Managing Money on a Commission, Part 1

One of the questions that I get asked pretty frequently is this:

"How do you manage money when you get paid commission?"

The answer? Very, very carefully (I assume, more on that later).

I have made quite a bit of money by selling cars. To give you an idea, I make about as much as someone who is 4 years into a normal entry-level job would make. You see short gains every year, as more and more customers refer their friends and family members, and as those customers start to replace the cars that they've purchased from you. From personal experience, a lot of my business comes from repeat customers and referrals. I have one young family that sticks out in my mind, as they've purchased three vehicles for themselves, and referred in their parents and one of their neighbors. One family, 5 cars. You can't ask for much more than that.

Money still doesn't come in at a constant rate, even for the best and most seasoned salesperson.

So how do you manage money that comes and goes in spurts?

In short, I don't.

You're probably thinking, "How can you write a post on managing money when you work on commission if you don't do it yourself?"

Because it's a two-part post and it's my blog.

I recently came across The Simple Dollar, a money management blog. The author, Trent Hamm, went through a self-described "financial armageddon" as he tried to sustain a lifestyle that he could not maintain without burying himself in credit card debt.

As I read his story, I began to recognize some of his destructive behaviors in my own financial life. I wrecked myself with credit cards, TWICE. I have a crapload of debt I'm trying to manage, including a metric ton of money from my time at Michigan State University. I've begun paying off my debt, but seeing someone else pull himself out of a situation similar to mine is inspiring to me.

Growing up, I had everything I needed. Both of my parents worked for the most part (my mother stayed at home when my siblings and I were small), so I always had food on the table. I had a Nintendo, then a Sega Genesis. But one thing I never quite got the grasp of was delaying gratification. My girlfriend will attest to this. I always have a new cell phone (though I recently purchased an HTC EVO 4G, so I think I'll be satisfied for a good long while). I recently bought myself a new laptop. I bought an iPad when those first came out, simply because I wanted one. Clearly, I have work to do.

So, I'm going to adopt some of his strategies for saving and frugality and apply them to my own life. After I feel like I've accomplished some things, I will do a follow-up post. Maybe watching my climb from the depths will inspire someone else to do the same.

J.D.