Step Two: Add Up All Monthly Expenses

If I really want to stay home with my son I need to figure out just how much money we spend each month. After looking at some of the numbers I must say I feel slightly house rich and otherwise poor.

The biggest chunk of change certainly comes in the form of monthly mortgage payments. All told we still owe over $698,000 on two properties, which leaves us with a combined mortgage payment of nearly $6,000 each month. The mortgages are both set to expire in 13 years and the interest rate on both are fixed at 4.5%. In addition we pay roughly $9600 in property taxes each year, which works out to an additional $800 each month.

When we refinanced our homes we shortened the length of both mortgages in an attempt to pay them off more quickly. That made a lot of sense when my husband and I were both bringing in large paychecks. Unfortunately now that I’m toying with the idea of staying home for awhile I am a bit concerned with the size of those payments.

Selling the properties is probably not an option. It’s not that we couldn’t sell them, (neither property is underwater), but my husband and I just don’t want to take that route. It’s not entirely off the table, but for now it’s not an avenue I want to explore.

For all of the non-property related expenses I had to take a look at my husband’s unbelievably detailed record keeping. Thank God he does such a stellar job of tracking all of the dollars and cents that move into and out of this house each month.

Last year we spent a significant amount of money on home repairs and maintenance. We replaced each and every window in our home, along with all of the exterior doors and repainted every inch of wall and ceiling space. Those alterations cost us over $35,000. Luckily we made those changes when we did, because if I don’t bring in a paycheck we probably won’t make any further modifications that aren’t required. This category can shrink down to a few thousand per year, unless something unexpectedly breaks.

The other big categories broke down as follows:
  • Food – $11,000+
  • Auto – $7,000+
  • Utilities – $6,000+
  • Insurance – $5,300+
  • Travel & Entertainment – $5,200+
  • Gifts – $1,100+
  • Baby – $1,000+
  • Clothing – $1,000+
  • Projects – $2,000+
Last year’s totals amounted to a monthly expense of over $3,300. That number was so large that I didn’t quite believe my eyes and stepped through the numbers two or three times in absolute disbelief. In order to sustain this level of spending it goes to show that we were both bringing in very large paychecks each month.

Some of these categories were slightly inflated due to my pregnancy and the birth of my son. For instance, we bought furniture for the baby’s room and I spent a few hundred dollars on maternity clothes. We also ordered take out quite a bit in October, November and December, which is not something we typically do. Our expenses will certainly be much less in these categories this year.

The travel and entertainment category was also quite large as my husband and I took a fairly expensive trip to Boston early last year. We also stayed at a pricey hotel in Maryland a few weeks before the baby arrived. If I don’t return to work this category will shrink down quite a bit.

The ‘auto’ category includes things like maintenance, gasoline and tolls. As I mentioned before my husband and I drive 10+ year old cars, but even without a car payment they often need tweaks here and there to keep them running. I also spent quite a bit of money on my commute. I paid a toll each time I drove to work and spent upwards of an hour in my car each way, which cost me a quarter of a tank of gas with each trip.

I’d like to see our non-mortgage related expenses dwindle down to no more than $1100 a month. My husband and I can drastically cut down on the discretionary categories like travel, gifts, baby, clothing and projects. The auto category will dwindle and we can save much more on food. It’ll certainly help that I won’t be buying lunches out. Some other categories like utilities and insurance are more difficult to cut, so I think we need to factor them in without any alterations.

My next step is to figure out just how much money we can earn this year and how much we have buffered in savings.

3 thoughts on “Step Two: Add Up All Monthly Expenses”

  1. Are you factoring in any rental income to offset your mortgage payments, or is that too much like counting your chickens before they hatch?

    If you ultimately decide to stay home I think you'll never regret it. My kids are 16 and 20, and I swear it seems like yesterday that my 20-year-old was born. You hear that all the time, but it really is true!

  2. I left my full-time job for a part-time one when the Baby was born, and Hubby had been moved to second shift shortly before that, so the loss of income was offset by the lack of daycare. The biggest areas we cut back on were take-out and gifts. For Christmas, I made banana breads for everyone we normally give to – teachers, coworkers, etc. Meals out also was a huge part of our budget, and being home in the afternoon to cook makes a huge dent in that bill. You'll also eat better!

    We cut back, but utilities, food, and insurance do add up. Don't be unrealistic; allow yourself some wiggle room on your budget for the unexpected (a jump in heating costs, the growth spurts when they're CONSTANTLY hungry, and grow out of sizes in 6 weeks!).

  3. @Pam – We don't include too much of our rental income in our estimates since we never know exactly how much we'll earn each year or what extra costs we might encounter there.

    @WorkingMom – Thanks for the advice. I think you;re right about allowing ourselves extra wiggle room in the budget. I need to create a realistic picture of the ins and outs of our income and expenses, otherwise we are setting ourselves up for failure.


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