Can we afford $45k/year private for 2 kids? Stats included

[Anonymous]

No way! Move to an area with good public schools.

[Anonymous]

You can afford it, because you can always go public.
Not sure why you would do this to your money.

[Anonymous]

No! Cash income is $380k and after tax likely under $300k. Spending $90k on private school is a bad idea. Get the kids started in public schools and see how it goes.

[Anonymous]

Their mortgage is way too high for this income, especially recent.

[Anonymous]

Anonymous wrote:I wouldn’t. You are talking about $100k post-tax money and that will only go up every year. Your cash position is low.

100% this.

OP learn math and finances.

[Anonymous]

I would ignore the stock and then ask yourself if you can afford it. Ignoring the stock, the answer is clearly no. Most elementary schools are good. Put your kids in public, save the stock and bonuses to give yourself a nice cushion and reexamine for middle school.

Just remember, if your company goes south you could be out of a job and the stock won't be worth as much. yes you could switch to public schools if that happens, but you won't get the money back you spent on private.

[Anonymous]

The other big question is are you expecting any inheritance or additional money? People who can anticipate some $$ should conservatively factor it in. The upperclass group in their 30s and 40s will likely be inheriting massive amounts of money, especially with the way the stock market has performed. If you haven't had frank conversations about estate planning with relatives, it is smart to do (even if the $$ is small, it prevents surprises and miscommunication).

[Anonymous]

You can afford but I wouldn't. It's a lot of money on your income.

We have a similar income ($550K) and two in high schools that cost $55K each. We feel it and resent it at times, especially when our kids get a super crappy teacher (which happens not infrequently) or the school does something really dumb (also the case).

We're also somewhere in the lowest 25% of income at the school. Which is crazy but true. It's never fun to make an absolute ton of money (by any reasonable, objective standard) and regularly feel poor or have your kids feel poor. It messes with your head.

[Anonymous]

Anonymous wrote:The other big question is are you expecting any inheritance or additional money? People who can anticipate some $$ should conservatively factor it in. The upperclass group in their 30s and 40s will likely be inheriting massive amounts of money, especially with the way the stock market has performed. If you haven't had frank conversations about estate planning with relatives, it is smart to do (even if the $$ is small, it prevents surprises and miscommunication).

I disagree -- assuming there is not a trust in place already, you just don't know what could happen. I have a friend whose mom died and her dad remarried. He is now leaving everything to the new wife and my friend won't see any of it. That said, if you think your parents would be able to subsidize you now if you lost your job, you can take some more risk. But I still would not do private unless you have pretty good job security.

[Anonymous]

Yes of course you can.

[Anonymous]

Anonymous wrote:I know this question has been asked time and time again, but wondering if the wise folks of DCUM can give some thoughts on if we can comfortably afford private school for 2 kids, ages 4 & 1. We are considering private K-12 for both children at $45k/kid and wondering if we can make it work for the long haul with tuition increases etc.. Both of us work and are fairly young in our careers (early 30s), so we don't have a substantial nest egg to fall back on.

Our stats:
HHI $650k, this is recent and very heavily on stock RSUs. $380k is salary/guaranteed bonus and the remaining is stock
401k: $400k (max out, both have access to mega back door)
529s: $75k (planning to continue to fund $16k/year total)
HSA: $50k (put in max every year and do not use it)
After tax brokerage: $30k
Cash savings / emergency fund: $45k
Home equity is roughly $700k, have about $800k mortgage at 4%; $7.4k / month. No other debt.

Biggest concern is our liquidity and heavy reliance on stock which is volatile. Also concerned with signing up for tuition payments so early on, and needing to maintain high earning power for the next 2 decades.

I always ask this about RSUs but are they vesting in the calendar year or are you counting grants that will vest 2-,3-, or even 4- years out in your annual HHI? That is a lot of money in stock and your base/bonus are low so I’m guessing you’re in tech in which case you are right about volatility.

Considerations: (1) What is your childcare situation? You will still need a nanny or some after care during elementary unless you or your spouse can dip out between 2-6 every day, summers, and holidays plus random school holidays. I know that people work with their kids at home in the afternoon but realistically this is difficult before kids are 8 or 9 and you are then probably using tv and committing to no after school enrichment or activities during the week. Many privates don’t have buses or aftercare. Can you afford a PT nanny on top of tuition? That will be $30K-40K (2) Tuition goes up. My kids’ tuition went up $5K in one year (it’s $50K now). (3) You don’t have enough in 529s to fund four years of private - plug it into a college cost calculator. (4) You don’t have a lot in 401Ks (5) How much is in your brokerage + HSA? You will be diverting most of that money to private school tuition in a year.

I would consider later entry years - 3rd or 4th. You need to build up your savings and 529s and 42% of your income is not guaranteed. That’s really high.

[Anonymous]

Anonymous wrote:You can afford but I wouldn't. It's a lot of money on your income.

We have a similar income ($550K) and two in high schools that cost $55K each. We feel it and resent it at times, especially when our kids get a super crappy teacher (which happens not infrequently) or the school does something really dumb (also the case).

We're also somewhere in the lowest 25% of income at the school. Which is crazy but true. It's never fun to make an absolute ton of money (by any reasonable, objective standard) and regularly feel poor or have your kids feel poor. It messes with your head.

Yes to the last part. A lot of family money and a lot of high incomes. And it’s hard to say “We’re paying for private so won’t do XYZ because so many other kids are doing XYZ.” And it only gets crazier as kids get older.

[Anonymous]

Anonymous wrote:keep in mind private schools also heavily pressure you to donate. You loook like a loser if you don’t donate and it’s all published for all to see.

Tuition is just the beginning. Pressure is high to donate.

[Anonymous]

You can't afford it, no. Also how you're savings makes no sense. I'd talk to a financial planner.

[Anonymous]

I make about what you make total but with less tied up in stock and cash bonus at 40-50% of salary. I have kept my kids in public and now spend about $35K for after school child care (mainly help driving) plus activities for my middle schoolers. And my kids don't play hockey That does not include summers.