The U.S. Financial Diaries showed just how volatile income has become for American households. On average, the monthly inflows varied by at least 25 percent in almost three months of the year – and in some cases, the good summer months would bring in double the income of the lean winter months. Writers may go months with little income and then hit the jackpot with the sale of a screenplay only to return again to few dollars coming in each month.
It’s good to have your own bank
The families in the U.S. diaries did not have good solutions to address the instability created by such income volatility but numerous non-profit (and for-profit) companies are developing financial products to help even out such unevenness. However one idea might be to set up your own MyBank. In good months, you invest in MyBank and save all the dollars you can. When the lean months reappear, you have your own bank from which to take an interest-free loan. Set a target maximum balance for MyBank and when you start to exceed that limit, search out the debts with the highest interest rates (or the most cumbersome terms) and start paying them down. For most people, the most expensive debt will be credit card loans (or payday loans).