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Posts tagged with: living on last month’s income

Disappointing Debt Payment

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First, thank you so much for all of your kind comments regarding our family health situation. I’ll try to keep you updated (especially in terms of finances) as I get more information.

In the meantime I wanted to tell you about how this situation, coupled with the no-income May, are going to affect debt payments this month.

It kills me to do this….but I’m going to have to pay only minimums.

We live on last month’s income, so having such a low income for the month of May is really hurting us in June. Hubs’ business drew no income last month (thankfully it didn’t cost us anything so he had enough income to cover his expenses, but no profits were earned). Also, remember how we owe the IRS money? Yeah. We already have some of the money set aside but I was going to use my May paycheck to cover the rest of the bill. BUT, since my paycheck was our only source of income for the month, I’ve put some aside for IRS bill, but I’ve kept some to help cover part of our expenses this month. And we’re raiding our EF hard-core. I’m trying to minimize the amount we have to withdraw from the EF (we’re trying to sell everything possible), but it could come close to being wiped out this month. A very scary feeling.

Given all this (and uncertain future spending) I think that it’s better to keep some money in the bank, pay minimums on current debt, and try to build some reserves this month. Debt payments will be as follows:

  •       PenFed (car payment) = $0 (I’m prepaid ‘till next April so no fees incurred)
  •       Student Loan Payments = $433 (minimum payments:  $77 to ACS ; $356 to Navient)
  •       Medical Bill = $25 (minimum)
  •       Balance transfer = $0 (no interest currently, but this means later payments will need to be higher to cover this month’s deficit)

That’s only $458 in debt payments this month!

I hate it! This is my lowest monthly debt payment in the 15 months I’ve been blogging here.

To compensate I’ve also taken away all monthly savings in their entirety. That means nothing toward:

  •       Cruise 2016 fund
  •       EF (in fact, we’re raiding the EF)
  •       Car repair fund
  •       Health/Dental/Vision fund
  •      Semi-annual fees fund

Usually I put several hundred toward savings each month (up to $1,000), but all savings is being suspended until we can get the financial bleeding to end.

So…minimum debt payments, no savings. Pretty much sums it up.

I’ve got to get back to work – Mondays are always a busy work day for me because assignments are due on Sundays. : ) Still thankful for my job!


May 2015 Budget Update

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I have been dreading this post. Like – dreading it!

This month has not been great in terms of our budgeting. I’ll show you the numbers in a second and I know they’re higher than our average numbers, but I also don’t feel like we went crazy or anything.

In basically all categories, our overspending was due to known expenses that I had failed to plan for. Basically – no big surprises came up (no crap river or emergency dental visits). Instead it was stuff like needing to buy the girls new swimsuits for their free swim lessons (they grow too fast! I tried to put them in last year’s swimsuits and the resulting atomic wedgies indicated it was NOT going to happen). Also, I mentioned that my mother-in-law and grandmother-in-law visited for four days. While here we paid to take them out to dinner one night in celebration of MIL’s birthday (and to thank them for their visit). That single dinner blew our entire month’s eating out budget. I should have increased it for the month since I knew this visit was coming up. Same thing happened with groceries. Aside from the one big dinner out, we did most of our eating at home and I hadn’t adequately planned by increasing our grocery budget.

At the month’s end we were over budget by nearly $400.

This is where YNAB comes into play and – again – why I have loved it so much (see my full review here). Going into the software I was easily able to move some monies around. I’d originally planned to put some money toward savings for dental/vision and annual fees but I re-allocated that money to different categories. Additionally, I had to tap into some of my Capital One 360 savings accounts. I didn’t want to pull all the money from my Emergency Fund (more on that in a minute), so I pulled about half from the EF and the other half from my semi-annual fees account. This move was partly psychological and partly strategic. It didn’t feel like as big of a “hit” when I spread the money out (instead of taking solely from my EF). That’s the psychological part. How was this move also strategic?

Sigh…

Here’s the part I’ve REALLY dreaded of this post. I have to tell you guys that this month did not go well for husband’s business. In the past when we’ve had lower income months I’ve gotten all introspective about it and been very public with what I think our mistakes were and how to correct them. But in the interest of keeping some things just between hubs and I, I’m not going to go into reasons this month (though he and I have discussed them endlessly, so its not for lack of analysis).

Long story short, Hubs’ business came up empty-handed this month. Completely. This isn’t the first time, though it’s the first time in a looooooong time (first time since I’ve been blogging). In the early days of his business some 4+ years ago this happened more frequently. There were even some months where he’d lose money! (Yes. As in, we’d have to take money from our personal checking/savings to cover his business losses). On the overall, his business’ trend has been upward. But this is life owning a small business. Some months are awesome! And some months you may not make anything. You hope the awesome months are more frequent and the crappy months are few and far between (and, in general, that’s the trend his business has been taking). But this month was a crappy one.

So how will we survive?

Well, fortunately, I still get paid from my job! And with the shortage we’ll be forced to raid our EF. However, we’ve also been trying to sell things to minimize our losses. Husband has sold some of his shoes (it’s funny, but he has a larger shoe collection than I do!), and has sold a nice watch he owns. Our regular pay will still be business as usual (being saved for the following month since we live on last month’s income). But with any side-money we receive from selling things, we’ll use it to supplement the current month (June) to minimize the amount we have to take from our EF to survive the month.

So there you have it. Last month’s overages and the plan for next month.

Now, onto the actual numbers.

 

Place Amount Spent
Rent 1055
Electricity 127
Water 61
Natural gas 18
Sprint (2 lines) 119
Cable/Internet 99
Car Insurance 58
Health Insurance 394
Trash 35
Preschool 1024
Gift-Giving 29
Restaurants 162
Entertainment 10
Groceries 550
Gasoline 71
Medical 11
Household Goods 100
Clothing 20
Toddler purchases 60
Work Purchases 47
Rainy Day Savings 130
Savings Goals 500
Debt Payments 1708
Total 6388

I hope your May was more fruitful than ours! Here’s to hoping we knock it out of the park in June!

Do you/have you ever had a variable income? How do you handle the fluctuations? Our variable income is one of the main reasons I loved YNAB’s idea of living on last month’s income. It’s also one of the main reasons we have a larger emergency fund than the $1,000 beginner EF recommended by Dave Ramsey. That’s way too low for my comfort level given the sometimes unexpectedly low income months we have on occasion.

 

Note: My YNAB and CapitalOne360 links are refer a friend links. If you join it doesn’t cost you anything extra but I do get a small compensation for the referral. All opinions are 100% my own and I joined paying my own money so this is not a sponsored post and I received no discount or anything for mentioning them. Particularly for YNAB, I’m just giving them a shout out because their budgeting system really has made a HUGE impact on getting our financial house in order!


A General Life Update – Rambling Style

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Accept my apology up-front for this kind of rambling update.  I think Ashley sent us her cooties (ie allergies) and it’s been a miserable couple of weeks for those of us with allergies and those of us without listening to those that do have allergies.

As of this week, I have paid all this month’s bills and next month’s bills (ie rent + utilities + insurance.)  For the first time in I don’t know how long I am not waiting nail-bitingly to see when my checks arrive and prioritizing who to pay with this money and who to pay with a subsequent payment (remember, as contract labor I have no set pay dates and am really at the mercy of my clients time table.)

I still have 4 checks that should arrive before the end of the month or soon thereafter.  I will be socking away that money for June’s monthly bills and then proceeding with debt payments (remember we only paid the minimums this month to allow me to get to a place to live on last month’s income.)

We’ve spent all of our grocery allowance for this month and I’m hoping to save May’s until after our mini-vacation in mid-May.  We will have 2 months (April and May) of our Misc money to spend on our vacation.  And frankly, living with no extra has not been so hard.  I think having the incentive of what promises to be a really nice mini-vacation has made it much more bearable.

As  I mentioned last week, I have gotten two new work jobs…one project and one on-going.  I have decided to delve into that money a little bit and give eh kids a birthday party this year.  It will still be frugal, but with us being so close to being consumer debt free, this being “extra” money that is not currently incorporated in our budget and the kids being SO, SO good about our cutting back in all aspects of life, I think this is a great way to treat them.  I’m hoping that since they are not expecting a party, I can pull off some sort of surprise party…still frugal.  So I’m sure I’ll post on this once I get more of a solid idea.

We are wrapping up our school year this week with standardized testing.  So every morning the younger two kids go to a small private school who is also doing their testing.  For a nominal cost of $25 each, they sit in a classroom with kids their age and take their tests.  We’ve done it this way since they were K and 1st grade and it’s a week they look forward too as they get to be in a “classroom” and it symbolizes the end of their school year.  (We school year round, but our summer schedule is much looser and we will take the next few weeks off until after our mini-vacation.)  The twins can’t go to this same school as it only goes through middle school, so I order their tests from setontesting.com and I proctor them. That costs me $40 per child and it will take 2-3 days 2-3 hours per day.  Just a glimpse into our homeschooling world and costs associated with it.

I think that about sums it up on the financial end.  We are still staying busy with gymnastics 3 days a week, field hockey 2 days a week, Navy Sea Cadets 1 drill weekend a month and finishing up the high school lab sciences for the twins.


Living on Last Month’s Income

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Last week I told you that we were going hardcore on the debt pay off journey beginning in April! But in addition to that I would really like to get to a point where I am living on last month’s income as Ashley has.  So that is where I am going now…

With the new monthly output of $3000 per month on the hardcore budget we are sticking too, I estimate I will be able to live on last month’s income May 1st.

What this means short time is no big debt payoff for the month of April. But those will resume in May.

For the long term…a peace of mind that I’ve not had in a very long time.

Thank you for helping me to get this place where I have choices and know I can do it.

Thank you.


The Downside of Living on Last Month’s Income

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I’ve run into a problem with living on last month’s income. In general, I think its an awesome thing and has been really valuable for us. But maybe you YNAB-ers can fill me in on how to handle this situation….

You’ve got a budget all planned for the month and things are going well. Mid-way through the month (and everything is on track), something costly comes up. It cannot be put off until the following month and it is 100% for sure going to blow your budget.

If you are living on your current month’s income then maybe you can try to sell some things, work extra hours, or do whatever it takes to boost your income. But if you’re living on last month’s income then your income is already set and there’s really not much you can do about it (aside from “cheating” and using money from the current month’s income and/or dipping into savings). How is this issue best handled???

Let me tell you what’s happened/happening…

Remember my friend whose getting married? Her wedding is at the end of this month. Remember how I talked about giving her a decent-sized check because I’d initially thought I might be a bridesmaid, but since I’m not incurring any of those expenses I’d like to put (some of) the money I would have spent toward giving her a nice gift? Wellllllll, apparently things have changed.

What is it about the wedding industry that sucks people in and forces them to get all hyped up on the hoopla even when they’re trying to avoid it? I swear, its like they tell you that if you don’t get the monogramed napkins and matching monogrammed floor sticker that your marriage is doomed to divorce. I don’t want this to come off as talking badly about my friend but….she got sucked into the trap. And now, all of these things that didn’t exist before (bachelorette party, bridal shower, etc.) suddenly exist.

I had already budgeted to give her and her husband-to-be some money. Initially I’d thought $100-$150, and I ended up budgeting for $100. But that is it. There is no more wiggle room in our budget. Now, with two weeks notice, I have been invited (and would love to attend) a mini bachelorette the week of the wedding. Nothing crazy or over the top, but it’s a night out that will NOT fit in my eating out and/or entertainment budgets. And although she said no gifts, I feel like there’s an inherent expectation of maybe picking up a round of drinks or showing up to the party with some of those fun penis-shaped straws and whatever bachelorette parties entail. This all, of course, costs money. Maybe not a lot of money (certainly nowhere near as much as being a “real” bridesmaid would have cost), but money nonetheless and money I don’t have in our budget.

I know many will say simply not to go. But even though we may not be life-long friends (we met 4.5 years ago), she is one of my best friends in the state. We moved here at the same time (for school) when we didn’t know anyone else and have been through some serious life transitions together (weddings, babies, graduation, employment/lack thereof). I want to support her. I want to be there. So then do I just go and not really participate? Don’t buy her a drink, don’t buy myself a drink, don’t partake in the festivities? Do I give her less for her wedding and put some of that money toward these expenses? What would you do?

And, back to the down side of living on last month’s income, what do you do if you simply have an expense that exceeds your monthly budget/allotted income? Where does the extra money come from? I know a wedding/party is a whole different situation than a real necessary expense (like, a car tire blows out and HAS to be replaced immediately), but either way, how does this work with the YNAB living on last month’s income system?

Suggestions? Advice? What would you do?


Planned October Budget

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So after everything was said and done with last month’s employment and compensation (see issues related to husband’s compensation here and my compensation here), we ended up earning a total of $6410 for the month. This puts us just barely above what we had to work with last month (see last month’s planned budget – with $6317 for income – here). Remember, we live on last month’s income, so the money we earned last month will be used this month to pay bills!

And, unlike last month, where the planned budget was $200 over our income, I’ve balanced this month’s planned budget to come in just under our income for the month. I’m hopeful that we’ll have a little money leftover and can apply it toward an additional debt payment. But, if not, at least we’re still chugging along. Remember, even with these lesser amounts applied toward debt (last month and this month), we’re still paying well over our minimum monthly payments so we’re continuing to make progress. Every bit helps! See my last debt update post here.

Here’s October’s Planned Budget:

Place Planned Budget
Rent 1055
Electricity 241
Water 65
Natural gas 17
Sprint (2 lines) 114
Cable/Internet 100
Car Insurance 55
Health Insurance 350
Trash 35
Debt 1843
Miscellaneous 300
Groceries 400
Baby Purchases 1200
Gasoline 125
Saving for Irregular Expenses 495
Total Budgeted 6395

 

Now we just stay the course and try to keep living within our means. To help with this, I’m doing the modified money envelope system for groceries and eating out expenses. So far, so good. I’m under for the week’s groceries and haven’t spent a dime on eating out yet. Let’s see how long this will last (as I historically struggle in these areas).

Also, thanks for all the tips on Sunday night’s blog post (about my situation with University B and the delayed pay). Following reader advice, I did reach out and say I’d like to continue working with them. I took last week off and am requesting a slight reduction in work-load for this week (and they did oblige, so we will continue our working relationship together). Even though I know the money is coming down the road, it’s still a bit scary to continue working without immediate compensation. I’ll be making slightly less if I work less (since I get paid per project completion and I’ll be taking fewer projects), but I’m also gearing up for application/hiring season and need to make sure I have enough time to give my applications justice. Wish me luck in this endeavor! First one is due in just over a week! Yikes – need to get on it!!

Hope you all have a great week!


September Planned Budget

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As I mentioned yesterday, August was a bit of a dud income-wise.

Everything said and done, we ended up earning (after taxes) $5728. To that figure, I’ve added the $589 we had leftover from last month. This brings us to a total income of $6317 to budget for the month of September.

Here’s the plan:

Place Amount
Rent 1055
Electricity 260
Water 65
Natural gas 20
Sprint (2 lines) 115
Cable/Internet 100
Car Insurance 104
Health Insurance 350
Trash 35
Debt 2009
Miscellaneous 300
Groceries 400
Baby Purchases 1200
Gasoline 100
Savings 445
. 6558

 

You may notice instantly that the amount planned ($6558) exceeds the amount we actually have to budget ($6317). I’m not quite sure how to handle this difference. I can strive to spend less in the miscellaneous and grocery categories, but its unlikely I’ll be able to save a full $200. Other options include putting less toward savings (which would solve the immediate problem, but causes a longer-term problem when we don’t have money to cover things like dental & vision or car maintenance expenses), or use some of our income from September on September purchases (instead of putting it all aside for October, since we’re living on last month’s income). We’re not talking about a huge difference here ($6558-$6317 = $241). I could try to cut back here and there and just wait to see how short we fall at the end of the month (hoping to make up the difference), and then use some September income to cover the difference only if needed.

What do you think? What would you do to make up the difference?


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