In case you missed the big announcement on last month’s debt repayment update, we no longer have any loans through the federal student loan servicer! During our monthly budget meeting yesterday, my husband started signing into our loan servicer’s site out of habit! Hooray for not needing to go there anymore!
The remainder of our debt is owed to a family member who graciously offered to help defray interest costs by loaning us $30K to refinance some student loans. We’re paying her back at half the interest rate we were paying on the student loans. It’s a win-win situation because she is earning more than three times what she was making when her money was sitting in a savings account.
It blows my mind to think of how $25K feels like we’re almost there. Over the past two-and-a-half years we have really picked up steam! Our slow and steady turned into fast and furious as we first reduced our expenses and then increased our income.
Last week I really had fun writing about our plans when we’re debt-free. I also answered lots of the typical questions I get on that topic. If you haven’t read it, go check it out! 🙂
Debt Repayment
In April we paid off $5,585 in debt! While this isn’t nearly as much as what we were able to pay last month, we are very happy with our progress.
In case you’re new to our method, I’ll give you a quick overview. We hang onto all the money we earn in a month and don’t touch it until the following month. At the beginning of each month, we have the entire previous month’s income waiting for us, so we know exactly how much money is available for that month’s expenses. We allocate that money to our budget and whatever is left we pay toward debt. You can get a more detailed look at this process in my Guide to Getting a Month Ahead Financially.
After setting budget amounts for the month, we put a big chunk of the “extra” money toward our debt in a payment at the beginning of the month and hold on to a portion of it as another buffer toward surprises that come up (the kind of “surprises” that come up when you drive older vehicles). At the end of the month, we also take any unused amounts from our budget categories and add them to our end-of-the-month payment. You can read all about how we maximize our debt repayment at the end of the month.
Income
Our total net income for April was $9,664 which includes retiring a vehicle and our state tax return. Since we live on last month’s income, this is income that we haven’t used yet. We have it budgeted to spend in May.
Attorney Income (Day Job)– $5,126 Mr. SixFiguresUnder has been working full-time as an attorney for the state of California since last fall. His actual take-home pay is $3,778, but I add back in the cost of the benefits (insurance, dental, vision, parking, union dues and retirement) that are automatically taken out of his check so that I can show them to you in our budget below.
Attorney Income (Private Practice)– $632 My husband is a really busy guy. On top of working full-time (with a three-hour round-trip commute), he has his own private law practice on the side. The days are long and won’t be sustainable for the long haul, but right now the extra income is really helping us tackle our debt. That income is very variable, and this last month he also had several business expenses, so this month’s profits are lower than usual.
The big goal for this month is to send out bills. It has been a while since he’s done that. There is always something more pressing that needs to be done to take care of clients, so the bills get moved to the back burner. Hopefully he can make time to get those out at the beginning of the month and get paid for a lot of the work he has already done.
My Income (Blog)– $2,022 The income that I report is the income that I received this month minus all of my blogging expenses. I keep track of both what I earn each month and what I receive. If you’re interested in the details of my blogging income as well as other blogging tips and resources, you can sign up for my Behind-the-Scenes Blogging emails to get the scoop.
If you want to start your own money-making blog, check out my complete step-by-step instructions for setting up a self-hosted blog and the resources I recommend for starting a blog on a budget.
Vehicle Retirement (Red Van)– $1,500 I’m so happy to tell you that we finally got rid of that pesky red van that we bought last summer a few months before it lost its mind. I’ve talked about it before, so I won’t go through all the drama again. Suffice it to say that we feel immensely blessed to have qualified for the vehicle retirement program. Because of its freak problem it would not pass or fail smog, so according to what I know about the program, they could have denied our van, but they didn’t.
State Tax Return– $384 We owed over $2000 on our federal taxes (which we expected), but we got a return from the state! Hooray! We’ll take it! 🙂
Spending
Each month we budget down to zero using last month’s income. Our spending in April came from the income we earned in March. In addition to the debt payment above, here’s how we spent money in April:
Tithing– $985 We happily pay a 10% tithe on our total income from the previous month. You can read more about why we pay tithing even though we’re in debt.
Other Giving– $50 Other charitable donations this month.
Mortgage/Rent– $0 Living in my in-laws’ unfinished basement is a huge blessing. I don’t expect everyone to do what we do, but for us, it’s worth sacrificing some comforts and privacy to pay off our debt faster. If you are considering living with family, here are some things to consider.
Internet– $0 Thanks to some legal work that my husband did for our service provider, we will have free internet for a while. It’s nice to stretch our budget by bartering, though we will still be paying income tax on the fair market value of this service come tax time next year.
Republic Wireless Cell Phones– $31 We switched our Republic Wireless phones to the new Republic Refund plans. With our refund for the data we didn’t use the month before, I ended up paying just under $12 and my husband paid just under $19 for our phones. That includes taxes too! You can read about getting refunded for cell data you don’t use here.
Health Insurance– $739 We have our insurance through my husband’s employer. This is the portion of the insurance premium that his employer does not cover. It includes dental and vision insurance premiums too. The portion that comes out of his pay check should go down after he has worked at the state for a year.
Car Insurance– $151 This will be going down next month because we are back to just two cars now. Phew! Our auto insurance is great. In addition to the wonderful coverage, they also give us dividends at the end of the year, which is always a nice treat.
Renters Insurance– $14 Our renters insurance is also through USAA. It doesn’t cost much and it’s really great to have when you need it.
Food– $349 Our being over budget this month is due to slacking off in recording transactions. There was a transaction that I completely forgot to record until we were reconciling our budget accounts. Oops! See, it happens to me too! :/
Gas– $309 I get excited every time I see how our gas budget has gone down. A year or two ago, we budgeted $500 per month. Right now the gas near us is just over $2.50/gallon.
Parking– $155– Working downtown means paying for parking. It is set up to come straight out of my husband’s paycheck, which means it is paid for with pre-tax dollars, a small consolation I suppose.
Clothing– $11 We stopped by a thrift store and I found some gems, including a pair of sandals and new favorite shirt for me! 🙂
Household– $49 In addition to the usually toiletries and kitchen non-edibles, I finally ordered myself some new glasses. It has been five years. I actually ordered two pair from Zenni since the shipping charge is the same no matter how many pairs you get. The total for 2 pairs of prescription glasses with shipping was $26! If you’ve never bought glasses online, read this article. I love them!
Entertainment– $21 We watched two movies with VidAngel, a service that allows you to stream filtered movies. The way it works is you essentially buy the movie for $20, but after you watch it, they buy it back for $19. As long as you continue using the service, that $19 credit just sits in your account so each subsequent movie only costs a dollar out of pocket. If you leave the service you can get your initial deposit back. We are really careful what media we bring into our home. With VidAngel, you can keep it clean by choosing what type of content from the film you want to filter out.
Car Repair– $125 One of the shock absorber bolts our van broke as I was driving last week. After watching some videos, my husband figured he could fix it himself. He ordered the parts and replaced one side easily, but could not get the broken bolt out on the other side. After trying lots of different remedies, we will be taking it to a professional soon.
Medical– $11 We bought some wart medicine at Walgreens because each of the kids has a wart on their hand or foot that has been there for a while. Hopefully this will take care of them.
Gifts– $44 I sent some hand-me-down and gift baby clothes to my brother and sister-in-law who just had their first baby. I also got some photos printed for my parents and ordered something that my 6-year-old will be getting for his birthday.
Taxes– $454 Last month we set aside $3,000 for our tax bill. That covered our actual income tax bill, but we used another $421 from April’s budget to pay our estimated taxes for the first quarter of 2016. We also paid a $33 fee to file electronically through TaxSlayer, which we have used for over 10 years.
Retirement– $484 With my husband’s state job, this amount comes directly out of his paycheck and into goes into his state retirement. While we have some retirement savings from our before law school, it’s nice to finally be contributing again.
College Savings– $100 We contribute $25 per month per child to 529 accounts. More on our decision to start saving for college in this post.
Whew! That pretty much sums up April! I’m excited to hear how YOU are doing with your budget and goals!
How About You?
- How did your budget turn out in April?
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We got a massive and unexpected tax return back ($8000) so two out of the last three grad school tuition payments will be covered. We only need to save enough to cover our last payment due in early January 2017, and we can focus more on other goals now.
Holy cow! That is a massive tax return! That’s awesome that you only have to come up with one more fgrad school payment!
Good for you guys! You are definitely on the home stretch and may be done sooner than your original goal date! I am always inspired by your family and how hard you work when I read your posts. From your husbands extra job plus long commute and your blogging with all of the intense homemaking, it’s really impressive. I’m glad all of the sacrifices are having large payouts now!
This was an exciting month for us as well since we paid the final student loan off! Now all we have is a mortgage and it feels amazing! Its been a long journey with lots of detours and bumps but we made it and I’m excited for you to join us soon in the no more law school debt club 😉
Congrats on making the final payment Judi!! That is super exciting! I’ll be happy to join you soon. We’re definitely planning on a few months earlier than planned (as long as our vehicles hold up)! 🙂
As always, I loved the monthly report. My family gets so much inspiration from yours. We are continuing to throw money at our debt. This month I was accepted into grad school for my doctorate, so we are having to reconfigure the budget because we refuse to get any student loans.
Congrats on getting accepted into grad school! Doing it without student loans will be awesome!
Bravo! $25k does feel very close. Also, as a lawyer myself, very impressed your husband is keeping up a private practice in addition to his day job. Impressive work ethic.
Thanks! I am impressed by my husband too. He is one hard worker! I don’t know how he does it all!
Hi Stephanie!
Super great job again this month! Won’t be long before you and your family will be debt free and saving for your new home!!! So exciting!!!
We paid off our final debt on April 25th – we now own our home!!! It’s still seems unreal but it was so thrilling to see the words “Paid in Full” on the balance owed line when we checked our account online! Thank you for the inspiration last January 2015 to set the goal to pay off our debt (we had a similar balance amount) super early – we actually paid off 11 months earlier than we believed possible!!! We will continue to live frugally while we address and deal with needs that we put off while being gazelle intense on our debt!
Cheering for you and your family!
Midori
“Paid in Full” — that is so exciting Midori! You OWN your home! Hooray! So cool that you even beat your goal! Like you, we will definitely have some needs to address once we’re done being super intense about debt payoff. Thanks for the encouragement! 🙂
BRAVO! My guess was 10% or approximately $3K and once again you BLEW RIGHT BY!
Okay – guess for May’s payment is 20%, which would put you at $20K.
Congrats on being persistent with the state government regarding your old van. So glad for you that chapter is – dare I say it – SLAMMED SHUT!
I think it’s fun that you like to guess. I will be happy with your guess for this month. We’ll have to see how it goes!! And yes, we’re so glad to only have one van to deal with! 🙂
Hi Stephanie! As promised in your last blog post about what you’ll do when you’re debt free, I’m so excited to tell you that I paid off my student loan this month!! I’m currently in Iceland sitting in a pub as I write this. What a way to celebrate! I still owe $7000 on my car, so I’m not totally debt free, but I will be by the end of the year. Congrats to you and your family for another great month!
That is awesome Tracie! How cool that you’re in Iceland! That is an awesome celebration! That’s great that you’ll still be able to pay off your car by the end of the year!! Enjoy the rest of your trip!
Well done! You’ll be down to 4 figures before you know it. I’m always shocked at what Americans pay for health insurance and health care. The kids and I are American, and my husband would have no problem getting a green card, but health care is one of the top 3 reasons we’ll never live in the US. In Australia, everybody pays a 2% Medicare levy to cover health care. Our system is all levels of screwed up with ample room for improvement; it’s far from a model system. But it works fairly well for the majority of people, and 2% of my income is a lot less than I’ve seen anyone pay for insurance in the US. And comparing my experiences with the experiences of my parents and siblings in the US, I think our quality of care is better too.
Yes, healthcare in the US is a sore topic. That’s awesome that you can get great healthcare for 2% of your income! I can’t imagine that! That’s got to be hard to be so far away from your family though. Do you get to come to the US and visit very often?
We catch up every couple of years. Last year we flew to the US and went to Disneyland together. This year they flew over here and we spent a few days in Sydney together before flying up to the Gold Coast, and then they spent about a week at our home in Victoria. Qantas has incredibly cheap fares to LA at the moment, about $780 return, and I’m tempted to go back for Thanksgiving, but it probably won’t happen, since we’re going to Japan next month and up to far-north Queensland in August. We’re also learning to sail, and we’re hoping to hire a boat for a few days in October, so that’s our vacations for this year pretty much sorted. But this is the second year in a row they’ve had very cheap fares for that time of year, so maybe we’ll try to pencil it in for next year.
I’m out of town, staying with grandchildren. Because I’m on an ancient laptop I keep for trips, I didn’t have your site bookmarked. I kept typing in “Five Figures Under” in the search engine and wasn’t getting your site. I couldn’t figure it out. Then I realized what I was doing wrong. Anyway, I thought you’d find it funny since you are, indeed, now five figures under.
That’s funny Linda! We’re been five figures under for a while now, it’s true. And four is just around the corner. Maybe when we’re all done with debt I’ll have to say “the family that once was Six Figures Under.” Well, until we buy a house in California, then we are sure to be six figures under again!
I. LOVE. YOUR. BLOG.
Thanks for all you share and disclose. I’ve been reading it for a while and get a lot of inspiration.
Quick (or maybe not so quick) question: I’ve had YNAB for about 18 months and am very faithful about recording all my expenses but haven’t taken up the budgeting aspect. I told myself I would when I switched over to the web based app in March but still haven’t done it.
I’m doing well with paying down my debt by working lots of overtime and significantly curbing my spending. I would love to get the one month ahead clarity about my finances but have, until now, been stuck in the cycle of watching my bank balances-mostly my primary checking account.
Do you have any suggestions about starting with budgeting on last month’s income? Since it’s already the 7th of May shall I wait and start in June or begin this month? I don’t have all of last month’s money saved up yet. So how, when I’m working on getting a full month’s income set aside, do I budget using this plan?
Thanks in advance!!
Hi Stephanie, I have been following your journey since you had around $90k still to go.
WOW. Talk about progress, talk about determination!
Very happy for your family as you get closer to making final payments soon.