Budget off of base or commission?

[preppy]

My H and I both accepted new jobs and are moving to Massachusetts and are looking at places this weekend. Both of our jobs are salary + commission and we have been told "target" commission ranges, but at the end of the day we won't know until we start. The commission ranges are about equal to what or bases are, so about 50% of our income. When budgeting for the move I originally had a higher rent amount alloted but I am thinking maybe we should base our budget on base only? This would leave us living well below our means but knock us out of the areas we like best rent wise.

Anyone have a similar situation or a highly commission based job? WWYD? Thanks in advance!

[DazeyDee]

I've always based our budget on my base. Even when my commissions doubled our income, I never wanted to count on that money. I'm up for another job that would be the same situation, and I'm not even counting the commission money in our monthly budget - I'll have separate budget "goals" for commission money (gifts, travel, savings, 529, etc). It feels safer that way to me.

[preppy]

Oct 10, 2012 16:03:26 GMT -5 DazeyDee said:

I've always based our budget on my base. Even when my commissions doubled our income, I never wanted to count on that money. I'm up for another job that would be the same situation, and I'm not even counting the commission money in our monthly budget - I'll have separate budget "goals" for commission money (gifts, travel, savings, 529, etc). It feels safer that way to me.

Thats a good idea. The budget I made includes things like Roth IRA contributions, clothing allowance, diners out, etc that aren't "needs" that could come from commission checks and leave base for the bills and must have budget items.

[cricketwife]

Especially given that both jobs are new to you, i'd budget on base.

[Deleted]

50% of your income is a lot of variable. Unless you have enough liquid cash right now (e-fund/savings, etc.) to pay the rent comfortably at base salary, I would budget for base salary. I feel that the commission estimates are always overpromised.

[dawnyp]

When I was on commission I used to budget fixed expenses on base salary only. Commissions were used for savings, travel, gifts, eating out, entertainment etc. This way if there was a bad month I knew all my bills were paid and I just cut back on non-essential items like eating out.

[preppy]

Oct 10, 2012 16:09:40 GMT -5 @missy1 said:

50% of your income is a lot of variable. Unless you have enough liquid cash right now (e-fund/savings, etc.) to pay the rent comfortably at base salary, I would budget for base salary. I feel that the commission estimates are always overpromised.

Yea it makes me a little nervous. We have an efund but are using a chunk for moving expenses and deposits on our rental so I don't want to use any more till it is bulked up again.

Maybe I should look at this as a good way to save a ton and live below our means.

[flygirl22]

I always wonder how MM would deal with a purely commission based job... If you can make any sort of reasonable budget work with your base, go for it, but I don't think it's a terrible idea to use a conservative estimate for your commission based income and include that in your budget.

[preppy]

Oct 10, 2012 16:19:55 GMT -5 flygirl22 said:

I always wonder how MM would deal with a purely commission based job... If you can make any sort of reasonable budget work with your base, go for it, but I don't think it's a terrible idea to use a conservative estimate for your commission based income and include that in your budget.

It's tough, it is the difference between budgeting for a much smaller place or a crappier area, or taking a risk. I think I am going to make a lot of things like fun money, dinners out, shopping, etc based off of commission. I would be kinda bummed if we had to live in a crappier area. I am going to make a mock budget and see if I can make the higher rents work.

[pamela]

Dave Ramsey has a variable income budget where you list things in order of importance. Your base should cover the necessities (above the line), commission covers the rest (below the line).

[sillygoosegirl]

I would try to pay for all necessities with the base, if possible. The budget strategy we follow is "The 60 Percent Solution" where you are supposed to cover all your fixed expenses and necesities with the first 60% of your income, with the remainder divided between fun, savings, and retirement. So keeping your fixed expenses and necessities to 50% instead isn't that far off. On the other hand, it also seems pretty unlikely that you wouldn't get at least 20% of your target commission...

[iheartbanjos]

We have a budget for our base. Commission goes into savings or is put towards large purchases, clothes, or other luxuries like the gym or a housekeeper. Our non-commission budget includes almost no savings. Most years, my base is only about 40% of my total take home.

[preppy]

This is all great advice! I really appreciate it. I am going to separate out all the real needs (i.e. bills with a due date) and make sure those are easily covered, then do all non necessity line items out of commission, including savings, IRA, travel, shopping, etc. I have some number crunching to do!

[lemondrop]

Oct 10, 2012 16:47:17 GMT -5 preppy said:

Oct 10, 2012 16:19:55 GMT -5 flygirl22 said:

I always wonder how MM would deal with a purely commission based job... If you can make any sort of reasonable budget work with your base, go for it, but I don't think it's a terrible idea to use a conservative estimate for your commission based income and include that in your budget.

It's tough, it is the difference between budgeting for a much smaller place or a crappier area, or taking a risk. I think I am going to make a lot of things like fun money, dinners out, shopping, etc based off of commission. I would be kinda bummed if we had to live in a crappier area. I am going to make a mock budget and see if I can make the higher rents work.

This is a good idea. All of those extras could now be considered rewards to yourself for a job well done.