June 2024 Budget Update

It’s budget time! Many people dread making or reviewing their budgets, but I love it!

Some people think that you can only enjoy budgeting when you have lots of money to work with, but I had the opposite experience.

I learned to love budgeting when we didn’t have lots of money. In fact, we were in six figures of student loan debt when I learned that a budget should be your friend, not your enemy.

Instead of seeing our budget as restrictive, our budget became the main tool to help us reach our goals.

In our budget we choose to put our money where our priorities are, instead of just spending it on whatever opportunities present themselves first.

Reviewing the budget at the end of the month and making plans for the next month has become something I look forward to. Each month gets us closer our goals!

Here are the details of our family’s June 2024 budget including our spending, earning, and progress toward our goals.

Spending in June

When we first understood the concept of living on last month’s income, it rocked our financial world in the best kind of way. If you have no idea what that means, here’s a video walk-through. Or you can read up on how you can get started.

At the beginning of each month, we start budgeting by first adding up the income we earned the month before. In June, we budget and spend what we earned in May. We knew on June 1st exactly how much money we had to work with during the month. So on June 1st, we start the June budget by taking everything we earned in May and assigning it to our June budget categories.

We can’t see the future, so on the first of June, these dollar assignments were really just best guesses and goals. We’ve been doing this for years and can make some pretty good guesses, but every month is different. Our dollar assignments at the beginning of the month almost never stay exactly the same because our needs and priorities usually change during a month.

It’s normal for our spending plan to change during the month. The important thing isn’t spending exactly how much we had guessed at the beginning of the month. It would be silly to let our June 1st guesses dictate what we can and can’t do all during the month. The important thing is to not spend more total in June than we earned in May.

If we need to spend more in one budget category than we had originally assigned, that money has to come from some other budget category. We revise the budget categories to meet our priorities during the month, but we can’t just add more money to all of them, because the total amount stays the same all month long. A changed budget is not a failed budget. A budget needs to be flexible in order to be successful!

Here’s our family’s final June spending for all of our budget categories.

Giving

Tithing – $1,438 We start out the month paying a 10% tithe on our income. Like all of our June spending, our tithing is calculated on what we earned in May, which you can see in this Budget Update. We often get questions about this. You can read our thoughts on tithing here.

Fast Offering – $100 Each month we take one day to go without food and drink (fasting) and contribute to a program that helps people who need it.

Monthly Bills

Mortgage – $2,823 We have a 15-year mortgage on our 2200 sq ft house in Northern California. We’re so thankful to have locked in our mortgage interest rate at 2.375% when we refinanced in December of 2020 (all of the details and numbers are here.) We currently have about $171,000 remaining on our mortgage.

Electricity – $6 Last year we installed solar panels on our property, a $70,000 investment that we just finished paying for. Our electric bill is just the $6 unavoidable fee.

Car Insurance – $335 Having a teen driver made our rates go up $125 per month. And that’s for a girl. I hear it’s even more for a teen boy. Next year we will be adding a teen boy to our insurance too!

Internet – $75 We have cable internet through Comcast. When we bought our home six years ago, we invested $5,000 into getting cable internet brought to our property. It has been worth it every single day since then.

Water – $75 Our water bill comes every other month, so we set aside about half of what we expect the bill to be.

Garbage- $49 Like the water bill, our trash pick-up bill comes every other month, so each month I set aside the money for half of the bill.

Cell Phones – $212 We pay for eight cell phones: five for our family, and three for the Ukrainian family that we sponsor. Our phones are all through Visible. Visible is a Verizon subsidiary that offers no-contract plans with wifi calling, unlimited cell calls, and unlimited data on the Verizon network. We’ve been using them for years. You can’t beat paying just $25 per phone each month with unlimited data.

Music – $0 Our music teacher generously offered his time and talent to teach our 11-year-old Ukrainian girl free of charge. What a blessing!

Everyday Expenses

Food – $473 I didn’t do a big grocery shopping trip in June. Back in May, I made quite a few freezer meals and we still had plenty left for June! In June I also made a few other freezer meals that I had purchased ingredients for in May but didn’t have space in the freezer to make them when I made all of the other freezer meals. We also had our two oldest gone for a week and my oldest and I were gone for a week.

If you need help getting your grocery spending under control, you can learn all about my strategies and method in my Grocery Budget Hero online course.

Fuel – $818 It’s good to have our gas spending down from last month. Our two oldest (who require the most driving for work/sports/activities were gone for part of the month and it shows!

Household Misc – $354 Our miscellaneous category in June included some things to fix our clothes dryer.We pay for Scribd (Everand) every month, too, so we always have lots of audiobooks on demand without having to wait to borrow them with the Libby app or pay for audiobooks individually like with other apps.

Clothing – $561 – We are in the process of getting new running shoes for our oldest boy. At a size 17 Wide, finding him any shoes, let alone running shoes is tricky. We order several pair online and then he tries them on. Most of these (if not all) will get returned and we’ll try again. He is only 14, but we’re really hoping his feet are done growing.

Animals – $120 We bought dog food, cat food and chicken feed.

Allowances – $130 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.

Sinking Funds

For our normal budget categories above, we take out any funds that are still left at the end of the month and send them toward our big financial goal. For example, if we started the month with $600 in our food budget category, but only used $520 of that, the other $80 would go toward our current major financial goal. Focusing all these extra funds from each category into one goal helped us pay off our solar panels several years early.

In contrast to the regular budget categories described above that we zero out each month, we also put money into the categories below. These are our sinking funds. Our sinking funds are categories where we set aside money for periodic expenses each month and let it roll over and build up until we need it.

The amount in bold is the amount we added to the fund this month, followed by spending notes and the current balance of each fund.

To answer a question we often get, we do not have separate bank accounts for these funds. We had separate accounts many years ago when we first started budgeting but we learned that was overkill. Instead, all of the money sits in our checking account. Since we spend according to our budget category balances, not our checking account balance, we’re not worried about getting the money mixed up. 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, a budgeting tool we absolutely adore. Yes, you can adore a budgeting tool. Don’t believe me? Try it out. If you have been using Mint or something similar to manage your finances, you’ll want to read about our switch to budgeting with YNAB.

Medical/Dental – $300 added. We spent $90 including an orthodontist payment, an office visit, and a prescription. Current category balance is $2,007.

Car Maintenance – $800 added. In June, we spent $900 on brakes, an oil change, and some other maintenance! Current category balance is $756.

Christmas – $200 added. In June, I spent $0 on Christmas 2024. Current category balance is $1,190.

Disability Insurance- $190 added We set aside money each month for disability insurance so that when the annual premium is due we have the money ready. If Mike is unable to do his work as an attorney due to illness or injury, this disability insurance will replace about 60% of his current income. Since our income potential is our greatest financial asset right now, we want to have disability insurance to help us protect it. Current category balance is $660.

Life Insurance – $100 added. Our life insurance premiums are due each November, so we set aside a portion of the estimated total each month which will go toward next year’s premium. Current category balance is $773.

Birthdays & Gifts – $50 added. We June we spent $100. Current category balance is $78.

Car Registration & Smog – $50 added. We spent $0 in June. Current category balance is $252.

Family Fun Fund – $100 added. We spent $72 on tickets to Sharon McMahon’s book tour. Current category balance is $28.

Home and Garden – $0 added. We spent $152 in June on some wiring and a weedeater part. Current category balance is $104.

Big Trips – $1,400 added. We originally made this sinking fund to save up for a fun family trip in 2025, but we are expanding it to include a trip we will take this summer, a trip that we’ve dreamed of for over a decade. We will need to put aside around $1,400 per month to make both our 2024 and 2025 adventures happen. In June we spent $709 for our 2024 trip. Of that $600 was just getting Guatemalan Quetzales so we have some cash when we arrive. Current category balance is $6,355.

Investing

Kids’ 529s – $150 added. Investing just $25 per child per month for college isn’t much, but we are okay with that. Neither of us had much college savings when we went to college, but with scholarships, grants, loans, and jobs during school we were able to get our undergraduate degrees without debt. We may contribute more later, but right now we’re happy with small, consistent contributions. I looked at the balances recently and was pleased to see that this small contribution that is barely noticeable in our monthly budget has added up to over $15,000! If you want to know more you can read about how we decided to start 529s for our kids.

IRA (Steph) – $583 added. With this same amount each month, I will reach my $7,000 IRA contribution for 2024. Mike has about $1,300 each month deducted directly from his paycheck into the state pension fund for his retirement.

New Goal!

Since we finished paying for the remainder of our solar installation back in November, we have a new financial goal (in addition to our trip goal)!

With our Honda Odyssey gone, we’ll need to find a replacement vehicle soon. Originally we were set on another 8-passenger van, but since we have our 15-passenger van for when we all go together, we might get a car instead. The most we have ever spent on a vehicle is $5,500 (the 2007 Odyssey that we bought in 2019), so our goal of $20,000 sounds like a lot!

In June, we set aside $1,200 for our new van fund.

With our current total of $12,227, we are 61% of the way to our goal of $20,000.

Income Earned in June- $9,730

Above you can see everything we spent in June (that we had earned and received in May.) At the same time we were spending what we earned in May, we were also (of course) earning money during June. At the beginning of July, we set up our budget to allocate spending from our June income.

This concept of getting a month ahead, has made such a huge impact on our finances! It takes some work to get to the point where you are living on last month’s income, but the effort is completely worth it!

The income section below shows the money we earned in June, which we won’t touch until July.

Attorney Income – $8,925 Mike works as an attorney for the state of California. This is his take-home pay after taxes, social security, his pension contribution, and health insurance premiums.

Rental Income – $0 For years we rented out a one-bedroom apartment on our property through Airbnb. We gave that up to take in a Ukrainian refugee family for a couple of years. We loved Airbnb and will likely go back to that in the future. If you’re thinking about renting out your space on Airbnb, check out this post where I talk about how much you can make on Airbnb.

Law Firm- $0 Before working for the state, Mike did estate planning and business transactional work. Over the last few years he has had a steady stream of potential clients, most of whom he refers to other attorneys, but he still occasionally helps former clients. He doesn’t cut himself a paycheck each month, just a couple of times a year.

Blog – $0 I only pay myself a couple times a year now. My blogging income took a major hit when I put the blog on the back burner during Covid to start homeschooling my kids. It is slowly recovering as I put more effort into posting regularly and all of the things I do behind the scenes. Thankfully the income still covers my fixed blogging expenses (which are a lot more than most people would guess) and allows me to pay myself a few times a year.

Child Care – $805 Back in August, I started taking care of the 2-year-old Ukrainian girl while her mom goes to English school (and her siblings go to regular school). This payment includes some backpay.

In a month from now, come back to see how we used this income to fund July’s budget.