Don't Be a Starving Writer

As a freelancer, you've probably experienced the "feast-or-famine cycle." It's when one month you have plenty of work and are eating [insert your favorite, most-expensive meal here], while the next you're watching the dust settle on your computer and using your credit card to buy ramen noodles. (And while ramen noodles taste pretty good, they are extremely bad for you!)

So what do you do if your income is all over the place?

That's what I'm talking about today over at Mint.com in my article, How Freelancers Can Budget with a Feast-or-Famine Income. Check it out and cycle back!

To further expand on that idea, I'd like to share a sample budget that wasn't included in the article because I was way over word count.

Example Budget for a Fluctuating Income

Have you heard of the 50/20/30 rule? Well, this is a slight variation we'll call the 50/30/20 budget. The emphasis of this budget is paying down debt and putting money into your emergency and retirement funds.

Let's say in the past year you made: $5400, $300, $1700, $900, $3600, $6800, $300, $4100, $8000, $500, $3600, and $5900. Average all those numbers out to create a monthly budget of $3425, and remember to subtract taxes. In this case, the tax bracket would be 25%, so you'd subtract $856 each month, which comes to a monthly budget of $2569 per month.

So with the 50/30/20 budget, your budget of $2569 per month might look like:

Fixed Costs:
Rent: $700
Utilities: $45
Health insurance: $150
Internet, Cable, Phone bundle: $90
Cell Phone: $90
Car insurance: $40
Gas: $150
Subscriptions: $20
Total: $1285, which is around 50% of your net pay.

Financial Goals:
Debt: $170
Emergency fund: $400
Roth IRA: $200
Total: $770, which is around 30% of your net pay.

Flexible Spending:
Groceries: $350
Shopping: $100
Day spa: $64
Total: $514, which is around 20% of your net pay.

Of course, your budget would vary. And yes, this budget is tighter than a frog's you-know-what, but the idea is to create enough of a cushion in your emergency fund to provide you with three to six months of income.

The rest of the article at Mint talks about streamlining your expenses and changing your business model, because the budget above is almost impossible to live on unless you have a roommate or significant other. I don't know about you, but where I live in Southern California, you can't find a rental for $700!

Okay, your turn. If you have any budgeting ideas for a feast-or-famine income, we'd love to hear them!