“Rich” but Broke - What can we cut?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

Agree. The problem is they have two earners instead of just one and $5k a month in childcare.

Yup. Having one big earner makes the numbers so much easier to deal with - since you wipe out much of the childcare costs. Plus with a spouse at home, you need to outsource so much less. Food, cleaning, maintenance, etc go down substantially. Plus the at-home spouse is essentially a full time job, but it isn't taxed.

But yeah, OP is living a big law life on dual GS-15 salaries. They need to realize us GS-15 may have that mortgage, but we have other compromises. Live in DC for PK-3, have one non-luxury car, use metro/bikes.

I agree with the pp, someone needs to make more money. It's a really bad idea for one of the parents to drop out of the work force - you're already not maxing out your retirement and you have student loans - to stay home and scrub toilets. The kids will need to be in preschool anyway, so that will cost money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

1. Nowhere did op say she had 500k in student loan debt
2. 48k is the AVERAGE price of a new car. A luxury suv costs 80k. OP bought a used Acura, not a brand new Mercedes.

I agree she needs to be realistic because they made these purchases with big law money coming in. My point is that so many boomer and gen x posters have incredibly unrealistic ideas about what things cost now. They love to pat themselves on the back for buying a 10k car and having a 250k mortgage...that they bought into 25 years ago. It's delusional to think you can do that today.

[Anonymous]

Personally, I’m happier in cheaper housing with a loose budget for day to day. I’m sure that in terms of long term gain this is not the right way to be. But I would hate to be stressed out about going to a restaurant or buying the wrong groceries or signing up my kids for activities. I’ve done it both ways and I’m just not good at managing a tight budget and the associated stress. I know some people are great at it and it’s like a sport for them.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why are people claiming a $900k house on $350k HHI is too much house? It's perfectly reasonable, particularly with the low interest rate environment when OP purchased it. The house is fine.

Housing should ideally be only 2x your income not 3x.

Ideally I'd have a trust fund, low cost and high quality child care would be available for all children, paid maternity leave would be available for all, there would be world peace.....Shall I keep going about what is ideal?

But you have control over what housing you choose. There are so many good choices between a large home in Chevy Chase and the housing projects in DC proper. You can't have it all---so you need to learn to budget and make choices. Or make choices about what job/pay you need if you choose the luxury home choice.

While I agree, seeing that rule of thumb again really makes you appreciate the much more limited choices of people making closer to the median income for the area, or lower. A family with a $100k HHI is most likely spending far more on housing than ideal, for example, because houses within their ideal price range don't exist around here.

With interest rates and housing prices being what they are, I don't think it makes sense for OP to move, the savings just aren't likely to be enough to be worthwhile. If childcare expenses are expected to go down soon, I would just muddle through it, and take a look at the non-fixed expenses to see if there's anything that could be easily trimmed.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

Lol. Find me a new Corolla that costs 21k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

1. Nowhere did op say she had 500k in student loan debt
2. 48k is the AVERAGE price of a new car. A luxury suv costs 80k. OP bought a used Acura, not a brand new Mercedes.

I agree she needs to be realistic because they made these purchases with big law money coming in. My point is that so many boomer and gen x posters have incredibly unrealistic ideas about what things cost now. They love to pat themselves on the back for buying a 10k car and having a 250k mortgage...that they bought into 25 years ago. It's delusional to think you can do that today.

1. She absolutely did: Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).
2. They bought these luxury SUVs 6 years ago, not this month. The average cost of a car 6 years ago was pre-chip-shortage, pre-supply-chain-issues, and nowhere near $50k. They could have even bought one stupid luxury SUV and a Prius and been better off, but they made the spendiest choice possible while still students.

Now they're stuck in spendy lifestyle choices post-Big Law, on more typical salaries. And I'm still lost as to how they could be spending so much on insurance with a fed in the family. This is just pick the wrong option, every time you have an option, right down the line. Only exception to that rule is locking in the big mortgage at a historically low rate - they did that right.

[Anonymous]

They could move to DC this fall (rent a 2BR apartment in DC), rent out their current home for instant profit, and get kid into PK3 in the spring (there are always a few spots if you're willing to be flexible). Ride it out in DC until the youngest goes to K, then head back to MoCo. That's going to free up $75K post-tax right there.

[Anonymous]

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

You don't need new cars and certainly not luxury brands. Just because the average money idiot spends $48k doesn't mean you should. Do you know how we know OP couldn't afford the cars? Because she needed to finance them over SEVEN YEARS to be able to make the payment. SEVEN YEARS.

[Anonymous]

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

The avg cost of a new car is not $48K, or at least it does not have to be. I can get a Accord/CRV/Camry/Rav4 for ~$30-33K, I can get a smaller vehicle for $25K. I can spend $10-15K on a decent used car if my budget says I cannot afford a new vehicle.

They made expensive choices at the top of the cost list. They could easily have purchased a place with only a $500K mortgage 8 years ago in a good area with good schools. They could have purchased good $10K used vehicles 8 years ago instead of used MDXs for $20K+ each.

And if you choose to cripple yourself with student loans, then it is up to you to live accordingly until you pay them off. If I had $100K+ in student loans, I would not be purchasing a home or having kids. I'd be working my ass off and living frugally to pay off those loans---I'd be living like a poor grad student in a 1 bedroom apt with a cheap car (or no car if I could live near public transportation---or only 1 car for a couple) and putting every extra $ towards the loans. I'd be getting a 2nd job if needed to add to a quicker payoff. And if I was in big law, I'd be using that extra salary to get out of debt as fast as possible, so that means living frugally.

Yes I get that loan debt cripples you, but you chose to take on that debt. Nobody forced you to. They had a high paying job in big law. Could have easily lived more economically for 4-5 years and totally wiped out that debt and have savings for the future. It's not up for debate---they are living the good life and could easily have taken a different path and be more finically secure. That is a fact. Life is all about choices....and then you have to live with your choices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

1. Nowhere did op say she had 500k in student loan debt
2. 48k is the AVERAGE price of a new car. A luxury suv costs 80k. OP bought a used Acura, not a brand new Mercedes.

I agree she needs to be realistic because they made these purchases with big law money coming in. My point is that so many boomer and gen x posters have incredibly unrealistic ideas about what things cost now. They love to pat themselves on the back for buying a 10k car and having a 250k mortgage...that they bought into 25 years ago. It's delusional to think you can do that today.

yes, the OP did state they had ~$500K in student loans. That's why they took 7 year loans for their used luxury cars.

It is not delusional to think you can take a $250-500K mortgage. I see nice homes in gaithersburg for $500K. There are condos in rockville for less. There are places to live that cost a lot less. How the hell do you think people who only make $100K live? Most don't just rent, they live in a house/TH/Condo they can afford.

10 years ago there were many more affordable options for this family. But those wouldn't be in CC where they can keep up their image.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

1. Nowhere did op say she had 500k in student loan debt
2. 48k is the AVERAGE price of a new car. A luxury suv costs 80k. OP bought a used Acura, not a brand new Mercedes.

I agree she needs to be realistic because they made these purchases with big law money coming in. My point is that so many boomer and gen x posters have incredibly unrealistic ideas about what things cost now. They love to pat themselves on the back for buying a 10k car and having a 250k mortgage...that they bought into 25 years ago. It's delusional to think you can do that today.

1. She absolutely did: Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).
2. They bought these luxury SUVs 6 years ago, not this month. The average cost of a car 6 years ago was pre-chip-shortage, pre-supply-chain-issues, and nowhere near $50k. They could have even bought one stupid luxury SUV and a Prius and been better off, but they made the spendiest choice possible while still students.

Now they're stuck in spendy lifestyle choices post-Big Law, on more typical salaries. And I'm still lost as to how they could be spending so much on insurance with a fed in the family. This is just pick the wrong option, every time you have an option, right down the line. Only exception to that rule is locking in the big mortgage at a historically low rate - they did that right.

Agreed 1000 percent.
Since all they did right was locking in a big mortgage at a low rate, it does not make sense to sell now. However, imagine if they had locked in a great low rate on a good house that they could still afford---their finances would be a different picture.
But they basically have done most things wrong financially. They want to live the big law lifestyle with 2 kids but chose to ditch the big law salary. Something has to give if you do that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

100% in agreement! Op, get through those few years of childcare costs and it'll be better...or will it?! We have similar stats as you, slightly higher income, and one 1 kid left with childcare costs but everything has been getting more expensive and it's like cutting out one of those costs have done nothing. Taxes are up. Insurance up up up. HOA cost-- went from $575 to $900 a month since moving into our neighborhood. It's hard to get ahead when you budget for one thing and that thing goes up without anything changing "due to rising costs and the economy."

I agree, and anyone who bought during the pandemic got whatever house they could get - people were offloading their fixer-uppers and homes with tons of deferred maintenance. Not to mention the bidding wars-remember those?? I think they bought reasonably well and in a great neighborhood. It is just a tight financial time with daycare. $5k is what we pay for two in childcare in Maryland.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 35 and so sick of the delusion of some of the older posters on here. "Spend 10k on a car! Drop the 5k nanny! Your house costs way too much!"

It is 2023. Housing and childcare costs are out of control. The average cost of a new car in America is over $48,000. My generation has been crippled by out of control student loans and multiple financial crises, not to mention being forced to parent young children during a global pandemic. Yes, OP has made expensive choices but guess what? This is WHAT THINGS COST in an expensive metro area in 2023.

Eh, I'm the same age as you, but OP is spending a bit much overall. They are living a CCMD lifestyle on a Brookland or Takoma budget. We have the same salary and mortgage, but we don't pay for PK3/4 and have just one car since we live near public transit. CCMD would be fine for OP if one was big law. And no, half a mil of student debt is super atypical. Most of us has more like 20-30k in student debt. Super easy to manage. We just weren't going out buying 48k+ luxury SUVs in school. Hell a brand new toyota corolla is 21k.

1. Nowhere did op say she had 500k in student loan debt
2. 48k is the AVERAGE price of a new car. A luxury suv costs 80k. OP bought a used Acura, not a brand new Mercedes.

I agree she needs to be realistic because they made these purchases with big law money coming in. My point is that so many boomer and gen x posters have incredibly unrealistic ideas about what things cost now. They love to pat themselves on the back for buying a 10k car and having a 250k mortgage...that they bought into 25 years ago. It's delusional to think you can do that today.

See her post at 19:43 on 9/6. They had $500K student debt between OP and her DH.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

A vehicle purchased for 10K that long ago would likely need to be replaced at this point. At least these cars are almost paid off.

Given interest rates and transaction costs it would be foolish to move (and I say that as someone who has a higher HHI than OP and lives in Silver Spring with a lower mortgage. Also, my last kid is almost out of high school and if I had to do it over, I would've bought in a place with better schools.).

Silver Spring PP here and if I had it to do over again (my kids are young adults), I'd buy in the same place, with Silver Spring schools.

Some Silver Spring schools are better than others.

[Anonymous]

i agree that they overspent on house and cars, but I think the main problem is that those problems aren't that easy for her to correct right now. If they could go back in time, they could make very different house/car/childcare decisions and be in a much more comfortable place, but they can't.

They' have been paying $1000 per month on cars for 7 years, and are almost at the end of their loan -- that is $84,000 that is gone. You could have played that very differently, and had a huge portion of that money in your bank account. But now, I can see how that decision is hard to correct. their value has plummeted, so it's not like you can get it back.

The only thing I can really see is renting out their house, renting somewhere smaller in DC and sending your kids to free PK3. crunch the numbers on that, and you may be able to actually have a better quality of life for a few years. When it's time for Kinder, you can move back, and i assume your car payments will be over, and you'll have free public schools -- I think it will be fine.