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Welcome to the first of my monthly debt payoff series!
Every month on Instagram, I document how much debt we’ve paid off, but I never explain exactly how we’re able to make those payments. Starting now, and until the end of our debt-free journey, I’ll be sharing a recap of our monthly income and expenses so that you’re able to see exactly how our budget and debt payoff goes each month.
Before we get started, I’m going to share a brief synopsis of how we got started and where we currently stand.
In June of 2018, I started my journey to debt freedom. My ‘ah-ha moment’ came once we were back from our honeymoon, which we paid for by maxing out a credit card. I started with about $75,000 worth of debt, including a medical bill from giving birth to our daughter nearly three years prior, six credit cards, an auto loan, and a personal loan from my mom. She paid off my student loans so that I wouldn’t have to pay a boatload of interest and for that, I’m forever grateful.
Following the snowball method, my medical debt was the first to go. Next, I focused on my credit cards. Present me was very thankful that about a year prior, I rolled my balances across several 0% interest cards. I was racing against the clock though because my promotional period was ending soon. I knew I had to hustle if I didn’t want the accruing interest to capitalize, or be added to the current balance. Thankfully, I was able to pay off my credit card debt in just eight months, and I’m proud to say that we’ve been credit card debt free for seven months.
In January, my husband and I fully combined our finances, and we had a total of $115,000 worth of debt between the two of us. Yikes! His student loans were next in line in the debt snowball, but since they are currently deferred, we analyzed our financial situation and realized that it would be best for us to work towards getting rid of my car. That would bring back nearly $700 in our monthly budget. So, we paused our debt snowball and begin saving to purchase a new (to me) car. We set a goal of saving $10,000 to purchase the car. We settled on this amount so that we could get something a little more reliable that could last me throughout our debt-free journey, which will take us a few years. Currently, we’ve saved a bit over $9,000 and we’re set to fully fund this by the end of the month. If you would have told me that I would have this much money saved a year ago, I would have laughed in your face. Once that fund is complete, we’ll be back to paying off debt, focusing on the underwater balance of my car so that we can get me out of my current car and into the new car by the end of 2019.
Okay, maybe that wasn’t a brief synopsis, but I wanted to catch you guys up so that you would understand where we are today.
With all that out the way, let’s get started.
August’s budget was all over the place. It was a bit in shambles if I can be completely honest here. We started pretty well even with booking a last-minute, end-of-summer vacation, but then we had to cash flow four new tires for my husband’s car, there were last-minute necessities for back-to-school, and we decided to plan a last-minute birthday party for our daughter.
Our total income for August was $9,740.47. Thanks to a three-paycheck month for my husband. See below for a complete breakdown:
Our combined income: $8,740.80
My husband’s OT, mileage, and/or reimbursement income: $275.01
Sofi Referral Bonus: $700
Ally Interest Earned: $12.07
Sofi Money Interest Earned: $1.45
Local Bank Checking Interest Earned: $0.18
Cashback Earned: $0.71
Target Refund: $10.25
My husband and I are paid on opposite weeks. Every week, we create a zero-based budget based on our income, allocating every dollar earned across our budget categories. We use the You Need a Budget (YNAB) app and are currently a month ahead. Therefore, as we are paid, we use those dollars to pay our bills for the following month.
Since we’re focused on saving for a new (to me) car, every extra dollar we earn goes toward our savings goal unless we have a specific goal we’re trying to reach. For example, the Sofi referral bonuses earned in August paid for my husband’s tires, so that did not affect our budget at all. If he hadn’t needed tires, we would have save that amount.
Here’s how we spent our money in August:
Mortgage – $1,629.68 This includes our payment, property taxes, insurances, and PMI since we didn’t put 20% down. I don’t advise buying a house without a 20% down payment. I’ll save that rant for another post though.
Utilities – $273.60 Our utilities usually run in the high $200s this time of year because it gets very hot in Florida and we have to keep our grass watered to keep our homeowners’ association (HOA) happy.
TV/Internet – $144.04 We have both cable and internet through AT&T. This could be much higher, but we have a negotiated rate until 2021. I’m trying to convince my husband that we can do without cable and instead sign up for an alternative, such as YouTube TV or Hulu to save some money.
Gas – $332.96 Our budget was $450. We came under over $100 and that’s with traveling to Orlando for our vacation. I’ve done a pretty good job of trying to make my gas stretch for two weeks to keep this category as low as possible.
Insurance – $215.70 We currently pay our auto insurance on a monthly basis. My goal is to switch to semiannual payments to take advantage of the extra discounts. We’ll get there.
Maintenance – $690.13 As I mentioned earlier, we cash flowed new tires for my husband’s car. Thankfully, we were able to pay for this using the referrals from Sofi Money.
Groceries – $489.67 During five-paycheck months, I like to challenge myself to only spending $100 on groceries and to use this as an opportunity to clear out our freezer and pantry. Clearly, I didn’t meet this goal this month. I didn’t take into account that we’d be traveling and would need extra food while we were in Orlando to help keep our expenses low. Also, we needed to purchase extra items to prepare for Hurricane Dorian. Our normal monthly grocery budget is $400.
Dining Out – $68.17 We are usually able to keep the number pretty low, as we very rarely eat out as a family. If my husband and I eat out separately, we use money from our personal allowance to cover those expenses.
Preschool – $480 We are very grateful that our daughter attends a very affordable Christian preschool. This cost could easily be just as much as our mortgage payment each month.
Cell phone – $177.82 Yes, I know our cell phone bill is a lot. We’re just a few months out from paying off my phone. We can’t pay it off early because we took advantage of a buy one, get one free promotion when we upgraded. If we pay off my phone early, we’d have to pay off my husband’s phone as well. Once that payment is settled, we’re thinking about switching to a cheaper carrier. We currently have AT&T.
Allowance – $803.40 My husband and I each get $100 a month to spend however we wish. The majority of the time, my funds are spent on planner supplies. We also earmarked money for my daughter to get a few extra school supplies and to pay for her birthday expenses.
Personal care – $171.28 We picked up some necessary beauty products, I got a pedicure and my husband got two haircuts. Pedicures aren’t a regular occurrence for me. We budget for my husband to get his haircut weekly, but if he doesn’t go, I like to treat myself every so often as I reach my goals.
Apple music – $14.99 We pay for the family plan.
Dance – $75 Our daughter started dance classes in August and this is a new reoccurring expense.
Vacation – $642.16 Our budget was $700. I am happy to report that we came under budget. This includes tickets to Sea World Orlando, our hotel, food, and miscellaneous spending. I honestly didn’t do a very good job of tracking our vacation spending. It was nice to just live in the moment for a few days. I don’t recommend this though because this could have gotten way out of hand.
Cars – $1,205.06 This category gives me the most anxiety. As I mentioned previously, we are currently saving for a new (to me) car to replace my car. I cannot wait until that payment is gone. I am hoping that once we see the benefit of not having one car payment that my husband will agree to sell his car too.
Mom IOU – $200 Once my mom paid off my student loans, we agreed that I would pay her $200/month until I’ve paid her back.
Student loans – $0 My husband’s student loans are currently in forbearance. Our first payment is due on January 15, 2020.
New Car Fund – $1,670.32 This brought our fund up to $8,500. We were very close to funding this account this month, but we beefed up our emergency for in preparation for Hurricane Dorian.
Christmas – $102.69 We started saving for Christmas a few months ago, and luckily I found a few gifts on sale so I snagged them. I love a good sale on items that I was planning to buy anyway. Starting Christmas shopping early is a great way to save money and to prevent the rush at the stores.
Work – $153.31 My husband had a trip for work. These expenses are reimbursable though.
The remainder of our budget went to tithing (10%) and launching this blog. I’ll make a separate post regarding start-up costs for launching a blog.
Whew! You made it to the end.
August was not a typical month for us. As you can see, it was quite spendy. Our goals for September are to stick to the budget, keep our expenses low, and to throw every extra dollar to savings so that we are able to fully fund the New Car Fund.
What are your goals for September?