December 2023 Family Budget Update

Talking about personal finance shouldn’t be taboo! That’s why we share our real budget with you every month. In fact, talking about budgeting is a great way to learn how to budget

Our budget will look different than yours, and that’s how it should be. Our needs, values, and priorities are different, so it only makes sense that we would spend money differently too.

Even though our numbers and categories are different than yours, you can apply these budgeting strategies to your own finances.

Okay! Let’s just jump into the numbers for December 2023!

Spending in December

When we first understood the concept of living on last month’s income, it rocked our financial world in the best kind of way. If you don’t know what I’m talking about, this video will tell you all about living on last month’s income  and how life-changing it is. Or you can read this article on how you can get started.

At the beginning of each month, we start budgeting by first adding up the income we earned the month before. In December, we budget and spend what we earned in November. We knew on December 1st exactly how much money we had to work with during the month.  So on December 1st, we start the December budget by taking everything we earned in November and assigning it to our December budget categories.

We can’t see the future, so on the first of December, these dollar assignments were really just best guesses and goals. We’ve been doing this for years, so we have a lot of history we can rely on, but every month is different.  Our dollar assignments at the beginning of the month almost never stay exactly the same because our needs and priorities often change during a month.

It’s normal for our spending plan to change during the month. The important thing isn’t spending exactly how much we had guessed at the beginning of the month. It would be silly to let our December 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in December than we earned in November.

If we need to spend more in one budget category than we had originally assigned, that money has to come from some other budget category. We revise the budget categories to meet our priorities during the month, but we can’t just add more money to all of them, because the total amount stays the same all month long. A changed budget is not a failed budget. A budget needs to be flexible in order to be successful!

Here’s our family’s final December spending for all of our budget categories.

Giving

Tithing – $1,166 We start out the month paying a 10% tithe on our income. Like all of our December spending, our tithing comes from what we earned in the month before. You can see November’s Budget Update here. We often get questions about this. You can read our thoughts on tithing here.

Fast Offering – $100 Each month we take one day to go without food and drink (fasting) and contribute to a program that helps people who need it.

Monthly Bills

Mortgage – $2,823  We have a 15-year mortgage on our 2200 sq ft house in Northern California. We’re so thankful to have locked in our mortgage interest rate at 2.375% when we refinanced in December of 2020 (all of the details and numbers are here.) We currently have about $180 K remaining on our mortgage.

Electricity – $225 Our electric bill has normally been just the $6 unavoidable fee. We have credits in our account for extra solar production from the summer months, so we aren’t sure why we were billed. Last year we installed solar panels on our property, a $70,000 investment that we just finished paying for last month. For part of the year we produce more than we use, so we will also have some credit toward our bills in the winter when we won’t produce as much because of the shorter days.

Car Insurance – $209 Our car insurance went up significantly when we got a 15-passenger van so we could drive ourselves (8) and our Ukrainian refugee family (4) together in one vehicle. See this post for details. It’s not just the new vehicle, though. With 12 people in the household, each with their own appointments and activities, we’re (I’m) also driving a lot more miles and more miles means higher auto insurance premiums.

Internet – $70 We have cable internet through Comcast. When we bought our home six years ago, we invested $5,000 into getting cable internet brought to our property. It has been well worth it every single day since then.

Water – $150 Our water bill comes every other month, but each month we set aside about half of what we expect the bill to be.

Garbage- $52 Like the water bill, our trash pick-up bill comes every other month, so each month I set aside the money for half of the bill.

Cell Phones – $187 We pay for seven cell phones: four for our family, and three for the Ukrainian family that we sponsor. They are all through Visible. Visible is a Verizon subsidiary that offers no-contract plans with wifi calling, unlimited cell calls, and unlimited data on the Verizon network. We’ve been using them for years. You can’t beat paying just $25 per phone each month with unlimited data.

Music – $0 Our music teacher generously offered his time and talent to teach our 11-year-old Ukrainian girl free of charge. What a blessing!

Everyday Expenses

Food – $625  Our grocery spending is just for our family of 8 (the Ukrainian family gets government assistance now). I didn’t do a big grocery haul at the beginning of the month like I used to.

If you need help getting your grocery spending under control, you can learn all about my strategies and method in my Grocery Budget Hero online course. Get $20 off with the coupon code STARTNOW.  That puts your total cost at $39. I promise you’ll earn that back many times as you build your grocery budget hero skills.

Fuel – $703 With a break from school, our gas spending was lower than normal, which is a beautiful sight!

Household Misc – $395  In addition to normal household necessities, we also restocked postage stamps, bought some parts to fix the dryer, and made a few non-Christmas donations (Christmas donations come out of out Christmas budget).

Clothing – $135 – We bought a few season clothing items for our family.

Animals – $126 We bought chicken feed and dog food.

Allowances – $84 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.

Sports – $176 We made $70 donation for our daughter’s basketball team shootathon. Our son had a wrestling meet out of state, so Mike went and stayed overnight.

Sinking Funds

For our normal budget categories above, we take out any funds that are still left at the end of the month and send them toward our big financial goal. For example, if we started the month with $600 in our groceries budget category, but only used $520 of that, the other $80 would go toward our current major financial goal–right now, paying off our solar panels.

In contrast to the regular budget categories described above that we zero out each month, we also put money into the categories below. These are our sinking funds. Our sinking funds are categories where we set aside money for periodic expenses each month and let it roll over and build up until we need it.

The amount in bold is the amount we added to the fund this month, followed by spending notes and the current balance of each fund.

To answer a question we often get, we do not have separate bank accounts for these funds. We had separate accounts many years ago when we first started budgeting but we learned that was overkill. Instead, all of the money sits in our checking account. Since we spend according to our budget category balances, not our checking account balance, we’re not worried about getting the money mixed up. 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, a budgeting tool we absolutely adore. Yes, you can adore a budgeting tool. Don’t believe me? Try it out. If you have been using Mint or something similar to manage your finances, you’ll want to read about our switch to budgeting with YNAB.

Medical/Dental – $0 added. We spent $0 at the dentist in December. Current category balance is $1,269. 

Car Maintenance – $0  added.  In December we spent $99 on some minor DIY car repair. Current category balance is $499.

Christmas – $200 added. We spent $1,595 on Christmas 2023 which includes gifts for our family and the Ukrainian family, Christmas cards and postage for sending them, as well as gifts for families from a community adopt-a-family program. Current category balance is $12.

Disability Insurance- $190 added We set aside each month for disability insurance so that when the annual premium is due we have the money ready. If Mike is unable to do his work as an attorney due to illness or injury, this disability insurance will replace about 2/3 of his current income. Since our income potential is our greatest financial asset right now, we want to have disability insurance to help us protect it. Current category balance is $1,737.

Life Insurance – $100 added. Our life insurance premiums are due each November, so we set aside a portion of the estimated total each month which will go toward next year’s premium. We had a $73 remaining after paying last year’s premiums. Current category balance is $173.

Birthdays & Gifts – $0 added. We spent $66 in December for birthdays.  Current category balance is $13. 

Car Registration & Smog – $40 added. We spend $0 on registration in December. Current category balance is $87.

Family Fun Fund – $0 added. We spent $0 in December from our fun fund. Current category balance is $78.

Home and Garden – $331 added. We spent all of the money from this category for a couple of new ceiling fans for our house and some new light fixtures for our rental (where the Ukrainian family is staying). Current category balance is $0.

2025 Trip – $620 added. We have top secret plans for a family adventure in 2025, so we made a separate budget category for it. We’re aiming to add $500 each month either through our normal budget or other means. In December, all of the money added to this category came from credit card points ($120) and bonuses from opening new a checking account and credit card ($500).  Want to do this too? You can get $300 bonus when you open a Chase checking account online and set up direct deposit within the first 90 days. Current category balance is $1,120.

Investing

Kids’ 529s – $150 added. Investing just $25 per child per month for college isn’t much, but we are okay with that. Neither of us had much college savings when we went to college, but with scholarships, grants, loans, and jobs during school we were able to get our undergraduate degrees without debt. We may contribute more later, but right now we’re happy with small, consistent contributions.  I looked at the balances recently and was please to see that this small contribution that is barely noticeable in our monthly budget has added up to over $15,000! If you want to know more you can read about how we decided to start 529s for our kids.

IRA (Steph) – $542 added. With this same amount each month, I will reach my $6,500 IRA contribution for 2023.  Mike has about $1,300 each month deducted directly from his paycheck into the state pension fund for his retirement.

Goal Progress

In case you missed it, we finished paying for the remainder of our solar installation back in November!

If you are thinking about getting solar or are just curious, you can read about why we got solar, how much it cost us, and how we’re paying for it.

Our total cost for getting solar was $70,000. We paid about $2,704 of interest on the $50,000 loan we took out to cover the majority of the cost.

I made a chart to keep track of our progress. I colored in a little square for each $250 we put toward our solar purchase.

We will talk about our next financial goal soon!

Income Earned in December- $9,925

Above you can see everything we spent in December (that we had earned and received in November.) At the same time we were spending what we earned in November, we were also (of course) earning money during December. At the beginning of January, we set up our budget to allocate spending from our December income.

This concept of getting a month ahead, has made such a huge impact on our finances! It takes some work to get to the point where you are living on last month’s income, but the effort is completely worth it!

The income section below shows the money we earned in December, which we didn’t touch until January.

Attorney Income – $9,925 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, his pension contribution, and health insurance premiums.

Rental Income – $0 For years we rented out a one-bedroom apartment on our property through Airbnb. We gave that up to take in a Ukrainian refugee family for a couple of years. We loved Airbnb and will likely go back to that in the future. If you’re thinking about renting out your space on Airbnb, check out Mike’s post about dealing with insurance for your Airbnb rental or our explanation of how we handle our Airbnb finances.

Law Firm- $0  Before working for the state, Mike did estate planning and business transactional work. Over the last few years he has had a steady stream of potential clients, most of whom he refers to other attorneys, but he still occasionally helps former clients. He doesn’t cut himself a paycheck each month, just a couple of times a year.  He took a big income disbursement in October for a case that he had been working on for years.

Blog – $0  I only pay myself a couple times a year now. My blogging income took a major hit when I put the blog on the back burner during Covid to start homeschooling my kids. It is slowly recovering as I put more effort into posting regularly and all of the things I do behind the scenes. Thankfully the income still covers my fixed blogging expenses (which are a lot more than most people would guess) and allows me to pay myself a few times a year.

Come back soon to see how we use this income to fund January’s budget.

How’s Your Budget Working for YOU!?

That was a lot of words and numbers! Congratulations for making it all the way through our December 2023 family budget update!

Now we would love to hear from you!

Any questions on what or why we spend what we do?

What are your current financial goals?

Do you find that your budget is helping you reach your goals, or is it not working like you wish it was?

Let’s chat in the comments!

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