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Reply to "How to budget when your income is all bonus?"
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[quote=Anonymous]We are in the same situation - DH’s bonus is 80-85% of our annual income. We handle it by living off of our monthly paychecks, although we do exhaust almost 100% of our monthly income each month. When the bonus comes in, we look at our expected expenses for the upcoming year and pull out however much we think we might need as a cushion, then invest the rest. That will provide us with a cash slush fund just in case any unexpected expense comes up or we have a particularly expensive month. The trick is to not preemptively spend the money, because that can cause you to fall into debt if the bonus isn’t as big as you hoped. Live on the 20%, and use the bonus to provide an emergency fund, fund any large unusual expenses (e.g., one year we used the bonus for a house down payment), or for savings and investments. [/quote]
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