Transparent Family Budget Update - September 2024

I always look forward to going through our budget at the end of the month. When we look at our budget at the end of the month, we aren’t looking to see if we matched our spending up exactly with the amount we set for each budget category. Throughout the month we track our spending as we go and we move money around between categories as needed, so we usually don’t have any big surprises. At the end of the month we can put any extra funds from our regular categories towards the financial goal that we’re working on. It’s also the time that we make plans for the next month.

At the end of September I was especially excited to see our total spending on gas. Throughout the month I’ve been surprised how often we’ve been able to drive our new car instead of either of our two vans (a 7-passenger Dodge Grand Caravan which uses twice as much gas as the Prius and a 15-passenger Chevy Express which uses four times as much as the Prius!) I’ve been eager to see how the month’s gas spending would add up and how it would compare to our spending in a comparable month. I had high hopes, but reality actually exceeded my expectations! You can read all about that below.

We also need a new goal now that we accomplished our last goal by buying a new car. We are still deciding what our next major focus will be, but in the mean time, we are going to beef up our car maintenance fund.

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

Spending in September

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

We can’t see the future, so on the first of September, 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 September 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in September than we earned in August.

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 September spending for all of our budget categories.

Giving

Tithing – $1,294 We start out the month paying a 10% tithe on our income. Like all of our September spending, our tithing is calculated on what we earned in August, 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 $163,260 remaining on our mortgage.

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

Car Insurance – $377 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 – $224 Our water bill comes every other month. Last month we set aside $130, so this month we had the remainder of what our bill turned out to be.

Garbage- $54 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 – $667 I didn’t do a normal monthly grocery shopping trip in September. I picked up groceries at both Winco and Sam’s Club a couple of times. I also stopped by Grocery Outlet several times during the month when I was in the area. We didn’t get pizza (or any other eating out) this month, so we only ate from 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 – $482 Adding a 2008 Prius that gets 45 miles to the gallon made a HUGE difference in our gas spending. September was our first full month of being back in school and our school driving schedule is much different from our summer driving schedule. Compared to May, the last full “in school” month when we only had the minivan and the 15-passenger van, we spent $657 LESS on gas. That’s an even bigger savings than we had anticipated. It turns out there are more opportunities than we realized where 5 (or fewer) seats are required.

Household Misc – $347 We had our normal subscriptions like Google Suite ($6), cloud storage ($100), crash plan ($30), Adobe ($20), and Scribd/Everand ($12). We also bought normal household/toiletry items and various things on Amazon, including a book I’m so excited to read: The Small and the Mighty.

Clothing – $293 – One of the kids needed new running shoes. Another needed cowboy boots for a welding class. My oldest son needed new dress pants (even though I got him some only a few months ago). Kids grow so fast! I got a few new things too.

Animals – $0 The animal feed was all stocked up so we didn’t need to buy any in September.

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.

Sports – $200 Our two high school runners went to a cross country meet in Southern California. The team paid for most of the trip with their fundraising, but they asked for a $100 voluntary contribution for each runner.

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 – $100 added. We spent $101 on medical and dental in September. Current category balance is $1,739.

Car Maintenance – $400 added. In September we spent $0! Current category balance is $1,106.

Christmas – $200 added. In September, we spent $40 on Christmas 2024. Current category balance is $1,543.

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 $1,230.

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 $1,073.

Birthdays & Gifts – $50 added. We September we spent $141. We hosted a birthday party for our 7-year-old. I also bought three packages of these awesome paint markers. We used them at an activity where we painted happy messages on rocks so we already knew they worked great! Amazon has a 38% off coupon that makes them a great deal, so I got some for future gifts. Current category balance is $94.

Car Registration & Smog – $50 added. We spent $0 in September. Current category balance is $402.

Family Fun Fund – $330 added. I planned a couple of fun (and fancy) dates for us for the rest of the year (including seeing Wicked and Hamilton). Also I made a reservation to take a family visit to Timpanogos Caves. 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 – $464 added This sinking fund is to save up for a trip we are taking in 2025. We added $350 of our own money. We added $74 from credit card points and $40 from a refund of a sledge hammer that was recalled. We filled out the product recall form more than a year ago and had completely forgotten about it until the check came in the mail. Current category balance is $4,744.

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 September- $9,770

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

Attorney Income – $8,925 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- $0 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 – $0 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 – $845 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 October’s budget.