One of the silver linings of paying off six figures of debt was learning to budget and really take charge of our finances. I’m so thankful for the habit of consistently budgeting that we developed during that challenging time. Because we are actively involved in our finances and very aware of our income and expenses, we can make adjustments to fight inflation before it hits us too hard.
Many are noticing that their expenses are creeping up and overtaking their incomes. Without tracking spending and keeping a consistent budget they can’t tell where the problems– or solutions– are. If you aren’t keeping a budget or tracking your expenses, now is a great time to start! It will be the first, most important step in improving your financial situation.
Over the years we have found that it has been helpful for others to see a real budget “in action” since most people aren’t directly taught about finances. Maybe the only budget you’ve ever seen is your own. While budgets are personal (your priorities are different than ours, so you’ll spend your money differently than we do), sometimes it’s helpful to get ideas from how others handle their money. For us, sharing our budget also helps keep us accountable.
So let’s take a look at our numbers for June.
Income Earned in JUNE – $13,932
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 June, which has all been set aside to use in our July budget. The spending section below shows the money we earned in May and spent in June.
Attorney Income – $8,651 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, pension contribution, and health insurance premiums. It also includes a small “work-at-home” stipend that he started getting from the state.
PTO Buyback – $4,281 Once a year Mike gets the chance to cash in some of his paid time off (PTO). He is at a point in his career that he accrues PTO faster than he needs to use it. This was really good timing for us because we’ll have to pay a big chunk of money for our solar installation soon.
Blog Income- $0 I haven’t been giving myself a paycheck every month for two reasons. First, I haven’t done much work on the blog in the past two years. Homeschooling my kids has been my priority and I haven’t figured out the best way to balance my blogging work with my family, which is my most important work. Second, while my blog does produce residual income even when I’m not working on it, it declines every month and no matter what I earn, I have about $500 in blogging overhead expenses each month. Right now I’m holding off on paying myself as I’m reinvesting a chunk of what I’m earning back into the business.
Rental Income – $1,000 We rent a one-bedroom apartment on our property. We had it listed on Airbnb for a few years, but have a long-term renter now instead. Though we don’t earn as much as we did with Airbnb, there are some big perks. Not having to clean and turn over the apartment regularly has been nice. Also, our renter helps take care of our animals and property when we go out of town. Our renter moved out this month, so we’ll be back to Airbnb. 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.
Spending in June
Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in May.
Giving
Tithing – $1,058 We always pay a 10% tithe on our income. This tithing, like all of our June spending, comes from the money we earned in May. 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 – $2,369 We have a 15-year mortgage on our house. If you’re interested in the details of our Dec 2020 refi, you can check out all of the numbers and details.
Electricity – $306 This bill covers both our home and our rental which are both completely electric. That will be great once we have our solar installed, but right now the price of electricity keeps going up and up.
Car Insurance – $116 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 Having good internet access is super important with everyone at home for work and school. We’re so glad we invested in bringing internet access to our property when we first bought our house. That $5,000 investment was worth every penny!
Water – $75 Our bill comes every other month so we try to set aside about half of what we anticipate the bill to be.
Garbage- $42 The bill for our curbside trash pickup also comes every other month so we set aside half of the bill each month.
Cell Phones – $75 We have three cell phones: one for me, one for Mike, and one we use as a home phone for when the kids are home without us (or that the older kids take when they babysit or work at someone else’s house). They are all through Visible. Visible is a Verizon subsidiary that offers wifi calling and unlimited cell calls and data on the Verizon network. We’ve been using them for over two years now and have no complaints at all. It is $25 per phone, but right now you can get the first month for just $5 through my link.
We used to use Republic Wireless, which costs a little less, and some readers rave about Mint Mobile’s great service and even lower costs, but neither of those use a network that provides cell signal at our home.
If you’re paying more than you want for cell service, check out one of these three great and affordable companies: Visible, Republic Wireless, Mint Mobile.
Music Lessons – $120 Our oldest takes piano lessons.
Everyday Expenses
Food – $751 Our food spending includes both groceries and eating out. In July I’m going to start back to sharing our monthly grocery hauls so you can get an idea of the prices here and see what has changed.
Grocery prices are soaring, which means it’s even MORE important to be a smart, strategic grocery shopper! If you are ready to get your family’s grocery spending under control, you’re going to want to sign up for Grocery Budget Hero! You will learn the exact strategies I use to rock our family’s grocery budget (even with rising prices). Enrollment is open now! Get $20 off with the coupon code STARTNOW. That puts your total cost at $59, and I promise you’ll earn many times that back as you stretch your grocery budget hero skills.
Fuel – $872 Gas here is still over $6 right now. With three of our kids on swim team, we drive daily often multiple times. We also drive to swim meets on Saturdays that are an hour away. Our kids went to a youth camp that required a drive. We also had 6 hour drive home from our camping trip that we took at the end of May. We are going to Yellowstone in July, so there will be more significant gas spending coming up. I’m just so glad Mike isn’t commuting anymore. I can’t even imagine what our gas budget would look like!
Household Misc – $194 This includes a renewal of our Sam’s Club membership. We bought normal household things like toilet paper, band aids, and vitamins.. We also pay monthly for a Scribd subscription because we love the unlimited access to so many audiobooks.
Clothing – $65 – I got some jeans for my older kids and myself that were on clearance at Sam’s Club. We need to try them on to decide if we will keep them or not.
Animals – $28 We bought another bag of chick starter feed. We have a dozen baby chicks and two ducks. We also have several duck eggs in our incubator that are just starting to hatch! This is our first time using the incubator, so we are super excited.
Allowances – $84 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.
Homeschool – $0 We didn’t allot any money to homeschooling in June.
Sinking Funds
For most of our budget categories, we zero out what is left at the end of the month and send it to whatever our big financial goal is at the time, 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 paid $300 on doctor bills. Current category balance is $931.
Car Maintenance – $200 added. We spent $0 on car maintenance. Current category balance is $2,586.
Christmas – $200 added. We didn’t spend anything for Christmas 2022. Current category balance is $838.
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. Current category balance is $534.
Life Insurance – $75 added. Next year’s life insurance premiums will be due in November. Current category balance is $479.
Birthdays & Gifts – $0 added. We spent $0 on gifts in June. Current category balance is $141.
Car Registration & Smog – $0 added. We didn’t do any spending here. Current category balance is $60.
Family Fun Fund – $0 added. We didn’t add anything to this category, but spent $180. We went to the county fair and got ride wristbands. We went on kids’ day so the kids got in free. The rest of us had passes from volunteering. Current category balance is $640.
Home Projects- $203 added. Mike picked up some things at Home Depot for some projects around the house. The category balance is currently $0.
Garden & Orchard- $100 added. We didn’t spend anything in June. The category balance is currently $112.
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) – $500 With $500 monthly, I’ll max out my $6,000 IRA contribution for the year. Mike has about $950 each month deducted directly from his paycheck into a pension fund.
Goal Progress
We are pausing our mortgage payoff goal for the next two years to tackle a new goal. Mike and I 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 recent post.
We started making payments on the $50,000 loan in April. Our payments are $1,502 per month.
We also have another $20,000 that will be due by the time everything is done. The total cost is $70,000 (plus about $3,000 of interest on the $50K loan if we pay it off in 2 years).
Our contribution to our solar goal in June was $1,037.
That brings the total we’ve saved toward paying for solar to $11,692.
The way we have our it set up in our budget is kind of like a sinking fund. We put money into that category each month, some months it is a lot, some months it is a little. There is an automatic payment of $1,502 toward the solar loan each month that comes out of that budget category. At the end of June the “Solar” category balance was $6,186. In addition to paying the solar loan, the balance in our solar category will go toward the additional $20,000 over the $50,000 loan (total will be $70K). They haven’t installed anything yet, so we haven’t had to paid the rest of the funds yet.
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.
How About You?
- How did your budget and/or debt repayment go in June?
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We’re in California & paid to have solar put on a few years ago. It was our agreement that we could only have AC installed if we had solar to offset the cost. I’m blown away by how expensive your system is going to be. Ours was about $30k, of which we got another $8-9k of a tax incentive. That included an entire electric panel rebuild, as ours was too old to handle the solar installation. Do you have an incredibly big system planned? Or, perhaps the cost has risen drastically in the few years since we had it installed. We went conservative (solar production just about equal with usage), & we’re on track every year, but I wish we’d done a few more panels. We also are due to get on the roof & clean them, which has a big impact on productivity – particularly whenever there are fires.
The cost has risen drastically!! We got estimates several years ago when we were trying to decide between getting solar and working toward paying off our house (at that time we chose to focus on the mortgage). If I remember right the estimate back then was closer to $40K. We are going conservative too, the system will cover current usage, not any extra and no batteries.
There are still some tax incentives. For 2022 we’ll be able to take advantage of the Residential Energy Efficient Property Credit which counts 26% ($18,200) of the total cost of solar against our federal income tax liability. The result is that for 2022, and into future years until we use up the $18,200 tax credit, we won’t owe any federal income taxes.