October 2024 Family Budget Update

What do you do when you have unexpected expenses? As you’ll see in our budget below, we try to plan ahead by adding to sinking funds for specific purposes. By adding money to each of these categories every month, we build up sums of money that will come in handy when those expenses come up.

Car maintenance is one of those sinking funds that we add to nearly every month. Most months we don’t need to use any of those saved funds, but when we do need it, having that money keeps future car repairs from becoming financial emergencies. Having sinking funds prevents us from needing to use our emergency fund.

Sometimes, the unexpected expenses are more than what we can cover with our normal budget or our sinking funds. For example, remember back in 2022 when our water bill was suddenly $1,500? We sure didn’t see that coming!

We went to our three-part plan for dealing with unexpected expenses.

1. Change how our money is allocated in the month’s budget
2. Split the cost with next month’s budget
3. Use our emergency fund (then pay it back ASAP)

Thankfully, we were able to handle the sky high water bill with parts one and two of our plan.

I love having an emergency fund, but I also love not having to use it.

In October, we had another chance to use parts one and two of our method to deal with unexpected car maintenance expenses, which I’ll discuss in this update.

Having a plan to handle unexpected expenses makes your budget robust so those unfortunate surprises are less likely to derail your financial progress.

Okay, let’s get to our October’s spending, saving, and earning for our family of eight.

Spending in October

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 October, we budget and spend what we earned in September. We knew on October 1st exactly how much money we had to work with during the month.  So on October 1st, we start the October budget by taking everything we earned in September and assigning it to our October budget categories.

We can’t see the future, so on the first of October, 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. And a budget that changes during the month is good!

It’s normal for our spending plan to change as we move through the month. The important thing isn’t spending exactly how much we guessed we might spend in each budget area at the beginning of the month. It would be silly to let our October 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in October than we earned in September.

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 October spending for all of our budget categories.

Giving

Tithing – $1,144 We start out the month paying a 10% tithe on our income. Like all of our October spending, our tithing is calculated on what we earned in September, 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 $161,319 remaining on our mortgage.

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

Car Insurance – $376 We have three vehicles with two adult drivers and one teen driver.

Internet – $105 We have cable internet through Comcast. When we bought our home seven years ago, we invested $5,000 to have Comcast extend cable internet to our property. It has been worth it every single day since then, even though the cost for internet service went up recently.

Water – $150 Our water bill comes every other month. We set aside $150, which is about half of what we expect the next bill to be.

Garbage- $53 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 this service recently increased, too.

Cell Phones – $175 We pay for eight cell phones: five for our family, and three for the Ukrainian family that we sponsor. Mike is trying out the annual plan, so we now only pay 7 phone bills per month). 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.

Everyday Expenses

Food – $763 At the beginning of the month we took a road trip which included getting pizza, but other than that, all of our meals were made at home.  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.

Fuel – $809 Our fuel spending wasn’t as low as last month because we took a road trip in October. We had some drama with our big van, so we had to drive two cars to Utah.

Household Misc – $493  We had our normal subscriptions like Google Suite ($6), cloud storage ($100), crash plan ($30), Adobe ($20),  Scribd/Everand ($12), and Dropbox ($199 annual). We also bought normal household/toiletry items and various things on Amazon, including

Clothing – $31 – We got a few clothing items for Halloween costumes.

Animals – $53 We got dog and cat food.

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.

Sinking Funds

For our regular 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 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 – $0 added. We spent $86 on medical and dental in October.  Current category balance is $1,653. 

Car Maintenance – $448 added.  In October we had huge spending on car maintenance. You can read all about the drama with our big van in the most recent Feats, Flops, and Funnies post. In order to manage the $4,054 we spent on car repair this month we had to push one of the charges )$2,553 off to November. I just changed the date of the expense to November 1st. This only works because we are a month ahead. To be clear, we did pay the full repair bill and also paid the credit card bill. We just didn’t have enough funds in our October budget to cover the expenses even though our accounts had plenty of money because we are a month ahead. We could have used our emergency fund, but we knew with just an extra month, we could plan for this unexpected expense. You can read more about how we handle unexpected expenses here.  Current category balance is $53.

Christmas – $200 added. In October, I spent $80 on Christmas 2024. I bought matching Christmas pajamas for the eight of us from The Children’s Place. Current category balance is $1,662.

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 $1,420.

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 $1,173.

Birthdays & Gifts – $50 added. We October we spent $0. We had a birthday, but already had gifts and had friends over to play instead of a normal party.  Current category balance is $144. 

Car Registration & Smog – $50 added. We spent $0 in October. Current category balance is $452.

Family Fun Fund – $350 added. We took a road trip to Utah and stayed in a motel one night on the way there. We also bought tickets to see a cousin in a theater performance next month.  Current category balance is $0.

Home and Garden – $1,330 added. We spent $1,479 on a new chain saw and new lighting for our bedroom.  Current category balance is $17.

Big Trips – $422 added This sinking fund is to save up for a trip we are taking in 2025. We added $363 of our own money. We added $59 from credit card points and Rakuten. I wrote in detail about how we’re saving for this trip creatively. Current category balance is $5,166.

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.

Income Earned in October- $13,463

The categories above show everything we spent and saved in October, which was all the money we had earned in September. At the same time we were also (of course) earning money during October. At the beginning of November, we set up our budget to allocate spending from our October 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 October, which we will use during November.

Attorney Income – $9,088 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- $1,600  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 – $1,954  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 For the past year I have been taking care of the 2-year-old of the Ukrainian family that we sponsor. The state pays for childcare while the mom is at work. It’s much less expensive and more convenient to have her stay with me than to bring her to a standalone child care facility.

Come back next month to see how we used this income to spend and save in November’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 October 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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