The Spending Chronicles: The Writer and the Engineer

We have zero debt, but taxes are a killer.

I have always enjoyed keeping a very detailed account of my finances. I even have all of my budget worksheets dating back to 2006 when I first started college. For me, tracking my financial journey helps keep me motivated to stay the course, and it assures me that I’m moving in the right direction. Every once in awhile, I like to really dive into the details, like I am right now, to see if I’m happy with how I’m handling my money.

I’m a 29-year-old freelance writer with a bachelor’s degree in English from the University of Nevada, Reno. My husband, also 29, is a mechanical engineer with a bachelor’s degree from the same alma mater. We both made it through college without student loans, thanks to reasonable tuition costs, grants, scholarships, and (for my husband) a little help from parents.

We bought our first home during the recession and sold it last year for nearly double what we originally paid, allowing us to move into a bigger house in a nicer part of town. We live in Reno, Nevada, and have three kids, ages two, four, and six.

We have a joint account and agree on our budget before the start of each month. Here is how that monthly budget breaks down:

The Numbers

Income: I bring in an average of $4,000 per month pre-tax through my freelancing. No benefits. My husband’s paychecks come out to $4,000 post-tax, after health insurance, dental insurance, and 401(k) retirement contributions (six percent to get the employer match) are deducted. Total monthly cash flow: $8,000. Annual pre-tax household income: $117,360.

Total monthly expenses: We do a zero-based budget, which means if $8,000 comes in, $8,000 goes out. I track every last expense down to the $1.50 vending machine charges at my husband’s work. I know where every last dollar goes and why.

Here’s the nitty-gritty:

  • Home Expenses: $1,850
    • Mortgage, property tax, homeowner’s insurance: $1,600
    • Utilities, water, sewer/trash service, HOA fees: $250
  • Other Bills & Fixed Expenses: $2,695
    • Life Insurance: $54
    • Car Insurance: $40
    • Phone/Internet: $65
    • DirecTV/Netflix: $88
    • College 529 Contributions: $300
    • Roth IRA Contributions: $900
    • Children’s International (sponsor child): $28
    • Taxes: $1,000
    • Gymnastics Classes: $100
    • Husband’s Lunch Money: $120
  • Flexible Expenses: $3,455
    • Groceries: $820
    • Gas/Car Maintenance: $650
    • Entertainment (movies, dinner out, wine club, etc.): $250
    • Holidays/Parties: $250
    • Home/Health Items: $175
    • Kids’ Items: $250
    • Clothing: $60
    • Vacation: $500
    • Medical/Dental: $500
  • Debts: $0

What Surprised Me

Honestly, I was surprised I actually had to look at my budget to get all these numbers. I have always prided myself on being a budgeting queen, but it turns out that I have to be staring at the spreadsheet to get a good grasp on our finances. That’s partly because our financial state has changed drastically over the past year. We’ve bought a new house, I’ve tripled my yearly freelance income, and our three kids are getting older (and more expensive). So, our budget is no longer as stagnant and predictable as it used to be.

I still have a good overall idea of where our money is going at all times, but I definitely have to stay on top of it. I aim to update the budget every day. I know it seems like too much, but it works for me. I’m a money control freak. Budgeting calms me.

What Frustrates Me

The medical and dental category is the bane of my existence. We have health insurance, but it covers such a negligible amount that we’ve been stuck with over $5,000 in out-of-pocket medical expenses already this year.

With three danger-loving kids (and multiple ER visits per year) it’s like trying to dig your way out of quicksand. As soon as one bill is paid off, we’re back at the doctor’s office accruing more medical debts.

What You Don't See

We actually have quite a bit of money hiding in the eaves. For five years we followed Dave Ramsey’s plan to get out of debt (including trying to pay off the home mortgage for a while). That means we set aside 6 months of bare bone living expenses, which comes out to $18,000.

We’ve also saved up a lump sum for our daughter’s preschool next year which is $6,000 for the year. Then there’s the recent addition of our vacation savings account (currently at $7,000) which fills me with glee every time I see it. That’s Disneyland money, baby. We keep trying to set aside an extra budget for medical expenses but it depletes itself constantly.

What Makes Me Cringe

Taxes are the worst! I feel like I’m making big money as a freelancer because my income matches my husband’s (well, his take home at least), but when all’s said and done a whole quarter of my paychecks are set aside for Uncle Sam. I have to pay quarterly estimates every few months, but because my income is growing, I know it’s not enough to cover it. I have to make sure that 25 percent of my yearly income is waiting for the government to take come tax time.

Last year was my first serious year of freelancing, and the first time we had to pay taxes instead of receiving a refund check. It’s my least favorite part of being a freelancer. It’s such a bummer to watch friends living it up come tax time, while it’s my scrimping season, but I guess that’s a tradeoff I’m willing to make to have a job that doesn’t require wearing pants.

 

What Makes Me Proud

Seeing $0 in the debt category. It was a long road to get out of debt and stay out of debt. We went through a job demotion during a time of medical stress and ended up on WIC for a few months, but we never fell back on credit card debt once we clawed our way out. We’ve paid cash to upgrade to new (to us) cars. We pay cash for vacations. Because we had paid off a good deal of our home mortgage by the time we sold our first home, we were able to buy the house of our dreams with over a 30 percent down payment.

While I am bummed about having a mortgage payment that’s going to hang around for the next couple decades, having no consumer debt frees us up to easily save 15 percent of our income for retirement, to sock money away for our kids’ college expenses, and save for some great vacations. It’s been a long uphill battle to get to a point where I feel financially secure, and I finally feel like we’ve arrived.


Check out part one of The Spending Chronicles here. And are you willing to break down your monthly finances for DailyWorth? Email [email protected] with ‘Spending Chronicles’ in the subject line.

Join the Discussion

14 Responses to “The Spending Chronicles: The Writer and the Engineer”

  1. Sashamonique

    I was very surprised by your clothing budget of sixty dollars. I sure would like to know how you manage on that amount and I think you are a financial genius. I am a saver by nature too, and it is hard to say no to yourself when everyone else is buying nice things but I manage to do it by buying a smaller less expensive item that I like, to quell my urges to spend money. This post is very helpful to people who think they cannot save money and you will look at money in a whole new light.

    • Dot

      Sorry you have to pay taxes like the rest of us…

    • Kathryn

      My clothing budget is basically $0. My husband and I do not make nearly this much and we would rather save, save, save for retirement one day! Until about a month ago, it had been over 2 years since I bought a piece of clothing for myself and I actually bought it with a gift card and only paid about $10 out of pocket. I have a basic work wardrobe that might not be the latest trends, but at least I look professional. My parents like to give me some clothing for Christmas each year, so I at least get a few new items once a year. Other than that, I have no need for a ton of new clothes all the time. It helped that we used to live in a tiny apartment with only one small closet, so there was no room for clothing. As long as your style is simple and classic, there is no need to be spending money on clothing constantly.

    • Rachel

      I’m guessing that the $60/month is for her and her husband and that clothing for the kids is budgeted in the $250/month for kids’ items. At least, that’s how we budget in our household. Plus, as a work-at-home freelancer, she probably doesn’t feel the need to keep a freshly updated wardrobe each month, just to sit at home in front of the computer. My husband and I both work in office jobs, and we only spent an average of $75/month between the pair of us for clothes last year. The kid clothes budgets are in a whole other category, though, because they’re constantly growing out of things and also much harder on their clothes so need new stuff more often.

    • Gemma Hartley

      Actually, that is the area which I normally don’t use or cut if I have a lower income month. It’s for both my husband and myself, and I rarely feel the need to buy clothing unless I’ve worn through one of my staples (like black flats). I have a capsule wardrobe and maybe buy one or two items per season.

  2. Julia

    As a freelancer, can you not file as your own business (So-and-so freelancer inc.)? That way you can semi-get-around some taxes by spending pre-tax money instead of after-tax money. So you can say that shopping for clothes is a business expense since you use those clothes to go to meetings and talk to client and that rent is also a business expense since it doubles as your office. And if you happen to spend all your pre-tax money on real business expenses then you technically only have to pay tax on the remainder. I’m not sure about all the logistics but I would definitely recommend speaking to a lawyer/CPA, it could end up saving you a lot of tax money.

  3. ladyartist

    Interesting numbers. I love the math and do a very similar spreadsheet system myself. But what is glaring to me is why on earth are you spending $820 on groceries? You have young kids who can’t possibly and should not be eating that much food. On the other hand some of your other categories like clothes are low so I commend you on that. An additional place to save is streaming TV instead of paying direct TV large sums of money. I cut the cord years ago, as they call it, and have saved thousands.

    • Gemma Hartley

      I know, it’s an outlandish amount when I look at it too, but since I prefer to eat mostly paleo and like to buy a bottle of wine or two per week it is what it is. I know I am capable of cutting back that part of the budget (and I did for many years), but I simply don’t want to anymore. And honestly? These kids eat like bears. Ha ha.

  4. M

    As much as the tax bill may make you cringe, be grateful there are government funded programs like, WIC, which you used, that are paid for by your taxes. Great to hear you are doing so well now!

  5. Christine

    I love this series! It is really helpful to hear about other people’s budgeting experiences / tips. The transparency is wonderful. Thanks for sharing!

  6. Heather VacLav Hooper

    This article totally speaks to my season of life, recently married and relocated to a bigger city (Dallas). Do you work with a Certified Financial Planner? My husband and I have been talking about seeking out a CFP to help us with our saving goals. Also, I have been trying to find a digestible Excel spreadsheet template for our budget. I’ve had a pretty plain one for years, but would like to figure out the best joint spreadsheet for us moving forward. We have a shared account and shared household and food expenses/budget, but separate accounts for our own expenses, i.e. I have a car payment and he does not. What spreadsheet format do you recommend and what are your thoughts on a CFP? Thanks! -Heather

    • Gemma Hartley

      Yes, I work with a CFP, and have a trustworthy accountant for my taxes. Having a good financial team gives me a lot of peace of mind.

  7. Melanie

    Have you considered shopping for individual insurance with better coverage instead of relying on your husband’s work insurance? It may actually save you in the long run, and as a freelancer you can likely deduct the premiums from your taxable income.

  8. LLR

    Actually, during tax season, your friends are only getting back what they’ve prepaid. If you chose to pay monthly, you too might get a refund of your own money. Wait a minute – you’re paying quarterly, so you too may get a refund of your own money that you’ve overpaid 🙂 Those tax refunds are not really any sort of bonus – you’re only potentially overpaying your taxes in advance only to get a portion of that back.
    People are funny about taxes… though I don’t always appreciate how the government spends my money, I’d challenge people to think about some of the third world countries that are quite corrupt and somewhat lawless. The American alternative, including taxation, might not look so bad depending who you compare to!