Welcome to another Family Budget Update where we share our real numbers with you!
Why do we share all the details? Budgeting is such an important skill for everyone, but very few people are taught how to do it! It isn’t taught in most schools (except, eventually, in the School of Hard Knocks!) If you were lucky, your parents may have taught you how to manage your money and budget, but did they actually show you their budget?
Personal finance is full of confusion and mystery for many people. Society’s “rules” that make it taboo to talk about money encourage that confusion.
At Six Figures Under, we are doing our best to open up the conversation about money so you don’t have to learn the hard way. We are open and honest about our finances, so that you can see how a living, breathing, real-life budget works for real people.
We started sharing our family’s budget updates back in 2013 when we earned a fraction of what we earn today and had six figures of student loan debt (it’s paid off now!). You can look back on ten years of our past budget here.
If you are new here, welcome! Please feel free to ask any questions you have and I’ll do my best to answer them! Oh, and it might be useful to know that we are a family of 8 in Northern California who recently took in a refugee family of 4.
Okay! Let’s just jump into the numbers for August 2023!
Spending in August
After years of trying different different budget techniques, starting with what we “learned” from our own parents and advancing from there, the only consistent success we’ve found is when we budget by living on last month’s income. If that doesn’t mean anything to you, check out this video explaining how learning to live on last month’s income changed our lives or this post explaining how we got to that point.
We start each month’s budget plan with all of the income we earned the previous month. So in August, we budget and spend the money we received in July. We will allocate every dollar earned in the previous month into our budget categories for the current month.
As our priorities change throughout the month we move money around to accommodate and changing needs. A successful budget is a flexible budget!
Giving
Tithing – $1,374 We always pay a 10% tithe on our income. Like all of our August spending, this comes from the money we earned in July. 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 program that provides assistance for local folks who need it.
Monthly Bills
Mortgage – $2,823 We have a 2200 sq ft house in Northern California with a 15-year mortgage. With mortgage interest higher now, and potentially still climbing, we’re so grateful we could lock ours in at 2.375%. If you’re interested in the details of our Dec 2020 refi, you can check out all of the numbers and details. We currently have about $184,00 remaining on our mortgage.
Electricity – $6 We are finally reaping the benefits of our $70K investment into solar. We produce enough solar energy to cover all of our current usage, plus some credit toward winter months. The small bill is for a random service fee that can’t be avoided. We are still very conservative with our electric usage (we only turned on our air conditioning three times this summer) while we wait to see what an entire year of solar production looks like.
Car Insurance – $211 Our car insurance increased with the 15-passenger van we use to drive ourselves and our Ukrainian refugee family together in one vehicle (see this post for details ) and because we’re driving many more miles now. Our 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 Our cable internet bill is back to $70 a month. Between working from home and 7 kids constantly using the internet for school, consistent high-speed access is absolutely essential. Six years ago we paid Comcast $5,000 to run cable from the adjacent property to our house, and have never regretted it.
Water – $200 Our water bill comes every other month, so I put set aside about half of what I expect the bill to be. This is always higher during the summer as we irrigate the garden and fruit trees.
Garbage- $50 This bill also comes every other month, so I allocate the money for half of the bill each month.
Cell Phones – $201 We now 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 wifi calling and unlimited cell calls and data on the Verizon network, at much less than Verizon prices. We’ve been using them for years and love paying $25 per phone each month with unlimited data. We also have a Gabb watch and a Bark subscription.
Music – $256 Our music teacher generously offered his time and talent to teach our 11-year-old Ukrainian girl free of charge. What a blessing! The hybrid charter school that our younger kids attend started offering guitar classes this year. Two of the kids are in one class and two are in another, so we purchased a 3/4 size guitar and a baritone ukulele (we already have two full size guitars) so they will have some size options. All of the guitar excitement at our house got the older kids (who are super busy with school and sports) interested in guitar too, so I’ve been teaching them a little on the weekends. Look for our family album at this time next year!
Everyday Expenses
Food – $692 Being so busy with transportation and logistics for the past four months has really made intentionally planning meals and grocery shopping more difficult. I haven’t been doing a big monthly grocery haul like I used to. I cook several big meals a week and we eat lots of leftovers. I’m thankful that our “survival mode” doesn’t include take-out or anything too outrageous.
Food prices are definitely higher than they were a few years ago, but I still believe almost everyone can spend a lot less than they currently do on groceries. You can learn all about my strategies and method in Grocery Budget Hero now. Get $20 off with the coupon code STARTNOW. That puts your total cost at $59, and I promise you’ll earn that back many times as you build your grocery budget hero skills.
Fuel – $1,154 Looking at our gas spending, you’d never guess that my husband works from home! Or that he and I are the only drivers out of the 12 of us. Most of those miles are driven by me. With six of our own active and involved kids to drive around and our four Ukrainian friends who also have full schedules, I spend many hours on most days on the road. I combine trips and try to do things in the most efficient way, but it still adds up!
Household Misc – $408 We paid for the online portion of drivers education for our oldest. We bought some school supplies, including a box of 10 reams of paper. I stocked up on several toiletries when Sam’s Club had a discount on the products we use. I got a new ironing board because my old one bit the dust. That doesn’t mean we’ve suddenly taking up ironing clothes–I use it almost exclusively for quilting😆.
Clothing – $76 – I got some cross country racing flats (shoes) for our oldest boy and a few other clothing items for the family.
Animals – $42 We bought two bags of chicken feed.
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 – $175 In addition to club wrestling, we paid for a high school athletic boosters family pass that lets us into all of the kids sports events for the year. Our high schoolers also use the pass to attend football games and other sports events that their friends are participating in.
Refugees Misc – $64 I decided to have a separate category for the expenses for our refugees that don’t fit in other categories. We spent $40 on bus transportation for the Ukrainian mom to attend her daily English classes. We also bought some soccer socks and shin guards for the daughter.
Sinking Funds
For all of the budget categories above we zero out any money still left in the category at the end of the month and send it toward our big financial goal. As an example, we started the month with $150 in our clothing budget, but when we only used $76 of that, the other $74 was sent toward paying off our solar panels, our current major financial goal. Well, that’s what we normally do, but in August we had a minor “emergency” come up (more on that below), so we put the extra from all of our normal budget categories toward that unplanned expense.
In contrast to the budget categories above that we zero out each month, the categories below are our sinking funds, where we set aside money each month for periodic expenses 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.
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, a budgeting tool we absolutely adore. Yes. You can adore a budgeting tool. Don’t believe me? Try it out.
Medical/Dental – $0 added. We spent $403 in August on a bill for an x-ray from several months ago. Current category balance is $2,181.
Car Maintenance – $400 added. We didn’t spend anything on our car maintenance in August, though Mike did some legal work for our mechanic in exchange for looking into a mystery going on with one of our vehicles. Current category balance is $744.
Christmas – $130 added. We spent $17 on Christmas 2023. Current category balance is $1,448.
Disability Insurance- $190 This will replace about 2/3 of Mike’s current income 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. We put money aside each month to pay the premium when it’s due each year. Current category balance is $977.
Life Insurance – $100 added. Next year’s life insurance premiums will be due in November. Current category balance is $900.
Birthdays & Gifts – $80 added. We spent $102 in August for birthdays. Current category balance is $37.
Car Registration & Smog – $40 added. We didn’t spend anything in August. Current category balance is $120.
Family Fun Fund – $130 added. We didn’t spend anything in August. Current category balance is 154.
Home Projects- $738 added. In August, our dishwasher decided to break down. Is it possible to live without a dishwasher? Of course, but cooking and eating at home with a large family every day makes a LOT of dishes, and hand washing all of those take a lot of time, and time is already so full. We have been through several new-to-us (aka used) dishwashers in the past several years and decided that this time we will buy a new one instead of buying expensive parts to try to fix another old one. We spent $1,049 on a new dishwasher. Since that wasn’t an expense we knew about at the beginning of the month, we had to get creative in moving money around to cover the cost. Our “home projects” sinking fund only had $311 at the time. To make up the difference we contributed less to other sinking fund categories and also put the extra from our regular budget categories toward the dishwasher instead of toward our solar payoff goal. We do have an emergency fund that we could have used, but we try hard to not need to use it. The category balance is currently $0.
Garden & Orchard- $0 added. We moved $100 from this category to put in the “home projects” category to go toward the dishwasher. The category balance is currently $32.
Investing
Kids’ 529s – $150 We know that $25 per kid per month invested for college isn’t much, but college costs are not our highest concern. Scholarships, grants, loans, and jobs during school worked for us. We may accelerate this savings later, but we’re ok with small, consistent payments right now. The kids like to see their balances growing, and it adds up and teaches them good savings principles, even if it won’t entirely pay for school. You can read about our decision to start saving a little for college in this post.
IRA (Steph) – $542 With $542 monthly, I’ll max out my $6,500 IRA contribution for the year. Mike has about $1,000 each month deducted directly from his paycheck into the state pension fund for his retirement.
Goal Progress
We are getting close to finishing paying for our solar installation!
We shared all the details here about why we are getting solar, how much it costs, and how we’re planning to pay for it here in this post.
The total cost of getting solar was $70,000 (plus about $3,000 of interest on the $50K loan when we pay it off in 2 years). We started making payments on the $50,000 loan in April 2022. Our payments are $1,502 per month.
Our contribution to our solar goal in August was $2,206.
Our remaining balance for solar is $17,573 and we can’t wait to finish paying it off!
I made a chart to keep track of our progress. I color in a little square for each $250 we put toward our solar purchase.
Income Earned in August – $10,316
I put the income section at the bottom of the budget update because I think it makes more sense there. We saved ALL of the money we earned during August and set it aside to fund September’s budget. This concept of getting a month ahead, has made the biggest 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 August, which has all been set aside to use in our September budget.
Attorney Income – $9,316 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 transactions. 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.
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. Since then it really hasn’t recovered. The income still covers my fixed blogging expenses (which are a lot more than most people would guess).
Gift – $1,000 We were given a completely unexpected monetary gift from a kind friend with the instruction that it should go toward our family’s budget. They said they wanted to help support us because they know that we are using a lot of resources to help our refugee family. What a thoughtful and generous gesture.
Come back next month to see how we use this income to fund September’s budget.
How’s Your Budget Working for YOU!?
Congratulations for making it all the way through our Family Budget Update for August 2023! That’s a lot of words and numbers!
Now let’s hear from you!
What financial goals are you currently working toward?
How is your budget helping you reach your goals?
What struggles are you having with your budget?
Let’s chat in the comments!
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Budgeting is an essential skill for everyone, yet few people are taught how to do it!
Our dishwasher broke down last December, and we did the hand washing thing for four months. Honestly, it was a total nightmare, especially once our flower farming season started. I was SO GLAD we just decided to get a new one before our baby came (and I was so glad we ended up going with the more expensive Bosch family dishwasher, since it’s the best one we’ve ever owned and saves us so much stress). I’m glad you chose to replace yours right away instead of trying to muddle through until it was in your budget again…I can only imagine how much more stress I would have felt if I had an even larger family and was away for several hours each week playing chauffeur!
Without having to go back and look at each month are your budgets the same for each month like each month you spend the same amount for food each month you spend the same amount for utilities or are you making the budget a percentage of what you had made for that month?
That’s a good question! The quick answer is that it depends on the category.
Here’s the slightly longer answer:
When we set the budget (fund our budget categories) each month, some of the categories are exactly the same every month (like our mortgage, internet, car insurance, etc).
Other categories we might allocate the same amount each month (like groceries, gas, or household) but the actual spent will vary. If we spend less than the budgeted amount, the leftover will go toward the big financial goal that we are currently working on (or toward another category where we needed to spend more). If expenses come up and the budgeted amount in a category is not enough, then we will have to re-allocate unspent funds from other categories.
For some categories we will change the budgeted amount based on needs or expenses that we foresee, like in October we will need to buy new basketball shoes and wrestling shoes for two of our kids, so the clothing budget will need to be more than it would normally be. Or maybe I sneak a peek at our usage for one of the utilities and know that the bill will be higher or lower than normal.
In YNAB, there is a “quick budget” feature where you can easily set the same budget as the month before or you can go through each category with one click choose to budget either the amount you budgeted last month, the amount you spent last month, or the average amount you have historically budgeted or spent.