We had a great budget month to start the new year out. We didn’t have any huge expenses and we kept our spending under control. As always, in this transparent budget update I’ll share with you exactly how much we earned, spent, and saved in January. We made some serious and surprising progress toward our big goal, which you can see below.
I also want to remind you to quickly fill out your own Debt Smash-athon Report for January. I’m so, so excited to celebrate your progress toward your financial goals, whether that’s paying off debt, contributing toward your retirement, or saving for a big goal!
I’ll report our progress as a group when I get all of the submissions in. If you’re not already subscribed to get Debt Smash-athon updates, you can go here to sign up.
We started a new budget!
Starting the first of the year, we changed our budget from YNAB 4 (the old YNAB that’s not available to purchase anymore) to the new YNAB (the online subscription version).
For the details, I wrote a whole post about why we changed to the new YNAB last week. Our reasoning is a little unique, so if you’re still using the old YNAB, keep it up. If it ain’t broke, don’t fix it, right?!
How we found money when we started a new budget
In the process of switching from our old budget to the new one we actually found money.
One of the things about YNAB is that we don’t really look at our bank account balances except when reconciling accounts. We spend based on our budget categories, but all of our money for most of our categories is just sitting in our single checking account.
Not paying attention to your checking account balance might sound like a scary or irresponsible practice if you live paycheck-to-paycheck. It would definitely make me more nervous if we weren’t a month ahead of our expenses. Since our budget is, in essence, guarding our account, we aren’t worried about overspending. And, like I discovered, we actually have more money that I thought we did.
You see, we haven’t started a brand new budget for 5 years. Over the years, there have been occasions where we’ve written a check that never got cashed, or budgeted money in a category that we later archived, or entered a duplicate transaction without noticing (like Hubby and I both entering the same transaction).
All of these transactions were just sitting uncleared in our YNAB account register. We had allotted money in our budget over the years for those expenses. When an expense is entered in YNAB it’s as good as spent (even if the check I wrote was never cashed or the duplicate transaction didn’t really happen).
I knew there were some things like this but until we started a new budget from scratch, I had no idea that it would add up to be over a thousand dollars! I bet you can guess where we put that found money!
Join us for No-Spend February
If you’re looking to find some extra money in your budget, would you be up for having a no-spend month in February? It’s a great way to free up money to put toward the financial goal you’re working toward. You set your own rules so they work for you.
On to the numbers!
That was an uber long intro! I just didn’t want to leave it at “Surprise! We found extra money!” Because that sounds crazy.
I’m giving you options today. You can scroll down to read all about our spending and goals or you can watch this nifty video where I’ll share my budget screen and walk you through it all. Or you can do both! 🙂
Income — $10,197
We live on last month’s income. That means the money that we spent in January was money that we earned back in December and the money we earned in January (which I am about to list for you) won’t be spent until February.
If you want to see how we track our month-ahead income in the new YNAB, see my video tutorial showing exactly how we do it.
Attorney Income $6,126 Mike works as an attorney full time for the state of California. This is his take-home pay after taxes, social security, health insurance premiums, union dues, and parking fees are taken out.
Blogging Income $2,966 I started blogging here in 2013. After lots of hard work I eventually started making an income from it. I got my blogging training through Elite Blog Academy, a comprehensive online blogging course. Enrollment is closed right now, but it’s worth getting on the waiting list because they send out awesome blogging tips and valuable resources.
Airbnb Income $1,105 For Airbnb, I’m reporting the income we receive minus the expenses that are exclusively for Airbnb (propane for the heater, consumables, repairs, etc). There are other shared costs like trash, water, internet, electricity, and insurance that I haven’t taken out here. We only worry about all those nitty gritty details at tax time.
Each month we budget last month’s income down to zero. This is how we spent the money we earned in December.
Tithing- $865— We always pay a 10% tithe on our income. This tithing (like all of our January spending) comes from the money we earned in December. You can read about why we continued paying a 10% tithe even when we were in debt.
Fast Offering- $80— Each month we fast (go without food and drink) for two meals and make a donation to help the poor in our area.
Mortgage- $3,200 Our mortgage payment includes homeowners insurance, property taxes, and a bit of PMI. We have a 15-year mortgage, but our big goal is to pay it off in 5. If you’re a numbers person, or are looking at mortgages yourself, Mike has a number-full description of our mortgage just for you.
Electricity- $381 I think this is our highest electric bill to date. This bill mostly covered the month of December. We were slow at getting our wood stove running this year (we needed to get more wood cut and split), so we used our central heat through December. I can’t imagine what the bill would be if we actually kept our house above 63 degrees!
Car Insurance- $168 We drive two older vehicles (1999 and 2005). We have been so impressed with the service and coverage that USAA provides. 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/are in the military, you’re probably eligible for USAA too!
Internet- $70 We still remember what life was like when we moved into our new house and it took like six months (and $5,000) to get internet. We are very grateful to have internet from the comfort of our home.
Water- $50 Our water bill comes every other month and varies, but we try to set aside half of what we expect the bill to be.
Trash- $34 Our garbage collection bill comes every other month, so we set aside half each month.
Cell Phone (Steph)- $16 I love that my cell phone bill can never be more than $18. I only have 0.5 GB of data, but I’m usually home with wifi, so that’s not a problem. Republic Wireless no longer offers my plan to new customers, but you can get a 1 GB plan for $20, which is pretty sweet (that’s what Mike has, but it’s a business expense for him, so never shows up here)! If your cell phone costs you an arm and a leg, you should check out Republic Wireless.
Home phone- $5 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 a minimal $4 and the initial set-up (hardware, etc) was under $100. If you want to give Ooma a try, that link will also get you a $20 credit I believe.
Food- $410 We aim for $400 per month for our food for our family of 7. I shared our monthly grocery haul here.
Fuel- $351 This number doesn’t change too much. It’s always a lot.
Houshold Misc- $47 This number is a little deceiving because we returned some security lights that totaled $120. Since that return applied to this category, it covered a lot of our spending. We got a new shower head for our master bath, trash bags, toilet paper, a used shop vac (from when Kmart was going out of business), mascara, face wash, and hair clips. I also got a pack of 12 nail clippers on Amazon which was cheaper than buying 3 single nail clippers at the store. Anyone else have a handful of toenail clippers but can’t find a normal nail clipper to save their life? That’s what we’ve been dealing with for too long. Now every bathroom, car, purse, and bag is equipped!
Clothing- $45 In the last few days before our local Kmart went out of business I got some amazing deals on jeans for my kids. We should be set for a while!
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We stocked up on jeans for like the next four years! Our Kmart is going out of business next week. Prices are crazy. For 19 pairs of jeans/pants, 12 shirts, and 2 pair of shoes I paid… can you guess??? Swipe left to see! . . . #frugalfamily #debtfree #debtfreecommunity #dealshopper #kmart #stockup #goingoutofbusiness #kidsclithes #fivekids #dealofthecentury #cheaperthanthethriftstore
Animals- $50 We have four outdoor cats and about a dozen chickens. The chickens are usuallly free-range during the day which keeps feed costs (and bugs) down. We bought 44 lb of cat food and two 40 lb bags of chicken feed.
Kids’ Activities/School- $95 This covers two activities for two of our children.
Allowances- $60 We give our kids “practice money” as a weekly allowance. Each week they get $.50 per year of their age. I’ll explain our system and how it works in an upcoming post, but if you want a sneak peek, check out the book The Opposite of Spoiled.
Fun- $10 Mike and I stopped by In-n-Out on the way home from an otherwise free date. Shh… don’t tell the kids.
For most of our budget categories, we zero out what is left at the end of the month, but in our sinking funds we set aside money each month and let it build up until we need it. We carried over the category balances that we had in our old budget.
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 The current category balance is also noted.
We do not have separate accounts for these funds. All of the money lives in our checking account. I’m 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 balance unless we’re reconciling the account. We track our budget categories and spending in YNAB.
Medical/Dental- $400 We decided to combine our medical and dental sinking funds from now on. Our insurance changed at the beginning of the year. Our monthly premium is lower, but our potential out-of-pocket is much higher than it was in the past few years. We spent $132 from this fund for one ER visit, two office visits, and a pair of glasses. Current category balance is $1,677.
Car Maintenance- $300 We spent $123 on parts for Mike to do the brakes on his car. Current category balance is $1,857.
Christmas- $100 I bought some wrapping paper and a few other Christmas clearance things for a total of $11. Current category balance is $90.
Life Insurance- $75 Our premiums aren’t due until November, but if we put aside this much each month we should be able to cover them (they change slightly each year). Current category balance is $205.
Birthdays & Gifts- $40 I spent $42 on a baby shower gift and prizes for games at the shower. Current category balance is $124.
Car Registration & Smog- $40 We used $122 from this fund to cover the van’s registration renewal. Current category balance is $161.
Home Projects- $0 We aren’t actively putting money toward any home projects right now. Current category balance is $706.
Family Fun Fund $0 — Formerly referred to as the Kids’ Fun Fund, this is where we put money that the kids earn together. They collect cans to recycle when we’re hiking and occasionally pet sit. Most of the money comes from the OhmConnect program where you earn money for reducing your electricity during designated hours a few times a week. I have a post and video all about the program. We’ve spent it on service projects (like adopting kids/families at Christmas) and on family activities that the kids can all agree on (harder than it sounds). In the past we haven’t reported this category since it was technically the kids’. Current category balance is $314.
Kids’ 529s $125 — I know that $25 per kid per month invested for college looks piddly, but we’re not super concerned about it. You can read about our decision to start saving a little for college in this post.
IRA (Steph) $500 — Mike has a pension through work, so he can’t do the same kind of tax advantaged IRA, but we want to be sure and max mine out each year.
Mortgage Payoff Goal Progress
If you’re new here, our big goal right now is paying off our mortgage. We want to pay it off in 5 years, even though on paper right now it looks impossible. You can see all the numbers and details about our new goal here.
In January we put $7,006 extra toward our mortage. I realize this is a crazy high extra payment. Aside from the normal extra in our budget (when we budget down to zero and “empty” our categories at the end of the month) and the money we “found” when we started a new budget (which I talked about in the beginning of this post), we had a chunk of $4,600 that we put toward our mortgage principal. I explain via Instagram where that came from.
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We're jumping right into our new goal of paying off our mortgage in 5 yrs! I was super excited to make this payment today. Let me tell you where it came from (because who has $4,600 just sitting around!?). After refinancing to a 15-yr mortgage last year, our payment went up to $3,200 per month (includes home owners insurance, PMI, interest). That's a lot, so we decided to have two months of that just sitting in our checking account just to be safe (in addition to our emergency fund and living on last month's income). Now that we're focusing on the mortgage and have a $25,000 emergency fund, we decided to just pay that extra $3,200 payment as a principal only payment. So we're back to just being ONE month ahead on everything. The other $1,400 was sitting in our tax savings account. It's money that I save from my blogging income each month to pay estimated quarterly self employment taxes. After meeting with our tax guy in December, we know that we have more than covered our tax obligations for 2018, so we took this extra and put it toward principal today! To see the details of why we're choosing to pay off our mortgage early, click the clink in my bio and go to this image. https://www.sixfiguresunder.com/payoff-mortgage-in-5-years-goal/ . . #mortgagefreecommunity #mortgagefreejourney #debtfreecommunity #mortgagefree #debtfree #budgeting #2019goals #debtfreejourney #realnumbers #personalfinance #newyeargoals #frugalliving #californialife
These extra payment are on top of the $3,200 normal monthly mortgage payment we make which includes principal, interest, insurance, and taxes.
Original balance of 15-year mortgage: $372,700
Balance at start of 5-year goal (Nov 2018): $363,171
Current balance (after Jan 2018 extra payments): $345,672 (Am I the only nerd who looks at that and wishes we had paid $6 less?)
Percent of 5-year goal reached: 4.82%
You can get this hand-drawn brick house printable progress chart here. I love that it has LOTS of spaces (300+) 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!
Now go fill out the Debt Smash-athon report for January por favor! 🙂
How About You?
- How did your budget and/or debt repayment go in January!?
- Are you excited for No-Spend February?
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