Budgeting For Variable Income

Before I get into the fun post about my afternoon in New Orleans, I need to address a comment made by Croft in reply to my update about the truck.

He wrote:

I will get the first comment in. $300 ($600 if you add everything) is a lot for the repair. BUT it is only 2 – 3 month’s payments on a new vehicle. And payments on a new vehicle do not stop, they are month after month. Just sayin’.

That’s the point of view of someone who is living on a comfortable fixed income.

I have variable income and very little financial security in my day to day affairs (my little nest egg for retirement obviously does not figure into my daily budget). I never know how much is going to come in in the next month, so whatever came in this month has to go far.

Sure, my accounts receivable look flush on paper right now, but I’ve learned the hard way that clients don’t always pay up when they say they will. The only way I can make it is to budget with the money I have right now, which includes squirreling away a good portion of that in case the next cheque doesn’t come.

I have countless rainy day accounts that are all guesses for me based on how much I’ve spent in those categories on average in the past years. Some of them are flexible, like groceries and entertainment, meaning that I can move money out of them to fund emergencies. The non-flexible categories are things that I can’t skimp on, like vehicle repair and maintenance and income tax.

A car payment was much easier for me. I knew exactly how much I needed each month for that category in my budget and I was on a maintenance schedule. I’ve introduced an unknown element into my budget and until I figure out how much that truck is going to cost me on average in a year, something like this is going to be a big deal even if the amount might seem piddly to some.

I chose to live this way. I gave up a ridiculously comfortable life where I would drop $600 on a shopping spree without even thinking about it in the pursuit of something more real and enduring. So I accept responsibility for my choices and part of that responsibility is being honest about what it’s like to live this life without a steady income or pension backing it.

It’s taken me a long time to figure out how to finance my new life and I’ve finally got a system that’s working. The proof is that I am where I am tonight. I would never have come so deep into the US if I didn’t feel I could handle the financial end of the trip. So I am going to get through this, but unless I want to get myself into debt, I have to trim the budget in other areas. And I’d rather trim the budget in other areas than send more interest to the Visa company.

This budget might sound crazy strict, but it is so freeing to make decisions based on the money I have for certain categories of expenses rather than based on what my bank balance is. It means that when the end of January comes and I get that $150 bill for the web space renewal, I don’t have to worry about it since I put $12.50 a month aside for the past year to fund it.

Or that when I get an unexpected $600 truck repair, I can pull $300 of the truck maintenance account and be grateful that I only have to pull $150 out of food and entertainment since I got that windfall at the casino, but that I won’t get to spend $150 mindlessly the way I had looked forward to doing with that unexpected bonus.

That said, next month, my truck maintenance fund is at $0. What if something else breaks? So for the next few months, I’ll have to scrimp a little to build that fund back up. It’s like paying back the Visa company, only without interest.

The truth is, it would have been easier to not even mention that the truck had broken down and just carried on with the activities I could afford and I debated doing this. But I think that this incident could be helpful to other younger potential RVers trying to figure out how to finance a variable income life and weather a crisis, even one that seems small.