Real Family Budget Update- July 2021

It’s time for our monthly budget update.

I typed this up at the beginning of the month, but I was waiting to post it until we filmed the accompanying video where Mike and I walk you through our actual budget in YNAB.

But a lot has happened this month and that video pretty was low of the priority list.  We headed out on a three week road trip at the beginning of the month, but a day into our trip three of our kids tested positive for Covid.  They had spent the night at their grandparents’ the week before, then later the grandparents tested positive. We had the kids tested as we headed out on our trip as a precautionary measure even though they didn’t have any symptoms.  When we got the positive results we turned around and drove 12 hours home very disappointed.

Then a few days later my mother-in-law had two strokes from clots caused by Covid. She’s home from the hospital and recovering well.

And in the past five days our county has exploded into fire. More than 23,000 people (including my in-laws) are under evacuation warnings or orders and many have already lost their houses. We are a safe distance right now and I don’t think our property will be impacted, but our hearts are hurting for our friends who are suffering major losses right now.

So I probably won’t get to making a YNAB budget video for July’s budget, but you can read all the details below.  Hopefully we’ll be back to making a video for next month.

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 during the period where 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 one is achieved).

Income Earned in JULY – $13,405

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 July, which has all been set aside to use in our August budget. The spending section below shows the money we earned in June and spent in July.

Attorney Income – $6,917 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, and health insurance premiums. He’s still working with a temporary 10% pay cut, like all California state employees, because last year the state expected some really huge Covid-related budget shortfalls.  It turns out that tax revenue was actually up due to a strong stock market during the pandemic. With the state flush with cash, that pay cut will go away with the August’s paycheck.

Blog Income- $3,988 I haven’t given myself a paycheck since February for a couple of 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. This month seemed like a good time to begin paying myself again.

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 We received our first child tax credit payout. It’s actually supposed to be a little more, but that will get all straightened out at tax time.

Spending in July

Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in June.

Giving

Tithing – $1,346 We always pay a 10% tithe on our income. This tithing, like all of our July spending, comes from the money we earned in June. 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 – $229 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 once or 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 – $113 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 – $171 With the vegetable garden in full production, our water bill was $250. We had set aside part of the total last month (the bill comes every other month) but this is the first bill after the water company checked the meter and saw our summer usage level increasing with the garden, so the bill was much higher than usual.

Cell Phones – $50 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.  These payments will last through the end of this year.

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 – $120 Our oldest takes piano lessons. The younger kids are still learning off and on with mom.

Everyday Expenses

Food – $475   We ate from our garden a lot during July. I also bought food for a three week road trip that we started on August 1st. Sadly we had to turn around and come home to quarantine after a day of driving because our kids tested positive for covid. Our normal monthly food budget is around $500 for our family of 8. 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 late this summer!  UPDATE: Grocery Budget Hero enrollment is now open!

Fuel – $560 With gas at over $4 here, it adds up quickly!  While we didn’t take any big trips in July, the three older kids had swim team practice every day which meant lots of driving back and forth for mom. We also made a couple of trips to the airport, had swim lessons for the younger kids, and took some local trips (within an hour from home). It’s crazy that this used to be a normal monthly gas spend for us pre-covid when Mike was still working in the city.

Household Misc – $564 The majority of this spending was an EcoTank printer. I had my eye on the ET-4760 for a while and was waiting for a sale. I was excited to find it on sale for $50 off at Sam’s Club, a total of around $400. Other than that, we had normal household category purchases.

Clothing – $0 – We didn’t buy any clothes or shoes in July.

Animals – $58 We bought 4 bags of chicken feed.

Allowances – $70 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 – $8 Our children are enrolled at a homeschool charter here in California which means we have state funds to purchase curricula and supplies and pay for some lessons/activities. Most everything we need we can buy with state funds, but occasionally there are things that we purchase with our own family funds.

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 – $150 added. We spent $0 on medical expenses. Current category balance is $2,208.

Car Maintenance – $0  added.  We spent $915 in July between new an oil change, new tires, and replacing the neutral safety switch. Current category balance is $2,999.

Christmas – $100 added. We spent $27 on a gift for Christmas 2021. Current category balance is $579.

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 next November. Current category balance is $675.

Birthdays & Gifts – $0 added. We spent $82 on gifts in July.  Current category balance is $253. 

Car Registration & Smog – $0 added. We aren’t adding to this category for now. We didn’t spend anything either. Current category balance is $373.

Family Fun Fund – $1,075 added. We spent $1,520 which pretty much emptied this category. We made some purchases aimed at future travel.  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 take some trips we have been wanting to take, so long as the covid situations allows it.  Current category balance is $63.

Preparedness – $0 added. I didn’t do any extra emergency preparations. Current category balance is $314.

Home Projects- $0 added. We didn’t add anything to home projects, but we spent $74.  The category balance is currently $1,050.

Garden & Orchard- $0 added. We spent $60 on three truckloads of wood chips for the garden and $55 at Home Depot The category balance is currently $84.

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 $1,317 of principal in our normal July mortgage payment.  We also put $3,600 extra toward our mortgage principal. 

Current mortgage balance: $234,054

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: 35.5%
Percent of 5-year time elapsed (33 mo): 55%.

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 July?

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