Tuesday, October 20, 2015

Leveling the scales

When the post office hires new subs they don't guarantee you'll get hours.  A new sub can start out working anywhere from 1-6 days a week.  Typically the first week is spent in the academy learning the basics, and going through driver's training.  Once you get past that you get to go to the office you'll be working at to train for a week with your regular carrier.  It's possible the first experience will actually be learning with an OJI-on the job instructor.  All in all the first few weeks you'll have around 10 days of pay, ranging from 6-8 hours each day, and possibly spread over 2 pay periods.  After your initial training period you'll start learning other routes, but chances are, (especially in the summer) you may be waiting for the phone to ring each morning.  If you're not scheduled for a route you're considered to be on call.  Take this seriously, it's a requirement and you can be terminated if you are habitually unavailable.  

To survive financially in this job there are a few really important things to know.  The first and most important thing is how to do a budget on an irregular income.  Now, I know what you're probably thinking....."I know how to do a budget, you check your balance in your account and see how much you have to live on."  That's not a budget.  Neither is balancing your checkbook at the end of the month to see if it matches up with the bank records.  A budget is simply telling your money where to go, instead of wondering where it went.  
The subs in my office typically work 6-7 days a week during the fall, winter and spring.  There are (and always will be) down months though, and if you don't know how to budget for that you'll wind up being stressed, and possibly distracted on the job, which can lead to big mistakes.     

 This is going to start off pretty basic- but, well, it really IS pretty basic, and for some reason it's not taught in schools.  My husband and I recently went through Financial Peace University, which is Dave Ramsey's class on how to manage your money.  It's not all about getting out of debt, more importantly it teaches you the basic skills on how to handle your money, whether you're in debt, saving for a house, saving for retirement (yes, you need to save for retirement), putting kids through college, and how to live on less than you make.  It's not rocket science, it's simply intentional living.  Remember, it will probably take you 3-4 months of budgeting to get used to it...don't quit.

Step 1- Get a sheet of paper, or download this form.  If you're a real tech nerd you can go sign up for a free account on EveryDollar.com.  I find that for getting started pen and paper is the simplest.

Step 2- At the top of the page write down how much your paycheck is.  You can look up your paycheck stub on LiteBlue by Tuesday before payday.  If you are a 2 income family you'll want to do this before each paycheck is deposited. (In my house we have a payday every Friday, but our income is pretty predictible, so we budget before the 1st of the month.  Your family's needs will be different, so use trial and error to figure out when is the best time, each week, every 2 weeks, whatever.)

Step 3- List your bills to be paid in order of importance.  The top things should be in the 4 walls.  Food, clothing, shelter, and transportation.  If you can't do anything else, at least pay your mortgage, groceries, necessary clothing and gas, insurance, car payment etc.

Step 4- Go down the list subtracting each payment as you go.  When you get to 0 you're done.

Certain things to keep in mind....

Be honest about how much you intend to spend, if you usually spend $800/month on groceries, put $800, or you won't have enough at the end of the month.  If you want to go to movies, out to eat, baseball games, whatever, put it in the budget.  This keeps you from overspending on your categories, you have a PLAN.  It also means less fights about who spent what, because your budget told you you were allowed to spend that money.

Also, You NEED an emergency fund.  Before you pay off any debt, pay just the minimum payments until you save up $1000 in a separate savings account for things that are unexpected.  Unexpected does not include a surprise sale at Bass Pro, or Dillards.  An emergency is a car accident where you need to come up with a deductible to pay for your car repairs, a broken bone, etc.  My husband recently had a fender bender, no one was hurt, but his car was damaged.  We had to pay a $500 deductible, plus a rental car for about $150, so our emergency fund took a $650 hit, but if we hadn't had that extra $1000 we may have had a big mess, and possibly incurred more debt.

Hill and Valley Account- Another thing you need is a separate account for the ups and downs that come with an irregular income.  You should prioritize a set amount to keep for when you have a down month where you don't have enough to cover your bills.  If you have an extra $1500 (outside of your emergency fund) it could go a long way when your check is a few days short.  When you take money from it make sure it's in the top part of the budget list for building it back up ASAP.  This is extra important for regulars as well, who have very seasonal routes.  I know some regular carriers who may be a 44K in the high season, and drop to 30H in low season, that's 28 hours less per paycheck! If you don't plan ahead for summer that drop in pay can really put some stress on you, making you tempted to get by with credit cards to cover the deficit.  It's a lot easier and less stress to save up ahead of time and avoid costly interest charges.

So, it's Mid-October at the time I'm writing this....a GREAT time to start up a Hill and Valley account for regulars who will be getting their first high season paycheck this week.  I'm considering coordinating a Financial Peace class for anyone in the office that would like to learn more about budgeting, saving, paying off debt, and also insurance and retirement.  If you have any questions, feel free to leave a comment or send me an e-mail. 

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