Real Family Budget Update

It’s time for another monthly budget update! Well, maybe past time, but better late than never!

It still blows my mind that we’ve been sharing our budget updates here for over seven years. Our budget has changed a lot from back when we were in six figures of student loan debt.

I never expected to still be sharing budget updates at this point, but I’ve heard from so many of you that it is helpful to see how others budget, even though the numbers and circumstances for everyone are completely different. In a world where money talk is practically taboo and budgeting isn’t often taught at home or at school, we crave transparency and openness about finances. So we keep on keeping it real over here!

As usual, you can either read about our income, spending, and goals, below, or watch the the video below where Mike and I walk you through our actual budget screen in YNAB.

Income Earned in January – $10,697

We live on last month’s income. If that doesn’t mean anything to you, check out the video explaining how living on last month’s income changed our lives or the post explaining how we got to that point.

This income section shows the money we earned in January, which has all been set aside to use in our February budget. The spending section below shows the money we earned in December and spent in January.

Attorney Income – $6,917 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, and health insurance premiums. He’s still working with a temporary 10% pay cut, like all California state employees, because of expected budget shortfalls related to the pandemic.

Blogging Income – $2,780 This is my blogging income after expenses have been taken out. This varies greatly from month to month.

Rental Income – $1,000 We rent the one-bedroom apartment on our property. We’ve had it listed on Airbnb for the last few years, but we have a long-term renter now instead. Though we earn much than we did with Airbnb, there are some big perks. We don’t have to clean and do a full covid-disinfect and airing of the apartment between stays, for one. We expect that we’ll go back to Airbnb after our current renter moves out. If you’re thinking about renting out your space, check out Mike’s post about dealing with insurance for your Airbnb rental or our explanation of how we handle our Airbnb finances.

Spending in January

Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in December.

Giving

Tithing – $1,492 We always pay a 10% tithe on our income. This tithing (like all of our January spending) comes from the money we earned in December. You can read our thoughts on paying a 10% tithe here.

Fast Offering – $100 Each month we take one day to fast (go without food and drink) for two meals and contribute to a charity program that helps provide for the local poor.

Other Giving – $500 We set aside some money to help with a drive at a local homeless shelter. With the money we set aside, we purchased 10 sleeping bags to donate locally.

Monthly Bills

Mortgage – $0 We re-financed our 15-year mortgage most recently in December 2020. In last month’s budget update, Mike shared all of the numbers and details. Since this was the first month after the refi, we didn’t have a payment due in January. Our normal payment starting in Feb is $2,369, but in January, we just added the normal payment to our “mortgage extra” category for February.

Electricity – $367 Our electric bill covers both our home and our rental. Both completely electric, with no gas or propane.

Car Insurance – $78 We took Mike’s vehicle off the insurance at the beginning of the pandemic when we realized he would be working from home indefinitely. We’re essentially a one-car family now. Our auto insurance is through USAA and we love them! If you, your parent, or your spouse were/are in the military, you’re probably eligible for USAA too!

Internet – $70 Having good internet access at home is super important with everyone at home for work and school. We’re so glad we invested in bringing internet access to our property when we first bought our house (a $5,000 investment)!

Water – $0 This bill comes every other month, last month we set aside $125 (which is about half as much as it has been), but the bill ended up only being $90! Remember when our kids found the water leak on our property a couple of months ago (and we paid $500 to have fixed)? Looks like that’s finally paying off.

Cell Phones – $50 We have two phones with Visible, a Verizon subsidiary that offers wifi calling and unlimited cell calls and data on the Verizon 4G LTE network, each for $25 a month! This isn’t the very cheapest cell phone option out there, but the Verizon 4G network is the only network with any signal at our house, and we’re at our house pretty much all the time now.

We used to use Republic Wireless, which costs less, and some readers rave about Mint Mobile’s great service and even lower costs, but neither of those use a network that provides signal at our house.

If you’re paying more than you want for cell service, check out one of these three great and affordable companies: Visible, Republic Wireless, Mint Mobile.

Orthodontist – $61 Since our oldest gets her braces adjusted every other month, we’re treating this as a monthly bill rather than paying it all up front. These payments will last for nearly another year.

Disability Insurance- $151 This will replace about 2/3 of Mike’s current income for the rest of his life if injury or illness leaves him unable to work as an attorney. Our income potential is our greatest financial asset right now and disability insurance helps us protect it.

Piano – $120 Our oldest takes piano lessons. The younger kids are still learning with mom off and on.

Everyday Expenses

Food – $495 We had a pretty typical month for grocery spending. If you want to learn exactly how we keep our family’s grocery spending low and consistently stick to our budget, you’ll want to get on the waiting list for Grocery Budget Hero, my new course where I teach all of my strategies.

Fuel – $86 We are loving our Covid gas budget.

Household Misc – $141 We bought two non-slip outdoor runner mats to go across our front deck where the rain makes it slippery. We also bought some normal toiletries and household things.

Clothing – ($24) – We didn’t spend anything on clothes. We actually made a return so we added $24 back into the clothing budget from that return.

Animals – $74 We got five bags of chicken feed.

Allowances – $70 Because our allowance system is age-based, we increase this monthly amount as kids have birthdays. We give our kids “practice money” as a weekly allowance. You can read all about why we decided to pay our kids allowance that’s not directly tied to chores, as well as all the details of when and how much in this blog post.

Homeschool- $14 I bought a couple of homeschool things that I couldn’t get with state funds from the homeschool charter.

Sinking Funds

For most of our budget categories, we zero out what is left at the end of the month and send it to our mortgage payoff goal, but in our sinking funds we set aside money each month for periodic expenses and let it build up until we need it.

The amount in bold is the amount we added to the fund this month. Any spending is noted in the comments along with the current balance of each fund.

We do not have separate bank accounts for these funds. All of the money sits in our checking account. We’re not worried about getting the money mixed up because we spend according to our budget category balances, not our checking account balance. We seriously never even look at our checking account balance unless we’re reconciling the account. We track our budget categories and spending in YNAB.

Medical/Dental – $400 added. We spent $0 on medical/dental. We are pretty much starting over on this category since we almost completely drained it in 2020. Current category balance is $693.

Car Maintenance – $0 added. We decided to stop putting money toward this category for now. We have a nice balance and we’re only driving one car, and rarely, so we don’t have a lot of maintenance to do. Current category balance is $3,973.

Christmas – $100 added. We spent $59 during after Christmas sales on some initial presents for Christmas 2021. Current category balance is $62.

Life Insurance – $75 added. We add $75 per month here and then we have what we need for our life insurance premiums, which will be due next November. Current category balance is $225.

Birthdays & Gifts – $0 added. We spent $0 on gifts in January. Current category balance is $212.

Car Registration & Smog – $0 added. We aren’t adding to this category for now. Current category balance is $461.

Family Fun Fund – $0 added. We didn’t add to or spend from this category in December. Current category balance is $745.

Car Fund – $0 added. We were saving to buy a more efficient commuter car for Mike, but since he will be working from home through the end of 2021, we’re pausing the $550 monthly contributions we were making to this fund. We actually borrowed $4,900 from this category to use for a tax strategy we talked about in December’s update. Current category balance is $159.

Preparedness – $100 added. I didn’t do any extra emergency preparations in January. Current category balance is $264.

Home Projects- $200 added. Mike bought a few things (totaling $16) to make some repairs around the house. The category balance is currently $224.

Garden & Orchard- $1,600 added. We spend $1,171 in January. About $750 was buying 21 fruit trees, $30 was for seeds, and the rest was for supplies to start a fence for our orchard.

Investing

Kids’ 529s – $125 We know that $25 per kid per month invested for college isn’t much, but we’re not super concerned about college costs. Scholarships, grants, loans, and jobs during school worked for us. We may accelerate this savings later, but it’s not our highest priority now. You can read about our decision to start saving a little for college in this post.

IRA (Steph) – $500 With $500 monthly, I’ll max out my $6,000 IRA contribution for 2020. Mike has a little over $700 each month deducted directly from his paycheck into a pension fund.

Mortgage Payoff Goal Progress

Our big financial goal right now is paying off our mortgage. At the end of 2018 we made a goal to pay it off in 5 years. We just finished up the second year of working on this goal. You can read about our mortgage-payoff goal here and see the numbers for our most recent re-fi here.

We paid $0 of principal because we didn’t have a mortgage payment in January. Since we refinanced the house in December (our first payment on the new mortgage is Feb 1st). Since the mortgage payment site wasn’t set up yet, we couldn’t pay any extra, but we set aside $7,193 that we can put toward the mortgage in February.

Current balance (nicely rounded by the refi): $271,000

For reference:

Original balance of 15-year mortgage: $372,700
Balance at start of 5-year goal (Nov 2018): $363,171

Percent of 5-year goal reached: 25.4%
Percent of 5-year time elapsed (27 mo): 45%. Yep, we’re behind. We’re excited to make a much larger payment next month!

You can get this hand-drawn brick house printable progress chart here. I love that it has LOTS of spaces (365 in total) so that we can color it in often and celebrate our progress! It would work great for paying off your mortgage OR saving for a down payment.

Whew! That was a lot of numbers. Thanks for reading our personal finances made public!