It’s time for a budget update! I pretty much haven’t checked in with you all since our budget update a month ago. August was a crazy month getting homeschooling set up for our 4 school-age kids. It seriously consumed all of my time! You seasoned homeschoolers probably have all sorts of secrets that I don’t know since I’m new to this.
Just as we were getting into a groove, we were accepted into a homeschool charter where we had been on the waitlist for months. A lot of things stay the same, but they’re pretty strict about crossing all the t’s and dotting all the i’s as far as standards go. The big benefit of being with the charter is that we get funding for books, supplies, and activities.
But even with all the craziness around here, budgeting still happens. Every month. Just like we somehow manage to find time to eat every month, we always find time to manage our money. It’s such an ingrained habit that we make it happen even when life gets crazy busy.
Could we “get by” without budgeting for a month or two? Probably. Money isn’t super tight right now and our spending habits are pretty consistent and predictable. BUT we continue budgeting each month because we have financial goals! Without making a plan for our money (that’s called a budget), we won’t progress toward our goals like we want.
If you’re new here, for almost seven years we’ve shared our family’s real budget numbers here every month. We share what we actually earned, what we spent in each of our budget categories and how we are doing on our goals. Our finances have changes dramatically over the past seven years, but we hope whatever stage you’re in, it might be helpful to see an example of working a real life budget. There’s not one right way to do it, so if yours is different, that’s just fine! It would be strange if it were the same.
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 August debt payoff (and savings) progress right here!
Now, let’s jump into the numbers. If you want to see the budget walkthrough in YNAB you can see that in the video below, otherwise keep scrolling for all the written details.
Income Earned in August – $9,518
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 August, which has all been set aside to use in our September budget. (The spending section below shows the money we earned in July and spent in August).
Attorney Income – $6,503 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, and health insurance premiums. Because of pandemic-related budget issues, all employees of the state of California got a 10 % pay cut. August was the first month this cut showed up in our income.
Blogging Income – $1,696 This is my blogging income after expenses have been taken out. It fluctuates greatly each month, though this is nearly the same as last month.
Airbnb Income – $1,319 We rent the one-bedroom apartment on our property through Airbnb. Because we reserve more days between guests for thorough sanitizing and airing out, this is lower than pre-pandemic levels, but we’re happy to have any income at all here. 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 August
Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in July.
Tithing – $1,095 We always pay a 10% tithe on our income. This tithing (like all of our August spending) comes from the money we earned in July. 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 contribute to a charity program that helps provide for the local poor.
Mortgage – $2,781 In December of last year we re-financed our 15-year mortgage to a rate of 2.875%, which was an amazing rate then. Well, they’ve gone down again and APRs now are as low as 2.2%! If you have dependable income and a mortgage, there’s serious savings waiting for you on one of life’s biggest expenses. Mike shares our experience with a true no-cost mortgage re-fi, with all the numbers you could want. Anyone with a current mortgage rate above three percent is likely to find a better rate now. Check out the post to see how you might be able to save.
Electricity – $375 Our electric bill covers both our home and our Airbnb rental. Our house and rental are both completely electric, with no gas or propane.
Car Insurance – $89 We took Mike’s vehicle off the insurance a few months ago. Since he’s working at home, we’re just acting like a one-car family and saving on insurance and registration. We love the service at USAA. 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 at home is even more important with both Mike and our renters working from home 100% of the time!
Water – $200 We aren’t sure what our water bill will look like when in comes in September, but we know it will be high with our new garden, so we set aside $200 in August to go toward the bill.
Cell Phones – $50 After years with Republic Wireless, we switched our cell phones to Visible. We still think Republic Wireless is a great option for people with good reception from Sprint or T-Mobile, but at our house, Verizon is the only carrier with a reliable cell signal. Visible is a Verizon subsidiary that offers wifi calling and unlimited cell calls and data on the Verizon 4G LTE network, all for $25 a month! Having cell signal to complement our wifi access is especially important for us since, as we learned last summer, our power company periodically shuts off power in our area because of wildfire danger. No power means no wifi and without cell reception, that meant no phone service during power outages using Republic. We’re happy paying a few dollars more each month to Visible for more reliable communication.
Another great choice 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 even less than Republic Wireless.
Home phone – $5 We have a home phone as well. Mike mostly uses it for work. It’s through internet-based Ooma instead of a traditional land line. The monthly bill is $5 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 rest of the two years that she’ll have braces.
Disability Insurance- $151 This will replace about 2/3 of Mike’s current income for the rest of his life if injury or illness leaves him unable to work. Our income potential is our greatest financial asset right now and this insurance helps us protect it.
Piano – $110 Our oldest started piano lessons with me but has now graduated to a teacher who isn’t mom. I recently (finally) started teaching the next three kids myself.
Food – $582 With all of the craziness of getting homeschooling going in August, I didn’t do a big grocery haul. We made several smaller trips, ordered a pick-up order and a mail order from Sam’s Club, found some great things from Grocery Outlet, and even got pizza a couple of times. The good news is that we stuck to our budget pretty well.
Fuel – $151 The pandemic has been really great for our gas budget. With Mike working from home, we spend a fraction of what we used to spend on gas.
Houshold Misc – $251 We got some toiletries, books, toilet paper, printer toner, and vacuum filters. We also got some school supplies before we got into the homeschool charter. Now that we’re in the charter we can use that funding for homeschool things.
Clothing – $43 – The boys outgrew their church shoes during the pandemic, so I ordered them some new Sunday shoes.
Animals – $101 We bought four 50lb bags of chicken feed, a bag of cat food, and a bag of dog food. With the shortages, we try to be at least a bag ahead of what we need normally for animal food.
Kids’ Activities/School – $500 We will be buying instruments (a French horn and an alto sax) for our two oldest children in September, so we’re setting aside a portion of the cost in August and we’ll cover the rest in September. I’m hoping to buy older instruments of good brands that are in working order, most likely on Ebay.
Homeschool – $381 We had been on a waiting list for a homeschool charter for several months. In California you can get funding for curriculum and activities if you go through a charter, but this year the charters received many times the normal number of applications. We made it to the top of the waitlist and were accepted at the end of August but since we didn’t know that would happen, we bought a good portion of our curriculum out of pocket in July and August.
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.
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 had lots of bills for some recent surgeries and hospital visits, so we spent $1,194 and met our family deductible for the year. Current category balance is $2,145.
Car Maintenance – $0 added. We decided to stop putting money toward this category for now. It is built up nicely and since we only are driving one car (and driving it rarely), not a lot of car maintenance expenses are coming up! Current category balance is $4,082.
Christmas – $100 added. I spent $24 doing a wee bit of Christmas shopping. Current category balance is $689.
Life Insurance – $75 added. Our premiums aren’t due until November, but if we put aside $75 per month we should have them covered. Current category balance is $750.
Birthdays & Gifts – $40 added. We spent $46 on gifts in August. Current category balance is $237.
Car Registration & Smog – $0 added. We decided to stop adding to this category right now. Current category balance is $461.
Family Fun Fund – $0 added. We didn’t add to or spend from this category in August. Current category balance is $745.
Car Fund – $0 added. We were saving to buy a more efficient commuter car for Mike, but since it looks like he will be working from home for the forseeable future, we decided to pause the $550 monthly contributions we were making to this sinking fund. Current category balance is $6,279.
Preparedness – $100 added. I got some awesome screw-on canning jar lids for water storage (post/video coming soon). I also bought some more food storage buckets for expanding our food storage (Walmart has the best price for food grade buckets that I’ve found). Current category balance is $25.
Home Projects- $200 added. There will be more expenses for expanding our garden project. Soon we will start building more garden beds for next year and getting everything we need for planting fruit trees. We’re starting to put money into this category each month so we will be prepared for those expenses. The category balance is currently $200.
Kids’ 529s – $125 We 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 (hello garden!), 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 re-fi here.
We paid $1,489 of principal in our normal August mortgage payment, and we put $1,557 extra toward the principal. We still have $10,000 that is just sitting in our “mortgage extra” category of our budget. With the uncertaintly of the pandemic, we thought it prudent to keep it liquid for now, though we may just go ahead and put it toward the mortgage soon.
That brings our totals to:
Current balance (after August 2020 payment): $289,755
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: 20.2%
Percent of 5-year time elapsed (22 mo): 36.7%. Yep, we’re behind!
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!
How About You?
- How did your budget and/or debt repayment go in August?
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