Ever have one of the moments when you open up your Mint app, and go “WOAH! What happened?” Yeah, that was one of those months. But actually, not in a bad way for once. Take a look at our November Financial Update and see why this “WOAH!” isn’t out of panic or worry.
While we were only just barely under budget, it was a really good month for us. And overall, our finances are trending in the right direction.
How did your finances look in November? Did Black Friday do you in? What was your “WOAH!” moment?
The Budget Allocations
We use the Mint App as our main tool for budgeting, but we are not budget crazy by any means. We primarily rely on paying ourselves first and moving money around to keep spending below a threshold we are happy with.
We could definitely optimize this process more and squeeze out more money to pay down debts or invest. We are considering this, but its definitely easier to look at adding income and small cut backs, as opposed to harsh cuts and a rigid budget.
Overall Spending Total Allowed in Budget: $4,720 per month
- Auto Insurance: $150
- Daycare: $600 (we pay $30 a day to a lady in the town where I teach, cheap I know!)
- Entertainment: $5 (This is our new Hulu subscription which was a $2/mo. deal on Black Friday & an occasional rented movie)
- Food and Dining: $804 (P.S we blew through this one!)
- Gas: $200 (My wife drives a lot for her work)
- Internet: $77
- Cell Phones: $178 (we pay for my brother and parents’ phones and get reimbursed)
- Mortgage: $1,410
- Shopping: $200 (we smashed this up too)
- Student loans: $800 (deferred right now)
- Utilities: $250 (winter is tough in our old 1860s farmhouse)
- Life Insurance: $46
Overall, our budget is pretty do-able and fairly easy to stay within as a whole. Even if one of the categories is overspent, we usually balance out in the others.
November Financial Update: Budget Recap
Fixed Expense Categories
Auto Insurance: $147/$150 (+$3) Geico has been even cheaper since trading in my more expensive, financed truck for a owned-outright Toyota Corolla. Plus my wife’s car is 8 years old now.
Internet: $75/ $77 (+$2) No explanation needed here. Simple bill, doesn’t change much. Spectrum can be a pain to negotiate with though. Hoping to keep it below this amount for as long as possible.
Life Insurance: $45/ $46 (+$1) We get our life insurance through NY Life and only pay for term life insurance. My wife’s policy would be enough to settle all our debts. Mine is double hers, even though she’s the breadwinner, and would cover all our debts and provide 5 years of my income replaced.
Cell Phones: $173/ $178 (+$5) Back in March, after closure, my wife and I decided to switch from Straight Talk and go to Verizon. As a teacher, I got a discount on our policy for 5 lines and got five new Iphone 7s (why do you need newer when these were free!). My parents send $70 per month and my brother sends $36, leaving my wife and I, really just a $72 bill for two phones. We know we could do cheaper, but this was our way of making sure my parents had phones and helping my brother save a few bucks on his typical phone bill.
Mortgage: $1,500/$1,410 (-$90) I paid an extra $100 over our usual payment. We usually pay $1,400, which includes a $38 principal payment. This month we bumped it up to $138 in principal. Is this going to knock out our debt quickly? No. Is it the best place for that $138? No again. But it gives us some peace of mind, plus it builds some equity in our property. We would like to refinance at some point to get rid of PMI (private mortgage insurance).
Student Loans: $550/ $800 (-$250) With federal student loan interest cancelled for 2020, and payments deferred, we’ve still been paying on our loans, but targeting our high interest loans specifically. We could have paid $800 easily, but early in the pandemic we threw a lot of money at our high interest loans and most our stimulus check went there as well. Right now we are scaling back and investing for last two months of the year.
Variable Expense Categories
Shopping: $402/ $200 (-$202) Yeah, we shot over a little bit, but that’s because my Mint budget doesn’t change for the seasons, or our expected spending for different months. I use Mint for a general budget to track where we are at. Most of this spending was Christmas related, which is really cheap for how much we’ve spent in previous years.
Utilities: $182/ $250 (-$68) Usually November is a high heat month as we are getting used to the colder weather, but we did a good job of keeping the thermostat down. Also, we got a lot better at dealing with phantom electricity by unplugging appliances, and keeping lights off as often as possible. Regular cleaning of our furnace, dryer, and the coils of our fridge/freezer probably helped as well.
Daycare: $480/ $600 (+$120) We had four days where we didn’t need to use daycare as I was home from work. (Other cool thing about our daycare- we don’t pay on school vacations or summer. So we max out at around $6,000 per year for one child)
Entertainment: $2/ $5 (+$3) We didn’t rent any movies this month. Hulu’s deal is saving using an extra $3 per month for the next 12 months. Not a big amount but always feels good to spend so little on entertainment but still be perfectly content.
Food and Dining: $1,279/$804 (-$474) All of our progress above was easily wiped out here. We spent too much on ordering out (all small businesses) and picking up coffee and munchkins from Dunkin. Not proud of this one but not concerned.
Gas and Fuel: $148/ $200 (+$53) With both of us driving fuel efficient cars and not traveling on the weekends, it’s pretty easy to stay under budget here. Easily $50-75 of this was spent just traveling back and forth to assist my parents with remodeling their home and moving out before sale.
Budget Result for November: -$263
Really, this isn’t bad. It may seem insane to say as a personal finance blogger. But in reality, we knew where we were at and what income we had coming in and we allocated our money accordingly. We could have closed this gap a bit by not paying the extra $138 on our mortgage, or cut back on our food and dining.
The “WOAH!” Moment
The reason I said “woah!” at the beginning of post is because I was impressed!
We have always attempted to budget, but like I said earlier, we really choose to pre-determine where our money goes and pay ourselves first. A budget helps us to ensure we allocate money to our values, and we don’t overspend and need to make it up with savings. But, for much of the pre-pandemic months we had months where no matter our best intentions things got a little tight here and there at the end of the month.
October was similar for us to November’s update. We earned more (my wife did) than we had anticipated and had more leftover to invest or tackle debt than we had originally planned!
This was our WOAH! We realized we could probably kick our butts into gear and crank up the savings and investing. We have always taken a slow and steady approach to financial independence and growing our wealth.
We are cautiously aggressive with investing and using our money to pay down debts. Which to me means that we like to have a strong cash cushion to hedge against emergencies and downturns, but we like to invest aggressively into index funds. We also don’t have a problem with putting money towards paying down debts if it will reduce our cash flow outlays in the near future. If we feel our cash cushion and emergency fund is healthy we will pump cash to investments and to pay off debt.
It looks like we can be even more aggressive in the coming months! I can’t wait to add to my 457(b) contributions and hopefully max out both our IRAs in 2021!
November Financial Update: Income Report
Income in November was pretty high! Even though a $100 per paycheck increase in my 457(b) contributions started this month, the Mrs. more than made up for that!
It’s been crazy to see the difference between what our income was last year and this year. This time last year my wife was on step 2 of our teacher contract as our district’s school social worker. Now, she’s a medical social worker for hospice and making a considerable bit more.
On the school’s contract she made the same as me on step 5 including with my two coaching positions. But since leaving, and no longer paying union dues and into the NYS teacher retirement system, she’s getting to keep that 4% of her salary. This new job has more than made up for the lost of her retirement, as she receives quarterly bonuses, “peak pay” (a raise during busy times), and paid mileage for driving for work business. She has been working less hours than when at school, and she’s not working outside of contractual hours for free.
Even if the income and benefits weren’t comparable or better in this position, it is still infinitely better for her. She’s seen a massive boost in her confidence as a professional. She also has seen a marked difference in her mental health and general life satisfaction since making the switch. The school position brought her a ton of stress and the violence she was dealing with in the classrooms is gone. She doesn’t have to try to disengage her fight or flight every day on her way home.
So, anyway, here’s the income report for our November financial update…
Total Income for November Financial Update: $6,187
Wife’s W-2 Income: $3554.94
Lance’s W-2 Income: $2431.44
Gifts: $200.00
Interest/Dividends: $0.56 (Wow…)
Blog: $0 (Not monetized)
Side Income: $0
So, clearly, my wife is the bread winner by a fair margin! She will stand to bring in at least $11,000 more after taxes than I do this year.
For those wondering, I do pay for health and dental insurance out of my paycheck, as well as union dues (I will get those back at end of year as I serve as a building union representative). A $125 457(b) contribution comes out pre-tax out of my paycheck biweekly as well. Only taxes come out of my wife’s paycheck.
But even with those, she is doing very well in this job! She’s not even working a full 37.5 hours a week right now either!
State of the FI-nances
We had a total positive cash flow of +$1,204 in November!
What we did with this positive cash flow and leftovers from October cash flow:
- $1000 to wife’s Traditional IRA (some of this came from leftover cash from Oct., we bought more $VTI on Nov. 2nd)
- $100 to son’s 529 plan
- $400 to our emergency fund
- $300 to our secondary savings account
- $250 in pre-tax contributions to 457(b)
That’s a total of $2,025 of positive money moves!
We are definitely moving in the right direction!
Add in our $138 in additional mortgage principal payment, $500 in mortgage principal and $550 in student loan principal and we moved our net worth by +$3,213!!!
“Add in our $138 in additional mortgage principal payment, $500 in mortgage principal and $550 in student loan principal and we moved our net worth by +$3,213!!!“
Teachmoneylife
Not only that but our current emergency fund would cover 4 months of barebones survival budget and we ended the month with $1,500 left in our checking! With both of us being paid today (Dec. 3rd)!!!
December is going to be one of those rare 3 paycheck months!
What do you think we should do with the extra paycheck this month?!
Debt or invest?
Looking to the Future
If we can continue to see a positive cash flow of $1,200+ per month, we should be in pretty good shape. That’s a 20% savings rate on our net income. Adding in an additional $250 in pre-tax contributions, plus the value of my pension and we are headed in a very good direction.
While our investment accounts are pretty small relative to others in the personal finance space, we should continue to see them grow as we continue to add to them monthly.
Moving forward I’d like to look into and/or pursue the following:
- Refinance the Home
- Increase my 457(b) pre-tax contributions
- Cut back on our budget a bit
- Pursue a side hustle/build other income streams
- Student loan forgiveness
Refinance the House
Refinancing could be a good option now that I’ve eliminated more student loan debt, and completely wiped $17,500 of auto loans out in 2020. We should be eligible for a lower interest rate (current is 4.5%), and with a appraisal, might be able to get our equity above 20% LTV, and drop our PMI payments. Those savings could help us stretch our cash flow further and pay off debts/invest faster!
Increase 457(b) Contribution
I bulked up my 457(b) contribution from $25/paycheck to $125/paycheck this month. Starting 2021 I’d love to explore the idea of increasing that to $200/paycheck. Tax wise that would only result in another $60 out of my paycheck. I know we could squeeze another $120 out of our budget to add another $150 per month to our retirement accounts.
Regardless, I will increase it in September to account for 50% of my annual step increase.
Cut Budget
This one is obvious looking back. I know that I could cut back on our food and dining and shopping categories and find an additional $300-$500 a month in cash flow. While I scoff at this spending and chalk it up to what we value and don’t mind spending money on, there has to be ways to optimize this better.
I had failed at meal prepping, food lists, and couponing when I last gave it a good effort. Mostly because it was just so much to add to my current plate, that I opted to let it slide by the wayside. If anyone has some great resources for learning how to do it more efficiently, drop me a line!
Pursue a Side Hustle
Probably would start this much sooner if I wasn’t so drained from teaching all the time.
I’m looking into starting VIPKid, or into monetizing this blog over the next few months. My typical go to for a side hustle is picking up a part time job or coaching an additional sport at school. But all of those choices are limited or put me at risk of exposure to COVID, which in turn puts teaching at risk.
If I can find a way to make an extra $100 a month and grow that by 5-10% each month over 2021, I will be in a great spot financially. Scalability is what I am looking for the most, so monetizing the blog and online business is probably my best bet.
Student Loan Forgiveness
I would be lying if I said that I am not hoping to see our student loans forgiven at some point in the next few years. At least to some degree. I am technically eligible for a $5,000 forgiveness in NYS right now, but it pushes back Public Student Loan Forgiveness by another five years if I take that.
And yes, I am hoping for a Biden-Harris Whitehouse to look at the student loan crisis. Even if we can’t get our loans forgiven, a continuation of 0% interest would be welcomed. Without our student loans, we’d have an extra $800 per month in free cash flow!
For all you anti-forgiveness folks out there, no I don’t want forgiveness for free. I want to:
- pay income tax on my W-2 income
- property tax on my property (heck, maybe I’d upgrade slightly and consider expanding my family and space for my parents eventually as they age)
- school taxes to benefit my local school district and children
- sales taxes on the products I buy (maybe I’d spend a bit more even)
- To invest in U.S companies through the stock market
- Grow my wealth, which will be taxed in one shape or form
- Invest in myself with more education, educational products, etc. and support those who sell/provide those
- Donate more money to charities and fundraisers for youth groups and programs
I am more than positive that such an economic stimulus would more than reap its benefits in the long term. Even if the short term spending seems high.
In Conclusion
We still have a lot to work on to improve our financial situation. But, we are headed in the right direction and its a direction I am proud of. That we are proud of. We have a plan for things to look to improve upon, and a clear direction forward for us.
What about you? What successes/failures did you experience in November?