This month I was reminded of one of the bonus benefits of living on last month’s income. We made a mistake that could have been detrimental to our budget if we had not been a month ahead financially.
In June, estimated quarterly taxes were due for business owners. For the first quarter we paid $2,000 to the IRS and $200 to California. When my husband texted me to ask how much to pay, I told him what we had paid the previous quarter and said to just do that again.
Then, after thinking about it, I remembered that our tax guy had said that with the new tax law we would be fine just paying $1,000 each quarter if our income was about the same as last year, so I texted my husband back and told him to just pay $1,000 to the IRS this time.
I didn’t get to him soon enough though.
He had just submitted the $2,000 payment, except he sent the $2,000 payment to the state of California which was supposed to just get $200! Oops! We still had to pay the IRS at least $1,000!
So instead of paying $1,200 in estimated taxes in June, we paid $3,000. If we were living paycheck-to-paycheck, that would have been bad news. We wouldn’t have had the extra $1,800 and we would be strapped for cash.
As it was, though, it didn’t even phase us. We paid out of our checking account, which has a one month buffer of money (plus an additional month of mortgage payment on top of that). I transferred what we had accumulated thus far in our tax account (where I put 25% of my blog earnings) into our checking account. I will transfer over what’s needed to cover the rest of the $3,000 tax payment next month.
If I lost you at “taxes” don’t worry. That example was just to say that by being a month ahead we have the flexibility to handle unexpected expenses without touching our emergency fund. If you subscribe to my newsletter, you’ll get my Guide to Getting a Month Ahead Financially sent straight to your inbox!
Okay, onto the numbers from June 2018!
Our total income for June was $23,008. Since we live on last month’s income, this is money that we’ve been holding to start spending in July.
Attorney Income (Day Job)– $6,309 Mr. SixFiguresUnder has been working full-time as an attorney for the state of California since the fall of 2015. His actual take-home pay was $5,197 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 we can tithe on that money.
Attorney Income (Private Practice)– $0 My husband has a part-time private law practice on the side, but he didn’t take a paycheck from it this month. He still has work in his queue to do and bills to send out though.
My Income (Blog)– $16,084 This is my highest income month ever! I got a big, once-a-year affiliate payout from Elite Blog Academy, the course I took back in 2014 that set me up for blogging success. Since the income that I report is the income that I received in June (minus all of my blogging expenses), it’s income that I earned earlier in the year. Of this, I’m setting aside 25% for taxes ($4,021) and distributing $12,063 to the family checking account as my paycheck. I use Blog Finance Spreadsheets to keep track of everything.
Rental Income- $615 This is the amount of rent we keep after paying the utility expenses for the one-bedroom apartment above our garage. This is not the income we report on tax returns–it doesn’t count a pro rata share of the mortgage, property tax, and insurance payments as expenses against the rental income. When we account for those, we actually show a small loss on the rental. That doesn’t bother us. The apartment was a bonus with the house, and our mortgage stays the same whether we’re receiving rental income or not. For a detailed explanation about our rental, check out the bottom section of March’s budget update.
Each month we budget down to zero using last month’s income. This change revolutionized our budget! For more about how living on last month’s income works and how you can get started, check out my free Guide to Getting a Month Ahead Financially.
Our spending in June came from the income we earned in May. Here’s how we spent money in June.
Other Giving– $80– Other charitable giving this month.
Mortgage– $3,200 We recently refinanced our mortgage from a 30-year to a 15-year mortgage. If you want to see all the numbers and read about why we did it, read this post that my husband wrote explaining everything!
If you want to know more about our house finances, you can read more about why we got a conventional mortgage instead of FHA or USDA and then why we didn’t wait for a 20% down payment.
Electricity– $293 Our electric bill is for two households, as our renters are on the same meter. We haven’t used the heat or air for a while, so this is mostly from the water heater, lights, washer/dryer, fridges, etc.
If you’re in California, Toronto or Texas, you should definitely check out the OhmConnect program which lets you earn extra money for saving power. I’m working on a post that will give you all the details. In June we earned more than $30 with OhmConnect, just by using less power during peak times. That money goes straight to the kids’ fun fund.
Water– $46 Our water bill comes every other month, so I just set aside approximately half of what I expect the bill to be.
Trash– $32 Our bill for trash service comes every other month, so I set aside half of the bill each month. We’re currently paying for curbside pickup, but that’s not the only way to do it. If you’re trying to cut every expense to its bare minimum, here are some ideas to save on trash service.
Internet– $50 This is one bill that I am especially grateful to have. Last year at this time we still didn’t have internet at home and that was tough!
Home Phone- $4 Since my husband works at home a day or two each week, we decided to get a home phone for him to use. It’s Ooma, which is internet-based, not a traditional land line. The monthly service charge is minimal ($4) and the initial set-up (hardware, etc) was under $100. If you think Ooma might work for you, that link will also get you a $20 credit!
Republic Wireless Cell Phones– $15 We’ve been using Republic Wireless as our cell phone carrier for over three years now. This covers the cost of service for my phone, including all taxes and fees. (We’re on the Republic Refund plan from a few years ago which is no longer available; an equivalent plan for a new user today would be $20/month). My husband also has a Republic phone which he uses for his private practice, but that’s a business expense, not a family budget expense. If your cell phone bill is killing you, I definitely recommend that you check out Republic Wireless!
Health Insurance– $316 We have insurance through my husband’s employer. This is the portion of the insurance premium that his employer does not cover. The total coverage includes health, dental and vision insurance premiums. This $316 is deducted directly from his paycheck and goes straight to the insurance company, so it never makes it to our hands.
Car Insurance– $168 Our auto insurance at USAA is fabulous! In addition to the wonderful coverage, they also give us dividends at the end of the year, which is always a nice treat. We’re able to get insurance with USAA because my father-in-law was in the service years ago. If you, your parent, or your spouse were in the military, you’re probably eligible for USAA too!
Food– $495 This year I’m sharing exactly what we buy with our food budget. At the beginning of June I shared our $300 monthly grocery shopping trip. A few days ago I shared the rest of our grocery spending for the month and explained why I decided to go over budget.
I was planning on ordering some boneless skinless chicken breasts through Zaycon Fresh at the end of the month, but just days before I was going to place my order, Zaycon suspended business operations. While this was disappointing for me, it’s much more frustrating for all of the people who have already paid for orders that have not been (and most likely will not be) delivered. If you are in that boat, you should email firstname.lastname@example.org, then file a dispute with whatever payment method you used. I’m sad that they’re out of business and disappointed in how they handled things.
Gas– $283 Gas around here is at $3.35/gallon. I was super excited to get this under $300!! Clearly not going to school is saving our gas budget. Last month we spent $465! In July, we’re driving to Vegas (over 8 hours away) for a family reunion, so gas will be going up next month.
Parking– $165 Working downtown means paying for parking. It comes straight out of my husband’s paycheck, which means it is paid for with pre-tax dollars, a small consolation.
Clothing– $0 We didn’t buy any clothes in June!
Household– $109 We bought an uninterruptible power supply (backup battery) for our desktop computer because those random times the power goes out always happen to be when you’re in the middle of something that isn’t saved (am I right?!). We bought four canisters of tennis balls. There were a couple of other random household purchases, but thankfully we kept it right around $100!
Fun– $12 I took the kids to the fair on kids’ day (when kids are free), but still had to pay for my ticket. There are lots of fun, free things to do on kids’ day, so we decided ahead of time that we would not spend anything on rides. The kids want to save their Fun Fund money.
Animals– $16 We’re still going strong on the chicken feed that we bought a few months ago. We bought a 40lb bag of cat food though.
Tax Prep– $90 Our tax advice and preparation plan allows the cost to be spread over the year. Some people wonder why we pay so much for this (a total of $1080 a year), and that’s a valid question. We prepared our own returns for years, but in the last few years, as our income sources have been varied, we’ve found the planning and preparation more than pays for itself in minimized tax payments (actual dollars saved), not to mention to the additional peace of mind.
Allowances– $60 We recently started giving allowances for our kids. I’ll explain our system and how it’s working in an upcoming post, but if you want a sneak peek, check out the book The Opposite of Spoiled.
Kids Activities– $53 I bought a handwriting curriculum for my kids to work on over the summer. I’m having them do a page a day. I also bought the teacher’s edition of the math book I’ll be using for homeschooling one child in the fall (a completely new endeavor for us).
Now that we’re done funneling every extra cent toward debt, we use sinking funds in our budgeting. This is money that we set aside each month into certain categories where it builds up until we need it.
The amount in bold is the amount that was added to the fund this month. Any spending from the fund is noted in the comments, along with the current category balance.
Home Projects– $0 We didn’t add to or spend from this category. We still have $839 remaining in the home projects sinking fund.
Dental– $30 We have $180 in dental right now.
Medical– $100 We didn’t have to pay anything out of pocket in June. Our current balance for medical is $601.
Car Repair– $300 We spent $127 in June for a tune up for new front brake pads and rotors for the van (last month we bought the rear ones, but hadn’t picked up the front ones yet). The current balance in our car repair fund is $476.
Car Registration & Smog– $40 We currently have $184 in this fund.
Christmas– $100 We currently have $600 in our Christmas fund.
Life Insurance– $70 If we put aside $70 each month, we will have our premiums set aside when they’re due.
Gifts– $40 We currently have $158 in our gifts fund.
Retirement– $631 With my husband’s state job, this amount comes directly out of his paycheck and into his state retirement fund.
College Savings– $175 We finally added a 529 for our youngest. California’s ScholarShare program has an annual promo that starts May 29 (5/29 day) where you get a bonus $50 when you open a new account with $50 and set up automatic contributions for at least 6 months. We had been meaning to set this up and the bonus motivated us to get it set up. So this month included the $50 account opening contribution, plus the normal $25 monthly contribution to each of the five accounts. It’s not much, but it’s a start. More on our decision to start saving for college in this post.
Vacation/Family Reunion– $200 We have a family reunion coming up in Las Vegas, so we’re setting aside some money for that trip! We’ve never really taken a trip with a specific budget like this before (we usually just try to do everything as frugally as possible), so I’m excited for the freedom that it will give us to have money earmarked for vacation spending. We’re staying in an Airbnb (if you’re new to Airbnb you can get $40 off your first stay) that has a lot of fun things to do, so we’re planning to spend most of our time just enjoying one another’s company rather than going out spending money. I’m sure we’ll eat at a buffet at some point, probably check out the Adventuredome, and see some of the free attractions. We currently have $709 in this category, though I doubt we’ll use all of that. What we don’t use we’ll save for our next “vacation.”
Our savings goal for 2018 is $26,000 ($15,000 toward our emergency fund and $11,000 to my IRA). At the end of June we are at $17,386, which is 67% of our goal!
Our goal for 2018 is to reach $25,000 in our emergency fund (we started out with about $10,000 at the beginning of the year). In June we put $436 (and got a bit of interest, which makes the current total $20,017.
In May we contributed $550 to my IRA. We automate this contribution each month so that by the end of 2018 my IRA will be maxed out.
There you have it! Personal finance made public!
How About You?
- I’d love to hear about how your budget and/or debt repayment went in June!
- How is your progress on your financial goals for 2018?
- If you have any questions about how we budget, I’m happy to answer them in the comments or in a future post.
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