Yes, even though blogging is now officially paying me more than my day job ever did, I will be budgeting in self-employment. Specifically, I really dislike the idea of irregular paychecks.
My Plan’s Beginning
You may have noticed in my weekly savings updates that I have been building up a blogging income account at ING. My hope was to get it to $10,000 by the time I quit my day job so I’d have more than enough padding on months that I don’t bring in enough. I made it to $9200 as of July 15th and it looks like it will definitely be at $10,000 or more before I receive my last day job direct deposit on August 3rd.
I will be paying myself a biweekly paycheck directly from this accout so we never experience a budget crunch at all. In order for this plan to work, I have decided to pay myself $1500 every two weeks.
From that biweekly paycheck of $1500, I will be transferring $400 directly into our tax account. I know that is only looks like about 27% set aside for taxes, but based on my monthly spending for blogging, it will actually come to about 30%-33% of my profits. Plus we already throw an extra $150 a month into the tax account just in case there are any nasty surprises in April (now quarterly), which there hasn’t been since we started doing that 4 years ago. In short, I am 99.9% sure that our taxes are covered with $400 from each of my biweekly contributions.
Of the $1100 left, it looks like we’ll be spending about $125 with me on my husband’s insurance plan. That $125 biweekly should cover my health insurance, dental insurance, vision plan, and a basic life insurance policy. It’s not a fantastic plan – the deductibles aren’t great – but we have enough in our emergency fund to more than cover them.
I will know all of the details for sure in a few weeks. If I’m right based on last year’s info, then I should have about $975 left out of the original $1500 every two weeks. I was taking home $970 every two weeks at my day job, so I’ll have a $5 raise! Woot! Hahaha.
If my the numbers from the past couple of months are any indication, there is a great chance that I will be bringing in more than $1500 every 2 weeks. All of my blog income is transferred into my blogging income account, which I want to keep above $10,000. If I have paid myself all of my paychecks in a month and there is more than $10,000 left, we plan on dividing up the extra similarly to our normal monthly extra. The only difference will be taxes.
In short, this is how we plan to break the extra in the blogging income account down: Taxes (30%), Emergency Fund/Savings account (15%), the Extra Cash for Investments account (25%), the Vacation account (15%), and our two individual Fun Money accounts (7.5% each).
This is all tentative until I have some hard numbers, but you know me, I like plans.
What do you think? Is there a big hole I’m missing?