Being lower middle class and living well

[Anonymous]

Anonymous wrote:I don't think you're taking into account how you'll feel after the fourth sleepless night in a row while working full time, and then coming home to two small children having temper tantrums and a messy house. THAT will be the moment when you want to first start cooking dinner? Sorry, OP, but you'll want to order take-out on those nights.

Depending on her boyfriends income she may not be able to afford day care on that income. Op, good luck. Young and well.....just good luck. Life is very different when you have real responsibilities. I hope everything goes your way.

[Anonymous]

It's totally possible to live within your means in DC. I love reading the money and finance forums for this reason. The people who say they make 300k and still feel like they're barely scraping by make me feel infinitely wiser about the personal decisions I've made. (We have a HHI of 75k and live and work in DC.)

One of the best decisions we made was to buy a house in a less fancy part of town. My house that I'm completely in love with was a steal. Two people paying $650 for just rooms? That's the price of my mortgage. And it's appreciating well. I love it!

I'm not as frugal in other spheres. We like to eat out a couple times a week. We could definitely cut down on that. I too love cooking, but it's difficult when I'm tired and somedays I'd rather just play with my son. But other days I'm just being lazy and could definitely stand to cook more!

Also, we bought a new car a couple years ago, albeit at a good price. It was a previous year's model the year they came out with a new model, so we got a pretty awesome price on it. But we could have gone for a used one instead and saved more initially, maybe waiting to buy new when we made more money in the future.

I wish I had more money to renovate the bathroom, take nice family vacations in exotic locations, or even just Disney World, which is just as expensive as going to Cancun in my book, etc. But I figure we can work towards that. And that would just be icing on the cake.

Kudos to you for making your life make sense. Doesn't it feel nice?

[Anonymous]

Here is what is different when you have a family:
1) no longer living with roommates: higher rent
2) no longer willing to live in a lower middle class location: schools

suddenly, instead of $650/mo, you are paying $2000 per month for rent.

oops.

3) you need a car that will fit the childs seat....probably more concerned about safety....

When I was in grad school (in the late 80's, early 90's), I was living on 900/month

-- I had no car, no cable TV, and my computer connectivity was through school.....

The other big difference was in my 20's I was healthy....at 50, I have had cancer, and have heart issues....that costs me on average $750/month after insurance.

[Anonymous]

OP, all this sounds great! Keep it up.

Why stash all your savings in a savings account though? Are you maxing out all tax-advantaged space (401k, Roth IRA) I hope? Why not invest?

[Anonymous]

Anonymous wrote:OP, all this sounds great! Keep it up.

Why stash all your savings in a savings account though? Are you maxing out all tax-advantaged space (401k, Roth IRA) I hope? Why not invest?

ROTH IRA....she is probably paying less in taxes today than she will later....take the tax liability now....

[Anonymous]

Anonymous wrote:Report back after you are married and have kids.

+1. You sound alot like me in grad school 5 years ago. I was also very comfortable then and my husband and I saved half of our stipends (over $100k over 5 years).

We are now professionals and together make $190k/year. We essentially live the same lifestyle we did as grad students and we are happy to do it. Except now we have a toddler and another one the way. This has increased our expenses enormously. We are in great shape financially, but I can easily understand how families that make less or are have student loans or are slightly less frugal than us could be in trouble. Until you have kids you just don't understand how your needs and wants for your kids will change your expenses. I don't doubt that you will make it work. Because you are practical and frugal (like me!). But kids change everything and I don't think you realize this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, all this sounds great! Keep it up.

Why stash all your savings in a savings account though? Are you maxing out all tax-advantaged space (401k, Roth IRA) I hope? Why not invest?

ROTH IRA....she is probably paying less in taxes today than she will later....take the tax liability now....

Saving $5500/year isn't enough for retirement for most people- even frugal ones like the OP. Also, OP implied in a previous post that she won't have childcare expenses- she wants to be a SAHM. So she probably won't make more in the future.

[Anonymous]

Anonymous wrote:I don't think you're taking into account how you'll feel after the fourth sleepless night in a row while working full time, and then coming home to two small children having temper tantrums and a messy house. THAT will be the moment when you want to first start cooking dinner? Sorry, OP, but you'll want to order take-out on those nights.

Not everyone does. BTDT, cook from home.

[Anonymous]

Anonymous wrote:Hi everyone! I'm the OP. Thanks for the nice comments. One last post before I go to bed.

Anonymous wrote:

Anonymous wrote:Report back after you are married and have kids.

This. 1000 times this.

Why would that change anything? The conventional wisdom in fact is that if you want to save money, get married young. But sure, let's dissect this real quick.

Things that wouldn't change if I got married and had kids:
- Would still eat 99% home-cooked food and generic brands.
- Would still not buy alcohol.
- If my old car doesn't last then I'll buy a used car and use it the same way
- Same cheap $20/month phone plan
- Would still not pay for TV/cable.
- Would still hopefully have a job that pays all health and dental insurance for family.

Things that would improve if I got married:
- Giant standard deduction from taxable income
- Tax credit for each kid I have
- Tax-deductible contributions to a joint retirement savings account.
- If we buy and sell a home together, we don't have to pay taxes on the profit as long as it's not more than $500,000
- Could probably combine car insurance policies and get a discount.

Things that would suck if I got married and had kids
- Having to pay more on living expenses, such as rent or mortgage, because I only have the DH's income to split it with as opposed to 4 roommates and plus I'd have to choose a slightly nicer apartment to make room for kid(s).
- Costs having a child. This is really the only major expense problem. So you start paying right from prenatal care to the actual birth in the hospital, then you lose income even on maternity leave, the clothes and car seat and baby food, etc. Plus I may need to start putting down at least $800 a month for the college fund.

In any case that baby had better get good grades and wrangle some scholarship money! Public school and public university or I'm not paying. I went to public schools and it turned out great for me.

With my lifestyle habits and two incomes, why the hell can't I raise a child and still live well with my class/income level?

Good night for now!

Except you can't control or predict anyone else's choices or behavior so:

- Would still eat 99% home-cooked food and generic brands. - EXCEPT your DH may decide that he prefers to eat out and really enjoys doing so, so he does it. What will you do to stop him? I know, I know you are going to marry a guy who is on board with this and would never deviate from the plan. Good for you. (note: this is said with sarcasm)
- Would still not buy alcohol. - EXCEPT your DH may.
- If my old car doesn't last then I'll buy a used car and use it the same way - EXCEPT you may find that you now need to buy more than one used car, buy a more expensive used car or you are more concerned about space and safety then you were pre-kids so. Also, since you are frugal, you are likely doing a long commute to pay less for real estate. Now that used car needs maintenance, can't break down very often, and needs gas. Oh yeah, and then there is insurance and now you have more than one car.
- Same cheap $20/month phone plan - EXCEPT your DH may not and his plan costs more.
- Would still not pay for TV/cable. - EXCEPT your DH (heck maybe even the kids!) want cable and the shows needed are streamable so does DH get no say?

- Would still hopefully have a job that pays all health and dental insurance for family. - EXCEPT I work in a very large org that has steadily provided great health and dental benefits for the past 15 years of my employment. Starting in 2015, those benefits are dropping and there is nothing I can do about it. It sucks but I will now carry the burden of higher insurance and medical costs. It happens even in the best of companies. And comparing my private company benefits to the Feds, my benefits and insurance are way superior.

Now here are some things you didn't account for:
- Daycare for one child at a reasonable place can cost $15K a year.
- If your child has special needs, even needing speech therapy, you may pay out of pocket for this therapy. It's pricey and it adds up.
- Food costs go up. 2 Adults eat more than 1.
- Insurance costs. You need more of it when you have a family.
- Rent/Mortgage - you aren't living in shared housing anymore. What you will tolerate in a neighborhood in terms of safety and poor schools will change.
- Utilities - 2 Adults cost more than 1. Add in kids and it costs more.
- Home Maintenance costs - are you going to own a home? Good for you. They are expensive to maintain.
- Marriage counseling - while you are clinging to your frugalness and your smugness, your marriage might be going down the drain. Divorce is expensive so getting counseling will help.

It's very easy to be smug when you can have no real expenses, pressures or stress. You can't predict now what those will be.

Enjoy the fact that at this time in your life you can save lots of money and do so. Don't worry about how anyone else is or isn't doing this.

[Anonymous]

OP, I have never lived outside my means, always saved money, never bought things I couldn't afford, and don't make anywhere near as much money as many on this board. But you sound unbelievably smug. I agree with much of how you're approaching finances, but as I finished reading your self-pat on the back, all I could think is "boy, some day life is going to bite HER in the ass".

You are still young and have that black and white vision of youth. Someday, your life is going to turn very gray, and you're going to need to roll with the punches.

[Anonymous]

Congratulations! I'm happy for you.

But before you decide that the rest of us are just idiots, I'd encourage you to investigate both childcare prices and the quality of your local school. I think it'll be an eye-opener.

[Anonymous]

Anonymous wrote:OP, I have never lived outside my means, always saved money, never bought things I couldn't afford, and don't make anywhere near as much money as many on this board. But you sound unbelievably smug. I agree with much of how you're approaching finances, but as I finished reading your self-pat on the back, all I could think is "boy, some day life is going to bite HER in the ass".

You are still young and have that black and white vision of youth. Someday, your life is going to turn very gray, and you're going to need to roll with the punches.

I just chalked it up to OP being a Millenial I work with plenty--think that they have it all figured out with 3-4 years work experience. Reality catches up.

[Anonymous]

I enjoyed this post a lot in an sort of newly-middle-aged way. A blink of any eye ago, it seems, I was 20-something living frugally in a group house and now am a married working mom in the NoVa burbs.

It is so enjoyable to see someone from new generation doing sensible, thrifty living. It will turn out well for you, despite whatever unexpected twists and turns occur. That will be because you already practice virtues that protect you in adversity.

Also, you will surely solve the challenges that come with parenting with the same ingenuity you already have demonstrated. Though it is true we are paying a mint for the really great daycare....

High five OP! Keep on keeping on.

[Anonymous]

Anonymous wrote:Please let me know what Netflix plan you have. I have one that I share with my SIL and brother, and it's $30 a month total. What kind do you have that's $8?

I have the $8 netflix plan too. It is unlimited streaming (but no monthly DVDs like some of the higher priced netflix plans).

OP, I like you! Now that my salary has jumped, I have my own place. However, I still do a lot of the same things you do. Another poster mentioned Mr. Money Mustache. I really like his early articles. You should check out his website.

[Anonymous]

I respect this lifestyle and OPs discipline, considering that she is a young and single woman.

What I resent is that she assumes this is sustainable - even easy - to maintain as a non-single person with more life piled upon her. I concur with PPs that day care, health care, housing, and the general complications of a more complicated life will threaten her ability to maintain this strict disciplined lifestyle. In many ways it seems like such a strictly managed financial existence would be easier to maintain if she stays home and lives on one income (or if her DH stays home). So we'll see how life goes. Much of his is irrelevant to parents in the DC area. And I say this as a dual-income family who is truly low-middle-class at about $120K a year, and doing mostly fine but not saving much.