It’s time for our July 2020 real numbers budget update! Life in July was a little crazy for our family. We went from laying low in quarantine, literally not going anywhere, to having two scheduled surgeries and one emergency room visit in July, along with the associated doctor visits. And even aside from that excitement (most of which hasn’t hit the budget yet), July was a fairly expensive month.
We spent way more on groceries than we normally do, as we’re trying to get our long-term and short-term food storage to where we want them to be. We bought another chest freezer. I got a new cell phone. We got two new computers. We had our highest electric bill and water bill of the year, or maybe ever!
I’ll give you all the details below.
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.
Another reason we are transparent about our budget is to help remove make it more normal to talk about money. Money talk shouldn’t be taboo! Your self worth should not be tied to your net worth. Your value as a person has nothing to do with how much money you make. The “personal” in personal finance doesn’t mean private. It means you are the one who gets to choose what to do with y our money. It’s a personal decision.
Don’t be afraid to talk about money no matter how big or small the numbers are or how they compare to anyone else’s. With money talk being practically taboo, so many people never really learn how to manage their money. Don’t let the taboo of money keep you in the dark.
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 July 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 July – $10,316
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 July, which has all been set aside to use in our August budget. (The spending section below shows the money we earned in June and spent in July).
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 almost $200 a month!
Blogging Income – $1,650 This is my blogging income after expenses have been taken out. It fluctuates greatly each month.
Airbnb Income – $1,810 We rent the one-bedroom apartment on our property through Airbnb. We have had a family staying there all month. 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 July
Each month we budget the previous month’s income down to zero. This is how we spent the money we earned in June.
Tithing – $1,284 We always pay a 10% tithe on our income. This tithing (like all of our July spending) comes from the money we earned in June. 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 rates now are as low as 2.25%! 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 – $423 Our electric bill covers both our home and our Airbnb rental. This is really high. And we barely run the air conditioning in our house (though our Airbnb guests use the air in their apartment. I can’t even imagine what it would be if we did!
Car Insurance – $40 We are still benefitting from when we took Mike’s vehicle off the insurance. Since he’s working at home, we’re just acting like a one-car family and saving on insurance and registration. In August we’ll start the next six-month cycle for car insurance and see what our new normal is for having just one vehicle on record. 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 – $122 The $120 we set aside last month for the water bill that comes every other month was almost spot on! We just needed another $122 to cover the bill. I’m sure it will be higher next time since we’re watering our garden quite a bit now.
Cell Phones – $47 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 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 65% of Mike’s 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 taking piano lessons (from a teacher who isn’t me) and it’s going really well. The last few months she’s had socially distant lessons via Zoom.
Food – $1,037 If you’ve been following for any amount of time, you know that this is A LOT for our family to spend on groceries. We usually like to keep our grocery spending for our family of 8 right around $500, but as you know, we have been bulking up our food storage lately. In addition to our monthly grocery haul (video below), I stocked up on ground beef on a 4th of July sale and some bulk purchases of long-term and short-term food storage items.
Fuel – $123 Oddly enough, we spend the same dollar amount on gas in July as we did in June. I guess that’s our new normal. With Mike working from home indefinitely, we will enjoy seeing this much lower than the $400 it used to be.
Houshold Misc – $512 The biggest miscellaneous purchase this month was for another chest freezer. We got another 7 cubic foot chest freezer for the garage. In order to stock up as much as we wanted, we needed more freezer space. We felt so blessed to find one online at Sam’s club for just $200. I’ve seen it go on sale for cheaper, but with all the shortages lately, we were more than happy to find it in stock and pay regular price! (If you’re new to Sam’s Club, you can get a $20 Sam’s Club gift card when you join.)
We got some piano books (I started lessons for my younger daughter), garden seeds for next year, toothbrush heads (these generic ones on Amazon are so much cheaper than the name brand), a giant roll of plastic wrap from Sam’s Club (this is the third one we have bought in 15 years of marriage), a sledge hammer and splitting wedge for splitting firewood, a wireless mouse, wood chips, and some toiletries.
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It may be 90+ degrees out, but that isn't stopping my 8- and 10-year-old from heading outside with a maul and sledgehammer. Just like having kids help in the kitchen, Mike said having the boys help him with splitting wood makes the work take twice as long, but they're building character and there's no quick fix for that. Plus they are eager and willing, so we aren't going to turn down that enthusiasm! If you need wood chips or firewood, check out @chipdrop to see if they have and arborists in your area who need somewhere to dump their chips or rounds. Such a sweet deal and win-win situation!
Clothing – $1 I used a little credit with ThredUp and went $1 over the credit amount.
Animals – $29 I bought some inexpensive clippers on Amazon for pet haircuts. We’ll try them and see if they work well enough to do home haircuts for our dogs like we do for our people. We had stocked up on all of our pet food in previous months we didn’t have to buy dog, cat, or chicken food at all in July.
Kids’ Activities/School – $0 No spending here, but we added a new category…
Homeschool – $578 With ongoing uncertainty around public schooling in our area, we decided to homeschool our 4 older kids (grades K, 4, 6, 7) this year. We are on the waiting list for a homeschool charter but don’t know whether we’ll get in. In California you can get funding for curriculum and activities if you go through a charter, but the charters received 10x the normal number of applications. We are planning on funding homeschool ourselves this year and will be pleasantly surprised if we do get into a charter. In July (even before we decided to homeschool) we bought two new Chromebooks for the kids to use. We already had one, so now each of the three older kids will have their own computer to use for school work. Next month I’ll be buying some curriculum to supplement what I already have, so there will be more homeschool expenses in the future.
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 two surgeries and an ER visit this month (for three different people)! We’re grateful that most months aren’t this interesting. For one of the surgeries we paid a portion up front. In total we spent $851 from this category in July. We’re thankful to have a sinking fund filling up with enough cash to meet the out-of-pocket maximum for our family for the year. We’ll take care of the rest of the associated bills as they make it to us in future months. Current category balance is $2,939.
Car Maintenance – $300 added. We didn’t spend anything on car mantenance in July. Current category balance is $4,082.
Christmas – $100 added. We didn’t do any Christmas spending. Current category balance is $612.
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 $675.
Birthdays & Gifts – $40 added. We spent $26 on gifts in July. Current category balance is $243.
Car Registration & Smog – $40 added. We didn’t spend anything in this category. Current category balance is $461.
Family Fun Fund – $0 added. We didn’t spend from this in July. We’re hoping to take some low-key road trips later this year. 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 – $0 added. I used this category to put away money during our Quarantine Food Storage Challenge so we could stock up afterward. This month I just spent a lot in the food category instead of using this category, though I plan to utilize this category going forward as our grocery budget goes back to normal. Current category balance is $0.
Home Projects- $690 added. Our home project expenses were all part of our garden project. Mike put more permanent gates up for the garden and started installing drip irrigation. Hopefully we don’t have any more large expenses for a while, at least until we start building more garden beds for next year and getting everything we need for planting fruit trees. We will start putting money into this category each month so we will be prepared for those expenses. The category balance is currently $0.
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 $1,480 of principal in our normal July mortgage payment, and we put $2,400 extra toward the principal. We still have about $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.
That brings our totals to:
Current balance (after July 2020 payment): $292,800
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: 19.4%
Percent of 5-year time elapsed (21 mo): 35%. 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 July?
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