What's Coming In?

Dear girls,


The next step is pretty easy (in theory).  This is where you document your income.  You need this so you have a concrete idea of the limits of your spending.  You definitely should not spend more than you have coming in.  That way ends in a really big hole to dig yourself out of.


If you have a regular paycheck, then it's pretty easy.  You open your paycheck, note your NET income (this is the amount being deposited into your bank account).  And if you get paid every other week, or on the 1st and 15th, then you multiply it by 2.  And that's the amount of income you get monthly.  We're ignoring 3 paycheck months that occur twice a year if you're paid every other week.  Those are windfalls and should go right to savings or paying down debt.


If you're not regularly paid, you're a contractor or work hourly or some other situation where you can't rely on a regular paycheck.  I've not been in this situation, but if I was, I'd look back over the last year (if possible), and look at the lowest earning months.  I'd take that as your monthly income.  Anything above that would be treated as a windfall.


So that's it for this step.  By next week's letter, you should be done with both this week and next week (which is by far the greater effort).  And you'll be able to define your budget, or at least the categories.


This stuff is not rocket science, and I surely didn't think of it all by myself.  But it's the steps I took to figure out the budget.  You can't know where you're going without also knowing where you've been.


Love,
mama