Real Family Budget Update– September 2020

It’s budget update time!

If you’re new here, for the last nearly seven years we’ve shared our family’s real budget here every month. We share what we earned, what we spent in each of our budget categories and our progress, and sometimes lack of progress, on our financial goals. Those numbers have changed dramatically over the past seven years, but we hope that whatever stage you’re in, it might be helpful to see an example of working a real life budget. There’s not one right way to do it, so yours is almost certainly going to be different. That’s just fine! It would be strange if it were the same.

If you’re working on paying off debt this year we would love to have you join us in the Debt Smash-athon! Share your progress each month and see how much we can do together. You’ll also have a chance to win a monthly prize!

If your goals are for savings instead of debt, you can join in too! You can report your September debt payoff (and savings) progress right here!

Now, let’s jump into the numbers. For a live budget walkthrough in YNAB check out the video below. For all the written details, just scroll on down.

Income Earned in September – $8,858

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 September, which has all been set aside to use in our October budget. The spending section below shows the money we earned in August and spent in September.

Attorney Income – $6,383 Mike works as an attorney for the state of California.  This is his take-home pay after taxes, social security, and health insurance premiums.  Because of pandemic-related budget issues, all employees of the state of California got a 10 % pay cut.

Blogging Income – $1,488 This is my blogging income after expenses have been taken out.  It fluctuates greatly each month.

Rental Income – $987 We rent the one-bedroom apartment on our property.  We’ve pulled it off Airbnb and have it rented it to someone outside of Airbnb right now.  Though we make much less in rent than we did with Airbnb, there are some big perks. We don’t have to clean and turn over the apartment between stays while we’re also homeschooling, and with covid it’s nice to have something steady.  We expect that we’ll go back to Airbnb after this year-long rental.  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 September

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

Giving

Tithing – $1,011 We always pay a 10% tithe on our income.  This tithing (like all of our September spending) comes from the money we earned in August.  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.

Monthly Bills

Mortgage – $2,781 In December of last year we re-financed our 15-year mortgage to a rate of 2.875%, which was an amazing rate then.  Rates have gone down even more since then. In September we saw APRs dipping down to 2.0%! If you have dependable income and a mortgage, there’s serious savings waiting for you on one of life’s biggest expenses. Mike shares our experience with a true no-cost mortgage re-fi, with all the numbers you could want. Anyone with a current mortgage rate above three percent is likely to find a better rate now. Check out the post to see how you might be able to save.

Electricity – $478 Our electric bill covers both our home and our rental.  Our house and rental are both completely electric, with no gas or propane.  This bill covers most of August, which had lots of days over 100 degrees, where we actually used our air conditioning.  I can’t even imagine what our bill would look like if we used it regularly on days that aren’t in the triple digits!

Car Insurance – $71 We took Mike’s vehicle off the insurance a few months ago.  Since he’s working at home, we’re acting like a one-car family and saving on insurance and registration.  We love the service at USAA. 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 even more important with four students learning at home and Mike and our renter both working from home!

Water – $200 With all of our garden watering we thought our bill might be higher than it was. We set aside $200 in August, thinking that would be about half, but the bill that came in September (it comes every other month) was just over $300.

Cell Phones – $55 After years with Republic Wireless, we both switched our cell phones to Visible. We still think Republic Wireless is a great option for people with good reception from Sprint or T-Mobile, but at our house, Verizon is the only carrier with a reliable cell signal. Visible is a Verizon subsidiary that offers wifi calling and unlimited cell calls and data on the Verizon 4G LTE network, all for $25 a month! Having cell signal to complement our wifi access is especially important for us since our power company here in California periodically shuts off power because of wildfire danger. No power means no wifi and without cell reception, that meant that with Republic Wireless we had no phone service during power outages. We’re happy paying a few dollars more each month to Visible for more reliable communication.

Another great choice for affordable cell phones is Mint Mobile, especially if you want to bring your own phone. I’ve had readers rave about their great service and you can get data for even less than Republic Wireless.

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

Home phone – $5 We have a home phone as well. Mike mostly uses it for work. It’s through internet-based Ooma instead of a traditional land line.  The monthly bill is $5 and the initial set-up (hardware, etc) was under $100.

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 the rest of the two years that she’ll have braces.

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. Our income potential is our greatest financial asset right now and this insurance helps us protect it.

Piano – $120 Our oldest started piano lessons with me but has now graduated to a teacher who isn’t mom.  I recently (finally) started teaching the next three kids myself.

Everyday Expenses

Food – $856 We spent A LOT on food this month!  We spent $460 on our regular monthly grocery trip to Winco and Sam’s Club.  That was a little higher than normal, but we had also had two really big mid-month grocery hauls.  I made a quick three-minute video to show the amazing deals from  those trips. It was all money well-spent that will bulk up our food storage, so we have no regrets.

Fuel – $245 We took a road trip in September, so our gasoline spending was much higher than in recent months.

Houshold Misc – $226 We bought another big box of TP from Sam’s Club.  It’s $45 for 96 2-ply rolls and it’s shipped right to your door.  It lasts us well over six months.  We finally picked up copies of the birth certificate for our nearly one-year old, spending $50 for two sheets of paper!  I stocked up on two big boxes of baby wipes and a big box of disposable diapers.  We use cloth diapers most of the time, but disposable diapers are handy for road trips. There were some other miscellaneous purchases in there, but those were the big ones.

Clothing – $15 – We picked up some kids’ shoes at the thrift store.

Animals – $0 Since we’ve stocked up in the past couple of months, we didn’t actually spend any money on animal food in September.

Kids’ Activities/School – $375 Knowing that we would be buying a french horn and saxophone in September, we set aside $500 in August and $375 in September.  I found good used instruments on ebay.

Homeschool – $9 I bought a few things for school that I couldn’t purchase through the homeschool charter.

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.

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 $25. We know some bills are on their way for next month. Current category balance is $2,570.

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 don’t have a lot of maintenance to do. We did spend $64 on a minor repair. Current category balance is $4,018.

Christmas – $100 added. I picked up two fishing vests for less than $6 (they were 90% off on clearance).  Our boys are going to love them! Current category balance is $783.

Life Insurance – $75 added. Our premiums aren’t due until November, but if we put aside $75 per month we should have them covered. Current category balance is $825.

Birthdays & Gifts – $40 added. We spent $0 on gifts in September.  Current category balance is $277. 

Car Registration & Smog – $0 added. We’ve decided to stop 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 September.  Current category balance is $745.

Car Fund – $0 added. We were saving to buy a more efficient commuter car for Mike, but since it looks like he will be working from home for a while still, we’re pausing the $550 monthly contributions we were making to this fund.  Current category balance is $6,279.

Preparedness – $100 added. I bought more food storage buckets for our expanding food storage, along with some oxygen absorbers. We also ordered new batteries for Mike’s HAM radio.  Current category balance is $21.

Home Projects- $200 added. There will be more expenses for expanding our garden project.  It’s the season to start building additional garden beds for next year and getting everything we need for planting fruit trees.  We spent $289 in September on lumber for raised beds for the berries. The category balance is currently $110.

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 about $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.  The original goal was to pay it off in 5 years. It looks kind of impossible on paper right now, but we’re hoping to figure out how to still make it happen! We’ve made some adjustments to our priorities (hello garden!), so if we don’t make it exactly in our five-year time frame, we’ll be ok with that too. You can read about our mortgage-payoff goal here and see the numbers for our most recent re-fi here.

We paid $1,493 of principal in our normal September mortgage payment, and we put $11,097 EXTRA toward the principal.  With the initial panic of covid turning easing into a more informed wariness, we decided it was time to put the $10,000 that we’ve had sitting as a covid buffer into the mortgage to bring us closer to that 5-year payoff goal.

That brings our totals to:

Current balance (after September 2020 payment): $277,165

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: %23.7
Percent of 5-year time elapsed (23 mo): 38.3%.  Yep, we’re behind!

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!

How About You?

• How did your budget and/or debt repayment go in September?

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