“Rich” but Broke - What can we cut?

[Anonymous]

You should have either bought a cheaper house or been prepared for childcare to drown you. It drowned us for a few years for sure. It's much better now that the kids are in elementary school.

But cut activities for the kids. What do they need if they are toddlers? Nothing. Save expensive activities for when school is free.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You aren't doing anything wrong. Childcare is expensive. Once you don't have that expense you will be in great shape.

Lies. Summer camps. Sports. Music lessons. It’s a small savings.

I have a 6 and 8 year old. This summer we averaged 381.75 per kid per week of summer camp. If we had needed camp every single week this summer, that would have been a total of 381.75*2 kids*10 weeks = $7,635. Extended day at school is 340 each for 340*2 kids*10 months = $6,800. Total childcare is now up to $14,435, which is the same as 3 months of daycare for OP. I'm not sure what activities your kids are in, but our soccer, flag football, basketball, and one enrichment per session is not coming anywhere close to the other $45,000 OP is spending on daycare.

I guess if you have your kid in travel hockey and only send them to sleepaway camp you might not see any savings, but normal people get a big bump when daycare ends.

Yes this. It's a huge savings getting out of daycare unless you sign your kids up for multiple $1k+ a year activities (which we do not).

Also, during the summer when we go on vacation we used to have to still pay daycare. So if we were gone for 2 weeks, we'd end up paying $400 a week PER KID to not even use the daycare. Now that we pay for summer camp, we just don't have camp the weeks we vacation and it feels like you saved $1600 right there.

[Anonymous]

You bought too much house.

Insurance and taxes. Auto insurance on fairly new cars isn't cheap, and neither are the county car taxes. It shows. There is a reason people in the DMV drive very old cars. It's to lower their tax rates.

You chose Chevy Chase, you get to be house poor in Chevy Chase. Not much else to say. [Shrugs]

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

A vehicle purchased for 10K that long ago would likely need to be replaced at this point. At least these cars are almost paid off.

Given interest rates and transaction costs it would be foolish to move (and I say that as someone who has a higher HHI than OP and lives in Silver Spring with a lower mortgage. Also, my last kid is almost out of high school and if I had to do it over, I would've bought in a place with better schools.).

[Anonymous]

Anonymous wrote:FWIW I liked this article. I think a lot of the people we all think are rich are not - they're just showoffs and spending all their money.

https://www.ynab.com/three-factors-of-wealth/

Big hat, no cattle

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

Yes, Big Law with $500K in student loans. They could have bought secondhand Hyundais as students, or just one car, or forgone cars altogether. When I was in law school I bought a Chevy Nova for $500 and drove it into the ground.

I don't understand this mindset.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

A vehicle purchased for 10K that long ago would likely need to be replaced at this point. At least these cars are almost paid off.

Given interest rates and transaction costs it would be foolish to move (and I say that as someone who has a higher HHI than OP and lives in Silver Spring with a lower mortgage. Also, my last kid is almost out of high school and if I had to do it over, I would've bought in a place with better schools.).

Silver Spring PP here and if I had it to do over again (my kids are young adults), I'd buy in the same place, with Silver Spring schools.

[Anonymous]

The buying acuras thing as students is just insane.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

Yes, Big Law with $500K in student loans. They could have bought secondhand Hyundais as students, or just one car, or forgone cars altogether. When I was in law school I bought a Chevy Nova for $500 and drove it into the ground.

I don't understand this mindset.

I loved my Nova! That little car ran and ran.

I think the house in CC was a great investment; it’s just going to be hard to separate wants from needs in a super wealthy neighborhood. I’m sure some of our budget gurus would be able to run a detailed spending analysis!

[Anonymous]

Anonymous wrote:The buying acuras thing as students is just insane.

With 7 year notes! Two of them!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

A vehicle purchased for 10K that long ago would likely need to be replaced at this point. At least these cars are almost paid off.

Given interest rates and transaction costs it would be foolish to move (and I say that as someone who has a higher HHI than OP and lives in Silver Spring with a lower mortgage. Also, my last kid is almost out of high school and if I had to do it over, I would've bought in a place with better schools.).

Obviously it would be foolish to move now unless they want to rent somewhere more affordable.
But the issue is their mindset all along. How can you buy a lifestyle that you can afford because of being big law and then expect to drop big law, change nothing and still survive? I'd be looking at finding a way to have an au pair for a few years---you adjust and have them live with you, but you could save a ton. I get childcare is expensive, but there have to be ways to save. And they stated they take the train/public transportation, so perhaps there might be a way to only have one vehicle and manage---saving on insurance, gas, and car payments---used MDXs go for a lot currently (I know, I recently sold a 13 yo one for 30% of what I paid for it new and it needed body work and several electronic things repaired at the time). So keep the house, but you must adjust other factors in life if you want to take a lower paying job, simple math.

If they had bought two good used car each for $10K 7 years ago, they would have paid each one off 5 years ago. Then the extra payments along the way could have been saved, to purchase a newer car when needed. So they'd have $10K to put down for each newer car---so for only another $10K they could get a used Toyota/Honda/Suburu that has only 50-60K on it and then drive it until it dies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

Yes, Big Law with $500K in student loans. They could have bought secondhand Hyundais as students, or just one car, or forgone cars altogether. When I was in law school I bought a Chevy Nova for $500 and drove it into the ground.

I don't understand this mindset.

Me neither. Buy cheap cars and/or no car at all, don't buy a house or rather buy a starter home in a decent area. Live in an apartment near public transport and they wouldn't need a car. I'd be focused on paying off those $500K in loans quickly before I started "living the good life" (We did that on a lower scale of $100K in loans) and certainly would not be purchasing a home until I was well on a path to paying them off.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The buying acuras thing as students is just insane.

With 7 year notes! Two of them!

Nobody should purchase a vehicle unless they can afford to pay it off in 3 year, max of 4 years. If you can't, then you buy a cheaper vehicle. Really not that hard to understand.

[Anonymous]

Alas, you aren't in CCDC, with PK3, you'd be out of the hole in a year or two.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

Yes, Big Law with $500K in student loans. They could have bought secondhand Hyundais as students, or just one car, or forgone cars altogether. When I was in law school I bought a Chevy Nova for $500 and drove it into the ground.

I don't understand this mindset.

Me neither. Buy cheap cars and/or no car at all, don't buy a house or rather buy a starter home in a decent area. Live in an apartment near public transport and they wouldn't need a car. I'd be focused on paying off those $500K in loans quickly before I started "living the good life" (We did that on a lower scale of $100K in loans) and certainly would not be purchasing a home until I was well on a path to paying them off.

The fact is that for many of us, what we thought would be a starter home now seems like it's going to be our forever home due to interest rates and home prices. I wish that we had not been so conservative when we bought a few years ago and had spent a bit more per month for something we would be happy with long-term. It sounds like the OP has no desire to move and locked in a low rate in a place they intend to raise their kids. I wish I had done the same!