First, Some Background
Mr. C recently finished up his third (and final!) master’s degree. He also switched jobs that resulted in a pay increase. Between a pay increase and no longer needing to pay for tuition, we suddenly (and for the first time in our marriage) had more money coming in than what we needed for survival.
Previously, we didn’t have a lot of money. Therefore, we didn’t spend. Fortunately, we did start to max out our Roth IRAs before Mr. C was out of school.
While that worked alright for our family for a while, we decided we wanted to be more proactive and deliberate with our money.
Mr. C started contributing to his employer-offered 403(b) as we continued to max out our Roth IRAs.
We also recently paid off the mortgage on our rental property.
And…we wanted some FUN money too! (Over 15 years on a student’s budget with five kids was long enough!)
To make this all happen, we decided we needed to FINALLY get on a strict, written budget.
The Nuts and Bolts of Family Budgeting
Begining in 2020 we started using a budgeting program called You Need a Budget. It is basically an electronic envelope system.
At the beginning of the month, we use our take-home pay from last month and divide the money between all our “envelopes.” That is the number you see under “budgeted.”
Then, every week, as our credit card and checking accounts record transactions, we take the money out of our “envelopes.” That’s the amount you see under “spent.”
The “balance” is the amount of money that is leftover at the end of the month. We keep the money where it is and add it to our “envelope” for the next month.
With that intro, let’s look at the numbers:
September Family Budget Roundup
Because of the variable nature of our income, we live off of last month’s income.
My husband works in higher education, therefore he only gets paid in the summer if he teaches summer classes.
(Summer work is never guaranteed and is not enough to cover our summer expenses, so we always save throughout the year to have money to pay the bills come summer.)
This month, we refinanced our mortgage! We were lucky enough to find a true no-cost cash-out refinance where we paid a higher interest rate in exchange for the mortgage broker paying our fees. More on that in a later post…
We took the proceeds from our cash-out refinance and paid off the personal loan (a loan we took out for a family member).
It was a crazy month!
Quick Look
Here’s a quick snapshot of September:
The refinance funds really messed with our percentages!
With that said, let’s dig into the categories:
Our cash-out refi funded and left us with just over an extra $70,000 to spend.
We totally drained our summer fund this past summer, so it is time to start building it up again. Unfortunately, with low enrollment due to this darn pandemic, we aren’t expecting much overload this year, so we need to get more creative in how we finance next summer.
Percent of Budget: 1%
Mortgage-Primary Residence: This is how things sat at the beginning of September. However, you will see this 30-year 3.125% interest loan replaced with a 15-year, 2.375% interest come October.
Home Maintenance: Pool stuff mostly. We aren’t even around in the summer, so why have a pool?
Percent of Budget: 0%
Gas/Electric: Yes we have solar, and yes we have had years without a large bill at the end of it. This year is different. We had my parents living in a motorhome on the side of our house for several months, and then we bought two plug-in hybrid cars. We calculated that we are better off buying electricity for the cars when gas is about $3.50 or higher (and it has been almost the whole year).
Water: The bill comes every other month.
Internet: Nothing much to say. No cable, no phone. Just the internet. Luckily my husband, as an educator, gets a discount of about $20/month.
YouTube Music: A truly frivolous expense, but we enjoy it.
Red Pocket Mobile: This is our kids’ phone (yes, they share!). We switched over to Red Pocket from Republic Wireless a while ago since Red Pocket works in Alaska.
Cell Phones: This is a sinking fund for Mr. and Mrs. C. I have been with Mint Mobile for over two years now and love it. Mr. C recently switched over to Red Pocket. They are both great plans with Red Pocket having the advantage of working in Alaska. We are on the yearly plan for both, so by putting aside $35 each month, we have the yearly bill covered when our plans are up.
Technology Subscriptions: Nothing this month!
Audible: We funded this last month and then decided to turn it off. We have enough audiobooks to last a while.
Percent of Budget: 1%
Fuel: This was high, but we had several out-of-town trips.
Car Insurance This has gone up with the new cars. We got a low rate from Geico straight out of college several years ago and have never found a better rate no matter how many quotes we get from other places. This is for full coverage for both cars.
Car Registration, Smog: Since our cars are new, we shouldn’t have to smog them for the next four years. But, registration is not cheap.
Car Maintenance: With new cars, we hope this stays low. We purchased a screen protector for the Pacifica’s infotainment screen.
Percent of Budget: 1%
Groceries: This includes any fast food trips. Not bad!
Household: We don’t track this category too closely. It’s basically the catch-all for anything that doesn’t fit anywhere else.
Clothing: We were getting everyone school-ready in August that resulted in overspending and some returns that didn’t get done until this month. We still had to purchase new items for Mr. C and the kids. This is one category I save money on being a stay-at-home mom. I don’t have too many clothing needs.
Electronic Replacement: Yeah, it seems like our printer MIGHT be dying…
Percent of Budget: 0%
Life Insurance: This is a policy for my husband as he is our only source of income.
Medical: Most of our medical costs are covered by a health savings account that pulls $800 directly out of Mr. C’s paycheck. We don’t count the $800 as income since it comes out before taxes.
Percent of Budget: 3%
Charity: We tithe based on our income, so this fluctuates greatly. We also give $100 every month to help those in our community who are less fortunate. This month we also contributed $100 to another cause we felt strongly about.
Gifts: This is where we keep the money for gifts for mother’s day, father’s day, parents’ birthdays, and the occasional wedding or baby shower and teacher gifts. Actually, this month we had a family member severely sick with COVID, so a few gifts went that way.
Percent of Budget: 87%
Student Loan: Right before I wrote this post, President Biden came out with an overhaul of the Public Service Loan Forgiveness (PSLF) Program. We will probably take advantage of that overhaul and try to get this forgiven.
Car Loan-Clarity: This loan is at 1.99%, so we will make the minimum payments on this and prioritize other goals, like padding our summer fund.
Personal Loan: As I mentioned in last month’s budget post, this was a loan we took out in our name for a family member. We are making the payments and will be repaid hopefully by the end of next year. However, we decided to take out cash during a refinance and roll it all into one loan with a lower interest rate.
Percent of Budget: 5%
Retirement Accounts: We max out our Roth IRAs every year. Mr. C also contributes to a 403(b) (it’s like a 401(k), but for government workers) with pretax dollars through work. This was the first month we were able to up his contributions to $1,950! That means that over the course of a school year he will max out the 403(b) contributions. It feels great!
(Mr. C also has about 10% of his gross pay taken out for a pension plan. We don’t see the pension money and have no control over it, so we don’t put it in the budget.)
Emergency Savings (Goal $0) This just sits in a savings account attached to our checking account.
Brokerage Account (Goal $0) Several years ago, I got sick of watching our savings earn less than 1% interest, so we took a big chunk and invested it in some utilities that regularly pay 4% dividends. We left it there, and it’s been growing steadily (well, usually) ever since.
Percent of Budget: 1%
Parents Slush Fund: This is where my husband and I keep funds just for ourselves, no question asked! It’s fun.
Dates: We usually go out once a week without kids to see if we still know each other! COVID is helping us save money by doing drive-thru and take-out only. This month was mostly fast food, so it ended up under groceries. Haha. We are hoping to take a trip at some point too. Let me leave you with this thought: When in doubt, remember dating your spouse is cheaper than divorce…
Family Fun: This month we really spend a lot on an out-of-town wedding. Hotels are expensive in Southern California! We also have a membership to an amusement park and are paying for dance, football, and soccer. Considering all of this, I think we actually did pretty well.
Birthdays: Gearing up for an October birthday!.
Christmas: Having a sinking fund for Christmas is awesome. I have to say, it’s a stress-free way to shop for the holidays. No guilt, no wondering if we are over-spending. We know how much we have to spend and that is that. For reference, we generally spend $100 for the older kids, $50-75 for the younger kids, $75 for parents/in-laws, and the rest for family gifts or for Mr. C and me.
Percent of Budget: 0%
Rental: Property taxes came due.
Education: The high school has been paying tuition and this year COVID funds from the college paid for books.
Unusual and Unexpected: When we started budgeting, it seemed like we constantly forgot things. We are getting a lot better, but we keep this line item for crazy things we didn’t anticipate. Nothing happened this month. Yay!
Work-Related: Usually, Mr. C has work lunches. No lunches thanks to COVID.
How Did We Do?
One of the most important things in our family budget is making sure we are steadily investing in our retirement. We are on schedule to contribute a total of $30,000 to retirement funds and then another $12,000 to pensions for 2021.
Our donations to charity are another important (and big) category, but that is a deliberate choice for us.
Our goal with money is not to save as much as possible. Instead, we try to use our money in ways that will enrich our lives.
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