What's a good frugality book/system for someone self-employed? - Mothering Forums

Forum Jump: 
 1Likes
 
Thread Tools
Old 12-26-2014, 08:07 PM - Thread Starter
 
Smokering's Avatar
 
Join Date: Sep 2007
Location: New Zealand
Posts: 8,398
Mentioned: 5 Post(s)
Tagged: 0 Thread(s)
Quoted: 25 Post(s)
What's a good frugality book/system for someone self-employed?

So I've decided we really need to try harder with being frugal. Because honestly, we suck at it. We're not in debt, but we have basically no house savings and no spare money, despite living in a place with ridiculously cheap rent. I think most of our money goes on food.

The thing is, DH has his own business. So any system that relies on splitting up a regular paycheck isn't going to work - we might get a bunch of money one week, then nothing for the next six weeks. It's not hugely predictable. He makes OK money, but it does make it really hard to budget!

Does anyone know of a system that works with that kind of 'loosey-goosey' irregular, unpredictable income? I feel like adhering to some kind of System might serve us better than just trying vaguely to do better ourselves.

It doesn't help that I'm more worried about frugality and saving than DH is; I've tried instituting grocery budgets and stuff in the past, and he just ignores them if he wants something. I know that no system in the world can entirely prevent that, but I figure that if Financial Guru Mr Richperson were the one telling him to save money, instead of me, he might feel somehow more inclined to do it, because weird husband psychology.

If decomposition persists please see your necromancer.

Smokering is online now  
Sponsored Links
Advertisement
 
Old 12-27-2014, 04:42 PM
 
LittleKind's Avatar
 
Join Date: Feb 2011
Posts: 417
Mentioned: 170 Post(s)
Tagged: 0 Thread(s)
Quoted: 59 Post(s)
smokering you and I both have budgeting on the mind with babies coming. We're in the same DDC. My DH used to work for a contractor and his pay was really inconsistent. We used a concept from Elizabeth Warren wherein for each bit of income, 50% goes to things you need, 30% goes to things you choose, and 20% goes to savings, paying of debts, house fund, investing, whatever.

I also read Freedom of Simplicity by Richard Foster (I recall you are Christian? He is Christian Quaker and this is a great book if you're interested. Not really a budgeting book but more about contentment and lifestyle. He does mention how he managed his own finances in one section and my way is based on that). So I set up an excel sheet where I could type in any income into column A and it would calculate 50% of that for column B (needs), 30% in c (wants), and 20% in column d (security). Then, when I had to pay a bill, I would deduct it from the appropriate column. I kept a running total for each column lower down the page. I guess it is hard to picture without seeing the spreadsheet.

So, to make it easy, imagine he had a paycheck of 2000. It would go into the sheet in the first column as 2000 and also broken into three columns: $1000, $600, and $400. When I had to pay the rent (need) I would deduct $700 from column b. When I paid for our phones and internet (want) I would deduct $200 from column c. If any column "runs out" (happens more at first until you get a cushion built in each category) you know that you're not overdrawing your whole acct, just borrowing against column d (security) and short-changing your financial goals temporarily.

It worked really well for us to do this before we had regular monthly income because we knew that every single dollar we had was split 50/30/20 so we were constantly stockpiling every category to be ready when the bills came due.

I will also say we had a lot of student loan debt so for a while our budget was 80 (need) 19 (want) 1 (security) so it is ok to start with the categories weighted however you need and slowly move toward the more sustainable model over time.

Me (28) husband (30) and son (4)

After several angels, expecting a new baby!

LittleKind is online now  
Old 12-27-2014, 10:20 PM - Thread Starter
 
Smokering's Avatar
 
Join Date: Sep 2007
Location: New Zealand
Posts: 8,398
Mentioned: 5 Post(s)
Tagged: 0 Thread(s)
Quoted: 25 Post(s)
Oh ar? I'll run that by DH and see what he thinks.

How did you calculate 'needs' vs 'wants', though? Take groceries - they're obviously necessary to some extent, but when we buy things like fancy olives or steak they're just luxuries. Do you divide up the grocery bill according to necessary vs frivolous items?

And do clothes for yourself count as needs or wants?

I suspect we'd end up cheating a lot with this method. Because even buying a fancier version of a necessary grocery item is more 'want' than 'need'. Like, DH likes to buy fancy toilet paper, which I think is absurd and ridiculous. Need or want? He'd totally put it in the 'need' category, whereas I'd be torn on it...

If decomposition persists please see your necromancer.

Smokering is online now  
Old 12-28-2014, 12:07 AM
 
fayebond's Avatar
 
Join Date: Jun 2012
Location: Fringe Central, Oddballstate, USA
Posts: 1,372
Mentioned: 5 Post(s)
Tagged: 0 Thread(s)
Quoted: 15 Post(s)
Dave Ramsey!
He has an entire chapter in his book on budgeting for the saver and the spender couple. We love his methods.

Slightly crunchy mama of three, one cs, one ubac, one vbac.

fayebond is online now  
Old 12-28-2014, 03:18 AM
 
LittleKind's Avatar
 
Join Date: Feb 2011
Posts: 417
Mentioned: 170 Post(s)
Tagged: 0 Thread(s)
Quoted: 59 Post(s)
yea that is the hard part but make it as simple as possible. If you have money for it in the category, you can get it. So, fancy toilet paper is still a need, it is a high end version of something that is a need. If the category "allows" it, then it works. I made it easier by not splitting up receipts because I wanted the amounts in the categories to match my bank statements. It can't work as a super strict budget, more as a guideline to make sure you know where your money goes generally and how to adjust your spending to get more in savings. I liked that it was possible to cheat a little but stay within the limits.

Me (28) husband (30) and son (4)

After several angels, expecting a new baby!

LittleKind is online now  
Old 01-03-2015, 09:03 PM
 
alpenglow's Avatar
 
Join Date: Oct 2007
Location: Canada
Posts: 4,199
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 150 Post(s)
I found expense and income tracking was the best way to get objective data about where the money actually is going. Then from there, you can come up with a plan based on the patterns you see....keeping in mind the one time annual expenses you know will be coming up.

Is dh into tech? Does he like apps? There are some good expense tracking apps for iphone, etc. And all it takes is 10 seconds of time at the checkout to make a quick entry about that 1.50 muffin, or whatever other little expenses are adding up and getting sucked into that elusive money sucking pit. And it is kind of gratifying being able to pull up a report within seconds with the swipe of a finger....knowing exactly where you stand that month.
alpenglow is offline  
Old 01-05-2015, 08:59 AM
 
emilyfaith's Avatar
 
Join Date: Jul 2009
Location: Nampa, Idaho
Posts: 95
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 7 Post(s)
Quote:
Originally Posted by fayebond View Post
Dave Ramsey!
He has an entire chapter in his book on budgeting for the saver and the spender couple. We love his methods.

I'll second this, he also has budgeting tools online for irregular income. My husband is definitely the spender and it is difficult because he often doesn't realize how much he has spent beyond our budget. We do sit down and work our budget every month and then tweek it weekly to make sure we are task. I try to keep my mouth shut and let the numbers speak for themselves. For example we can look at our bank statement and see that all of the grocery money is spent and we have no milk.......and DH spent 30 bucks on beer or snacks at the gas station. It still happens occasionally and I expect it so I don't get mad anymore. But it has really helped for him to see the numbers to understand what is going on. I have relaxed a lot and he has come my way too but it will always be work to stick with our budget. We do use the envelope system and our credit cards are locked up at home, we know our weaknesses.
emilyfaith is offline  
Old 01-05-2015, 03:47 PM
 
Ragana's Avatar
 
Join Date: Oct 2002
Location: Chicago area
Posts: 2,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 35 Post(s)
Here is the basic Dave Ramsey rundown on irregular incomes:

http://www.daveramsey.com/article/ho...ney_budgeting/

I find his advice very good although I don't follow it to the letter (we keep a larger emergency fund than he recommends and have kept contributing to retirement at the expense of paying off debt more slowly, for instance) and don't care for the Christian angle sometimes.

Mom "D" to DD1 "Z" (15) and DD2 "I" (11) DH "M"

Ragana is online now  
Old 01-05-2015, 03:51 PM
 
Ragana's Avatar
 
Join Date: Oct 2002
Location: Chicago area
Posts: 2,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 35 Post(s)
The key is to keep everything on the table as a potential item to cut. The only exceptions, really, are a roof over your head, heat/electricity, food, basic transportation. So food of any kind goes into needs unless you are spending too much in that category - then olives and steak stay out of the grocery cart and TP is generic If you are meeting your other goals, then go for the olives, steak and fancy TP as much as that category allows.

Quote:
Originally Posted by Smokering View Post
Oh ar? I'll run that by DH and see what he thinks.

How did you calculate 'needs' vs 'wants', though? Take groceries - they're obviously necessary to some extent, but when we buy things like fancy olives or steak they're just luxuries. Do you divide up the grocery bill according to necessary vs frivolous items?

And do clothes for yourself count as needs or wants?

I suspect we'd end up cheating a lot with this method. Because even buying a fancier version of a necessary grocery item is more 'want' than 'need'. Like, DH likes to buy fancy toilet paper, which I think is absurd and ridiculous. Need or want? He'd totally put it in the 'need' category, whereas I'd be torn on it...

Mom "D" to DD1 "Z" (15) and DD2 "I" (11) DH "M"

Ragana is online now  
Old 01-05-2015, 03:53 PM
 
Ragana's Avatar
 
Join Date: Oct 2002
Location: Chicago area
Posts: 2,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 35 Post(s)
I would also count clothes as needs until you reach a certain point. How many outfits do you need to make it through a week at work and home? After that it's a want until you are on track with your goals.

Mom "D" to DD1 "Z" (15) and DD2 "I" (11) DH "M"

Ragana is online now  
Old 01-07-2015, 08:16 AM
 
MichelleZB's Avatar
 
Join Date: Nov 2011
Location: Ontario, Canada
Posts: 1,035
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 32 Post(s)
I want to recommend YNAB to you:

http://www.youneedabudget.com/

You can try it for a month free. You have to set it up on your computers, then commit to tracking--that's entering all income and expenditures from now on. However, it does have apps where you can enter your purchases while you're at the grocery store, etc. My husband (who was also bad at budgets) got on board because there was an app.

Both of us are freelance artists so income is super random. YNAB is a sort of zero-based envelope system, so we find it works very well for variable income.
MichelleZB is offline  
Old 01-07-2015, 09:37 AM
 
Ragana's Avatar
 
Join Date: Oct 2002
Location: Chicago area
Posts: 2,070
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 35 Post(s)
Michelle,

Does YNAB end up with you living off of last month's income? I know I looked into it at some point, but I can't remember the specifics.

Mom "D" to DD1 "Z" (15) and DD2 "I" (11) DH "M"

Ragana is online now  
Old 01-07-2015, 09:07 PM
 
MichelleZB's Avatar
 
Join Date: Nov 2011
Location: Ontario, Canada
Posts: 1,035
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 32 Post(s)
That is one of the things they recommend working towards, yes. We are not currently living off of last month's income, although we are usually about half a month ahead during the winter.
MichelleZB is offline  
Old 01-07-2015, 11:18 PM
 
alpenglow's Avatar
 
Join Date: Oct 2007
Location: Canada
Posts: 4,199
Mentioned: 1 Post(s)
Tagged: 0 Thread(s)
Quoted: 150 Post(s)
Ynab sounds great...I like the aspect of it being on iCloud and being able to use it on phone and desktop/laptop. I use "Cash Trails" (app), but haven't figured out how to get it into a user friendly format to computer...but it does have option to export reports into Exel spreadsheet. It was about $20 I think and had a free app to let you try, that would keep the entries if upgrading to the paid version. It's fine for me but ynab sounds more comprehensive, more options
alpenglow is offline  
Old Today, 08:56 PM
 
midwestmomma13's Avatar
 
Join Date: Aug 2012
Posts: 11
Mentioned: 0 Post(s)
Tagged: 0 Thread(s)
Quoted: 0 Post(s)
Quote:
Originally Posted by MichelleZB View Post
I want to recommend YNAB to you:

http://www.youneedabudget.com/

You can try it for a month free. You have to set it up on your computers, then commit to tracking--that's entering all income and expenditures from now on. However, it does have apps where you can enter your purchases while you're at the grocery store, etc. My husband (who was also bad at budgets) got on board because there was an app.

Both of us are freelance artists so income is super random. YNAB is a sort of zero-based envelope system, so we find it works very well for variable income.
I second YNAB! We're big Dave Ramsey-ites and YNAB works great with his principles. I feel like, after learning about DR, YNAB is the next biggest thing that has helped us get on top of our $$. The computer software and apps are great, and the video lessons are very entertaining.
midwestmomma13 is online now  
 
User Tag List

Thread Tools


Forum Jump: 

Posting Rules  
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off