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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