“Rich” but Broke - What can we cut?

[Anonymous]

I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

[Anonymous]

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

You spend $5k/month on childcare. Not saying you can do much better with tiny kids. These will just be lean years. It is what it is. We have a similar budget, but no childcare costs. It makes a huge difference.

[Anonymous]

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

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

You spend $5k/month on childcare. Not saying you can do much better with tiny kids. These will just be lean years. It is what it is. We have a similar budget, but no childcare costs. It makes a huge difference.

Agree with this. Just grit your teeth. It’ll be over soon.

[Anonymous]

These rich but poor threads are getting so old.

[Anonymous]

You bought cars that you can’t afford so now you have debt on those.
Childcare is also a huge expense, you might be able to cut there but do you want to?
You are living in Chevy Chase, now you have to keep up with that standard of living.

[Anonymous]

This is why you have the big pay checks, HCOL area. It is what it is.

You laid out $11,300 in fixed monthly expenses, leaving $3,700 to cover everything else. If you want to know where that is going track your spending, but understand that after housing, child care, and car you only have control over this amount. Could you sell one car?

[Anonymous]

Our stats are very close to yours OP. People will say you paid too much for your house.

You aren't broke. You just can't keep up with the joneses in this area who either make more and/or spend more on their home, cars or vacations.

[Anonymous]

Since your take-home is half your gross, you're apparently maxing retirement for two people (which is close to $50K per year in savings). On top of that, you choose to live in an expensive house on a good but not great salary. So living paycheck to paycheck sounds about right?

[Anonymous]

Cut the nanny that's your problem.

[Anonymous]

Your mortgage/tax/insurance and childcare costs are too high. That's what you are doing wrong.

[Anonymous]

You could ease up a little on retirement, but make sure you get your employer match as a minimum. No paid kid activities are needed for kids that age, so drop those. I’d look for more affordable childcare options, personally.

[Anonymous]

Moving would be dumb anyway unless you can pay in cash. 5K is a ton of money. In a few more years if you stash that away you'll have 50K a year saved before interest!

In your shoes I would consider selling one car if possible, limit alcohol to once a month or something (some people don't realize how much they are spending on wine), and see if you can meal plan around really inexpensive like garbanzo beans, whole chickens, etc. Even saving just a few hundred dollars a month is better than nothing (and way better than most people can do).

[Anonymous]

You'll feel a lot better in a few years. That $5K/mo daycare bill will go down significantly except for summer camps and your paychecks will hopefully increase. Just ride it out, you're fine.

[Anonymous]

If you’re saving for college, you could slow that.

This is why many don’t have the vanity third child. Kids are expensive.

You’re living in a wealthy location on an upper middle class income, plus that’s 2 incomes, meaning don’t have a SAH parent which would save on childcare costs. You can’t have it all.