Tallying Up My New Savings Plan: May Edition

Previously, on Nicole’s Budget: After discovering that I needed to save a lot more for freelance taxes than I had been previously saving, I set up a series of sub-savings accounts. Every Friday, I tally up all of the freelance payments I’ve received that week and put 20 percent towards taxes, 20 percent towards debt, and 10 percent into regular savings.

If I had started this system in April, the numbers would have come out as follows:

Total money earned: $5,178.79

20 percent taxes: $1,035.76

20 percent debt: $1,035.76

10 percent savings: $517.88

Left over for rent, bills, cost of living, and discretionary spending: $2,589.39

But in April, the $1,035 designated for taxes, some of the $1,035 designated for debt, and nearly all of the discretionary money went towards actually paying my taxes. No worries, though; I get a fresh start in May! How’d that go?

Total money earned: $3,383.05

Oh dear.

I bill around $5,000 of work every month (check out my Tracking Freelance Earnings column at The Write Life for the full deets), but I didn’t get a lot of payments in May — which I wasn’t expecting, by the way. I was assuming I’d get another $5,000 in the bank, easy peasy.

Here’s what happens when you run this savings system on $3,383.05:

20 percent taxes: $676.61

20 percent debt: $676.61

10 percent savings: $338.31

Left over: $1,691.52

My monthly overhead cost (rent, utilities, food, bills, transportation) is a rough $1,500. This means I had a little under $200 last month in discretionary income.

So I started cutting back. I did not get my hair cut this month (it’s now long enough to pull back into a paintbrush ponytail), I made dinners of “cheesy rice” instead of buying more groceries (and then ordered Thai delivery food this weekend because that’s what happens after a week of cheesy rice), I put off buying new glasses until my next freelance paycheck hits, I did not buy a copy of The Interestings when I went to hear Meg Wolitzer read, etc. etc. etc.

But I didn’t cut back completely; I finally saw Mad Max: Fury Road, and I did buy a ticket to hear Meg Wolitzer read instead of skipping the event.

Still, for the point of this budget roundup, I ended the month broke. Checking account broke, anyway. I still have that $338.31 in savings, and I am very glad of it; if I hadn’t specifically saved that money, I probably would have spent it on groceries and glasses (oooh, such profligacy). Now I get to still have the savings and buy groceries and glasses when my next checks come in.

Next month, I am anticipating at least $5,500 in freelance checks and probably more (since all the checks that didn’t come in this month have to come in next month, that’s how it works, right?). So that’ll break down to:

20 percent taxes: $1,100

20 percent debt: $1,100

10 percent savings: $550

Left over: $2,750

Which, I mean, think of all the discretionary money! That’s totally new glasses and a donation to Mary’s Place and the start of money I could use on a new apartment! (It won’t be enough to move, not yet. But it could be the start of an Apartmenting Fund.)

That also means I end June with around $900 in savings. I have not had a dedicated savings account since 2012, and I am getting really excited about this. It may get swept up into the Apartmenting Fund, and it may sit there and continue to grow, and it may get used on some emergency someday, but the point is that I have it, and that is wonderful.

So yeah, this budget plan was a smart idea. Even though it means I am living on 50 percent of my income, and even though this month it meant a lot of cheesy rice.

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