Every month we hold ourselves accountable to you by sharing what we earn and spend as well as the progress we make on our financial goals. The accountability helped tremendously as we paid off $144,000 of student loan debt, so we’ve kept up the tradition.
April was an expensive month between paying Uncle Sam and paying for the cable line to be extended to our new house so that we can finally have internet at home. It was a great example of one of the huge benefits of living on last month’s income. Because we are a month ahead of our expenses we have some real flexibility when it comes to giant expenses like we had in April.
We weren’t sure exactly what the damage would be on the tax front, but we had saved a large chunk over the past several months because we anticipated a big bill. It turned out the total we owed (2017 taxes + Q1 of 2018) came to $15,700, slightly less than the anticipated amount.
With the money we had saved (including what we set aside in April) we were about $2,000 short. If we were using a traditional (not a month ahead) budget, we would have had to either use our emergency fund, borrow the money, or pay taxes late with a penalty.
As it was, there was plenty of money to cover the tax bill because we were saving all of April’s income for our May expenses. Since we knew the money was there and would be “released” in two weeks, we used that $2K from May’s budget. We did the same thing to get the rest of the money for our internet installation bill (more on that below). Being a month ahead essentially gave us an extra month to take care of the expense.
Of course, the consequence is that May’s budget won’t have much wiggle room or opportunity to work on other financial goals, but since both the tax bill and the internet were time sensitive it was worth it to us.
We are very careful to not make a habit of borrowing from our future (next month) selves, because that could get messy (and we’d lose the peace of being a month ahead), but having the option there is comforting and useful. It’s one of our defenses against unexpected expenses too.
If you want to learn more about living on last month’s income and how to get started, you can download my free Guide to Getting a Month Ahead Financially when you subscribe to my newsletter.
Okay time for April’s report!
Our total income for April was $13,700. Since we live on last month’s income, this is income this is money that we would normally be spending in May. As you’ll see under the internet category, we did use a portion of our income from April to take care of some big expenses (even though we normally wouldn’t use this until May) since taxes were due and we were also in a hurry to get into the cable company’s construction queue to speed up the long process of getting internet.
Attorney Income (Day Job)– $5,509 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 $4,407 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)– $419 On top of working full-time, my husband has his own private law practice on the side (crazy, I know!). He started it last year to help speed up our debt payoff. His income fluctuates greatly from month to month. This was a super low month as far as income actually collected (though there are bills out).
My Income (Blog)– $7,772 The income that I report is the income that I received this month minus all of my blogging expenses. I counted 25% of the internet installation cost as a business expense (my husband will count another 25% and 50% will be personal). Of this, I set 30% ($2,332) aside for self-employment taxes and the remainder ($5,440) goes into the family budget.
If you’re interested in the details of my blogging income and expenses as well as other blogging tips and resources, you can sign up for my Behind-the-Scenes Blogging emails to get the scoop.
Each month we budget down to zero using last month’s income. When we started doing this, it literally changed our lives! 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 April came from the income we earned in March. Here’s how we spent money in April:
Tithing– $1,234 We happily pay a 10% tithe on our total income from the previous month (March). You can read more about why we paid tithing even when we were in debt. Since we pre-paid a big chunk of tithing at the end of 2016 (for tax reasons), this didn’t actually come out of out pockets this month, but we’re keeping track so we know when we’ve reached the end of our $8,000 of pre-paid tithing.
Other Giving– $80 Other charitable donations this month.
Mortgage/Rent– $2,500 Our payment is actually slightly less than this, but I like round numbers, so we decided to just pay a nice even $2,500 each month. This small adjustment actually shaves a few years off the mortgage! You can read more about our mortgage HERE (why we got a conventional mortgage instead of FHA or USDA) and HERE (why we didn’t wait for 20% down).
Electricity– $205 I budgeted $225 for electricity this month, not knowing what to expect. I just left the extra in that category for a future bill that may go over our budgeted amount. We haven’t used the heat hardly at all this month. Our house has stayed between 60-62 degrees. We just put on layers in the evening (well maybe I should say “I” because no one else around here seems to get cold). We use OhmConnect to earn some extra money for saving power. My kids think it’s super fun to save power now. They love Ohm hours! If you’re in California then you should definitely check it out!
Water– $45 Our water bill comes every other month (I think… we’ve only had one bill so far), but I set this much aside this month to go toward the bill that will come next month.
Internet– $2,010 If you get my emails, you already know that fantastic news that the final quote/bill for getting cable internet brought to our house is $4,900 (which is $1,400 less than their original quote). We paid half of the amount out of our family budget, and the other 50% split between our businesses as a business expense. We had already set aside $440 in the past couple of months towards this expense.We were eager to pay this so the cable company could put us on their list of projects and we could start waiting. We went ahead and paid the bill by using some of next month’s money (a perk of living on last month’s income). Since my blog income was higher than usual this month we were able to swing it. We should have internet by the end of June!
Republic Wireless Cell Phones– $42 We’ve been using Republic Wireless as our cell phone carrier for over two years now. This covers the cost of service for both our phones, including all taxes and fees (we’re on the Republic Refund plan). If your cell phone bill is killing you, I definitely recommend that you check them out!
Health Insurance– $408 We have insurance through my husband’s employer. This is the portion of the insurance premium that his employer does not cover. It includes health, dental and vision insurance premiums.
Car Insurance– $180 We paid insurance on three vehicles this month, but at the end of the month we cancelled the insurance on our old van now that we’ve donated it! 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 husband’s father was in the service years ago. If you or your parents were in the military, you’re probably eligible for USAA too!
Food– $442 We went over on our food budget, but I really don’t feel too bad about it because I got back into (mostly) doing a monthly grocery shopping trip and got more organized. Ever since the move, I’ve been a little scatter-brained with meals and shopping, but in April I did much better. I’m planning to rein in the grocery budget in May and be even more organized.
Gas– $512 While my husband’s commute is down to about an hour, I have a commute now too—taking the kids to school, which is an hour round trip, twice a day. When the kids were on spring break we went on a trip 4 hours away.
Parking– $155 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– $2 I found some nice shoes for my older son at a yard sale.
Household– $118 We bought toilet paper and a couple of other toiletries. I bought guitar hangers now that we’re starting to get our house put together. They were inexpensive, but work (and look) great! We also invested in a wood splitting ax which will help turn our downed trees into firewood (though we still need a chainsaw). I also picked up a couple of small household things at the thrift store.
Fun– $28 I’m including Easter candy in the fun category this time. We also went out for ice cream cones once. The kids all had gift certificates, but I bought ice cream for me and the littlest one to share.
Home Improvement– $387 We bought a $320 Stihl gas-powered weed whacker and accessories. It’s a commercial-grade trimmer (that you can’t buy on Amazon of at Home Depot), but with our large and steep property we needed something powerful. We already put it to good use for about 6 hours on Saturday (along with the push mower we bought last month).
Furniture– $100 We didn’t buy any furniture this month, but I left the money that I had set aside because you never know when something great will pop up at the thrift store or a yard sale.
Gifts– $30 Our baby turned two! We had cake and presents with our immediate family and gave gifts that either already had in my gift stash, were handmade, or were age-appropriate toys that we had packed away that she had never seen before. So the $30 we budgeted just went to our gifts sinking fund.
Animals– $115 We (my husband) worked on a chicken coop and run for our flock. For the coop, we used a shed that was already on our property, but we had to buy chicken wire and some other supplies (though it’s not done yet, so they’ll be some more spent on it next month).
Now that we’re done funneling every extra cent toward debt, we are using 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.
Car Repair– $150 Since we both drive older cars, we will definitely need this sometime in the future.
Medical– $100 We’re expecting a new baby at the end of August! Surprise! Because you’re faithfully reading every line of this long post, you’re the first readers to know about it! 😉 Or maybe you already guessed that pregnancy was the reason I was sooo sick in January. 😉
Car Registration & Smog– $20 This is another periodic expense that we want to have set aside for when we need it.
Christmas– $50 This is our first time having a sinking fund for Christmas!
Life Insurance– $70 If we put this much in each month, we will have our premiums set aside for when they’re due in the fall.
Retirement– $539 With my husband’s state job, this amount comes directly out of his paycheck and into his state retirement fund.
College Savings– $100 We contribute $25 per month per child to 529 accounts. It’s not much, but it’s a start. More on our decision to start saving for college in this post.
Here’s a quick look at our current savings goals. Now that we’ve taken care of taxes and the cost of getting internet installed, the next goals are to save for a new (used) car for my husband and then to beef up our emergency fund.
My husband commutes in his Camry which currently has 265,000 miles on it (and many quirks). We know it won’t last forever, so we want to be prepared to replace it soon. Then, we’ll work on growing our emergency fund. Now that we have a house, potential “emergencies” are more expensive.
Like I explained in the beginning, because the goals we accomplished in April were really split between April and May, we won’t be making any progress on these next goals until June, as May likely won’t have any extra funds.
How About You?
- I’d love to hear about how your budget and/or debt repayment went in April!
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