We Make $56,000/Year and We’re Paying Our House Off Early


Welcome to YNAB Money Snapshots—where you see a real picture of someone else’s budget and finances. They’re all anonymous, because sharing money is still a squirrelly topic for many, but we think airing them out in the open makes you better with your own money story. 

As you read these budgets, keep in mind that some people make lots of money and some people make a little bit of money, but we know it’s what you do with that money and how you feel about that money means more than any yearly salary. 

See how a family in Oklahoma making $56,000 a year spent their money in April.

About

  • Names: Nikki & Jim
  • Ages: 33 & 32
  • Location: Oklahoma
  • Jobs: Administrative Assistant & Stay-at-Home Parent
  • Living situation: Married with a toddler

Income: $56,000

Savings: $64,185

  • 401K: $42,500 (we put aside 15% of my income, plus my company provides a 3% match)
  • Checking: $1,000
  • High-yield savings: $20,685 (this is our emergency fund and sinking funds)

Debt: $86,500

  • $86,500 (mortgage only)

April Inflows: $5,662

  • Amazon card: $7
  • American Express: $49
  • Capital One Cash Back: $11
  • Stimulus Payment: $2,900
  • Payroll: $2,664
  • Monthly Interest earned: $30

April Budget

Budget

Catego­ry What
I
Spent
Notes
Charity
Church $348
Non-Profit Organization $170
Misc Charity $25
Transportation
Auto Insurance $514
Auto Maintenance $32
Housing
Mortgage $770 We bought our house for $115,000 two years ago.
Household Items $74
Garden/Yard $10 We spend more in the spring – Jim is the unpaid labor mowing our slightly dead grass.
Home Maintenance $11
Extra Mortgage Payment $41
Utilities
Water/Trash $80
Natural Gas $58
Electric $82
Internet $50
Food
Groceries $386
Eating Out $77
Health Care
Medical/Health $27 Most amounts are paid with FSA money
Medical Insurance $189 Jim is on a marketplace plan ($231/month pretax) and kiddo and I have coverage through my job.
Vision Insurance $0 We pay $28/month pretax (our budget income only shows post-tax dollars)
Dental Insurance $0 We pay $67/month pretax
Personal
Her Personal Account $195 Work blouse and earbuds!
His Personal Account $30
Child
Baby Care $23
Entertainment & Enrichment
Gifts $54
Savings Goals
Rainy Day $8
Total Expenses $3,254

About Our Budget

We live in a low cost of living city, cook from scratch (and shop at Aldi), and live very simply. We drive a hybrid and I only commute a few miles. In a typical month, we rarely spend more than $70 or so on fuel.

We’ll have high and low spending months. Because our money is “old” (currently 191 days), we have a lot of money sitting in sinking funds from prior months. So we spend “old money”, which makes it appear that we spend more than we make.

We live on last month’s money, and here’s how I ensure that happens: 

  • Each month, we send money from our paychecks into a “Next Month’s Budget” category 
  • At the beginning of a month, we take the money from that category and move it “To Be Budgeted”
  • Then we budget that money out to use for this month’s expenses

This setup helps me to not overspend and inadvertently take money from the upcoming month. If I overspend, I have to move money from the available funds for that month and not from the money we have set aside for the next month.

My Savings Categories

Right now my top savings goals are:

  1. Save 15% to our 401(k)
  2. Max out our FSA (about $2600/year)
  3. Save for a new (to us) car

One of our vehicles is over 100k miles and the other is over 200k. We’re expecting to replace the oldest one within 3-5 years and are working towards saving $12,000 to replace it in cash.

My Month

COVID-19 made it anything but a normal month. Thankfully, I’m still essential and can work from home, so our income wasn’t affected. We spent $0 on fuel (normally $70). I also spent way more than normal on clothing (I’d been saving for some updates to my workwear wardrobe and took advantage of all the online sales—that came out of my personal category since it wasn’t really necessary). We also bought take-out a few times to support local restaurants and paid for grocery delivery twice. Our 6-month auto insurance premium was also due this month and we shipped Mother’s Day gifts to both our moms.

We also received a stimulus check, of which we donated 10%, saved some for our (post-quarantine) refrigerator purchase, topped off our emergency fund, and set the rest aside in our “Rainy Day” category. It’ll likely end up in the Car Replacement category (we’re slow decision-makers sometimes).

Any interest we make on our savings is added to our emergency fund and any cashback from our credit cards goes to our Vacation Fund.

My Story

I was raised in a frugal household that hovered just above the poverty line. My parents never spent money on “frivolous” things like eating out, new clothes, or entertainment. I came into our marriage with no debt, an old (but reliable) car, and a solid little emergency fund thanks to my first few jobs and lack of social life. 🙂 

Jim came into our marriage straight out of college (with no student debt—thanks, in-laws!). Our premarital counselor recommended YNAB to us. I’d been budgeting as a single person for a few years in an Excel spreadsheet, but YNAB made me realize that I was actually just tracking my spending. Thankfully, I was naturally frugal, so I managed to stay ahead, but I was unwittingly riding the credit card float and not really aware of my true expenses. 

As a couple, we had already been stressing out about wedding planning (and paying for it ourselves), and YNAB was an immediate game-changer. It gave both of us access to (and responsibility for) the budget.

We rented a tiny apartment for a couple of years while living off of my income alone. In the meantime, we saved everything else for a downpayment on a house.

Once we found out we were expecting, we expedited our house search and decided Jim would be a stay-at-home dad due to the cost of daycare and some quality of life goals. My job has provided steady raises and good performance bonuses and we knew we could comfortably live on my income alone. We put a 20% down payment on our house and are working to pay off our mortgage early. We live in a really low cost of living area, which helps tremendously. Our cash flow was extremely tight that year, between a baby and that down payment, but it was SO worth it to have a smaller mortgage and be able to live on one income.

My Financial Goals

  • Purchase a rental property for passive income
  • Jim is working to learn more about investing (we set aside $150 from my last bonus to play with purchasing stocks)
  • Pay off our mortgage early (current pay an extra $80/month to principal)
  • Have a lifestyle that is significantly less dependent on a 9-5 job.
  • Continue fixing up our home, replace old carpet, renovate the kitchen (eventually)

I would rate my current financial situation: 4/5

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