Wednesday, September 9, 2009

Expenses Gaps

I got another great question. There were some "gaps" in my Expenses Breakdown. So here are the things we do not budget for, and here are the things that go "somewhere else" in our budget.

We do not budget for:

Life insurance - Yeah, we're not covered, and yes, we know the risks. My husband had some coverage through his old job. I'm not sure that Walmart gives any coverage.

Dental Insurance - I consider it a luxury. We take care of our teeth.

Vision Insurance - I have glasses. I wore an old pair, from high school. My mom offered me new ones. I got a discount at Walmart's Vision Center and a nice Christmas present last year.

Retirement - My husband wants to be a pastor. He says servants of God never retire. I tend to agree. Barring senility, this is our plan. For those wanting to retire, I agree that money should be budgeted for this.

Health Insurance - This is a tricky one. As I said before, we paid for our midwife out of pocket, and I am quite proud of that. But, we are covered by low-income state health insurance. We don't use it; it is for emergencies only.

Here is how I justify it (Some may say I don't need to justify it, but I think I do):

We plan on having a large family, not a frugal decision, I know. I will pop out my third baby before I am 25, so I would say it is not unreasonable to expect 10 kids. We are a hard-core homeschool family as well. By not sending our kids to public school, we are saving the government almost $1.3 million dollars. No joke, and that's at the current rate of cost per kid. It will have gone up by the time my youngest graduates.

(10 kids x 13 years, K-12 x $9,866, the national average cost per kid per year = $1,282,580)

So, each family member could stick the government with a $100,000 emergency medical bill and we would still be saving the government money. We take the responsibility of health seriously as a personal responsibility. But we thought it would be unfair to not have our kids covered in case of a car accident or fire. My husband didn't want to be on it, but they automatically put him on it when our first baby was born. My husband and my son have the same name, so I wonder if there was a mix up and they thought we were applying for him, too, but I'm glad he's covered.

So, things that we pay for, that are not on the Expenses Breakdown:

Savings - We do not put a consistent amount in savings every month, because each month's budget fluctuates. If I see beef at $1.22 a pound, I buy it all and may not put any money into the savings account. This is a form of an investment. It allows me to have more money in the long run.

We also have a bank that has a Keep the Change program. If I spend $26.08 in gas, $27.00 comes out of my account and $0.92 goes into savings. We've saved $350 through this program alone this year. With discipline, we probably would have saved the same amount anyway, but I like the program.

We also "snowflake" our savings account. Extra bits of money from any work I do, as well as Christmas and birthday money all go into savings. We aim for a $3000 savings. It is currently under $1000 (for shame!) due do the midwifery expenses. We are working hard to build this up.

Tithes - I was not asked about tithing, and I'm actually surprised. We tithe annually when we get our large tax refund. We do not have state and federal taxes withheld, but we get a large return for Earned Income Credit and Additional Child Tax Credit. Tithing annually cuts down (somewhat) on us fighting with God.
Total cost: $2000

School Bills - Dan is in college, which is expensive. I have looked into the scholarship program that his school offers. The first question on it is "How much of the school bill can you pay?" Although our income would qualify us for this scholarship, the honest answer is "All of it." With the tax return, we pay Dan's full school bill for the following year.
Total cost: depending on class load, $4000

Renter's Insurance - We do pay renter's insurance. It is not a monthly bill, but an annual one.
Total cost: $140

AAA - I love AAA. We often have a clunker car, although we love our current 1998 Mazda Protege and it hasn't given us any problems. AAA is our roadside assistance that also offers discounts for various vendors. This is another annual bill.
Total cost: $50

So, is it a lie for me to call this blog "Under $1000 Per Month" if we get a large payout at tax season? I say no, because we don't have much left after paying these annual expenses, and the school bills and tithe are expenses most people opt out of. For our basic living expenses, we have under $1000 per month.

26 comments:

Life is Good said...

W also would qualify for food stamps, etc. but choose not to and we also take the EITC, even though we didn't "earn" it. Here is how I justified it: We have been careful to not ask for any money that we have not earned, even the tax credit. The first year that we qualified for the EIC we did not put it on our taxes, however, we got a letter from the IRS stating that we had misfiled our taxes and that they were sending us the money for the EIC. Okay. So we have accepted it every year since.
If it makes the politicians feel better about themselves, we won't say no.
There is a bit of a problem with the logic with the public schools. It is actually the argument that never ocmes up when talking about school vouchers and charter schools. Your kids, unless they qualify for special Ed, do not cost even a fraction of that amount to educate. What the states do is take the total cost of education (including special ed) and divide it by the number of total students.
So, by not sending your kids to public school (whether home school, private or charter) you are making it more difficult to service the special needs students.
No worries, I have no intention of sending my kids to public school either, I just thought you should know.
BUt good luck to your family. We are trying to do it in Under $2000 a month for our family of 5.

scrappy quilter said...

You're doing great and for anonymous to keep playing devil's advocate, I would suspect they might just be a tad bit jealous from the great job you're doing. I'm very impressed with all that you doing for the amount of $$ you have coming in. For those who post anonymously and don't have legit comments, I just delete them without even responding. I don't have the time for that kind of stuff either!!

The Pittsburgh Pair said...

Hi, I posted the question about the insurance to you earlier this morning. I am so, so glad to see that you have renter's insurance.

I would really urge you to get life insurance considering that you have three small children. You don't have to get it through work; you can get a decent amount of coverage through outside agencies for very little money (term only).

Have you thought about disability insurance for your DH? I worry that he is the sole provider. What if he would pull his back out while working, for example?

Also, how much money do you bring in doing mystery shops and working on contract for the cigarette ID checks? Is it a decent amount to supplement what your DH makes?

I am really clueless about taxes, but how is it that you are able to get so much back? It looks like you only pay in (fast math) about $530 per year, yet you get back several thousand?

I'm just surprised that your return is enough to pay off your DH's school and tithe, so more than $6,000?

Also, your DH is getting an incredible deal on his schooling! Is he full-time?

Here, that won't even cover one semester of school part-time at a state university.

Lastly, I read your entire blog and saw that your DH could be paid as little as $500 per month as a pastor once he graduates (and that you want this to be his only job). Is that an exaggeration? Is the pay really that low?

I'm fascinated by this blog and just wanted to know if that is your long-term plan. We're very frugal and I applaud that, but we're the same age as you two and I can't imagine having three more mouths to feed.

Emily said...

Life is Good, we also are forced in taking the EIC. Yeah, I knew about the schooling being the avarage. I don't want to use any of the government's money on any medical emergencies, the same way parents don't want their kids to quailfy for special ed. We can't control it, of course.

Pittsburg Pair, We have looked at life insurance, pretty seriously at times, but haven't gotten it yet. My husband cleans and takes out trash at Walmart, it's not a high risk job, so we're not too worried about disablilty. Yeah, we get over $6000 from tax returns. We know we get more back from the government than we get. As far as taxes, that is how it is set up for people in our income bracket with kids.

My husband is getting a good deal, although $4000 seems like a lot to us. He goes ful-time to a college in the basement of a church. It is very probable that he could get a job for about $500 per month as a pastor in our state. Many pastors have several churches and outside jobs. But, many areas in Maine are much cheaper than where we live now. So, yeah, I want to make as much of our life sustainable so that he doesn't have to work a second job, but it will take time to reach that level of sustainability.

I really don't like doing mystery shopping and other contract jobs. I'd rather be home with my kids. But, if we have extra expenses, I can do a bunch of contract jobs in a short period and pay for it. It's a back-up more than a regular thing. I have a whole post about it that I haven't published. I'm impressed that you've read the blog so closely. You bring up good questions.

Patty said...

I just started reading your blog today noticed that you pay $150 in renter's insurance. We used to go through State Farm and our renter's insurance was only $110 as of last December. Totally pays to shop around!

Also - AAA has a 10% discount at Target too. I love their discounts! So worth the membership! AAA also has insurance too.

Emily said...

Patty, we get a discount on our auto insurance by getting them both through All State. I'll reconfigure the numbers, though, and shop around. Thanks for the tip!

gddyupchrs said...

Hi, I posted two questions earlier:

I was wondering if your husband would be taking on a second job once he gets a job as a pastor. You're doing a great job cutting costs now, so I'm just curious to see what your plans are if his income drops to $500 because I don't see that many more places where you could cut costs.

Secondly, I posted about what your backup plan is regarding retirement. I understand that your husband is not planning on ever stopping his ministry, but too often people are forced into retirement due to lack of job opportunities, disability or old age. In my line of work I've seen too many individuals who were in fairly safe lines of work fall ill with cancer, get hit by a car, been a victim of a violent crime, etc. If that should happen to your husband, how will you provide for your family? My concern is that it would be very difficult for you to both work outside the home and take care of the number of children that you are planning on having, so I would like to encourage you to think long-term. Frugality in the here and now is great, but it may not provide a healthy, happy life for your family in the long run, which I'm sure is the goal that you've set for your family.

Sarah Jessica said...

I just wrote a huge comment and it disappeared! Oh well. The gist:

1. You inspire me.

2. You impress me.

3. I think some of your choices wouldn't be mine, but I respect the heck out of your willingness to share them with the whole wide world.

4. I think dental care is a luxury, too. It's incredibly expensive. I wish it weren't so. I take the very best care of my teeth I can, and go to the dentist when I have to -- and I HAVE dental insurance through my employer. It's still insanely expensive and I try to live very frugally to pay down student loan debt. Spending comes down to choices, and you can't select all. :-) It's sad. Maybe someday it will economically feasible for everyone to get two cleanings a year . . . until then, I floss!

Jessica said...

As a recent SAHM, this is such an inspiring blog! I thought one teacher's salary was tough (with only one kid so far). Just out of curiosity, are you saving for a van or larger vehicle? If my memory's correct, you're expecting your third and I can't see three car seats in the back of a Mazda Protege! I've been thinking a lot myself about what to do when our family grows large enough for a van. Keep up the good work! You have some great hardcore frugal ideas!

Caroline said...

I agree with some of the other readers, that going without life insurance would be hard for me. I am a stay at home mom and we make sure that I'm covered as well as my husband. You never know what could happen and even though I don't "earn" an income, my husband would have more expenses if I were to die (such as childcare). Also, I think I'd rather go without rental insurance than dental insurance if I had to choose one, but that's just me.

We also tithe to our church so I completely understand the desire to do that. I just cannot believe the tax return you get back. I had no idea that the Earned Income Credit was that much. That must help out tremendously.

KillerB said...

I get that you pay for your medical bills. But do you not understand that you are not paying for your medical insurance, which you admit is very important to you, just as important as say car insurance, or renters insurance that you do pay for. Do you not understand that even if you don't use an insurance policy you are still BENEFITING from it. That peace of mind you get is WORTH something and my tax dollars are paying for it.

And you stated that you pay for some of these "annual expenses" like renter's insurance using your tax money. So yes you do use it for necessary expenses.

Sarah Jessica said...

I don't make a lot of money, so I don't, in the grand scheme of things, pay very much in the way of taxes. I am always curious when people say things like "My tax dollars do such and such," because how on earth do you know where your dollars are going? I did some (a very little) research.

According to http://www.cbpp.org/cms/index.cfm?fa=view&id=1258, about 11% of federal spending is spent on Safety Net Programs. That includes the Earned Income Tax Credit *as well as* "programs that provide cash payments to eligible individuals or households, including Supplemental Security Income for the elderly or disabled poor and unemployment insurance; various forms of in-kind assistance for low-income families and individuals, including food stamps, school meals, low-income housing assistance, child-care assistance, and assistance in meeting home energy bills; and various other programs such as those that aid abused and neglected children." That is a lot of stuff. From what I read, it looked to me like these policies all together impact around 35 million people.

I don't know what fraction of that amount represents the EITC. I do know that the EITC is about $3,000 per child. Personally, I didn't even pay that much in taxes last year. Out of every tax dollar I did pay, only 11 cents went to Safety Net programs like EITC. I'm guessing a few pennies at most.

I can afford it.

When the government hands people money with no strings attached, it can't tell people what to do with it. Hence the no strings attached part! Here's a stimulus check. Have at it - wallpaper your birdcage with it. The government can't stop you. They only get a say if you sign a contract, like a promissory note with a student loan. Then they get to have a say in how you spend their dinero.

Nota said...

While I'm kind of mesmerized by the blog and I really do admire your thriftiness under your circumstances, I can't support the fuzzy math you're doing regarding the children's education. Saying that you're saving the govt $1.3m based on you having 10 children is no different than me saying I'm saving the govt $2.6m based on not having 20 children. Savings is not hypothetical, it is tangible. You do not tangibly have 10 children right now - you have 2, neither of which are school age - so you are not saving anyone, anything based on their not going to public schools. Or if you are, then you are saving them the same amount that I'm saving them by having no children at all. When you actually have 10 children that are all being home-schooled, then you can start working out that math.

As a secondary point, a large amount of public school funding - at least in my area - is funded through property taxes, which you do not pay as you rent an apartment. So you are not currently taking anything from a system that you don't pay anything into - which is not the same as saving the govt money.

Contrast that against the $6k+ EIC that you get back in taxes you do not pay and you are, essentially, getting govt money for free which other taxpayers are supporting.

Also - I read an article awhile ago about the FDA approving a chemical spray for processed meats like hot dogs which essentially prevents viral accummulation on the meat and allows for longer shelf lives. How does this fit into your 'natural food' philosophy? I don't see one salad on your 2-week meal rotation or any green vegetables or many vegetables at all, for that matter.

Emily said...

Ok, this is going to be my last comment on taxes and what we recieve. If someone doesn't like what that we recieve money because of the tax code, barrading me about it isn't going to change anything for you, except you might feel better about yourself.

If you're unhappy about the current tax laws, vote, petition your elected officials, become politically active, help the poor in your community so that they don't need handouts. Do something to make a difference. Airing your grievance on my little blog is not going to make a difference in the tax code. Your welcome to continue, but I will not. I've said what I have to say. I don't think the tax code is fair either, but I didn't write it.

Emily said...

Nota, most of my dinners are one dish meals. The veggies are in the dishes. As I said about processed meat, that is where I contradict myself. We do not have a lot of processed meat, but both my husband and I like it. We grew up on it. I'm thinking of asking for a food processor for Christmas to make my own sausage. Would that make everyone feel better about my family's hot dog consumption?

Talariley said...

Emily I don't have a grievance on the tax code. I believe that a lot of people benefit from EITC that need the money. I'm not one to say that I paid for it etc. I was poor at one time and know money like that would have helped my family out inmensely. I feel that now that I have some money, it's my turn to build good karma etc and at least my tax dollars are going to a good place. I believe kids are innocent and depend on their parents for their well being. My grievance is against they way you chose to spend money that is intended for your kids.
I have no problem paying taxes and helping you feed your family. I do have a problem paying taxes for your personal religous peace of mind.
I'm interested to see how your family evolves, I certainly want to see you succeed, I will follow your blog.

Mary said...

I read your link about Weston Price, but I am sorry to say that if this is what you're basing your "dental care is a luxury" philosophy on, you are terribly misguided. Price is pretty widely recognized as a quack whose research studies were poorly designed at best. Most of what he espoused is simply incorrect and certainly will not lead to excellent health.

I truly hope you will reconsider your priorities and put your children's health higher up on the list.

Lyn said...

It's one thing to disagree with someone but it surely looks like civility lost out here.

As a comment though, I'm wondering as was mentioned if any of the protesters here sent back their stimulus checks. That's highly doubtful I'm sure. Doesn't that make you all hypocrites since you freely accepted government funds?

Lyn said...

Nota, you're entitled to your opinion but I still don't agree. Do you happen to know where all that stimulus money came from? Certainly not from the surplus of cash the U.S. presently does not have.

I think even if you don't agree with her you should stop. Life's too short to be so worried about others' choices. God judges each man's heart, so be concerned about your own instead.

If the naysayers don't like your blog, Emily, they can always leave - or you can just not publish their comments.

Lyn said...

Emily, have you thought of perhaps setting up moderation for comments? It certainly might take a little more effort, but you would be in control of what people leave on your blog.

Emily said...

I have, but I don't mind negative comments too much. A few have been offensive, many ignorant, but I think it makes people feel better about themselves. I'm surprised how many people come back to my blog when they disagree with me so strongly. I have disabled anonymous comments, and have the power to delete any. I may moderate in the future if it gets out of hand.

Emily said...

Talariley, it's just budget shuffling. The gov't reimburses us for the money we spent through the year and we "reimburse" God, if you want to call it that.

Mary, most dental problems are due to poor overall health and diet. We are striving, one step at a time, toward optimal health. http://www.westonaprice.org/nutritiongreats/price.html

gddyupchrs, sorry your comment got deleted. It was just overwhelming to see all those anonymous comments. I already answered about the $500, but here it is again:

"It is very probable that he could get a job for about $500 per month as a pastor in our state. Many pastors have several churches and outside jobs. But, many areas in Maine are much cheaper than where we live now. So, yeah, I want to make as much of our life sustainable so that he doesn't have to work a second job, but it will take time to reach that level of sustainability."

As far as the retirement, I'm just not sure how to answer that. My first thought is that we will trust God with that. It may not sound too concrete, but he is the solid rock on which we stand.

Sarah, I'm sorry you're comment was deleted, thanks for the encouragement, and for reposting (:

Sam said...

Hey Emily, just a thought on tithing. The Bible tells us to tithe our first 10%. It's meant to be a lesson in obedience, faith, and honor to God for providing for us. Doesn't it feel a little wrong to only tithe when you get your taxes? It's kind of like telling God that you can't afford it month to month so he'll have to wait until the end of the year when you have your yearly windfall. He's telling you to set aside the first 10%, not a large chunk of what the government gives you. My husband and I have some student loans (stupidly, we kick ourselves in the hiney when we think about it!) and we thought about not tithing for a while to pay those off faster and tithe double when we are done, but it just didn't feel right to tell God we didn't want to honor Him with the first 10% He gives us. Do you struggle with that too?

Emily said...

Sam, as far as I can see, tithing annually is a matter of budget shuffling. We could tithe monthy then set aside that $2000 to cover monthly axpenses as needed, but this works for us. Although I believe in tithing 10%, the Bible does not give any guidelines as to how frequently you should be cutting out that 10%, whether it is weekly, monthly, quarterly or annually. Yes, I imagine we all struggle with tithing, and I wouldn't say it's easy to pay out such a large amount. I hear so often stories about people who aren't tithing then do and are blessed. I don't want to be in those stories. I would rather do it consistently and in a planned way and this insures that.

Anonymous said...

Hi I just discovered your blog and have really been enjoying it. I saw a comment you made that you were not sure if Wal-Mart has life insurance available. My husband works there and they do. Now, I am not sure about part-timers but it would be worth checking into. There are different levels of coverage and I think the lowest one for my husband (full-time) was free, with no premium. Chris

Anonymous said...

Just an FYI, I am 28 and a woman and mostly healthy, and I pay about $9/month for a 25 year $175k policy. I chose to get this before I have dependents because I feared developing a condition several relatives of mine had that would have made it very hard to get approved for anything. Look into it--a small policy may be very cheap. Hopefully none of us will ever need them though.

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