July 2024 Transparent Family Budget Update

It’s the time of the month where I tell you how much I love having a budget! Budgets often get a bad rap because some people see them as restrictive, but if you’ve been around here for any length of time, you know that I believe the opposite is true.

Rather than being restrictive, a budget gives you the freedom to spend on what’s most important to you. Instead of mindlessly exchanging your dollars for whatever spending opportunity is right in front of you at the moment, choose to save those dollars for the things you prioritize.

Several years ago, our biggest financial priority was paying off six figures of student loan debt. We made many sacrifices (giving up things we wanted now) to be able to become debt-free as soon as possible (what we wanted most). A budget helped us reach our goal most efficiently, even sooner than we had hoped.

Lately we’ve been setting aside some of our current desires (like replacing our hideous carpet) to save money for something we wanted more: an epic trip to Central America with our three oldest kiddos.

We spent two weeks of July in Belize and Guatemala thanks to our budget.

If you aren’t loving your budget, maybe you need more compelling goals. Even a goal that doesn’t seem glamorous (digging yourself out of debt, for example) can get you excited about budgeting (it worked for me!).

We’re starting to talk about our future financial goals, which makes me even more excited to budget since I know that’s the fastest way to reach those goals!

Next week I will update you on the financial aspects of our trip including how our planned trip budget compares with what we actually spent.

On to July’s spending, saving, and earning for our family of 8.

Spending in July

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 have no idea what that means, here’s a video walk-through. Or you can read up 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 July, we budget and spend what we earned in June. We knew on July 1st exactly how much money we had to work with during the month.  So on July 1st, we start the July budget by taking everything we earned in June and assigning it to our July budget categories.

We can’t see the future, so on the first of July, these dollar assignments were really just best guesses and goals. We’ve been doing this for years and can make some pretty good guesses, 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 usually 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 July 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in July than we earned in June.

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 July spending for all of our budget categories.

Giving

Tithing – $1,140 We start out the month paying a 10% tithe on our income. Like all of our July spending, our tithing is calculated on what we earned in June, which you can see in this  Budget Update. 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 – $3,000  Our escrow account was reassessed and our total mortgage payment went down (from $2,823 to $2,525), but we decided instead to round up about $475 to make our payment an even $3,000. This move shaves two years off of our mortgage and saves us over $4,000 in interest If you’re new here, 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 $167,000 remaining on our mortgage.

Electricity – $6 Last year we installed solar panels on our property, a $70,000 investment that we just finished paying for.  Our electric bill is just the $6 unavoidable fee.

Car Insurance – $339 Having a teen driver made our rates go up $125 per month. And that’s for a girl. I hear it’s even more for a teen boy. Next year we will be adding a teen boy to our insurance too! We currently have two vehicles.

Internet – $105 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 worth it every single day since then, even though the cost for internet went up recently.

Water – $213 Our water bill comes every other month, so we set aside about half of what we expect the bill to be. We didn’t account for the increased summer water use the previous month this time, so we had to pay a larger portion in July.

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. The cost on our trash service recently increased, too.

Cell Phones – $462 We pay for eight cell phones: five for our family, and three for the Ukrainian family that we sponsor. Our phones 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. This is about $250 more than normal, though, because Mike decided to prepay his phone for a year in order to get  two months of service free.

Everyday Expenses

Food – $640 I didn’t do a big grocery shopping trip in July because we were going to be gone for half of the month. We did a lot of small grocery trips, which almost always ends up costing more than one big, well planned out trip. 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. I should also mention that about $150 of this was eating out right after getting back from Guatemala, which is something we normally never do.

Fuel – $496 Being gone half the month cut our gas spending in half!

Household Misc – $121  Our miscellaneous category in July was mostly composed of subscriptions like Google Suite, cloud storage, Adobe, and Scribd/Everand. We also added Peacock for the month so we could watch the Olympics. I also bought some books on eBay.

Clothing – $0 – We had a bunch of running shoes to return in July, so the reimbursement for those outweighed the purchases we made, with about $200 more left in this category (normally not a sinking fund).

Animals – $67 We bought chicken feed.

Allowances – $130 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 – $40 One of our kids swam and the Meet of Champions at the end of the swim season.

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 food budget category, but only used $520 of that, the other $80 would go toward our current major financial goal. Focusing all these extra funds from each category into one goal helped us pay off our law school debt much earlier than we thought possible.

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 – $300 added. We spent $71 on our monthly orthodontist payment.  Current category balance is $2,236. 

Car Maintenance – $400  added.  In July we didn’t spend anything on car maintenance!  Current category balance is $1,156.

Christmas – $200 added. In July, I spent $0 on Christmas 2024. Current category balance is $1,390.

Disability Insurance- $190 added We set aside money 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 60% 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 $850.

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. Current category balance is $873.

Birthdays & Gifts – $50 added. We July we spent $37.  Current category balance is $91. 

Car Registration & Smog – $50 added. We spent $0 in July. Current category balance is $302.

Family Fun Fund – $300 added. We spent $58 on a tank of propane to bring to a lake day. Current category balance is $270.

Home and Garden – $400 added. We spent $40 to have some local tree workers drop their woodchips at our house. An amazing deal for two huge loads of woodchips!  Current category balance is $464.

Big Trips – $503 added. We originally made this sinking fund to save up for a fun family trip in 2025, but we are expanding it to include a trip that we took in July, a trip that we’ve dreamed of for over a decade.  I will update  you soon on all of our trip spending and how it compares with our trip budget. Current category balance is $4,224.

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 pleased 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) – $583 added. With this same amount each month, I will reach my $7,000 IRA contribution for 2024.  Mike has about $1,300 each month deducted directly from his paycheck into the state pension fund for his retirement.

New Goal!

Since we finished paying for the remainder of our solar installation back in November, we have a new financial goal (in addition to our trip goal)!

With our Honda Odyssey gone, we’ll need to find a replacement vehicle soon. Originally we were set on another 8-passenger van, but since we have our 15-passenger van for when we all go together, we might get a car instead. The most we have ever spent on a vehicle is $5,500 (the 2007 Odyssey that we bought in 2019), so our goal of $20,000 sounds like a lot!

In July, we set aside $320 for our new van fund. Which would bring our car fund total to $12,547,

BUT…

We spent $4,330 on something that doesn’t even have wheels.

Mike has had his eye on a new DSLR camera for a loooong time. And for a long time we said no, but with our epic trip to Guatemala with our teenagers, we decided it would be the right time to upgrade our DSLR. (Fun fact: We bought our first DSLR right before our original trip to Guatemala in 2006, so it’s officially an adult at 18 years old!)

That reduces our car fund total to $8,217, which is 41% of the way to our goal of $20,000.

Income Earned in July- $9,746

Above you can see everything we spent in July (that we had earned and received in June.) At the same time we were spending what we earned in June, we were also (of course) earning money during July. At the beginning of August, we set up our budget to allocate spending from our July 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 July, which we will use during August.

Attorney Income – $8,925 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 this post where I talk about how much you can make on Airbnb.

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.

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.

Child Care – $821 Back in August, I started taking care of the 2-year-old Ukrainian girl while her mom goes to English school (and her siblings go to regular school). I think this payment includes some backpay.

In a month from now, come back to see how we used this income to fund August’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 July 2024 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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