Life is Easy in NW DC on $300k, AMA

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP, still really curious about how you can save so much without scrimping at all. What is your monthly take home (after taxes, tsp/401k, health insurance, etc.). And for the TSP/401K, are you doing regular or roth?

I've posted my budget upthread. Take a look. We do traditional 401k/TSP, not Roth.

From what you posted, it looks like you are taking about $15K home a month. That seems pretty high for an annual salary of $300K.

My last paycheck was 3342.08 after all the deductions. I get paid biweekly. My wife's paychecks are like 3100 something but she only gets paid twice a month. So, I think that works out to more less than 14k "take home" per month. Is this easier way to break things down for you? I don't usually think about things this way. "Take home" is a weird concept to me, because it seems to treat 401k (savings) the same as health insurance (spending) and taxes (a different kind of spending). Not to mention all the complications about putting things in FSAs, or how many exemptions you claim, or whether you get a tax refund, etc. But, does that help your question?

That works out to be approx. $13.5 take home every month.

Yes, it's a little more than $13.5k "take home" per month. That's right. Is everything clear now?

Not really. That's a total of about $160k take home, but the after tax expenses you listed are $20k over. That's not including the $5k annual donation (which I agree is generous):

74k taxes
---
36k 401k contribs
36k brokerage savings
10k 529
---
48k housing (includes PITI, utilities, and various home improvement/maintenance items)
21k daycare
11k groceries
9k insurance and medical
2k verizon
---
11k restaurants
11k clothes and other merchandise
9k travel
14k misc/uncategorized

I think I addressed your comment as well in my last post. You think it's off by about $20k, but I think you're not accounting for tax refund (which went straight to the brokerage), plus the pre-tax components of daycare and medical (which don't come out of "take home"). I think that makes up for most of the difference. I also think it's highly possible my expenses included some reimbursable expenses from work. I didn't include as "income" the reimbursements we got from work travel, but they'd still likely show up in the expenses I listed. Lastly, I rounded all of these categories and rely on Mint to spit everything out for me. I'm not shocked if that's not 100% lined up.

$25K after tax difference is not a negligible amount.

I don't know, it seems like you're really stretching it.

I've mentioned the tax refund, and the pretax contributions to daycare and medical insurance, which you're ignoring. That covers about $17k of the difference so there's only $8k discrepancy. If you're going to discount my entire post because I can't line up $8k expenses with my "take home" pay, I guess that's your decision, but I think you should consider a couple things that would easily explain the $8k.

First, I mentioned work travel -- which would cause some incidentals to show up in my expenses that didn't come out of my take home pay (bc they were reimbursed). Those reimbursements add up and I'd very conservatively say that's about $3k per year. It's probably more. We also get other reimbursements from work that I haven't mentioned (bc they seem de minimis to me and don't affect the point of the thread) -- like for metro and and cell phone data, and even my wife's gym membership. My metro reimbursement alone is about $1k for me per year. My wife gets one too but I don't know how much hers is. The data reimbursement is another 70/mo (840 a year). Those things wouldn't be reflected in our monthly "take home" and yet they'd still show up on our expenses.

After all of that, you're really left with a $2k rounding error. It's pretty trivial.

But this is the point. You're saying "look at all the things I pay for - $11k/year for dinners, etc." but then you're not actually paying for it out of your take home. Cell phones, gym memberships, metro reimbursements, dinners - those are the expenses that add up.

It's like 8k in expenses. I mean, we can call it $9k (not 11k) restaurants, $1k (not 2k) Verizon, and $8k (not 9k) travel and $10k (not 14k) in uncategorized if it makes a difference to you.

[Anonymous]

Or, fine, say we had 308k in income not 300k. So life is easy on 308k but not on 300k? This is the quibble you really want to cling to?

[Anonymous]

Anonymous wrote:Or, fine, say we had 308k in income not 300k. So life is easy on 308k but not on 300k? This is the quibble you really want to cling to?

DP but you seem very bothered by the fact that you provided numbers and people took the time to look at them. You were $25k off, that raises flags about whether you're being honest. The level of defensiveness coming off your posts honestly is making me think the difference is more meaningful than I would have otherwise -- why provide such precise numbers if you are going to then say "let's just say it's a different HHI and different expenses"?

[Anonymous]

Now 8K after tax is not a big deal, while earlier 5K in donations is generous?

A family making the exact same amount as you, with the exact same expenses, but none of it reimbursed, would barely be able to put anything in 529's (assuming they chose to spend their $ the same way). That's the point.

[Anonymous]

Anonymous wrote:Now 8K after tax is not a big deal, while earlier 5K in donations is generous?

A family making the exact same amount as you, with the exact same expenses, but none of it reimbursed, would barely be able to put anything in 529's (assuming they chose to spend their $ the same way). That's the point.

Or would have just put 8k less in the brokerage account. 28k instead of 36k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Or, fine, say we had 308k in income not 300k. So life is easy on 308k but not on 300k? This is the quibble you really want to cling to?

DP but you seem very bothered by the fact that you provided numbers and people took the time to look at them. You were $25k off, that raises flags about whether you're being honest. The level of defensiveness coming off your posts honestly is making me think the difference is more meaningful than I would have otherwise -- why provide such precise numbers if you are going to then say "let's just say it's a different HHI and different expenses"?

Where do I seem "very bothered"? I think I've stayed pretty good-humored even if I have spent too much time on it the past 2 days. It's been fun.

[Anonymous]

Is your wife following this thread too?

[Anonymous]

Anonymous wrote:Lol @ people minding what OP thinks what "generous" means. If OP came from a family without much means, 5k might in fact be a lot just because of his upbringing and not his current salary. But whatever, OP, you do you and people will always be salty.

Or you coasting in terms of career or are there plans on coming back out in the private sector?

OP Here. Sorry, missed this one. I may try to go back to private sector in the future, but not in the near term. Earlier in the thread I was answering someone's question about retirement, and I typed out the phrase "if I stay at DOJ for another 23 years." I'll admit, just typing that out gave me some pause. I like what I do here, for the most part, but something about contemplating doing it for another 23 years just put me off balance. So, I really don't know what the future holds, to be honest.

(FYI - I bristle a little at the notion that we federal litigators are "coasting". We work hard.)

[Anonymous]

Anonymous wrote:Is your wife following this thread too?

Ha! No, or at least I hope not. To be honest, I'd be embarrassed. I'm not one to typically post on online forums and I don't think of myself as someone who would. I've unexpectedly gotten caught up in this a lot more than I thought I would. But, I don't really want my wife to know about it.

[Anonymous]

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

Yikes! It would be really tough for us to afford $70k in yearly tuition. We'd have to make serious cuts to our savings and our lifestyle.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Or, fine, say we had 308k in income not 300k. So life is easy on 308k but not on 300k? This is the quibble you really want to cling to?

DP but you seem very bothered by the fact that you provided numbers and people took the time to look at them. You were $25k off, that raises flags about whether you're being honest. The level of defensiveness coming off your posts honestly is making me think the difference is more meaningful than I would have otherwise -- why provide such precise numbers if you are going to then say "let's just say it's a different HHI and different expenses"?

I don't see OP as bothered at all. When I use Mint to assess the spending, the picture is always off as, unless you often recategorize transaction, the totals will be skewed. OP's error (as in statistical error) has no impact on the AMA. He might have a water heater replacement one year and unexpected capital gains another year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Or, fine, say we had 308k in income not 300k. So life is easy on 308k but not on 300k? This is the quibble you really want to cling to?

DP but you seem very bothered by the fact that you provided numbers and people took the time to look at them. You were $25k off, that raises flags about whether you're being honest. The level of defensiveness coming off your posts honestly is making me think the difference is more meaningful than I would have otherwise -- why provide such precise numbers if you are going to then say "let's just say it's a different HHI and different expenses"?

I don't see OP as bothered at all. When I use Mint to assess the spending, the picture is always off as, unless you often recategorize transaction, the totals will be skewed. OP's error (as in statistical error) has no impact on the AMA. He might have a water heater replacement one year and unexpected capital gains another year.

+1 OP has been very pleasant and willing to change his viewpoints (ex: re: the "generosity of his donation). This is unusual for DCUM.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

No one would force you to move both kids so that you now had to pay 70K in additional tuition. If you're wealthy enough to afford private for 1, you move kid1 who is being bullied, and keep kid2 where they are presumably doing fine. If you choose to move both, because it's too much trouble/morally troubling to have them in two schools, presumably you can afford 70K in additional tuition.