have to never take out cash or account for every cent of the cash (doubt that would happen).  

 

I'm somewhat trying to think of ways to have an account that he puts money into for me to manage the bills with or give me access to all the money (to move around with his guidance (because he has to hold back some money in escrow and to pay business expenses, etc.) and then he would have some sort of allowance for spending budgeted in.  One problem is that there are some bills paid out of the business account and others paid out the personal account and I remember that being really tricky for me to figure out all the time, too.  

 

Part of me wants him to come up with a plan and then show it to me on paper and then continually update me on how the plan is coming along.  That would hold him accountable some to stick with HIS plan.  Our happy marriage is more important to me than finances and this is probably the biggest issue we have, but somehow there has to be a way for us to work out something that would be a blessing and relieve stress.  I have just never been successful at convincing him to have a strict plan and stick to it......I thought if maybe I could come up with another great idea he would listen this time......But maybe it has to be his idea.  I don't know.

[Lang Syne Boardie]

:grouphug:

[MomOfABunch]

One big missing piece is that in order to make some of this work I would have to get my husband to agree to write down every penny he spends. Most likely that isn't going to happen. He would have to never take out cash or account for every cent of the cash (doubt that would happen).

You don't have to get him to do that. You can put all your accounts and credit cards into mint.com. It simply views all the data and sorts it by category (you can get fancier if you want). You could make "cash for husband" it's own category. This is the program I use and it really helped me get a handle on where our money was going. Once you know this for a few months, you can figure out your minimum budget. For example, I prefer to spend 8-1100 for food for my family. If I have to, I can spend 4-600 and we won't die.

[MomatHWTK]

With any situation, I believe that getting as much information as you can is essential.  Begin with the information you have and slowly build on that information.  Doing something, even a small thing like making a list of known expenses is better than doing nothing IMO. 

[vonfirmath]

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. 

 

We can only transfer out of our savings 6 times a month.  That, by itself, puts a curb on it.

 

[vonfirmath]

ETA: logistically, we used to have an ING savings account where transfers took a couple business days. It was more for the higher interest rate, but it might cut down on impulse transfers. I don't think ING exists anymore though.

 

ING Does not exist. It was bought by Capital one.  I still have my ING account. I go to Capital One and I believe it is called a Capital One 360 account.  They still have their special deals around Black Friday, etc. too.

 

[Lady Marmalade]

 

One big missing piece is that in order to make some of this work I would have to get my husband to agree to write down every penny he spends.  Most likely that isn't going to happen.  He would have to never take out cash or account for every cent of the cash (doubt that would happen).  

 

 

 

An alternative to him tracking every penny he spends would be to have him agree to a simple set spending limit for himself each month, and then giving him the cash to do that with.  Then it's a simple entry in your budget of "cash for DH" and it's up to him what he does with it.

[elegantlion]

Ideally, you should have a few savings accounts. Your retirement account that doesn't get touched. A long term saving account that might tide you over in case of a large scale issue, such as another housing crisis, a short term savings for those periods when paychecks are weeks apart. 

 

I also think it's important to have some spending money, like an allowance, that isn't accounted for BUT only after necessities have been covered. 

 

Another issue we had was playing the blame game. It can be hard to remember you're in this together when it's a struggle. You need to also give each other permission to say no. Can't afford take out tonight? No - make other arrangements. Can't afford one more writing program - wait or make a different choice. 

 

It can look messy while you're trying to get a plan in place. He's running a business, but so are you. IMO running a household is a business - you just don't get financial paychecks or commission. Both are important to maintain and if cut backs are necessary, then it shouldn't automatically be the family that should sacrifice. there are compromises that can be made in business that won't affect his reputation or growth. 

[Artichoke]

 

I really appreciated hearing from the Mom who is living in a similar situation. I KNOW that in theory, it sounds so simple. Believe me, I have tried so many times to do something like what many are suggesting on here. If you have never had to live with an irregular income then it is hard to understand the logistics of it. It is like telling someone to just make a schedule with 15 minute increments and follow it every day until you can do it perfectly. For most people, that just doesn't play out. There are good ideas out there, but they mostly have to come from people LIVING it successfully for me to see that it is doable.

.

 

Hugs to you as you're going through such a stressful time. Complicated money matters are never never any fun. I quoted the info above because I totally agree with you here. I would however challenge you to go back through the discussion, and take note of just how many folks who replied are living or were living with irregular incomes.

 

Just to encourage you, my answers all come from the changes we had to make when dh sold cars. We never knew how much we would have, or if we'd have to hit the payday loan place. It was horrible. When we finally decided something had to change, we did Financial Peace and started communicating with each other about money. At the advice of the FPU guy we started the "fall back account " after creating a bare bones budget. It took time, but those steps we took during FPU totally changed our lives. Knowing we had the money to pay ourselves a paycheck took so much stress off of us that I could literally breathe easier.

 

Best wishes as you find a solution.

[merry gardens]

I'd like to say something about food "budgets": Food and groceries expenses are variables, not constants.

 

The term "feast or famine" referred originally to eating and food supplies. We have a large family and our income also varies. Some months we eat better than others. 

 

I buy food in bulk and/or stock up when things are on sale. With a variable income, that may mean some months you can't afford to stock up but instead eat what's already been stocked, and then buy just needed basics.  The idea of making meals ahead of time sounds nice in theory, but it takes up valuable freezer space that could be used to store perishables.

 

Know what foods and meals you can turn to when your budget is tight. When your budget is tight save the "good stuff" in the freezer for special occasions during that time--or use it to postpone trips to the grocery store so you don't have to spend money on food during a time when you don't have extra money.  When money is really tight, avoid buying groceries and try to live on what you've stocked up. 

 

Think of the story from the Bible about Joseph in Egypt: during the seven good years, they stored grains to get them through the 7 years of famine.

 

[5of5]

Think of the story from the Bible about Joseph in Egypt: during the seven good years, they stored grains to get them through the 7 years of famine.

 

But did that really happen?  Is this a historical claim you are making here?   :D

 

(Now I need to exit this thread fast...  :auto:  )

[morningcoffee]

can anyone recommend any free online videos about budgeting with a variable income? So many great ideas on this thread but I sometimes need to see it laid out visually to really get it. 

 

:grouphug: to you, stm4him. There are lots of us facing the same problems with our budgeting. 

[G5052]

We have a stable baseline with DH's, but peaks and valleys with medical bills and my income.  In some cases it is seasonal.  For example, January is always tough with post-holiday bills, insurance deductibles, and typically I don't get paid that month.  Next year my largest contract will go from quarterly payment to monthly, and I am SOOO happy about that.

 

Similar to what others have said, we developed a low-ball budget that will make sure that the basics are covered.  We all get personal money, not a lot, but some.  Some always goes to a savings account that is hard to get to.  We live "tight" until near the end of the month when I've paid all of the basics and any must-pay bills. Then we sit down and look at the rest and figure out what to do. Every month is different. Some months we have to raid savings, and some months we have some left for purchases and such that we've been waiting on.

 

And as a previous poster said, I always try to negotiate on medical bills and ask for a payment plan if we can't pay the whole thing at once.  Yesterday we got a bill not covered by insurance knocked down by 50% and a no-interest payment plan for 10 months.  A dental bill is coming soon, and I already called them and got a 12-month no-interest payment plan on that.  This helps a lot with our budgeting because I can roll the payments into my baseline budget.

 

It has also helped us to go on what they call "budget plans" for our utilities where you pay the same amount each month.

[Carol in Cal.]

The two books that helped me the most in becoming really frugal are:

"The Complete Tightwad Gazette"

and

"Your Money Or Your Life"

 

 

Also, something I haven't seen in this thread that helped us was this.  We often used to struggle with bills that were annual or semi-annual.  We knew they were coming but it seemed like every time they would throw us off.  These are for things like car insurance, property taxes, Christmas presents, stuff like that.  You could shop around but you couldn't completely avoid these.  Plus we drive old cars, so car repairs are always on the horizon.

So what I did about this was add them all up.  I estimated Christmas and birthday presents totals.  I also allowed an amount for car repairs--I think $1000/car/year.  Then I took that total and divided it by 12.  I started a separate savings account at our credit union for that stuff.  So our paychecks would come in, and the bulk would go into the checking account, but that savings of 1/12 of the non-monthly regular expenses went into the savings account.  That way I didn't spend that money if I was going to need it the next month for insurance, for instance.  

 

So then whenever one of those big bills came in, I would first look to see how much of it we might be able to pay from our checking account.  If I needed more than that, that's what the savings account was for.  If I had a lot of variation in income, I would fund the savings account more heavily OR pay some of those bills in advance if possible.  For instance, our property taxes are due in December and April, and we get the bill in October or November.  So I could pay those taxes any time I had money ahead over that several month period.  Frugality also helps--if you're buying gifts on sale as they pop up,  you don't have such a big hit right at Christmas time, for example.

It's a mind game, but it really was helpful, mostly because DH only got cash from the checking account and really didn't look at the balances in the other accounts that much.  Out of sight, out of mind.