Real Family Budget Update– May 2021

It’s time for another budget update!  I was a little late in getting April’s budget update put together, so if you missed it, you can find it here.

The most exciting part of May’s budget was putting a big chunk of money toward our mortgage.  For several months we’ve been contemplating putting in solar, which would have required a big outlay of cash so we had been holding onto our extra mortgage payments in case we wanted to go that direction.

You’ll find all of our other May spending numbers explained below.  If you’d rather watch a walk-through of our actual budget in the YNAB app, you can checkout the video below.  Otherwise keep reading.

 

Income Earned in May – $7,917

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 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 – $6,917 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, we hope that pay cut goes away soon.

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. We expect that we’ll go back to Airbnb after our current renter moves out. 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 – $915 We always pay a 10% tithe on our income. This tithing, like all of our May spending, comes from the money we earned in April. 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 – $208 This electric bill covers both our home and our rental. Both are completely electric, with no gas or propane.

Car Insurance – $123 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 – $60 This bill comes every other month, so each month we put approximately half of what we expect the bill to be.  This will be going up as we water the garden during the hot summer months.

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! This isn’t the very cheapest cell phone option out there, but the Verizon 4G network is the only network with any signal at our house, and we’re at our house pretty much all the time now.

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 – $504 We had a pretty typical month for grocery spending.  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 this summer! UPDATE: Grocery Budget Hero is now open for enrollment!

Fuel – $299 We drove more than normal because we took a few small trips and the kids started swim team.  The price of gas is also going up. Everything is over $4/ gallon where we are. Even so, this is still $200 less than when Mike commuted to Sacramento several days a week.

Household Misc – $251 I decided to stop cloth diapering and just buy disposables for the next 6 months or so of our littlest guy’s diaperhood.  We bought some new sheets and some laundry detergent. A friend had a yard sale and we bought some things like a Little Giant ladder, some pattern blocks, and random kitchen things.

Clothing – $77 – We purchased swim suits and some other clothes online.

Animals – $55 We replenished our dog food and cat food.

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 – $20 We put some money in this category last month for purchases I was planning to make (treating it a little like a sinking fund).  We spent about $60, leaving $10 remaining.

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 – $400 added. We spent $32 on some prescriptions. Current category balance is $1,700.

Car Maintenance – $0  added. We’re not putting money into this category right now. We have a nice balance and we don’t drive a lot now, so we don’t have a lot of maintenance. We spent $6 on power steering fluid. Current category balance is $3,914.

Christmas – $100 added. We didn’t make any purchases for Christmas 2021. Current category balance is $462.

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 $525.

Birthdays & Gifts – $0 added. We didn’t spend anything on gifts. Current category balance is $253. 

Car Registration & Smog – $0 added. We aren’t adding to this category for now. We spent $229 on registration for one of our vehicles. Current category balance is $373.

Family Fun Fund – $300 added. We started adding to this fund again to plan for some summer adventures.  Current category balance is $600.

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 or spend anything on home projects, but we know there will be things coming up.  The category balance is currently $1,124.

Garden & Orchard- $0 added. We spent $605 on hoses, nozzles, and organic insecticide.  The category balance is currently $219.

Investing

Kids’ 529s – $175 We finally opened a 529 for our youngest (opened with $50).  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. We just finished up two and a half years of working on this goal.  You can read about our mortgage-payoff goal here and see the numbers for our most recent re-fi here.

This month we paid $1,276 of principal in our normal May mortgage payment.  We also put $18,000 of extra cash toward our mortgage.  That’s money we’ve been holding onto from the third Covid stimulus check, our tax refund, and a few months of not making extra payments. We thought perhaps we would put it towards a solar system instead, but decided to keep working on the house payoff for now.  Solar will have to come later.

Current mortgage balance: $240,924

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: 33.66%
Percent of 5-year time elapsed (31 mo): 51.67%.

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 May?

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