Transparent Family Budget Update– November 2018

I’m really excited for November’s budget update because it’s the first month that we’ve focused on our new BIG financial goal.  If you missed it, I wrote all about it here and even shared about it in our first-ever live video.

In short, we’re going to be working hard to pay off our mortgage.  Like in 5 years instead of 15 (or 30).  We don’t know exactly how we’re going to make it happen, but that’s our plan.  We like a good challenge.

So if you’re currently working hard to pay off debt, we’ll be right there with you!  We can smash debt together!

Now it’s time to talk about how things went with our budget in November. Don’t get caught up in the numbers. Your budget likely looks completely different. And it should! We all have different income, different expenses, and different priorities. A meaningful budget should reflect all of those in a personal way.

Here’s are the details of our November budget:

Income

Our total income for November was $9,468. Since we live on last month’s income, this is money that we’ll spend in December.

Attorney Income (Day Job)– $6,837 Mike has been working full-time as an attorney for the state of California since the fall of 2015.  His actual take-home pay was $5,663 but I add back in the cost of the benefits (insurance, dental, vision, parking, and retirement) that are automatically taken out of his check so that we can tithe on that money.

Attorney Income (Private Practice)– $1,100 Mike has a part-time private law practice on the side, but the income from it (and when he is paid) varies from month to month.

My Income (Blog)– $1,531  This is my lowest month of the year. That’s a common pattern for blog income. Of the total, I’m setting aside 25% for taxes ($383) and distributing $1,148 to the family checking account as my paycheck.  I use and love my own Blog Finance Spreadsheets to keep track of the many different sources of blog income and expenses.  How did I learn to make money blogging?  First I read this book, then I took Elite Blog Academy (you’ll want to get on the wait list because enrollment only opens a couple of times a year).

Airbnb Rental– $0  When we set up our Airbnb this fall, we spent around $4,000 getting everything set up.  I’ll have a post with the details on that soon.  We used money that we had in other categories like our rental emergency fund and our home projects category.  We’re paying ourselves back for that with the income we’re getting from it.  We started renting it out in October.  With the bookings we’ve had and have currently have scheduled, we should be clear and ready to take a profit from it starting in January!  We’re excited to find out how this works for us and share what we learn with you.

Spending

Each month we budget down to zero using last month’s income.  This has revolutionized our budget!  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 November came from the income we earned in October.  Here’s how we spent money in November.

Tithing– $1,006— We pay a 10% tithe on our total income from the previous month.  You can read more about why we always pay tithing, even when we were in debt.

Other Giving– $90– Other charitable giving this month.

Mortgage– $3,200 We recently refinanced our mortgage from a 30-year to a 15-year mortgage.  If you want to see all the numbers and read about why we did it, read Mike’s post explaining everything!

If you want to know more about our house finances, you can read more about why we got a conventional mortgage (instead of FHA or USDA) and then why we didn’t wait for a 20% down payment.

Electricity– $242 We get our electric bill at the beginning of the month for the electricity we used in the previous month.  We’re actually using our heater this year instead of our wood stove because we don’t have any wood that’s cut and split.  We have the thermostat pretty low at 62 degrees during the day and 55 at night.

In addition to saving money by saving electricity, we also earn extra money by reducing our electric usage.  If you’re in California, Toronto or Texas, you should definitely check out the OhmConnect program. I have a post and video all about the program.

Water– $29 Our water bill comes every other month, so I usually just set aside approximately half of what I expect the bill to be. The bill we received in November was less than expected, so we only needed to add another $29 (in addition to last month’s $60) to cover it!

Trash– $32 Our bill for trash service comes every other month, so I set aside half of the bill each month.  We’re currently paying for curbside pickup, but that’s not the only way to do it.  If you’re trying to cut every expense to its bare minimum, here are some ideas to save on trash service.

Internet– $70  We love our Internet bill!  Not because we like bills, but because it means we have internet at home.  When we bought the house, it had no access to fiber, cable, DSL, or fixed wireless Internet.  We shelled out almost $5,000 to get cable internet brought out to our house and we love it!

Home Phone– $4  Since my husband works at home a day or two each week, we decided to get a home phone for him to use.  It’s Ooma, which is internet-based, not a traditional land line.  The monthly service charge is minimal ($4) and the initial set-up (hardware, etc) was under $100.  If you want to give Ooma a try, that link will also get you a $20 credit.

Republic Wireless Cell Phones– $17 We’ve been using Republic Wireless as our cell phone carrier for over four years now.  This covers the cost of service for my phone, including all taxes and fees. (We’re on the Republic Refund plan from a few years ago which is no longer available; an equivalent plan for a new user today would be $20/month). My husband also has a Republic phone which he uses for his private practice, but that’s a business expense, not a family budget expense.  If your cell phone bill is killing you, I definitely recommend that you check out Republic Wireless!

Health Insurance– $316 We have insurance through my husband’s employer.  This is the portion of the insurance premium that his employer does not cover.  The total coverage includes health, dental and vision insurance premiums. This $316 is deducted directly from his paycheck and goes straight to the insurance company, so it never makes it to our hands.

Car Insurance– $168  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 father-in-law was in the service years ago.  If you, your parent, or your spouse were/are in the military, you’re probably eligible for USAA too!

Food– $410 We didn’t do our regular monthly grocery shopping this month.  Knowing we had a trip coming up mid-month, we tried to eat up any perishables and shop on an as-needed basis.  This also means we shopped closer to home, which is more expensive.  Also $141 of this month’s food budget went to buying some food storage items.  We got ten 25-lb bags of white wheat and some fruit drink mix.  At the end of the month I got a 9-lb pork loin and 6-lbs of ground beef on sale.  Our food budget also includes getting (cheap) pizza on a crazy busy night.

Gas– $337 I put the gas for our Thanksgiving trip to Arizona in the vacation budget, so this is just for three weeks of my husband’s commute and my driving the kids all around.

Parking– $165 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– $31 I grabbed a few clothing items for myself when I was Christmas shopping for the family.  I might wrap them up for Christmas.  I haven’t decided yet.  Does anyone else do that?

Household– $310 In addition to normal household expenses, we (finally) got a spare key for our van made.  We bought the blank (computer chipped) key and it cost $120 to get it cut and programmed.  We also spent about $100 on solar lights to line our driveway.  Finally I found a big vintage mirror that we’ll fix up and hang in the dining room.

Fun– $6  We took the kids to redeem their free pizza certificates for the library summer reading program and Mike and I split some garlic cheese sticks.

Animals– $51  We got two 50-lb bags of chicken feed and a 44-lb bag of cat food.

Tax Prep– $90  Our tax advice and preparation plan allows the cost to be spread over the year.  Some people wonder why we pay so much for this (a total of $1080 a year.) That’s a valid question.  We prepared our own returns for years, but in the last few years, as our income sources have been varied, we’ve found the planning and preparation more than pays for itself in minimized tax payments (actual dollars saved), not to mention to the additional peace of mind.

Allowances– $60 We give our kids “practice money” as a weekly allowance.  Each week they get $.50 per year of their age.  I’ll explain our system and how it works in an upcoming post, but if you want a sneak peek, check out the book The Opposite of Spoiled.

Kids Activities/School– $160  We have two kiddos continuing tennis through the end of the year and one in musical theater/dance.

Sinking Funds

When we were paying off law school debt, we zeroed out all of our budget categories at the end of each month so we could maximize our debt payment each month.  Now we set aside money each month in certain categories where it builds up until we need it. We plan to keep up these sinking fund categories while we pay off our mortgage.

The amount in bold is the amount that was added to the fund this month.  Any spending from the fund is noted in the comments, along with the current category balance.

We do not have separate accounts for these funds.  All of the money lives in our checking account.  I’m 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 balance unless we’re reconciling the account.  We track our budget categories and spending in YNAB.

Home Projects– $0  We temporarily defunded this category when we were setting up our Airbnb rental.

Dental– $30  We didn’t spend anything this month.  We have $293 in the dental sinking fund right now.

Medical– $100 We just spent $5 on a prescription.  We currently have $985 in our medical category.  Right now most of our expenses are covered by insurance, but that will change in 2019.

Car Repair– $300 The only car-related expense this month was $46 for an oil change for the van.  The current balance in our car repair fund is $1,481.

Car Registration & Smog– $40  We used $181 from this fund for the required safety and emissions check and for renewing the registration on Mike’s car.  We currently have $203 in this fund.

Christmas– $100  We put in $100 this month and spent nearly everything we had saved over the year.  This is the first year we’ve done a year-long Christmas sinking fund and it was great!  We have almost all of our shopping done for our family and the family we’re adopting, and the things we’ll need for some traditions and Christmas events.

Life Insurance– $70 Because we put aside $70 each month, we now have enough to pay the premiums due this month.  This is one of the first sinking funds we started.  It’s so nice to have the money set aside when the big annual bill comes. We’ll bump this up to $75/month starting next month, as our premiums increase each year.

Gifts/Birthdays– $40 This is our fund for birthday and other gifts.  Mike’s birthday is right after Christmas.  It’s hard to decide what gifts to give him when, but I assigned some of them to this budget category.  We stocked up on some gift cards for future teacher gifts, too. We spent $139 and have $86 left.

Retirement– $693 With Mike’s state job, this amount comes directly out of his paycheck and into his state retirement fund.

College Savings– $125  We put $25 per kid into 529 accounts.  More on our decision to start saving for college in this post.

Vacation/Family Reunion– $238 We budgeted $350 to the vacation category this month not knowing how much we would need for our trip.  Thankfully we stayed under budget!  We took the remainder from the category and put it toward our house instead of keeping it in this more seasonal sinking fund.  In other words, we don’t have any big “vacations” planned for the near future, so we’re holding off on contributing to this category so we can focus on our big goal!

2018 Savings Goals

Our savings goal for 2018 is $26,000 ($15,000 toward our emergency fund and $11,000 to my IRA).

Emergency Fund

Our goal for 2018 is to reach $25,000 in our emergency fund (we started out with about $10,000 at the beginning of the year). We reached this goal in July, so in November we didn’t add anything to our emergency fund.

IRA

In November we contributed $550 to my IRA. We automate this contribution each month so that by the end of 2018 my IRA will be maxed out, and we’ll have reached our 2018 goal.

At the end of November we are at $25,450, which is about 98% of our 2018 goal!

Mortgage Payoff Goal

Officially starting in 2019, but we’re getting a head start because we’re so excited to knock this one out!  It’s going to be a long road, but we’re ready for a good challenge.

In November we put $4,868 extra toward our mortage. I know that sounds outrageous.  Don’t expect this kind of payment each month!  This is a healthy start, but not something that’s sustainable at this point.

Where did extra payment come from? 

Good question!  After paying all of our estimated quarterlies we still have a chunk of money in our self-employment tax savings account where I’ve been putting 25% of my blogging income.  With the changes in tax law, the estimated quarterly payments we’ve already made should cover our entire tax bill, so we decided to take $3,000 from our self-employment tax savings to put toward the mortgage. Hopefully that won’t come back to bite us.

The rest of this extra payment ($1,868) was what we had at the end of the month after zero-ing out all of our categories.  We have a different amount of money to budget each month depending on the amount of money we earned the month before.  Some months are leaner and there isn’t much extra, but in October, we had a higher than average income, so we had more remaining after funding our budget.

This extra payment is on top of the $3,200 normal monthly mortgage payment we make which includes interest, insurance, and taxes.  This extra payment goes straight to paying down the principal.

Original balance of 15-year mortgage: $372,700

Balance at start of 5-year goal (Nov 2018): $363,171

Current balance (after Nov 2018 extra payment): $356,669

Percent of goal reached: 1.79%

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

How About You?

• How did your budget and/or debt repayment go in November!?
• How is your progress on your financial goals for 2018?
• Have you come up with 2019 goals yet?

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