There are no pretty pictures in this post. If you came here for that then either scroll down or come back tomorrow. I have no idea if any of my readers are self employed so this may not help any of you, but I know when I left my 9-5 and my regular bi-monthly paycheck I was scared. Really scared.
A lot of people may scoff and say that I should just be paying myself the same amount each month which is probably true, but this has been my first year being fully self employed and I honestly had no idea what to expect.
There are months of plenty and months of want and budgeting for the months of want has been a challenge, but I have figured out a few things that really help. We follow the Dave Ramsey ideology and stick to it for the most part, but I've also come up with a few "hacks" that work for our specific situation.
First of all, if you don't have a car payment, then never finance a vehicle. It's really dumb and car payments are on my list of things I hate right up there with racism and The University of Texas. When we left NYC we had about $1000 to our name and no car so unfortunately financing was our only option. When I get this stupid thing paid off I am never ever financing another one as long as I live.
Anyway, this may not work for all lenders, but with my specific lender, they apply extra payments and just push back your due date, so paying early doesn't take any time off of your loan unless you want it to. This works awesome for me since I make 2 car payments a year. Yep. TWO.
Every 6 months, I make a giant payment that is 6 months worth of payments. This works great for me because some months I make a lot of money and some months I make almost no money. I haven't nerded out and done the math to see if this saves me $$ on interest vs making more regular payments (I also make monthly interest only payments...you don't have to do this).
My online account looks like this.
This is pretty great considering I probably won't pick up my camera the entire month of December and aside from retainers for 2015 weddings, I probably won't be making all that much. A lot of photographers charge a higher retainer fee than I do, but I prefer to get the majority of my money closer to when I'm actually doing the work.
Moving on, this one is pretty simple but if you pay your car insurance every 6 months rather than monthly, then that obviously cuts down on your monthly expenses and your insurance carrier probably give you a little bit of a discount.
Lastly, utilities...we pre-pay for our electricity which also eliminates another monthly bill. I am able to see what our average cost is and so every few months I make a large payment and then don't have to think about it for a while. When my balance gets below $30, my electric company sends me a text message (usually around 7:00 am) that says "Hey...give us some more money or we will turn off your lights and stuff."
All of my services I have to pay for as a photographer are paid yearly because it's cheaper and I also have to think about fewer things. Business liability insurance, equipment insurance, website hosting, online gallery services, online backup, and all other subscription type services are paid all at once.
This may not seem like a lot and although I'm still basically paying the same amount, this cuts down on recurring monthly expenses by $700+ which make a big difference in those poor months.
I hope this helped some of you. If not, then message me and tell me you hated it and to go back to only blogging pretty pictures.