The Budget Couple

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Episode 49: Planning for Pets and 10 Month Income

Nate and Danielle discuss how to setup a budget that includes unknown expenses for older pets and how to plan for a 10-month income on a 12-month basis.

Show Notes

Listener Bihn

How can I budget for an aging pet? It doesn’t happen often, but every once and awhile, a big vet bill falls into our laps. We have a special credit card we use just for their medical expenses, but having 4 pets and half of them senior, it sometimes hits us really hard. We don’t plan on having this many again and we can handle a couple hundred every few months but sometimes it’s way more than we can handle and we can’t pay it off by the end of the month. It’s usually a snowball of emergency clinics, meds, treatments like surgery, and their regular follow ups. I know ‘putting them down’ is an option, but we want it to be our last resort to stop their suffering. We’ve had these pets for 10+ years and they are part of our family. Should we change our priorities to our vet bills then credit cards?

We are actually in a similar situation as well. Our dog Maggie just turned 10 and we will be adopting Danielle’s grandmother’s dog as her grandmother enters hospice care. We are going to be taking a look at our budget once everything is set and will start planning for the long-term care of our dogs.

To begin with, we will average out the cost of each animal over the course of a year. While we don’t know everything, we can make a few assumptions on how many vet visits are realistic, how much medication costs, etc. Once we have an idea of the yearly amount of money that costs, we will put enough away each month to cover the bills. Some months we might be short and others we will have plenty to cover it as our pet fund grows. 

Most financial people will say to not going to debt for pets. While we agree in theory, we are both animal lovers and they are part of the family. So here’s what we would do if we were in your shoes:

  • Find out roughly how much you will spend each year on vet bills
  • Divide that number by 12 and put that amount away each month into savings
  • Pay for vet bills out of that fund
  • Use any extra money that you have in your budget to pay off other bills
  • Keep going on the snowball, your progress will be slower if you are putting money away but it stops you from going into more debt when vet bills hit unexpectedly

Listener Christina

Within the last 8 months I got married and my husband and I bought our first home. I, like you Nate, am a teacher and only get paid 10 months out of the year. My question for you is how do you budget and save for the summer? 

I am pretty good with saving money (I am much like Danielle haha), but with the new house there were a lot of unexpected expenses and more monthly bills to pay. I am trying to pay down my own debt with credit cards, student loans, and a car payment. As a result, I haven’t been able to save as much as I’d like. I have two side jobs where all the money directly goes into my savings account. Even though this helps, I feel like it won’t be enough to last through the summer.

We would put money aside each month into your savings account to basically pay yourself an income over the summer. The easiest way to do this is:

  1. Take a typical paycheck and multiply it by 20 (10 months of bi-weekly pay)
  2. Divide that total by 26 (12 months of bi-weekly pay) simulated paycheck
  3. Take your current paycheck and subtract the 12-month simulated paycheck, that will tell you how to put into your savings each month. 

When you stop getting paid for the summer, take a simulated paycheck out of your savings account and put it into checking every two weeks. This will act as you getting paid like normal. This does two things:

  1. Forces you to be disciplined on your spending
  2. Learn to live on less which allows you to pay down debt faster when you have more money

This is how we managed things for the first few years of me being on a 10-month pay. We don’t do this anymore because I do summer school and make a few paychecks during the summer and we stop my Roth contribution during the summer along with daycare cost because I’m home to watch the boy. These two cost cuts basically equate to the paychecks that I miss otherwise.

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