Managing an irregular income
Our income does not arrive in regular checks made out to the same amount. The bulk of what we make in a year will arrive in the month surrounding a book release. All the money arrives and sits in a big pile in our bank account. It is our reserve and for awhile we feel rich. But then the months pass by and the reserve dwindles. We still have bills to pay and we tighten our belts until the next book release.
One of the things I do to manage the money is keep separate accounts for the family and the business. The reserve sits in the business accounts and gets transferred to the family by means of small regular paychecks. This allows me to manage the family budget the same way I did when Howard still worked for a big corporation. At least in theory. The actuality is that when the business accounts begin to run low, we go longer between paychecks and the paychecks get smaller. Sometimes we even pull money from our home equity to cover bills for the last month or two prior to a book launch. That money gets paid back as soon as the next book launches.
We are currently at the lean end of our income cycle. Last year we launched a single Schlock book and then invested money into inventory in the form of XDM books, a reprint of Under New Management, and slipcases to make boxed sets. The inventory investment was necessary, but it diminished our reserve more quickly than usual. Since last August we’ve been about two months from having to borrow money to pay bills.
I did the accounting this morning and we are still about two months from having to borrow money to pay bills. This is largely due to additional advertising revenue. However all the scrambling we did during the Fall definitely helped. It also helps that Schlock fans were generous and bought the things we scrambled to make. Christmas sales went well.
Now Christmas sales are largely finished and advertising revenue always takes a nose dive in January. However, the end is in sight. Travis is hammering away at the coloring for the next book. Howard is hammering away at the bonus story. We should be able to send the book to the printer right about the time our reserves run out and we start to borrow. The borrowing makes us nervous, but the truth is that our home equity and our IRA accounts represent an enormous reserve in themselves. We stock them up when the money flows freely so that we can draw on them when things are tighter. If we are depleting a couple months of the year and accumulating the rest, then we’re still in good shape.
We really are very fortunate to get to do what we are doing.