It’s time once again to make personal finance public as we share what we earn, spend, and save each month!
Three and a half years ago we started sharing our family’s financial details to keep ourselves accountable and motivated as we paid off a whopping six figure student loan debt. The feedback we’ve received over the years has been so encouraging. I hope that seeing our family’s transparent budget will encourage you too. Just be sure not to get caught up in comparing. I don’t expect you to do what we do.
Talking about family finances is so often taboo. We hope that by openly talking about it here, we can help break the taboo. Personal and family finances are hard enough without feeling like you have to do it all alone.
Income
Our total net income for December was $11,886. Since we live on last month’s income, this is income that we haven’t used yet. We will be budgeting and spending it in January.
Attorney Income (Day Job)– $5,470 Mr. SixFiguresUnder has been working full-time as an attorney for the state of California since the fall of 2015. His actual take-home pay was $4,490. but I add back in the cost of the benefits (insurance, dental, vision, parking, union dues and retirement) that are automatically taken out of his check so that I can show them to you in our budget below.
Attorney Income (Private Practice)– $3,387– On top of working full-time (and a three-hour round-trip commute), my husband has his own private law practice on the side (crazy, I know!). He started it last year to help speed up our debt payoff. His income fluctuates greatly from month to month.
My Income (Blog)– $3,029 The income that I report is the income that I received this month minus all of my blogging expenses (except taxes).
If you’re interested in the details of my blogging income and expenses as well as other blogging tips and resources, you can sign up for my Behind-the-Scenes Blogging emails to get the scoop. If you’re looking for a tool to track your own blogging income and expenses, check out the Blog Finance Spreadsheets.
Spending
Each month we budget down to zero using last month’s income. When we started doing this, it literally changed our lives–in a big way! For more about how living on last month’s income works and how you can get started, check out my free Guide to Getting a Month Ahead Financially.
Our spending in December came from the income we earned in November. In addition to the savings goal above, here’s how we spent money in December:
Tithing– $972 We happily pay a 10% tithe on our total income from the previous month. You can read more about why we paid tithing even when we were in debt.
Other Giving– $91 Other charitable donations this month.
Mortgage/Rent– $0 Living in my in-laws’ unfinished basement is a huge blessing. I don’t expect everyone to do what we do, but for us, it’s worth sacrificing some comforts and privacy to make headway on our financial goals. It won’t be for much longer. If you are considering living with family, here are some things to consider.
Internet– $0 Thanks to some legal work that my husband did for our service provider, we have free internet for a while. It’s nice to stretch our budget by bartering, though we will still need to pay income tax on the fair market value of Internet service ($70/month) at tax time.
Republic Wireless Cell Phones– $25 We’ve been using Republic Wireless as our cell phone carrier for over two years now. This $25 covers the cost of service for both our phones, including all taxes and fees. If your cell phone bill is killing you, I definitely recommend that you check them out!
Health Insurance– $286 We have insurance through my husband’s employer. This is the portion of the insurance premium that his employer does not cover. It includes health, dental and vision insurance premiums. This just came down drastically, but it will be going up a little in the new year
Car Insurance– $210 We are currently paying insurance on three vehicles (we will be retiring our old van soon thankfully). Our auto insurance at USAA is fabulous! In addition to the wonderful coverage, they also give us dividends at the end of the year, which is always a nice treat. We’re able to get insurance with USAA because my husband’s father was in the service years ago. If you or your parents were in the military, you’re probably eligible for USAA too!
Renters Insurance– $14 Our renters insurance is also through USAA. It doesn’t cost much and it’s really great to have when you need it, like when my husband’s car was broken into a couple of years ago. Car insurance covered the car damage and vehicle related items, but it was our renters insurance that covered his personal property like his laptop and briefcase.
Food– $283 After a regular food budget in November, I was hoping to have an extra low food budget in December, but it ended up turning out pretty standard. I placed another order with Zaycon Fresh for 40 lbs of ground beef that I’ll be splitting with my mother-in-law.
Gas– $419 We took a short trip after Christmas, but considering that my husband didn’t have to commute for three days and the kids were off school for two weeks, the road trip didn’t really affect our gas consumption.
Parking– $155 Working downtown means paying for parking. It comes straight out of my husband’s paycheck, which means it is paid for with pre-tax dollars, a small consolation.
Clothing– $0 Some of our Christmas purchases were clothes (including some that I got free with credit from ThredUp), but I categorized them under Christmas instead of clothing.
Household– $24 I bought envelopes, trash bags, and a few other small things.
Entertainment– $25 As a Christmas gift for our family, we got a membership to the Monterey Bay Aquarium. We took our first trip the day after Christmas. We had to pay $15 for parking. We spent more on movie rentals than we ever have ($10)! Half of the expense was one (dumb) movie that we got from Redbox and forgot to return for four days in a row! Since the movie was ultra dumb, paying nearly $5 to rent it was painful. The other $5 was spent on five VidAngel movies.
Car Repair– $38 We bought brakes and windshield wipers for the new van.
Medical– $0 No medical expenses in December.
Christmas– $685 This includes everything associated with Christmas, including stamps and Christmas cards. Our big family gift was a membership to the Monterey Bay Aquarium. We spent $300 to get a family pass with two guest passes. We gave a “gift of experience” to both sets of grandparents. We’ll make another few trips to the Aquarium this year, and we’ll bring grandparents with us! With our aquarium membership and credits at Airbnb, the trip will make a frugal and memorable gift.
Retirement– $539 With my husband’s state job, this amount comes directly out of his paycheck and into his state retirement fund. While we have some retirement savings from before law school, we hadn’t contributed for several years while in school and paying off student loans. It’s nice to see our retirement funds growing again.
College Savings– $100 We contribute $25 per month per child to 529 accounts. It’s not much, but it’s a start. More on our decision to start saving for college in this post.
Random periodic expenses– $33 My husband had to renew his drivers license.
Savings Goal
In December, we put $6,580 toward our three pre-house goals, which brings out total to $31,272, or about 95% of our goal. You can read about our pre-house goals in detail here.
If you remember from November, we did spend some of this already on buying a new van ($5,390), which was one of the three pre-house goals we had set. We also put a little toward retirement ($1,000). For the sake of measuring our goal, I included the amount we already used in my total numbers and in my graphic below.
We met with our tax advisor in December to get an idea of where we stood. It looks like we will owe somewhere around $16,000 come April. This is why we were hoping to pre-pay some of our tithing for 2017 (a strategy explained in detail here). Our tax advisor said that at this point, every tax deductible dollar we spend (charitable contributions, Roth IRA contributions, business expenses, etc) will save us about 40 cents of tax.
We decided to pre-pay $8,000 of tithing. That should reduce our tax bill by about $3,200!
There you have it friends! Another month (and year) in the books!
Want to get motivated and inspired for your financial goals this year? Starting today, you can virtually attend the New Year, New You 2017 Financial Summit. There will be 16 interviews of financial experts speaking on topics like budgeting, getting out of debt, increasing income, and investing. You can watch the sessions for free when you register here!
How About You?
- I’d love to hear about how your budget and/or debt repayment went in December!
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This is so motivating! To see your blog income increase each month is so encouraging. #lifegoals Thanks for being so transparent and for always being an inspiration!
I love seeing how focused and thought-out your goals are. It could be tempting to focus on paying off debt and plan no further, but you have continued you set goals to get in a better financial situation. Congratulations! I hope to be joining the debt-free camp soon!
We lowered our debt balance to just under $70,000, which would be horrifying to a lot of people, but motivating to us – that was a goal I had in 2016. My husband got two modest raises this year which help us to make more progress on the debt, but we are also trying to use some of the raise to increase our emergency fund (it’s too low given that we are home-owners). I’ve also been stretching our dollars by finding deals on furniture that we needed through a local Facebook selling group – we just got a twin bed w/a headboard, mattress, and box spring for $25, and two wingback chairs last month for $10! So overall, I am grateful for where we are.
It sounds like you guys have had a pretty successful month! I can’t believe you have such a high tax bill! Have you been putting money away for it each month?
That would have been the smart thing to do (and we knew that), but we put everything toward paying off debt instead of holding some of our self-employment income aside for taxes. We figured we would have between January and April to get together the money for our tax bill, so that’s what we’re doing. Once we get 2016 taxes taken care of, we will set aside money each month for 2017 taxes. Out quarterly estimated taxes will be much more in 2017 so we won’t have such a drastic bill for 2017 taxes (since we’ll probably make LESS in 2017 since my husband will scale back his law firm on the side).
You’re going to have a pretty hefty tax bill! Aren’t you worried that prepaying tithing is sort of just playing kick the can with your tax bill? After all, if you keep increasing your earnings and stop prepaying tithing you’re just going to be hit with a bigger tax bill next year. It sounds like a good strategy for minimising tax for one year of above -average income, but not for the long term as your income continues to grow. I hope your tax adviser is also helping you maximise tax savings by taking advantage of company tax benefits. I don’t know much about US taxes (except that, because the US is one of two countries that makes its citizens living abroad file taxes, I still have to do my taxes every year, which is frustrating as exactly 0% of my income has anything at all to do with the US) but know in Australia we are able to do quite a bit through a company to minimise our taxes and maximise our income and I imagine you can, too.
Good points (as usual) Becca! The way the strategy works is that the following year (2017) we would take the standard deduction. So the plan is that you go back and forth every other year– one year itemizing with all of your deductions (double tithing, etc) and then the next year take the standard deduction because you have fewer deductions. This (2016) is the first year that itemizing actually made sense for us, so it’s the first time we’re trying the strategy. We won’t know until we file 2017 taxesif we’ll come out ahead. IT won’t hurt us though– we’ll either break even or come out ahead. I’m certainly not claiming to be an expert, just being open about what we’re doing, then I’ll let you know how it works out! 😉
The other thing is that 2016 will probably be kind of an anomaly as far as income goes. While I plan to have my blogging income increase, and my husband’s day job income will increase slightly, we are planning for his law firm income to DECREASE in 2017. He worked a crazy amount during 2016 so we could wipe out our debt, but he’s planning to scale back so we can see him more. He hasn’t done any advertising at all and is very careful about the work that he takes when new work knocks on the door. He will have matters finishing up that he started last year, which will result in some big checks, but he is not working to increase his income.
Since 2016 turned out so nicely for us income-wise, it seemed like a good year to try some tax-reducing strategies! We’ll see how it goes!
Congrats on all the amazing progress! I originally found your blog when I was starting with the YNAB program. Wondering if you are still using YNAB, and what version? Have you tried the newest version why/why not?
Hi Becky! YES– we still use (and LOVE) YNAB. We still use the Classic version, mostly because it was working so well for us we didn’t see a need to switch (and I liked having our years of historical data there, easy to access). I did sign up for the new online subscription version so that I could see how it worked and update some screenshots (for people who missed out on YNAB 4), but I wanted to stick with YNAB 4. It’s nice that it can import your transactions from your various accounts (if you want to do that) with the new version and the age of money is cool too. Even though YNAB 4 isn’t being sold or supported anymore, it still works perfectly fine for us. I hope that helps. I’m happy to answer any other questions.
So close to your funding goal!
I’m curious do you save/put away for taxes throughout the year knowing you will have to pay in? or is this going to have to come out of the emergency fund? Also, since you have prepaid a portion of your tithe for 2017 will this amount change in your budget a bit for 2017?
Good questions Maureen! Because we were focusing so hard on paying of our debt for most of the year, I did not set aside tax money. We did pay the safe harbor amount through our estimated quarterly payments to avoid a tax penalty. With my husband’s private law firm on the side, as well as the blogging self-employment, we weren’t sure how the whole tax situation would turn out, so this year was kind of a big experiment (not knowing how much we would end up making). We will be setting aside money from now through April to cover taxes!
As for tithing, we will keep track of how much we owe (based on 10% of what we earn each month) and subtract that each month from the amount we prepaid. When we hit $8,000, our tithes will come out of our pocket again. In the mean time that $1K or so each month that would normally go to tithing will go toward our tax fund since the tithing was already paid!
Thanks for the update!