February Mortgage Update and a Minty Fresh February Challenge: Is it worthwhile?

Last month (January):

Balance: $85,701.59
Years left: 6.916666667
P = $869.10, I =$345.30, Escrow = 621.66

This month (February):

Balance: $84,162.48
Years left: 6.833333333
P = $875.17, I = $339.24, Escrow = 621.66

One month savings:  $2.62

As we’ve talked about previously, DH is leaving his position in May at the end of the semester.  That means no more money from his salary.

Our current spending equals almost exactly our future take-home pay from my salary once we stop hyper-saving for retirement and pre-paying the mortgage (though I did get some grant money this summer, which will provide a bit of a buffer).

The worrisome part is that our [non-daycare] spending has been creeping up.  Some of that is more frequent emergencies… our stuff is getting older and starting to wear out.  Our Garmin broke, then broke some more, and then became unusable (we suspect planned obsolescence).  We needed to replace the tires on one of the cars.   The month before we had to call the plumber and replace our sink thingies because of a leak (after DH attempted a fix himself and broke things irrevocably– he’s great with electrical and mechanical stuff, not so much with plumbing).  And so on.  But we need to start planning for these more frequent emergencies if we want to stay within my income next year.

So we finally joined MINT.  I was going to have DH start it this summer when he has more free time, but when I looked into it, signing up was so easy that I just did it.  It downloaded 3 months of expenses from our credit cards and calculated a portion of our networth.  I haven’t put our main bank account in there because our credit union doesn’t play with mint.  One of my retirement accounts and one of DH’s retirement accounts isn’t in there because I would have to look up the passwords.  Ditto my single stock that kicks us big dividends every quarter.  But a good portion of our stuff is in there.

Mint is really neat because it automatically categorizes your credit card purchases.  It makes some mistakes and it doesn’t categorize everything, but that’s all fixable and it has the ability to learn.  (Also, sometimes it can’t download information and that’s annoying but generally it seems to figure things out within a few days.)

With this categorization, it provides an easy monthly budget that you can futz with.  You can also look at your spending in categories for each month.  I can see that we spent $567 on groceries and $610 on restaurants in November.  Of course, some of that restaurant stuff was reimbursed because it was on a business trip.  December shows $330 for restaurants.  January is close to $500, but that also includes a reimbursable business trip.  I think we’ll need several more months to see what a normal pattern is.

It’s also pretty easy to see what your net worth is on Mint, at least including the accounts you tell it about.  We’re doing much better than our age, we’re on track for families with my salary alone, and we’re a bit behind for families with our current combined salary (drat those years wasted in graduate school!)  Next year we stop our hyper-saving and drop to only putting 12% or so of my income towards retirement (well, probably a bit more than that as any extra money will first go towards IRAs… if there is extra money).

My first thought was to do a no-eating-out challenge.  But then I thought:  1.  What if we go into the city (not eating out would totally suck), and 2. Why?  Going a month without eating out when there’s no reason to seems like it will lead to unhappiness.  Cut back, sure, cut out entirely… that seems to be too much pain for too little gain.

So my second thought was to look at the whole rather than at just the restaurant part.  Can we keep credit card expenses under what we will need them to be next  year?  Sort of a mini dry run.

I did a little BOE and came up with $3000/month excluding childcare and the mortgage.  We spent more than that in November and in December according to mint, so it seemed like a good challenge.  Except the November and December spending included both business trips and multiple random emergencies or once a year expenses.  Which shouldn’t matter because almost every month has an emergency (or a one-time big expense)– if it didn’t our spending would probably be under 2K each month.  In fact, it looks like this month of January we’ll be coming under 3K without any effort on our parts [update: it did, just barely].  Heck, we’ll come in under 3K for the month including childcare if it takes a few days for our mother’s helpers to cash their checks [update: it didn't].  So perhaps 3K is too much for a short little month like February. [I know, I know, 3K/month even if you include rent is still a lot of money!  Part of me cringes at how much we spend now, even though we're a family of four and not two starving grad students.  A much bigger part of me never ever wants to go back.]

As I said before, with no emergencies, our regular spending should be something like 2K for food, utilities, diapers, gas, insurance, etc.  (And, indeed, if memory serves correct, the rare months without any emergencies or big spending we have spent less than 2K on the credit cards.)  Chances are there will be an emergency.  But let’s see if we can work around that and cut other spending to adjust for it.  Worst case scenario we can eat off our sizable pantry for a bit.

And that’s the challenge.  Keep non-childcare/non-mortgage spending, aka, our credit card spending, to 2K or less for the month of February.*  And this should be doable without too much sacrifice– let’s see if the little sacrifice hurts or not.  If there’s another seriously big emergency… well, hopefully we won’t have spent all our variable money on food already.  February is a short month.

What to do with the money we would usually spend but won’t… well, um, that kind of balances out November and December’s awfulness.  At the end of the summer I will take stock of where we are and put money toward bulking up the emergency fund, our 2013 IRAs, and possibly pre-paying the mortgage.

Part of me thinks this is a really stupid challenge.  A month is really not the right unit for controlling overall spending.  Spending not done in February may be moved to March.  Emergencies are generally unpredictable and either we get them or we don’t.  On top of that, we have a lot of savings from all those years we were saving 40-60% of our income.  We can always re-amortize our mortgage if we need to cut our monthly expenses in the future, and DH may someday bring in money.  By the time we run out of summer funding for me, DH will likely have brought something in.  We may never need to cut back our spending.  Why make things difficult for us now when time is at a premium?

Still, it’s February and why not?  It’s only 28 days of deprivation and I might learn something.

*Also not including DH’s allowance expenditures, or “his money.”  That is separate and already apportioned out.

Grumpeteers, Do you think this is a stupid and unnecessary challenge?  Do you think it’s ridiculous that we spend so much?

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43 Responses to “February Mortgage Update and a Minty Fresh February Challenge: Is it worthwhile?”

  1. NoTrustFund Says:

    Yay for mint!

    I think the monthly goal is a worthwhile exercise. I did a spending cleanse in jan and it really helped me reset some of my mindless spending. Enough so that I think it had lasting benefit even though there will be some deferred spending going on this month.

    Your childcare seems very reasonable. Jealous.

  2. Leah Says:

    I always think it’s useful to do a challenge month. Kudos to you if you can stick to it. I was pretty good about challenge months when I was single and/or not depressed (depression always makes it more difficult, sigh). What helps is when I have a goal in sight: maybe you can pick something you want to do with that extra money. For example, when I want the money to go travel somewhere, I have no problem cutting back on expenses. But when I try to cut back to cut back, it is more difficult for me.

    My husband and I are hoping to do one of these soon. We need time to sit down and go over our bank accounts. Glad to hear you like mint — maybe we’ll look into that.

    • nicoleandmaggie Says:

      It doesn’t make much sense for us to target the money right now– we overspent the last two months and we still need to figure out what our tax bill/surplus is going to be (it could go either way this year). We need to make sure we have summer money and an emergency fund etc. and there’s the possibility that if we target this money, we’ll overspend in March and then really lose out.. (Also, there’s no target that I would want more than our metaphorical latte factor!)

      In October we do a reckoning and decide what to do with extra money. Our main goals for next year are 529 plans, IRAs, and so on. DH’s IRA would be the first place to fund if we end up with excess. But given our current savings, I’m not sure it makes sense to deprive ourselves in order to fill up another year’s IRA.

      • Leah Says:

        Isn’t summer money a target? I think that’s enough motivation. Right now, I’m paying back the huge amount I spent down to pay my student loans off the first day they were due, and that is a big motivating factor for me to not spend too much.

      • nicoleandmaggie Says:

        We have summer money set up on track already plus I’m on grants this summer (so there’s already a big buffer built in on top of the regular emergency fund). I suppose I could try to have all our summer money in the bank extra early, but that seems silly compared to smoothing consumption over the school year.

  3. Comradde PhysioProffe Says:

    I am wary of providing all of my various financial account login information to a single entity like Mint.

    BTW, in relation to mortgages, PhysioWife and I are considering paying off our entire mortgage now, since the expected return we can make with the money seems highly likely to remain less than the interest rate we are paying for the foreseeable future.

    • nicoleandmaggie Says:

      Any chance you can do a no-cost refinance with your mortgage lender? We can’t– they’re only taking people who last did something with their mortgage in 2009 and we refinanced in 2010.

      As we’ve mentioned before– diversification is important, so make sure you don’t have too much of your portfolio locked in your home. If you’re good on other retirement savings, then go for it!

      And yes, having all the info there in Mint is kind of troubling. I don’t have our main bank account on it, and I don’t have our work retirement accounts on it. I think it would be safe just putting the credit card accounts on it. I got a little carried away putting other stock accounts on it.

      • undinenotofgeneralinterest Says:

        I’m wary of Mint, for CPP’s reasons, but want to take a look at it. We stopped eating out as much (once a week) about 5 years ago and haven’t missed it. Then again, I am a devotee of the Cult of Costco, which saves money and has some fresh/prepared/good foods to make up the difference.

      • nicoleandmaggie Says:

        I think Mint can still be used if you just want to put in your credit cards– those have a lot of protection even if Mint gets hacked.

  4. plantingourpennies Says:

    There are certain categories on our mint budget that we let roll over since they’re so variable (like pet spending). I think that helps us somewhat in terms of normalizing the monthly out-flow.

  5. Linda Says:

    Maybe I’m not understanding the challenge. What types of expenses do you put on your credit card? Do you charge basics like groceries and gas, or do you use it only for eating out and other discretionary spending? If you use it for basics, too, then are you thinking that the challenge will help you cut back a bit on fancy cheese and so forth?

    I like Mint for tracking expenses, but not so much for budgeting. I guess I just don’t understand their budgeting feature since I’m always either over budget or under budget on stuff that I buy only periodically, like clothing and pet care costs. I’ve tried setting these categories to rollover, and I’ve tried setting them as quarterly budget goals and that didn’t work. I think I’ve set them as yearly goals now and I’m still unsatisfied. But, yeah, the tracking is pretty awesome.

    As for your budget, I guess that seems about on par. that’s about how much our household of two spends per month on everything, including the mortgage. (I’m not including retirement saving in this figure, though, since that all comes out of my paycheck first so I never see it.)

    • nicoleandmaggie Says:

      We put everything on credit card except childcare and mortgage.

      This weekend DH did not bring any cheese home from the grocery store and I asked why… he said because he was trying to cut back (grocery bill was still $174, which is unusually high, but included some home maintenance stuff and food for a dinner party). I noted that he could have gotten some store brand cheddar even if not the expensive stuff. (Our store brand is an inoffensive mild cheddar. They also have a good jalepeno jack.) I don’t know that we *should* be cutting back on cheese.

      He also totally didn’t pick up my hints of going to get frozen yogurt after going to the playground (or rather, he did but rejected them). And in the end all we got at Target was the one thing we needed (white flappy things for the breastpump to replace a missing one).

      I’m not sure how I feel about all this.

  6. Leigh Says:

    I’ve actually been trying Mint as well, to see if I like it better than my system. It won’t download my 401(k), which means that its net worth calculation is totally off. It’s kind of nice for watching inter-bank transfers happen since it’s a pain to log into each account and see that it all cleared. It doesn’t sync into one of my credit union accounts, which is kind of annoying because I’d hoped to use it to see transactions on accounts that I don’t use all that often. I’ve been taking accounts off of it slowly once I’m realizing what I’m using and how it’s working exactly.

    $2k/month doesn’t seem really that crazy for a family of four! Especially considering that MMM and his family spent $25,046 total last year for a family of three: http://www.mrmoneymustache.com/2013/01/21/exposed-the-mmm-familys-2012-spending/

    I’m trying to keep my total yearly non-mortgage spending under $30k for the year, which averages out to $2,500/month. Now that seems like a crazy amount when you guys are a family of four and spend $2k, but if I subtract out my HOA dues and property taxes (which you include in mortgage), I’m at around $2k and that amount includes a $5k-ish yearly budget for travel.

    I don’t really want to go back either. I scrimp on the things I don’t care about and spend on the things I do. It hasn’t worked out too badly, other than the crazy amount spent on moving expenses last year…

    I don’t think it’s a stupid and unnecessary challenge because even if you don’t hit your goal spending amount, it will still force you to think about your spending a bit more.

    I don’t buy super fancy cheese, but I’m never going back to buying store brand cheese anymore. I at least buy it by the pound now which lasts for a couple of weeks’ worth of sandwiches and that’s about $5, but it is so delicious!!!

  7. hush Says:

    “Going a month without eating out when there’s no reason to seems like it will lead to unhappiness.” Amen, amen, put that on a bumper sticker!

  8. oilandgarlic Says:

    Does your $3,000 average include medical premiums and insurance? I’ve been working on my budget (spreadsheet, too nervous to trust something like mint.com) and those expenses really increase our monthly budget. I try to put all non-regular expenses like auto insurance, dmv, gifts, vacations, etc…into this budget, dividing it by 12, so that there are fewer surprises. Our average for a family of 4 is definitely around the $3 – $4 mark per month (including medical premiums).

    I think one of the best ways to cut is with groceries. Try more meatless dishes, learn more recipes using similar and cheaper ingredients, stock up during sales, using coupons, be more aware of food waste, etc.. I’m still working on this myself!

  9. chacha1 Says:

    “So much” is completely subjective, though. Your expenses make ours look like … well, let’s just say our rent alone is $2430.

    However. I am in favor of periodic reality checks on discretionary spending. I know that when I started doing our joint tax return, and started using Quickbooks to compile the records, it was appalling to see how much we spent on stuff we don’t NEED. And seeing it in black and white was a very potent spending-control motivator.

    Because at least for us, our spending was a direct result of lifestyle inflation. We were both quite used to spending everything we earned, plus a little more, from the day we started college and were making laughably low amounts of money. We both went for years with low earnings. We got used to living paycheck to paycheck.

    But there’s no good excuse for living paycheck to paycheck once your take-home pay is over $4000/mo, IMHO, and ours has been there for a looooong time.

    • nicoleandmaggie Says:

      The expenses listed don’t include the mortgage (which is ~2K) or daycare or private school (which are a lot). Also, (car, house, umbrella, life, etc.) insurance payments are generally a month’s “emergency” even though they shouldn’t come as a surprise. I don’t think through to amortize them across the year. So there are a lot of hidden expenses that aren’t variable there.

      I’m basically not saying what we actually spend on all outflows per year, just the ones that aren’t fixed (technically the phone and internet and netflix are included and fixed, but the phone is $72 for 2 lines so not a big part of the budget and we could always cut out netflix… I forget how much internet costs, I think ~$50).

      • chacha1 Says:

        Oh I’m a dope. Misread. :-) But … non-fixed expenses basically account for $6K a month around our place. Yikes and tarnation.

  10. First Gen American Says:

    Can you refinance again? It might be worth it even with closing costs? The rate I just got was 3.375%.

    I would want a little more buffer between income and expenses. This could be one way of doing it while you are in this temporary situation.

    • nicoleandmaggie Says:

      The folks we’ve talked to have said ~4K closing costs. It doesn’t seem worth it under any of the scenarios I’ve run. We only have 20K of interest left, IIRC, so even if we paid the whole thing off tomorrow (something we could do if we sold our taxable stocks and threw in the emergency fund), the savings would be limited.

      Recasting seems to be a much cheaper way to get more buffer… but I keep being torn with recasting vs. spending less.

      Or we could bring in more money, something that I’m pretty sure will happen… but when I do not know.

  11. J Liedl Says:

    Good luck! I think the month sounds like a good reality check as you move into a new financial situation shortly. You should have a better handle on some expenses and what you need to plan in that regard. I know that coming up with a realistic emergency financial fund is tough. We burned through all of that in two months last year with catastrophic pet illnesses and other costly problems that hit at the same time. Now I’m trying to build that back up at precisely the worst time in the year to find some extra cash. *sigh*

    I agree that it’s unrealistic and unhelpful to say “no eating out all month” but choose wisely. Some of our top picks for family eating out have loyalty cards (like the local Thai restaurant) or other deals this time of year if you’re not looking at Valentine’s Day! Pick some place you know you’ll all like and enjoy it, I say. (Also pick up some cheese and enjoy that, too!)

    • nicoleandmaggie Says:

      It helps that we’re a little burned out on local places and it isn’t the time of year for new restaurants to be popping up. Plus the food truck we like seems to have stopped doing Saturdays. :\

  12. Debbie M Says:

    I’m in no position to say your spending is ridiculous when my bare-bones budget during my shifty work situation (no charity or home renovation savings, lower food and entertainment spending) is still $1663 for one person with a paid-off house and roommate.

    I also don’t know whether this would be a good challenge for you. Sounds like you’re already cutting all you want to and might not actually learn any new cool tricks. Maybe you’d prefer “no eating out except for X cheats” (not really cheating when it’s part of the rules) or “…except for trips to the city and other special occasions.” Maybe doing a lot of tweaks on Mint and seeing how it works for you would be a good challenge. Maybe doing only free things for Valentine’s Day would be good (or free except birth control).

    I tried Mint, but it was never customizable enough for me. I tried tweaking the categories for a while, but I don’t even really like their categories. Instead, I decided to tweak my own spreadsheet. I have one page for spending, one for earnings, and then a summary cash-flow page. (Earnings sound really boring but I throw in the extra nickel for bringing my own bag, credit card rewards I cash in, interest and dividends on non-retirement accounts–actually it’s still boring!) Then I have one page each for various categories of savings (pension, IRA, other funds, stocks, savings bonds, other savings) and then a summary page that shows where my money is and what it’s for (I do amortize the costs of things like insurance, property taxes, and car upkeep and replacement). And then finally one summary page to rule them all where I can see how close I am (not) getting to financial independence (never having to work for money again unless we turn into Nazi Germany or something).

    • nicoleandmaggie Says:

      The main thing I like about MINT is that it does all the pulling from the cc statement and labeling/categorizing for us. DH is thinking about taking its stuff and downloading either to excel or quicken, since yeah, not customizable enough. But that’s for him to deal with when he has more free time!

      • Debbie M Says:

        Yes, the automated part is awesome. I had very high hopes. My credit card also automatically categorizes most of my purchases, though they won’t tell you exactly which purchases they stuck into which categories until the year-end statement (which is awesome).

        Actually another feature I (sort of) like is that MINT will tell you when you have a payment coming due and when some bank balances are low (sometimes it just freaks me out a little for no reason–I like keeping on checking account low, for example).

        But mostly I’d rather tell myself that if I can find the time to buy something, I can find the time to write it down. It also helps me stay aware (the same way that writing down everything one eats helps dieters stay aware).

      • nicoleandmaggie Says:

        Mostly it’s DH doing the shopping…

  13. janesavers Says:

    My Canadian bank will not insure my online transactions if I share my password information with a company such as mint. The bank is developing it’s own version so I will wait and give that a try.

    I have an emergency every single month (shredded tire, broken windshield, late night vet visit…..) and if I don’t have one emergency I have three or four. I have changed my budget to increase my savings for life’s little emergenices.

    • nicoleandmaggie Says:

      Hm, that’s kind of a scary thought.

      Yeah, we also have an emergency every month and just include that in the expected cash flow. Last couple months were more than usual, I think because our stuff is starting to get the 7 year itch.

  14. Revanche Says:

    I’m a wee bit surprised how many people don’t use account aggregators, I’ve used Yodlee for half a dozen years and only stopped a little while ago because I hated the new interface. I definitely watched out for any security discrepancies but never had a problem. I do wish there was a better one out there, I don’t love Mint either. It’s not bad, it’s just not something I love.

    I always find a month just doesn’t make a lot of sense in terms of evaluating expenses either, for much the same reasons you listed. My preference is to take a quarter of the year and that gives me a good feel for what’s going on.

    But for a quick snapshot of spending types and categories, etc., a month is as good a place as any to start.

    We’re embarking on a new budget for the first time this year – strength to both of us!

  15. Cloud Says:

    For those leery of having all their financial info online, I think you can accomplish a similar level of budget insight offline w/software like Quicken. We did that when we were budgeting to save up for our 4 month Asia/Pacific trip.

    I suspect we’d benefit financially from tightening up our budget now, but we’re doing OK and I don’t feel like putting in the effort it would require!

  16. MutantSupermodel Says:

    We are on the same wavelength apparently. A couple of weeks ago, I logged back into Mint, updated my accounts on there, updated some spending tracking classification behavior command things, and am trying to loosely update weekly. Funny seeing you do a spending challenge =D


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