Sunday, January 1, 2017

December 2016 Update: $69,862.93

Well, the end of the year has finally arrive, and I'm happy to report that we finally broke the $70,000 mark, even if it was just barely! Earlier on in December, I started plugging in bank balances, credit card balances, and other amounts left to pay into a spreadsheet that I use, and realized that we were spending more than I thought we would. I went through everything we had purchased and talked with my husband about it, and we both quickly agreed to try to spend as little as possible on "non-necessities" as possible so that we could stay on budget for the rest of the month. 

In the month of the year that most people spend the most money, this wasn't easy, but we had already purchased our gifts and were on target for everything else.

This coming year, we hope to get down to $57,000. With our monthly interest accruing at about $250 a month right now, that means we have to pay a lot more than $13,000 to get to this place, but I feel hopeful that we can get there.

Wednesday, December 28, 2016

Our new budget for 2017

I haven't posted on our budget in awhile, but given that both our income and our expenses have changed, I thought it would be good to update here. This past year we were blessed to receive a $5,000 raise and then my husband got a new position in the same company, and found out that they approved another roughly $5,500 raise. Sometimes it feels small given that our health insurance premiums are also increasing (again), but truly we are grateful to have more money to direct. So currently, our annual income sits at $60,650 a year.

Because we work for the state, we are committed to contributing 6% of his salary to the retirement fund. We also opted to take advantage of their health care plan, and while I haven't included these expenses in past budgets, I decided to include them here so that you can get a feeling for where all the money goes, including monthly taxes.

We get two paychecks a month, but because we are on a 26-paycheck schedule, twice a year we get three paychecks. These extra paychecks do not have contributions for healthcare taken out - those are only on the other 24 paychecks, so these two extra checks are usually higher than the others.

We try to live on the two paychecks we get every month, and when we get 3 paychecks, the extra money goes into savings for irregular expenses like sports fees, swimming lessons, home improvement/repair needs, clothing, homeschooling purchases and other expenses.

Here is our monthly gross from two paychecks:

Deductions taken from 2 paychecks (1 month's average income):
Taxes (Social security, disability, state and federal) - $442
Healthcare and dental premiums - $288
Retirement - $280
Personal contribution to HSA - $150
Total Deductions: $1160

After our deductions, we have a take-home pay of $3504. Here is how we budget it:
Tithe - $461
Mortgage, property taxes, and homeowners insurance - $675
Security system - $37
Water, sewage and garbage - $75
Gas and electric - $132
Cell phones - $52
Internet - $55
Gasoline - $55
Groceries - $400
Car registration and membership fees - $20
YMCA - $54*
Home Care - $20 (for things like toiletries or air filters, hardware store runs, etc.)
Life and auto insurance - $108
Student Loan - $665
Auto Loan - $294
Emergency Fund - $300
Special Savings - $75
Christmas/birthday fund - $25

A few things I would like to point out about this year's focus:
* We have added in a gym membership. I am happy to workout at home, but my husband's preferred way to workout is to swim, and our local YMCA offers a family membership for $54 a month. Many places charge $5 per swim, so to us, it made sense to purchase a membership that we could all use for the same price, and we could have access to fitness classes, machines, and a pool for our kids to practice swimming during the long cold winter we have here (or the hot summers!).
* We are saving some of our extra money to build up our emergency fund. At some point we may decide to put it toward debt, but as homeowners we feel like our current fund is just too low. We don't plan on having this category indefinitely, but it hopefully will build up our fund in a year or so to free us to more aggressively pay down our debt. That said, I am excited that we can now increase our student loan payment from $465 a month to $665/month for the time being.
* Special savings is a category to use for something we normally can't afford but would like to save up for. I like to call it the sanity fund :).
If you break down the percentage of our take-home income that goes toward debt, it works out to be about 27%. 

So that is our budget! Some people break out in hives over the "B" word, but I've always enjoyed planning out what we are going to do with our money and then checking to see if we made our goals. I don't really set massive goals that I don't think we can reach but rather look at what we actually have coming in and what's realistic for our family and stage of life.

Tuesday, December 13, 2016

November 2016 Update: $70,637.32

First off, I apologize for the late timing of this update! Yes, we are still here. And yes, thankfully, we are still paying off our debt! :) With Thanksgiving and then family visiting from out-of-town, I just didn't get to posting our numbers. And because this post is almost two weeks late, there is added interest that has been accruing, so our current debt number will not be what it would have been two weeks ago. That said, let's get on with the numbers!

Our current debt is $70,637.82. This includes credit card, student loan, and auto loan debt. 

For the most part, we were able to stay on track with debt repayment, though a lot of the "Black Friday" deals caused our bank account to drop more than we expected once we paid everything off. When I crunched the numbers originally, I should have known was off when it seemed like our account was doing better than I thought with some recent purchases, and then realized that though I got a confirmation of our tithe on email, it hadn't been taken out of our bank account yet. It was a good wake-up call, though, and I went through each expenditure and itemized what we had spent and showed my husband. Once he saw the numbers, he was totally on board with being much more careful for the rest of December. It hasn't been easy to not spend in one of the biggest spending seasons of the year, but we know that we have what we need.

The lesson learned? "Feeling rich" can make you spend more freely, and pretty quickly you realize you are back to where you started!

Instead of spending more, I am trying to focus on simple things to make our home feel better like working on projects that I already have supplies for or just doing the "boring" thing and cleaning/organizing. It's amazing how much your outlook improves when you pick up and stay on top of laundry!

Frugal wins, broken screens, and unexpected blessings
Even though we've had to trim our spending this month, I have been grateful to get free tickets for our city's performance of the Nutcracker. We managed to make it through half of the performance before my oldest son couldn't manage his ear pain (he had an infection and I had forgotten to give him ibuprofen!) We also took in a free light show, and our boys got to go with their scouting group to sing Christmas carols to residents of a nursing home.

We lost a major appliance this month, though thankfully, it is one that we can live without. The night before the election, one of our kids accidentally threw a dice at our plasma television screen and the picture quickly died. We decided not to replace it even though there were plenty of deals to be found.

Then, this past week, a mysterious letter appeared in our mail. I thought that it was a Christmas letter, but instead it was a gift card with a typed note that said, "Go buy yourselves a dishwasher. Merry Christmas." I haven't really talked much about it because it's a 1st world problem, but our dishwasher broke several years ago and we have been hand-washing ever since. I've lived overseas where people washed dishes in gutters with no soap, so to me, running hot water is a luxury I continue to appreciate, but I am also looking forward to picking out a new dishwasher soon. I have no idea who sent this. I had only briefly mentioned on Facebook when our tv broke that if I was going to buy anything new, it was going to be a dishwasher next, but still, my husband and I were both shocked and humbled by the generosity we received this week.

Stay tuned in a couple of weeks when I post our final debt update of 2016. I'm hoping to break $70,000, which was a goal at the beginning of the year. Also, I'll update our budget and give you an idea what we are aiming for in 2017!

Saturday, October 29, 2016

October 2016 Update: $71,216.70

Every month I update where we are at in terms of our total debt (aside from the mortgage). It helps me to be accountable to readers as well as to myself. I have been posting our debt updates for over two years now, and while it feels like slow progress, I know that things will pick up over time as our income situation (hopefully) improves and the interest drops as we pay off our debt.

To clarify for new readers, this debt includes our car loan as well as student loans. Our student loans stand at around $62,000. Right now, we still owe just about $9,000 on our 2007 Toyota Sienna. While it would be ideal to have purchased our van outright, given the timing of the situation and our desire to have an extremely reliable vehicle for our one-car family of six, we opted to get a low-interest loan for 5 1/2 years along with a warranty for major engine problems such as transmission, etc. 

So let's get on to the fun part - our debt has dropped to $71,216.70. This month, the most exciting thing was that we paid more toward our loans than we have in the past. Usually we allocate $465 per month, and had planned to increase it to $665 this month, but once again some unexpected expenses arose when we discovered that a spring on our garage door was broken. The cost to repair that was $250, and through some rearranging in our budget, we managed to pay for it with some of our extra student loan money as well as our own bank account and decided not to sign up for the YMCA this month. Still, with the major repair expense, we managed to pay $620 toward our student loans and the regular payment of $294 toward our vehicle. That's over $900 that we put toward debt, and considering that our take-home pay is $3250, I'm happy with that number.

One thing that has really helped me in our debt repayment process is to create a spreadsheet that anticipates what we could pay off each month if we committed to a certain amount. It reminds me of where will we be if we keep going, as well as what we are giving up if we spend the debt-repayment money on something else. At my husband's current income, we could break the $70,000 mark by Christmas, and by next Christmas, we could be down in the mid-$50,000 range. By Christmas of 2018, our debt could be down to $37,000. So while $71,000 doesn't feel great, $37,000 two-years-from-now motivates me to press on.

Tuesday, September 27, 2016

September 2016 Update: $71,724.97

So here's the good news - we finally got our balance below $72,000! Every thousand feels like it takes time, but I like to celebrate the victories when I can. In a month or two we will reach another big landmark: paying off over $20,000 of our debt since we started this journey two years ago.

This month, we were hoping to increase our debt payment by $200 because of my husband's recent modest raise of $5,000 (our total income now is about $55,000 before anything is taken out). But as unexpected (and expected) costs trickled in, we realized that it was better to keep our payment this month at $465 to protect our bank account from getting too low.

The extra expenses stemmed from a wide variety of things - we put our three boys in both a Wednesday night and Monday night ministry, partly to give me a break and some time to research side income opportunities, but also to give them more opportunities to socialize with other kids since they are homeschooled. Three children's fees add up quickly, in this case amounting to about $200 for the three of them. My husband also found out that his new position at his office will require him to get another type of license to practice which came in at $175. We also had to order checks, which cost us $30.

The extra expenses this month amounted to over $400, so we felt like it was better to put that extra $200 we would have put toward debt toward floating some of these expenses while paying for the rest out of our savings. I like to make progress, but putting the baseline amount of our bank account in jeopardy is also not worth the slight amount of interest I might have saved.

We had a few other things go out home-related this month, including a kitchen drain and our garage door sensors. I am planning on replacing these two items myself this coming month with new parts I researched and bought from a local hardware store and eBay. As I continue to not have Amazon Prime, I am finding that it forces me to look for good deals in other places, and usually they are just as good, but without Amazon's annual fee.

What I am grateful for this month

Our two year-old daughter was accidentally hit in the face with an aluminum baseball bat. She is okay, but we ended up taking her to the emergency room just to be sure there were no fractures/breaks. I don't know what the emergency room bill will be yet, but hopefully our HSA will be able to cover it as the bill comes in. And more importantly, I am grateful that she wasn't hurt that badly! I know that accidents happen to kids and even if they are much worse, God is still watching over them, but in this case, I was so thankful that she wasn't hit harder, and it was the brother with the weakest swing who accidentally hit her.

Saturday, September 17, 2016

Work with what you actually have

A few months ago, I had the opportunity to read Charles Duhigg's latest book, Smarter, Faster, Better: The Secrets of Productivity in Life and Business. One story of the emergency landing of Qantas Flight 32 stuck out to me as a lesson in debt and life management.

As the pilots made their ascent after takeoff from Singapore in 2010, they heard a boom and then a crash. What investigators found later was that an oil fire had caused a turbine disc in the engine to detach, break into multiple pieces and rip through the left wing. Eventually fuel began leaking from the left wing into the open sky.

As systems began to shutdown and instruction upon instructions spewed out from the computers, the pilots debated what to do in light of the multiple conflicting pieces of advice they were receiving.

Finally, the main pilot, de Crespigny, stopped and took his hands off the controls. Instead of trying to account for everything that wasn't working, he realized that they needed to look at what still was working, and how to use that to land the plane. Once it was clear that their jet was functionally more like a Cessna, de Crespigny had a better idea of how to land the plane.

I found this story to be insightful on a number of levels, primarily because it fit what we often face in debt repayment or other financial challenges.  Imagine your budget as a plane, and a successful flight to be a balanced budget with no debt, where everything necessary is provided for and you are living within your means. Then, imagine a financial emergency, mistake or challenge as that disc ripping through the wing of your budget.

It is easy and tempting to look at others budgets and wish that you had their means or situations to help you, just like I'm sure that pilot wished he were flying a normal plane, but he wasn't. And only when he faced the limitations of his own reality was he able to land his own plane.

Wherever you are today, it is okay to acknowledge limits. Whether it is to say, "This is all we can do today with the budget we have," or "this is as large as a debt payment that we can afford," getting real with yourself will help you deal with the situation you have, not someone else's.

Wednesday, August 31, 2016

August 2016 Update: Total Debt of $72,212.29

Hey everyone! In the last few hours of August 2016, I am glad to report that we've dropped our debt to $72,212.29! For those of you who are visiting the first time, you are probably shocked that I'm excited about that, but it's because we have a plan and this is almost exactly where we planned to be at this time. 

This month we traveled to California to attend my husband's grandmother's 100th birthday. Initially we were only planning on sending my husband due to expenses, but his brother offered to pay for some or all of our tickets. I didn't want to have him pay for all six of us, so he ended up paying for the kids to go. It was fun for the kids to get to go to the beach and I got to see my brother and his family while we were there, but the prices of food there startled me at first (and we even used to live there!) I realized how much I loved Aldi, and even if we had to drive a bit, we went to one of the new Aldi's in Southern California to get the groceries we needed.

We didn't have any major expenses this month, but our baseline bank account balance (what's left after we pay all the bills) dropped a little more this month. Even with my husband's modest raise, the daily expenses of life add up. We had the piano tuned ($100), had to pay for airport parking (another $100), and signed our kids up for Trail Life USA (almost $80). Add to that a need for more vitamins ($50), and a homeschool order (another $60) and you can see why our savings dropped a bit. I am determined to do what we can to make our planned debt payment every month, but in order to do this we have to dip into savings.

The good news is that my husband applied for a different position at his office, not sure if he would get it (it was a stretch job) but we just found out that he was selected. His salary will remain the same for the time being, but has the possibility of going up at the turn of the year. Because we have had some expenses and are already planning on putting most of the extra money from his current raise toward debt, if and when a new raise kicks in, we will use it to build up our savings for awhile.

I know many Dave Ramsey followers adhere to the $1000 emergency fund rule, but lately I have felt nervous about that. Even in a government job, you never know what will happen, especially if the political climate changes. While debt repayment is important to us, so is having a healthy emergency fund. 

It also seems that it is leak week at our house. A few days ago our refrigerator started to leak, and as I took everything out of the freezer to de-thaw the ice sheet that had blocked the drain hole, I had to get something from under our kitchen sink, and of course, I noticed that a piece of cardboard down there felt damp and realized one of our drains was on its last legs. I don't think we'll need to call a plumber for this one though - my philosophy is that if it is not dangerous or an emergency, we can afford to put a bucket under it, watch the Youtube videos, and try to fix it ourselves, and if it still doesn't work, we can at least have the parts when we call the plumber! :)

Next month I will be posting our new budget as we raise our debt repayment amount.
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