11/27/2013

Variable Income

How do you manage?
How do you even set up the budget?

I don't know how many different charts/sheets I've already created and tossed because they didn't work as I had anticipated...I need some help on where to start.  I want to create the budget, with all of our automatic payments, based on Jordan getting $0 commission - so I know we're covered.  Then, if/when he does get commission - I want to use that money to 'top up' our debt/savings plans.

Using a typical month, I've sorted out that we cannot continue regular contributions to our Emergency, Vehicle, Christmas, Gifts, and Vacation Funds - so that will come from commissions.  I've also reduced our payment to the Line of Credit to what is mandatory.  I've kept RRSPs and the Baby Fund.  All that and you can see we're left with $43/month - perfect.

So that tells me I'm on the right track - but the part I'm having troubles with is the timing of it all.  Jordan will get paid on the 15th and the end of the month and I get paid bi-weekly.  I feel as though we need to consider the four months that have five Friday's (January, August, May and October) - but in only two of them (January, August) will I get paid three times...and of course Jordan will still just be paid twice.

I also broke down our expenses on a weekly/monthly basis to see if that would help.


So looking at this chart I know that (I think), at any given time - I need to have $2,587.12 in my bank account to account for both monthly and weekly withdrawals.

I also know that every single Friday $1,303.28 is withdrawn from my account.

Given that my take home pay is ~$1,775 and Jordan's base take home would be ~$1,025 - what do we do? How do I figure out what my 'buffer', my personal overdraft should be, to account for the fluctuations in income/withdrawals.


Here's one scenario that I worked through - trying to see how the numbers would jive.

You can see that we don't have get past $0 in the account - but at the end of the month we're down to $1,419...not the $2,500 we would need to start out with.  So I'm stuck again on how to make this balance.

I would appreciate any thoughts/ideas on how to make a budget that works given this new pay structure.


Thanks!!!!
Jessie & Jordan




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6 comments:

  1. Congrats to Jordan! I'm on commission so I can five you my two cents. I only budget for my base and use my commissions to either pay down debt or build up savings or large one-time purchases. For my piece of mind, I need to know that on my base salary and my husband's income, we can pay our monthly bills.

    Regarding getting paid weekly or monthly, we are both paid twice a month now but previously I was paid twice a month and my husband was paid weekly. I actually separated what bills came out of each paycheck. I would pay our mortgage and car payment. He would pay for daycare and utilities. Maybe you need to make two spreadsheets and pretend you are separating the bills. However, I don't use a spreadsheet. I just use paper and pencil so its easier for me to visualize. Good luck!

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  2. Hi ND! I think that might be a good strategy...It all of my number crunching, because I knew it would work out at the end of the month I kept trying to force all of the automatic savings...but perhaps I'm going to have to cancel the auto-deductions for RRSPs/Baby Fund as well, and do those manually (ugh) or change the frequency.

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  3. Wow! You've put a lot of thought into this! Unfortunately, I can't really help with your question beyond my comment to your last post. Considering the way that I and T split our bills vs you and Jordan I can see that its not as simple as I had made it seem (pay half on one pay and half on the other) that's just the way we split our bills. But I definitely agree with ND to try and think of the commissions as "extra money" and maybe you only put those amounts in the savings when you can. Hopefully it all works out. Good luck!

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  4. Hi, I have been following you for a while now. Great job overall and your are an awesome planner.

    here are the problems with the charts:

    1- You are missing the $400 escape payment from the running balance calculation.
    2- Which is more important:
    a. your combined monthly income on regular month is $1775*2 + 1028*2 = $5606
    b. your monthly expense on a 4 weeks month from you bills chart is = $7054

    As you can see you will always eat at any buffer that you star with as you expenses are more than your income.

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    Replies
    1. Hi Anon!

      Thanks for commenting. I think I included the $400 escape payment in the 'regular' - but you're right I might have missed it..thanks for flagging it with me so I could double check.

      Another good catch on the combined for a 4 week month...I've stuffed something up b/c on the monthly chart it all worked out...hmmm...Thanks so much for the comment! It's back to the drawing board....I think I spotted it - in the monthly I had the LOC payments at the minimum $400 and in the weekly breakdown I forgot to update it and it was back up to what we're paying now (big principal payments).

      Delete
  5. Thanks Morgaine! I think that's the way to go with the commissions.

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