“Rich” but Broke - What can we cut?

[Anonymous]

In DC for awesome PK3 and PK4. Really saving us a ton of money. Current kid is in PK4 and our youngest is starting daycare next month ($2.2K per month).

The savings are real. Will reassess the school situation once our youngest hits K and maybe think about leaving the area.

But putting two kids through DC PK3 and PK4 will add about $100K post-tax to your net worth relative to someone living in MoCo having to shell out for preschool until K.

[Anonymous]

IMO you have to wait out the time until you stop paying for daycare.

How much are you spending on groceries?

[Anonymous]

I don't understand how your gross income is 350k and your net is 15K per month after taxes. This would mean you're paying $170,000 a year in taxes. That just seems impossible.

[Anonymous]

Anonymous wrote:I don't understand how your gross income is 350k and your net is 15K per month after taxes. This would mean you're paying $170,000 a year in taxes. That just seems impossible.

Agree the net seems low even if you factor in TSP/401k, FERS pension payments, insurance.

$350K gross:
-$35K (10% 401k/TSP)
-$5K (health insurance for family)
-$5K (dependent care FSA although this does get credited back)
-$6K (FERS for the one fed employee)
=$299K - $180 net claimed by OP = 119K in taxes which seems high.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't understand how your gross income is 350k and your net is 15K per month after taxes. This would mean you're paying $170,000 a year in taxes. That just seems impossible.

Agree the net seems low even if you factor in TSP/401k, FERS pension payments, insurance.

$350K gross:
-$35K (10% 401k/TSP)
-$5K (health insurance for family)
-$5K (dependent care FSA although this does get credited back)
-$6K (FERS for the one fed employee)
=$299K - $180 net claimed by OP = 119K in taxes which seems high.

They might have all sorts of things like metro, parking, life insurance, LT disability etc. taken out of the check. Also may be figuring the salary in monthly net but annual salary with bonuses. But I agree that the numbers have a hard time adding up.

[Anonymous]

Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

[Anonymous]

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

The house expenses would have been fine if they didn’t also have big daycare expenses and throw away a crap ton of money on cars. But I agree that the house would be reasonable for a family that could budget and save.

[Anonymous]

Do you actually need two cars? Many parts of CC are very walkable. Plus you can use Uber as needed. We managed for 10 years with one car. DH biked to work. Occasionally we used Uber or a bus if there were overlapping needs. I know lots of families with one car.

[Anonymous]

You spend too much on cars and home. If you aren't willing to cut there then there's not much you can do.

Look at your other spending. You mention kids activities. The kids are under 3. Look at your groceries/clothes. I'm sure there is stuff you don't need there.

[Anonymous]

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

I think it's too much house if they're “Rich” but Broke as they self described.

[Anonymous]

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

They don't have a 900k house, they have a 900k mortgage. And the property taxes and insurance are making it unaffordable for them with all their other expenses (and the fact that they are behind in retirement/college savings).

[Anonymous]

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

Housing should ideally be only 2x your income not 3x.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

They don't have a 900k house, they have a 900k mortgage. And the property taxes and insurance are making it unaffordable for them with all their other expenses (and the fact that they are behind in retirement/college savings).

because they have a 900K mortgage, and had a 500K in student loans for much of that. And 1k in monthly car payments. So they are behind on a lot and will have to budget well and save for several years if they want to stay in the house. I get that they have a good deal on the house with low interest rates, but they bought when they were big law, and they aren't anymore. So if the salary goes away from big law, something has to give or you will feel broke on a decent salary because your input is less than your output.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

Housing should ideally be only 2x your income not 3x.

How's life back there in the 1980s?

[Anonymous]

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

Because they have day care, loans, expensive cars and other expensive lifestyle choices.