“Better late than never” is pretty much my motto over here lately.
We went thought August’s budget and set September’s budget right at the end of August as usual. It just took a little while for me to make time to sit down and type up the post about it!
This homeschooling four kids while watching two little ones on the side is no joke. I really love being able to have my kids home (most of the time) and teach them everything (though they tell me I require more than their public school teachers), but it takes all the livelong day (and then after they go to bed I’m planning and researching)! Though it’s not what I expected to be doing (if you asked me back in 2019), I feel like it’s one of the most important things I’m doing right now.
But budgeting (even if I’m not prompt at posting about it) is something we do every month no matter what else is going on.
For those who are new here, we are a family of 8 in Northern California. Several years ago we worked hard to pay off $144,000 of law school student loan debt. We started sharing our family’s finances while we were focusing hard on that goal. And we haven’t stopped. We’re now working on paying off our mortgage (and we have a whole list of other goals once that is achieved).
Income Earned in AUGUST – $10,022
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 August, which has all been set aside to use in our September budget. The spending section below shows the money we earned in July and spent in August.
Attorney Income – $7,522 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, and health insurance premiums.
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 year. 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. I figured I would hold off on paying myself since I wasn’t doing much work and wasn’t earning very much. I paid myself in July and I probably will pay myself again in December.
Rental Income – $1,000 We rent the 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. We don’t have to clean and do a full Covid-disinfect and airing of the apartment between stays, for one. Also, our renter helps take care of our animals and property when we go out of town. We expect that we’ll go back to Airbnb after our current renter moves out. 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.
Child Tax credit – $1,500 In August we received our second child tax credit payout. It’s actually supposed to be a little more, but that will get all straightened out at tax time. We are putting it into the budget like normal income, but essentially it gets funneled right into our family travel fund.
Spending in August
Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in July.
Giving
Tithing – $1,341 We always pay a 10% tithe on our income. This tithing, like all of our August spending, 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 charity program that helps provide for the local poor.
Monthly Bills
Mortgage – $2,369 We re-financed our 15-year mortgage to a 2.375% rate in December 2020 and this is our current monthly payment. Mike shared all of the numbers and re-fi details here.
Electricity – $306 This electric bill covers both our home and our rental. Both are completely electric, with no gas or propane. I think we’ve only used our air conditioning twice so far this summer. It has been hot, but it usually cools off pretty nicely at night, so if we’re strategic with when we open the windows and when we close the windows and blinds, we can keep the temperature tolerable.
Car Insurance – $116 Our auto 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 – $150 We set aside half of what we expect the next bill to be (the bill comes every other month). This is a generous estimate though. Hopefully our bill will be much less than $300.
Garbage- $45 The bill for our curbside trash pickup comes every other month so we set aside half of the bill each month.
Cell Phones – $55 We have two phones with Visible, a Verizon subsidiary that offers wifi calling and unlimited cell calls and cell data on the Verizon 4G LTE network. Each phone is $25 a month! We’ve been using them for about two years now and have no complaints at all. If you’re interested, right now you can get the first month for just $5 to give it a try!
We used to use Republic Wireless, which costs less, and some readers rave about Mint Mobile’s great service and even lower costs, but neither of those use a network that provides signal at our house.
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.
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. We’re excited to be almost done with her treatment!
Disability Insurance- $185 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.
Piano – $0 We normally spend $120 per month on piano lessons for our oldest, but we had planned to be out of town for most of the month before our kids got hit with covid and we had to go home on day 2 of our trip (see July’s update for the story).
Everyday Expenses
Food – $545 Our normal monthly food budget is around $500 for our family of 8, so this was a little higher than normal. We did stock up on some things that were a great deal, so I was fine with going over . If you want to learn exactly how we keep our family’s grocery spending low and consistently stick to our budget, you’ll want to get on the waiting list for Grocery Budget Hero, the online course where I teach all of my grocery strategies. It will be opening up again soon! UPDATE: Grocery Budget Hero enrollment is open now!
Fuel – $490 It kills me to pay $4.50 for a gallon of gas! Our gas is extra high this month due to our failed road trip at the beginning of the month (drove 12 hours, then turned around and drove another 12 hours home because we received positive covid test results for three kids).
Household Misc – $174 Nothing especially exciting here, just regular household things and a new wireless keyboard.
Clothing – $25 – The kids needed a few things.
Animals – $25 We bought a bag of dog food.
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 – $454 We bought a new Chromebook so that each of our school-age kids has one to work on.
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 – $650 added. We spent $756 on medical and dental expenses. Current category balance is $2,103.
Car Maintenance – $300 added. We spent $0 in August. Current category balance is $3,299.
Christmas – $100 added. We spent $0 on Christmas 2021 in August. Current category balance is $679.
Life Insurance – $75 added. We add $75 per month here and then we have what we need for our life insurance premiums, which will be due in November. Current category balance is $750.
Birthdays & Gifts – $40 added. We spent $0 on gifts in August. Current category balance is $210.
Car Registration & Smog – $40 added. We didn’t spend anything in this category. Current category balance is $184.
Family Fun Fund – $2,000 added. We added a big chunk of money here because we are planning to do some traveling this year. With our kids homeschooled and having a wonderful renter who is willing to take care of our animals and property, this year should be a good time for our family to travel a bit. In August we spent $145 on family adventures which included an annual pass to a local hands-on science museum that gives us reciprocal access to other science museums in the country. Current category balance is $1,918.
Preparedness – $0 added. We spent $55 adding some hot chocolate to our emergency food storage. I also got more screw-on plastic mason jar lids for water storage (see this post). Current category balance is $259.
Home Projects- $0 added. We didn’t add or spend from this category. The category balance is currently $1,050.
Garden & Orchard- $0 added. We spent $50 on seeds for the fall and next year’s garden. The category balance is currently $34.
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 2020. Mike has about $800 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. At the end of 2018 we made a goal to pay it off in 5 years. You can read about our mortgage-payoff goal here and see the numbers for our most recent re-fi here.
This month paid $1,328 of principal in our normal August mortgage payment. We also put $3,000 extra toward our mortgage principal.
Current mortgage balance: $229,726
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: 36.7%
Percent of 5-year time elapsed (34 mo): 56.7%.
We’re not on target now to pay off the mortgage in our goal of 5 years, but we’re a whole lot closer than if we had not set the goal in the first place. And we’re really not heartbroken about our progress. We’ve been making decisions together and intentionally, trying to balance how much focus we put on our financial goals with how much time and money we want to spend with our family as they’re growing up so quickly!
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.
How About You?
- How did your budget and/or debt repayment go in August?
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New to your blog. (Also Frugal minded and YNAB lover) Have you heard of Red Pocket or Tello for cell phones? If you don’t use a lot of data they are worth looking into. Tello is cheaper, but Red pocket uses any network you want as long as you get the corresponding SIM card. Our current phone bill for two phones is under $38. (Going off the Verizon’s network as it’s the only one that works at our house).
So fun to hear from you again. I just wanted to encourage you in your goals and decision-making. You are doing a wonderful job in challenging times. Blessings to you and your family!