400k salary and creep factor we never really have much left

[Anonymous]

Anonymous wrote:You Need A Budget (the program). You’ll end up saving thousands the first year - we did.

Thank you, this sounds great

[Anonymous]

Anonymous wrote:

Anonymous wrote:You are clearly doing something wrong if you can’t save with this income. Are you buying designer clothes? Eating out non stop? Even then I can’t see how you can go through this much money.

I was OP without doing those things.

OP, one thing I found that really helped was a monthlong "spending fast." Almost no spending for a month. Eat from the pantry/freezer except for some fresh vegetables and fruits, shop your closet, make your coffee. It really helps you reset and also see where you're mindlessly spending.

Eating out is probably a big one for us. I think a lot of it is also just gifts/meal trains/ those kids if obligations. We have about 50 birthday parties a year and then I get invited to do a meal train or baby shower usually 2x a month and these add up. I usually spend $75 on the meal train because I hate cooking and the shower gifts and invited to social events where you often pay like someone’s birthday dinner add up.

[Anonymous]

Inflation eats into everything

[Anonymous]

Anonymous wrote:

Anonymous wrote:We live a fairly modest lifestyle but with $400k salary and we do reasonable travel (not international or anything, like 4 star domestic trips, half drive half fly, public schools, just paid off cars but before payment was $600 a month, 567k mortgage balance (house worth 1.4 from appreciation), childcare is about $7k a year total, camps/activities for kids add up to several thousand but run of the mill team stuff… What’s the thing that had the biggest impact for everyone on just cutting down on spending? We spend on everything! A lot is charity, at least $15k a year for that and then it seems like endless other expenses and emergency expenses related to kids, pets and home. Advice needed. I would love to be more meaningful with our money and at least have something more to show for it like doing an amazing trip every year.

Where on earth is all your money going? You clearly don't have a modest lifestyle especially given your income. A 1.4 million dollar house is not modest.

It’s a 4bedroom/2.5 2500 sf house in a really good area for schools but it’s not extravagant or updated. It’s really just a good location. We also didn’t even pay half that.

[Anonymous]

Anonymous wrote:So, we have 465k left on our mortgage. Have two teens. HHI is 130k. My husband maxes out his 401k, we put away 6k for college each year. Two cars, paid off. Have about fifty thousand in savings outside of 401k and 529s. About 250k equity in house.

You are doing something wrong if you can’t save more on that HHI.

You aren't doing any better than OP and overspent on a house.

[Anonymous]

Anonymous wrote:Inflation eats into everything

Yea it does. I stopped doing coffee unless it’s a social thing because with tip and tax it ends ip being $7.

[Anonymous]

Anonymous wrote:Your reported spending doesn’t add up at all. Our HHI is $320k and we max out a post-tax Roth 401k, a Fed 403b plan, and 15k to an employee stock purchase plan.
Our childcare is $6k for extended day for 2 kids in public school, $8k for camps ($400/week 2 kids 10 weeks), plus $1500 in school break camps, sports fees, coach gifts, cleats, suits, and googles.
Our mortgage is also $600k on a $1.5m house, just under 3%.

Last year we got a new flagstone patio and did some large landscaping projects (planned) and a new furnace and A/C unit (not planned).

We also go on one trip to the west coast to see family - $2k+ in plane tix alone, a week at a rented beach house, and a few long weekends to a resort or nearby city like NYC or Philly. We also entertain less formally on a monthly basis and host 2-4 catered parties for 25-50 people each year.

We live a modest lifestyle and don’t feel stretched at all. We feel pretty comfortable.
I’m not sure where your money is going, but I think you are underestimating what you actually spend on childcare and activities.
Do you eat out a lot? Have food delivered?
Do you meal plan and eat seasonally - or do you have high grocery bills and high food waste?
Do you have high healthcare costs?
Expensive pets - boarding, grooming, special food?
Expensive hobbies?
Do you have expensive clothes? Dress your kids in expensive clothes?

This is not a modest lifestyle.

[Anonymous]

Also what’s with all the costs of fast casual now? Now that they added too it’s like $18 for a chicken rice bowl.

[Anonymous]

Well I think modest for some of the big things like housing and cars are modest for income level. I know we can probably save $2-5k a month. Granted about $20-30k a year are emergencies. I got hit by an uninsured driver and while I had a good policy for this it costs us some things as we went through the repairs, etc.

[Anonymous]

Both of our dogs had emergencies this year, one has pet insurance and one wasn’t insurance, those were about $6500.

[Anonymous]

Download the Personal Capital app, link your credit card and checking accounts to it, and you will easily be able to see exactly where every cent you spend is going with a touch of your thumb.

[Anonymous]

I am a meticulous budgeter and we still over spend lol. A budget is helpful but it isn't a silver bullet.

Fwiw, restaurants and eating out are always the line item that shocks me the most. I do not think of us as people who eat out a lot by any stretch, and NEVER delivery (prices are obscene IMO) and yet every month, somehow we've spent $800 on restaurants. One date night and one meal out for the whole family, maybe an afternoon at a brewery or something, and boom, our budget is hit. As a person with a spreadsheet that could tell you how much I spent on Starbucks in September of 2014 (seriously), I am still surprised by it every month. It adds up fast.

[Anonymous]

I bet you spend a lot on convenience (picking up take out food) and lots of internet shopping (Amazon, clothes, kid stuff, etc)

The monthly credit card bill can blow up quickly when you do a bunch of online shopping.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So, we have 465k left on our mortgage. Have two teens. HHI is 130k. My husband maxes out his 401k, we put away 6k for college each year. Two cars, paid off. Have about fifty thousand in savings outside of 401k and 529s. About 250k equity in house.

You are doing something wrong if you can’t save more on that HHI.

You aren't doing any better than OP and overspent on a house.

Yup. With late teens, that means they are in their forties. 465k mortgage with 250k equity is pretty bad at that age. Hopefully the 401k is in the 1-2 million range.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.