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Am I a financial disaster?
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Anonymous
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Perhaps you could look into refinancing your mortgage. We recently refinanced and saved $850 month just by doing that (brought our mortgage down from $4,000/month to $3,150/month). Of course, it's less after you figure in the tax deduction but still a significant savings. You will likely need at least 20% equity in your home and good to excellent credit scores but you may want to check into it.
Another thing I found that helped was to put everything on the credit card (but of course, pay it off in full each month). It helps me track expenses better. When we spend cash, I can't tell how much is being spent where. So DH and I put everything we possibly can on the credit card. That way I can tell how much is being spent eating out (even fast food counts), parking, etc. Also, it really helps with the cash back reward (recently received $400 in checks for cash back rewards). We save about $1,500/month (not including maxing out our 401ks and an additional $10,000 we send to our nondeductible IRAs). We also try to save all of our bonus (around $30,000 a year after tax) although that does not always happen. I estimate we save between 20 to 25% of our gross income. We pay the same amount for a nanny as you and our utilities are about the same but we do not have a high student loan payment ($100/month), car payment (2 Hondas bought with cash) or lawn care (my husband enjoys mowing). We also do not have the monthly tuition payment but our LO is only 19 months with a second on the way. We make the same monthly 529 payment. We have almost $100,000 in an emergency fund but I think that's probably more than we need. My DH is very conservative. My sister on a MUCH lower salary ($70,000/annual) saves 30+% of her gross salary (living in DC) so she makes me feel bad. Of course, she is single and does not own a home so her expenses are much lower. |
Anonymous
OP, it's a little hard to tell to what extent you're joking (and in fact, it's none of my business whether you are or aren't). However, if you do believe that you need those things in order to save your marriage, don't cut back now. Maybe you can develop a long-term plan to save some money (cheaper dates, for example, or a cheaper lawn service) on those things in the future. But not doing maintenance work on your marriage for money reasons is just as dumb as not fixing a leaky roof. Your marriage is the most important investment you, your husband and your children have. |
Anonymous
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OK, now I am freaking out. Do people really have 9 months worth of salary in savings? We used to, before we bought a house. Then we still kept a good cushion...and then we had a kid. Now we're just trying to survive and get a little ahead.
For those who say they save 20 percent of their income, does that mean in savings in ADDITION to retirement? Just wondering how horrible we are doing. Geez, I thought we were doing well, given we have friends who are in debt up to their eyeballs. I need some more financially savy friends : ) |
Anonymous
| The biggest expense is in having both a nanny ($3300) + tuition ($1300)= $4,600. Can you get a part-time nanny and put the 2nd child in part-time daycare? Seems the meat of the monthly expenses after mortgage goes to the nanny. |
Anonymous
You and me both, pp. I thought OP wasn't doing half badly after I saw her expenses! And I also thought I was saving enough but clearly I need to save more! |
Anonymous
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This is a great post/thread but suuch a slap of reality. We are totally underwater financially, especially since we overpaid for our house on top of living beyond our means for the past several years. Luckily, DH's job is on the uptick of late and we hope to be able to pay back all of our credit card debt (I know, stupid, stupid) and get back in the black by this time next year.
I have no excuses--just buried my head in the sand and lived beyond our means and now am paying the piper. I feel very grateful to God and the Fates that DH and I are still youngish (under 40) and have secure, high paying jobs to get ourselves out of this terrific mess. I am totally ashamed that it has taken me this long to get a financial clue...9 months worth of savings. I guess I know now what I should be aiming for. I will be lucky if I eliminate our credit card debt in 2009. Thank you, OP for raising this timely topic and putting yourself out there. |
Anonymous
| We save about 5% a year of our gross income. We have about 1 month's worth of net income in savings. After that, we would have to tap credit lines and 401Ks/IRAs. We would save some expenses because of either one of us lost our job that would be the end of the nanny, who takes about 1/6th of our monthly net income. So, yeah, one lay off away from the brink of disaster. I like to think of this as a little teachable moment for myself. I hope I can be scared straight and avoid the disaster, but who knows what life has in store? At the moment I am working on paying off every debt I can possibly think of to minimize mandatory monthly expenses. Next up will be increasing the savings. |
Anonymous
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I don't see the disaster here. How many 401ks are you maxing. If only 1, you need to do some cutting back. If one for each of you, I think things are ok. don't buy another car like that.
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Anonymous
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I was talking to a friend today who has his own (modest) contracting business about this thread and he said "Money should give you freedom, not put you in a prison" and I thought that was pretty interesting.
I bought a house I don't really like and live in a okay neighborhood (and regularly envy people living in Chevy Chase and NW) but I sleep soundly at night knowing we are able to have one parent stay home and save a good bit of money just in case life throws us a curve ball. I should also add that I think we are able to keep our discretionary spending low-ish because we live in a true middle class neighborhood neighborhood. My neighbors drive Hondas, a night out is pizza at Mama Lucias, almost all the kids go to public school, parties are simple affairs, we mow our own lawns and plant our own begonias. We basically don't know any different! I think it would be tough to hang out with friends and neighbors who consider a normal night out dinner at the Palm and really save. I know "Waa waa" being rich is so hard", but for you $300k+ people out there feeling like saving is hard, I am empathetic 
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Anonymous
| What is the big deal with the car loan? We had to buy a second car after having just one for many years (paid off). We bought a minivan for about 26k and our monthly payments are also around $700 (for 3 years). We had no choice but to buy a car because of work logistics and lack of public transportation near work. And we did not have that amount of money saved. We were able to get a no-interest loan. So...I guess I just don't see why this is the expense that is bothering people compared to some of the other expenses OP has. |
Anonymous
| $700 is a big car payment. |
Anonymous
I have the same wish, where do you all live? Would love to find a nanny share since both kids will be attending school 1/2 day (FT another PT). |
Anonymous
Op, if you are thinking about refinancing, I was able to refinance 15 years for 4.785% (NO FEE). I know some adds the fee to the loan amount, my was Zero fees. I can provide his name to you if you are interested. I think 30 years would be about 5%. |
Anonymous
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OP, it's hard to see where you can cut your expenses without reconsidering your choices on large items (house, car, child expenses).
Our HH income, retirement and 529 savings are almost identical to yours, but we save around $6000 a month. The difference comes from your higher mortgage payment (+2000), nanny + tuition + babysitting (+2000), student and car loans (+2000). |
Anonymous
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OP here. Thanks so much everybody. Good to hear what others are doing. Yes, we are maxing out both 401ks. We also each have an IRA (rollover from previous jobs) with 20k or so each, but we are not contributing right now. We need to do that, even if it is a small amount.
The PPs are right that the tuition and nanny together is the big dent that I can't get rid off. I would never take him out of his private school that I love and believe is worth every penny (not to mention we live in a terrible school district) but the nanny is at least temporary. I hope when the baby starts school (2 years away) that I am able to share the nanny with someone else, or if that does not work, help her find another full-time job, because I know she can't afford to stay with me if I can't pay her fulltime. In any event, it's good to hear both from those who are doing better (to motivate me) and from those who think I am not such a disaster after all (to console me.) Thanks
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