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We kicked off this year with a goal to buy nothing new. We’re now through our third month. It’s accountability time and this month is going to be interesting. We spent a ton and made a big strategy shift in our quest to become debt-free.
Here’s a look at our finances for the month, our progress on the nothing new year goal, and how we’re doing on paying off our mortgage by 2020.
By buying nothing new, we hope to reduce our impact on our bank accounts and the environment. Let’s start with an overview of our spending for this month.
Here’s a snapshot of our spending summary from Thrifty:
We knew things were going to be higher this month based on our home updates but this was way more than I was planning. We even earned the dubious distinctions of:
- breaking our monthly spending record in the time we’ve been using Thrifty
- having a negative savings rate this month
Yep, we spent more than we made. By a lot.
How did we get here? Let’s break everything down:
|Charity||$600.00||We continued with our standard monthly giving for 2017. Half to our church and half to The Hope Effect|
|Childcare||$30.00||I haven’t been so good at ensuring we have regular date nights. This month we’re getting things started back up so I expect our childcare expenses to bump up to $60 a month going forward.|
|Clothing||$196.08||Less than last month but still a bigger month. We bought four new pairs of men’s socks and four new pairs of women’s socks. In addition, we got 1 pair of jeans, 1 adult dress, 3 women’s shirts, and 6 girls dresses (2 for each kid). We’re at the point that our kids are outgrowing clothes, so a few replacements are in order.|
|Eating Out||$365.62||About $125 was our regular “Friday night pizza and ice cream”, and $75 was our date night - both “good” spending in my book. The remainder ($165) was convenience-driven food. Whether at home or at work, we spent extra because it was easier to grab food than cook. If we can eliminate this, we’ll have an extra $2000 every year!|
|Entertainment||$12.10||We did our best to wait until I had enough Google Play credits to get Tiny House Nation for free. Our best wasn’t good enough and we caved this month. That said, we love our time watching this together so it’s worth it to me.|
|Gifts||$167.56||My wife’s sister was due last month so we spent on gifts for the second baby shower and the baby’s pending arrival. In addition, we bought seed bombs from Seedles for our kids for a fun Easter gift.|
|Groceries||$806.97||My wife has been killing it on bringing our grocery bill down. This time last year, we were averaging about $1050 a month and she’s been able to bring it down to $850 a month (and it’s still falling). That’s $2400 less in groceries every year!|
|Healthcare||$2,266.63||Boom. There’s one of the big reasons we were high this month. The ER bills from our visit in February finally came in to the tune of $1500. Throw in a couple unplanned clinic visits, our premiums, and you’ve got a rough month in the healthcare department.|
|Hobbies||$230.47||Gymnastics fees, markers, and a couple used dress-up dresses off Craigslist for the girls. Their old ones had gotten pretty tattered - time for a refresh :)|
|Home Updates||$6,809.49||Ba-boom. I wrote earlier this month about how we managed to shell out $3,200 for a new furnace without losing our minds. On top of that, we did just a few home updates in our quest to get our house ready to sell. We got all three bathrooms tiled, a new backsplash, and new vanities, sinks, and faucets for two of the bathrooms.|
|Household Care||$139.76||Oxyclean, dish soap, toothpaste, toilet paper, pull-ups, baking soda, vinegar, tape, borax, envelopes, garbage bags, stamps, hair detangler, non-toxic surface cleaner, bath bubbles for the kids (another Easter present)|
|Services||$19.10||Life insurance through my work|
|Shelter||$191.00||The only expense in here is for our mortgage interest. Every month this drops by about $4 as more of our payment goes to principal - it’s a beautiful thing to watch :) We don’t log our principal payments as an expense since we consider them to be net-worth-building payments.|
|Thrifty||$92.00||Hosting fees and source code storage for Thrifty. Also, filing my LLC annual report and renewing my PO box.|
|Transportation||$192.37||Five tanks of gas (four for us and one for a friend who helped us get into our locked car)|
|Utilities||$162.75||Gas, electric, and internet|
Did We Buy Anything New?
When we kicked off the year, we defined our boundaries.
Used, refurbished, reclaimed, are all fair game, but “new” is to be avoided wherever possible.
Food and household consumable items (baking soda & vinegar for cleaning, soap, art supplies, etc.) are allowed new for obvious reasons.
Other than this, we only have a short list of exceptions we allow:
- Socks and shoes
- Photo prints (school pictures and for our road trip map)
- Stainless steel baking sheet (though we’ll look for used options if we can find them)
- Car maintenance parts (we know we need new tires next year)
- Home remodeling
So, how did we do?
All of our new purchases this month (socks and remodeling) fit on the exceptions list - so we’re still meeting our goal.
In all, we were fortunate that this crazy month didn’t really have an impact on our day-to-day finances because the way we budget builds these kinds of situations in. We had money saved up for our renovations, we drew from our HSA to cover our healthcare bills, and we used some of our emergency fund to cover the furnace.
What’s next? I wish I could predict our spending will drop but based on our ambitious strategy change, I think we’re in for a sharp increase in spending in the next few months.
Mortgage Payoff Strategy Change & Update
For the last few years, we’ve been simultaneously working on two goals:
- Prepaying our mortgage so we can be debt-free as soon as possible
- Renovating our house to make it a fresh, welcoming space that’s staged to sell
By putting those two side-by-side, you can quickly see that these goals can, be at odds with each other. The more we focus on prepaying, the slower our remodeling goes and the longer we’ll be in this house.
Knowing that we want to sell and downsize but not seeing any tangible options on the horizon, we’ve teetered on whether to focus more on prepaying or remodeling.
After a lot of discussion this month, we came to a big decision.
If we want to be ready when the right opportunity comes, we need our house to at least be ready to sell. Ideally we’d have the cash from our equity in-hand.
So…we called our bank and stopped our automatic prepayments.
We’re going to be refocusing our finances in the short term to finish our renovations as fast as reasonably possible with the goal of selling our house this summer and moving into an apartment while we figure out our next step.
It’s a big change, but we’re excited to finally be done with renovations. We’re looking forward to spending our nights and weekends together as a family instead of split with one of us doing projects while the other hangs with the kids.
This change impacts our month-to-month impact on our outstanding mortgage balance but thankfully we’re at a pretty good place in our amortization curve so even a normal payment makes a pretty sizable dent.
Here’s the update chart for where we’re at after our April 1 payment:
With our standard payment this month, we knocked another $750 off our outstanding principal!
Presuming we are able to list and sell our house this summer, we’re anticipating being completely debt free in August. From there, our plan will be to rent while we figure out our next step. If we do purchase a home in the future, our plan would be to do so with cash.
Three Down, Nine to Go
It was another exciting month - lots of spending and a big change to our strategy. We’re feeling good about the direction we’re pointed. Looking forward to giving another update next month!
What do you think about our strategy change? Have you ever had a month with spending that blew all the others out of the water?