Ask The Get Out of Debt Experts Budgeting & Budgets

How Can I Create a Budget When My Income Fluctuates? – Willy

Written by Steve Rhode

“Dear Steve,

Hi Steve, I’ve read both your books, The Beach Misses You and Eliminate Your Debt Like a Pro. I am a realtor who gets paid on commission only.

How can you have a budget when you are a realtor and you get paid on commission? You may have a good month and in that month you are playing “catch up” to your past months when you have fallen behind on your bills. I am now one month behind on my mortgage. Utilities are up to date. Recently my son relocated to San Francisco and left me his car, along with the car payment. I have a tendency in believing that I have not made any foolish expenses. Any suggestions?


Dear Willy,

Ah yes, the age old problem of the variable budget.

The issue is to resist spending up to your income in those good months and banking the above average amount to tap in the bad months.

Variable Budget

Your emergency fund or savings account will act as the buffer to keep you overall positive even if you have to reach into it in the bad months. And don’t feel bad about having to reach into the emergency fund in those down months when you’ve planned for it.

Emergency Fund

Using your last twelve months income you should be able to determine what the average amount per month is and start with that as your base income level. Whenever you earn more than that, bank it in your emergency fund.

But that’s just the start.

We also need to adjust that saving amount upwards to account for other obligations as well. We don’t just want that emergency fund to be flat, we want it to build up some additional value and even leave room for you to save towards retirement.

Once you build that base you can then make a yearly deposit into your IRA to save for the future.

Emergency Fund Base Value

You did not say if the car was in your name or your son’s. If it is in his name and he financed it, maybe it’s time to let him deal with it.

If you think this put you on track and you can’t dig out from your past obligations then it might be time to learn about the theory of dissavings and take action to get a fresh start and move forward in a more sustainable way based on this new approach. Otherwise, you will be playing catch up for a long time if there is no room in your current income/expenses to get caught up.

Please post your responses and follow-up messages to me on this in the comments section below.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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