As someone who is self-employed I have a very unpredictable and varied income and I can often have months where my abilities to pay off my debt are challenged. Sometimes my income drops a little and I have to slow down my over-payments a tiny bit, other times my income drops drastically and more extreme changes to my debt payments are needed. Here are a few tips on how to handle a slow work month based on my own experience.
Focus on minimum payments
Whilst I would normally throw every spare penny at my debt, my focus shifts completely during months when my income is lower. My priority is always to manage all of my minimum payments. Those absolutely have to be covered, both for my own sanity and of course to avoid any penalties or issues with lenders. Beyond that, anything I can afford to over pay is a bonus.
To help me keep track of these, as minimum amounts always change with things like credit cards, I like to keep a note of them on my phone. Having the numbers marked down in a place where I’m always looking means that they are top of mind. If, like me, you once tried to remain blissfully unaware of your debt you will know how helpful this can be. If you currently put your head in the sand and aren’t sure how to stay on top of things I highly recommend trying this!
Make some extra money
In order to combat the lack of invoices that I am able to send out I look for new ways to bring money in. I have spoken about Prolific Academic many times before and it continues to remain a firm favourite for earning an extra income. It’s a brilliant survey site and so easy to keep an eye on whilst I am getting on with other things during my day. It goes without saying that another big favourite of mine is Ebay.
When it comes to getting more creative with making some extra money, there is one place that I will always go. Emma Drew’s blog! Emma is known for her inventive money making techniques and even has a group on Facebook based around making money in your spare time. I’d definitely recommend you pay her a visit if you are in need of some new ideas! (I’m not affiliated with Emma, she’s just awesome).
This final point may seem obvious, but spending less money during months of low income can be vital for me. There are a number of ways to help make this easier. For those who find it difficult to cut down spending, why not try using cash only when shopping? It will make you more aware of where your money is going and less likely to throw it away on things you don’t need.
Another great way to keep on top of spending is to track your “no spend days”. Marking your spending on a calendar or chart you will help to show you exactly how often money leaves your account or purse and you might be shocked to see just how often small amounts disappear without you realising. I tried this last year and was shocked at the results!
Of course, hindsight is 20/20 and when we find ourselves in the difficult situation of a low income month, that is when we realise that we should have done more to prepare ahead of time. When things are going well and you are having a high income month set some money aside. I’ve talked about the importance of an emergency fund many times before, but this is a little bit different.
Keep you emergency fund for the unpredictable events that life throws at you and have a separate buffer prepared for the inevitable slumps that self-employment brings. Enough to cover a months worth of bills and outgoings would be ideal. I know that having that puts my mind at ease and lets me focus on increasing my work load again instead of going into panic mode.
Slow work months can feel rotten, demoralising even. One week you are working crazy hours to get everything done, the next you are sitting wondering how on earth you’re going to fill your time. With a bit of preparation however, a slow month can quickly switch from panic stations to enjoying some unexpected time off if you know how to handle it well.