Real Family Budget Update– May 2020

We’ve been talking food storage a lot lately around here, but today we’re back to more normal programming with our monthly budget update for May.

If you’re new here, every month for more than six years we have shared our family’s real budget numbers.  I share what we actually earned, what we spent in each of our budget categories and how we are doing on our goals.

Like many of you, our finances have been (and will be) affected by the coronavirus pandemic.  So far it’s just been a hit to our Airbnb income, but in the coming months it will also be a pay cut.  As a state employee, Mike will take a 10% pay cut starting in July.

We feel so grateful to still have a steady job in these challenging times, so you won’t hear any complaints from us!

Before I get into all of our numbers, I want to ask you for a favor!  I am working on planning the future of Six Figures Under and I could really use your input.  Would you be willing to take a reader survey for me?  It’s been a looong time since I’ve done a reader survey (like many years), so I would love to get your thoughts and perspective.  Learning a little about you will help me be sure I’m sharing more tailored, awesome content that is relevant to you!

If you’re working on paying off debt this year we would love to have you join us in the Debt Smash-athon!  If you’ve got savings goals instead of debt, you’re welcome to join in too! You can report your May debt payoff (and savings) progress right here!

Let’s jump into the numbers. If you want to see the budget walkthrough in YNAB, checkout the video below.

Income Earned in May – $9,167

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.

The income section shown here is the money we earned in May, which has all been set aside to use in our June budget. (The spending section below shows the money we earned in April and spent in May).

Attorney Income – $6,856 Mike works as an attorney for the state of California.  This is his take-home pay after taxes, social security, and health insurance premiums.  Normally parking is taken out too, but when we realized that he would be working at home for a while, he cancelled his parking pass, which saves us $180 a month.

Blogging Income – $1,597 My blogging income has been low for a while now.  The majority of it is ad revenue.  I really need to diversify.

Airbnb Income – $714 We rent the one-bedroom apartment on our property through Airbnb.  We were grateful to have one couple stay during a period of self-quarantine as they relocated from Hawaii before moving in with their family. While this is less than half of what we usually earn, it’s double what we earned in April. If you’re thinking about renting out your space, 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 May

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

Giving

Tithing – $1,440 We always pay a 10% tithe on our income.  This tithing (like all of our May’s spending) comes from the money we earned in April (which was way more than normal–you can read about April’s income here).  You can read about 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 make a donation to help the poor.

Monthly Bills

Mortgage – $2,781 This is our newly refinanced mortgage.  Mike recently published all the details and shared our experience with a true no-cost mortgage re-fi. This might seem like an odd time to think about refinancing your mortgage, but rates are currently as low as they have been in the last 100 years. Anyone with a mortgage interest rate above three percent is likely to find a better rate now, putting real money in your pocket every month for the life of your mortage.  Check out the post to see how you might be able to save.

Electricity – $172 Our electric bill covers both our home and our Airbnb rental, but since the Airbnb wasn’t used much during this billing period, the bill is nice and low.

Car Insurance – $99 Since Mike is working at home, rather than commuting, we took his vehicle off the insurance.  Last month we paid what we normally pay for 2 vehicles, so the $99 we paid in May includes prorating April’s premium. We have been so impressed with the service and coverage that USAA provides as both a bank and an insurance company. We’re able to join USAA because my father-in-law was in the service years ago.  If you, your parent, or your spouse were/are in the military, you’re probably eligible for USAA too!

Internet – $70 Now that Mike is working from home and we have three kids schooling from home, we decided to upgrade to a little faster internet.

Water – $96 I try to estimate what half of the bill will be and set it aside as the bill only comes every other month.

Trash – $37 Our garbage collection bill comes every other month, so we set aside half each month.

Cell Phones – $47 This includes one Republic Wireless phone and a new phone using through Visible. We’ve had a Republic Wireless plan for many years. It offers a unlimited calls and texts and 1 GB of cell data for $20/month with no contract.  The nice thing about Republic Wireless is that any time you’re in wifi range, the phone uses wifi for both calls and data, so we rarely get close to the 1GB data limit.

We live in kind of a funny spot where Republic Wireless cell service isn’t available. That might sound crazy, but since they use wifi for calls when it’s available, it has never been a problem.  Until last year when PG&E started turning off our power for days at a time when fire danger is high.  Without electricity we have no wifi, which means we can’t call or text either.  Not the kind of situation you want in a potential fire!  So we found a great affordable carrier that does get service where we live.  It’s called Visible and it has both wifi calling and unlimited cell data (on the Verizon 4G LTE network), all for $25 a month!  We decided to try it out.  So far we’re pleased with it! This will be great to have when PG&E turns off our power in the summer/fall due to fire danger.

Another great option for affordable cell phones is Mint Mobile, especially if you want to bring your own phone.  I’ve had readers rave about their great service.  You can get data for a lot less than Republic Wireless.  Mint Mobile or Visible both look like they’re worth looking into if you want a cheaper cell phone bill!

Home phone – $5 Since Mike works at home a day or two each week for the forseeable future, we have a home phone for him to use. It’s also handy for the older kids to be able to call us when they are babysitting at home.  It’s through Ooma, which is internet-based, not a traditional land line.  The monthly bill is a minimal $4.50 and the initial set-up (hardware, etc) was under $100.  If you want to give Ooma a try, that link should also get you a $20 credit (let me know if it’s not working).

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 for the two years that she has braces.

Disability Insurance- $151 We have been talking about getting disability insurance for Mike for years, but we finally did it in February.

Piano – $110 Our oldest started taking piano lessons from a teacher who isn’t me and it’s going really well.  The last two months she’s had socially distant lessons via Zoom.

Everyday Expenses

Food – $106 We haven’t gone to the store at all, but we’ve ordered some food items here and there from Walmart.  It’s not grocery pick-up, but they have free shipping on orders of $35, which is so nice because their prices are much better than what you find on Amazon.  I stocked up a bit on peanut butter, jam, baby food and a few other random things.

Fuel – $88 We mostly stayed home in May, but borrowed Mike’s parents’ truck to get things for the garden.  With all the shortgages, it took some driving around to find the lumber and fencing.

Houshold Misc – $149 We got some miscellaneous household things like deodorant, garden seeds, wood chips, and these extra long bread pans that I’m suuuper excited about (and they were a fabulous price)!

Clothing – $29 I ordered a few things from The Children’s Place, including new church pants for my older boys (in case we get to go back to church someday!).  The Children’s Place is probably my favorite place to get new clothes for the kids.  I’ve been shopping there, mostly online since my 12-year-old was a newborn.  Their prices are great (especially sale/clearance prices) and they have free shipping an all orders everyday! You can get a $10 off coupon if you’re a new customer.

Animals – $26 We bought a bag of cat food in one of our Walmart online orders.

Kids’ Activities/School – $0 Nothing here.  Lots of playing outside at home for free.

Allowances – $60 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 tied to chores, as well as all the details of when and how much in this blog post.

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 future 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.  I’m 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 balance unless we’re reconciling the account.  We track our budget categories and spending in YNAB.

Medical/Dental – $300 We had a $25 ER copay from several months ago.  Current category balance is $3,137.

Car Maintenance – $300 We didn’t spend anything on car repair or maintenance this month, which isn’t surprising since we only drove a handful of times. Current category balance is $3,584.

Christmas – $100 We didn’t do any Christmas spending. Current category balance is $412.

Life Insurance – $75 Our premiums aren’t due until November, but if we put aside $75 per month we should have them covered. Current category balance is $525.

Birthdays & Gifts – $0 We didn’t spend or contribute anything to this category in May.  Current category balance is $188. 

Car Registration & Smog – $40 We spend $156 to renew the registration on one of our vehicles.  Current category balance is $381.

Family Fun Fund – $25 We didn’t spend from this category, but we added a little from OhmConnect.  If you’re in California, it’s a great way to save money by just reducing your electricity for an hour once or twice a week.  And now that summer time is here, there will be more opportunities to earn. Current category balance is $817.

Car Fund – $547 – We have a new sinking fund to save up to buy a used Prius for Mike to commute in.  We’re planning to have $10,000 saved by the end of the year.  He’s been driving our second van (the one we were going to sell after we bought our 8-seater) ever since his car was totaled by a deer, though for the last 10 weeks or so he hasn’t been driving anything!! Current category balance is $5,729.

Preparedness – $400 This is a new category that I’m going to use to restock our long-term food storage when we finish our Quarantine Food Storage Challenge.  I didn’t spend any from this category in May. Current category balance is $511

Home Projects- $5,332 We haven’t had any money in this category for a long time, but we added $4,860 from our stimulus check to the home projects category for our garden project.  I am still working on putting together a post and video of this enormous project.  In addition to the stimulus check we added another $472 to cover the garden expenses.  The category balance is currently $0.

Investing

Kids’ 529s – $125 I know that $25 per kid per month invested for college isn’t much, but we’re not as concerned about college costs as some people.  Scholarships, grants, loans, and jobs during school worked for us.  We may accelerate this savings later, but it’s not our highest priority right now. You can read about our decision to start saving a little for college in this post.

IRA (Steph) – $500 $500 monthly will max out my $6,000 IRA contribution for 2020.  Mike has about $700 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.  The original goal was to pay it off in 5 years. It looks kind of impossible on paper right now, but we’re hoping to figure out how to still make it happen! We’ve made some adjustments to our priorities, so if we don’t make it exactly in our five-year time frame, we’ll be ok with that too. You can read about our mortgage-payoff goal here and see the numbers for our most recent refi here.

In addition to the $1,473 of our normal payment that went toward principal, we also had $0 in additional principal.  Yep, that’s a big ZERO.  We have a lot more sitting in the “Mortgage Extra” category of the budget, but we’ve decided to just keep it available there and put a hold on paying extra on our mortgage while we wait out these uncertain times.

That brings our totals to:

Current balance (after May 2020 payment): $298,157

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: 17.9%
Percent of 5-year time elapsed (19 mo): 31.67%.  Yep, we’re behind!

The 6-month goal we set for Day 1 of the Frugal Fresh Start Challenge is to put an additional $25,000 toward our mortgage by June 30th (this is above our normal monthly mortgage payments).  So far we have put $8,216 toward that goal. We also have another $9,890 waiting in our checking account that will go toward the mortgage once some of the current economic uncertainty is abated and we feel comfortable actually making the payment.

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.

Whew!  That was a lot of numbers.  Thanks for reading our personal finances made public!

If you haven’t already done so, take a sec and fill out my 2020 Six Figures Under Reader Survey and report your Debt Smashing progress for May!

How About You?

• How did your budget and/or debt repayment go in May?

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