Life is Easy in NW DC on $300k, AMA

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

No one would force you to move both kids so that you now had to pay 70K in additional tuition. If you're wealthy enough to afford private for 1, you move kid1 who is being bullied, and keep kid2 where they are presumably doing fine. If you choose to move both, because it's too much trouble/morally troubling to have them in two schools, presumably you can afford 70K in additional tuition.

NP here but if the choice is between putting both kids in a new private school wouldn't it make more sense to just move to a different house and pay one-time transaction costs rather than ongoing private school expenses?

[Anonymous]

Kids have to learn to deal with bullies. My bully made the mistake of jumping me in January with winter gloves on. He cold cocked me and it did not hurt as fool had a ski glove on. Gave him the smack down of a life time as I had no gloves on and God was that great. Thank god my parents did not show me in private school over that two years of beat downs and stuff from that guy man it felt good, my fists were swollen for two days.

[Anonymous]

I think that OP did a great job of ballparking it. We are very similarly situated, a few years older, a slightly higher HHI, higher mortgage (bought earlier but major renovation), no childcare but a lot on kid activities/camp and season tickets (sports and theater). We don't save quite as much outside retirement but we are on track for solid retirement savings plus fed pensions. I say that all to respond to those nitpicking around the edges of the OP's numbers. It is a nice life in upper NW DC, I work hard and feel very lucky indeed.

[Anonymous]

Definitely a nice life in DC, and I really don't see how anyone could disagree with that or with OP's breakdown and assessment.

My problem is that I'm in NYC and that $3500/month gets you at most a 2-bedroom apartment somewhere the schools aren't good...

[Anonymous]

Anonymous wrote:Definitely a nice life in DC, and I really don't see how anyone could disagree with that or with OP's breakdown and assessment.

My problem is that I'm in NYC and that $3500/month gets you at most a 2-bedroom apartment somewhere the schools aren't good...

This is why we moved. It's hard to save money, especially for a downpayment, when you're stuck paying so much in rent and taxes. Then when kids come along you're adding in a nanny and private schools. You have to make A LOT to save money AND live well in NYC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Definitely a nice life in DC, and I really don't see how anyone could disagree with that or with OP's breakdown and assessment.

My problem is that I'm in NYC and that $3500/month gets you at most a 2-bedroom apartment somewhere the schools aren't good...

This is why we moved. It's hard to save money, especially for a downpayment, when you're stuck paying so much in rent and taxes. Then when kids come along you're adding in a nanny and private schools. You have to make A LOT to save money AND live well in NYC.

Or you move to the burbs

[Anonymous]

OP, do you budget every month/keep track of spending categories or do you just generally try to keep costs down save whatever is left?

[Anonymous]

oP, thanks fo posting.
My spouse is periodically considering getting a lower paid job and I’ve had trouble thinking through what our budget would be. I’m really interested to see how little you pay in taxes. We currently pay 50-60% of income in taxes so that takes a big swath. We have 3 kids and they are older so more expensive (we definitely couldn’t get by on 900/month in groceries unless we were seriously coupon clipping!!) but your post makes me feel like 350 or 400 would be do-able.

As some posters have pointed out, the big problem with any family budget is that there are so many unknown factors. For us, we didn’t anticipate certain special needs our kids have, so we pay a lot of money in unreimbursed therapies plus we really can’t use the cheapest after-cares and camps. We’ve managed to stick with public school so far but I’m no longer so confident that will be a good idea for the long-term.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

No one would force you to move both kids so that you now had to pay 70K in additional tuition. If you're wealthy enough to afford private for 1, you move kid1 who is being bullied, and keep kid2 where they are presumably doing fine. If you choose to move both, because it's too much trouble/morally troubling to have them in two schools, presumably you can afford 70K in additional tuition.

NP here but if the choice is between putting both kids in a new private school wouldn't it make more sense to just move to a different house and pay one-time transaction costs rather than ongoing private school expenses?

NP -- but that is our plan if needed. We can't afford private -- so moving would be our best option.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't think $5K per year to charity on an income of $300K is the least bit generous.

We have a similar income and two kids but we give around $15K which I also don't consider enough or particularly generous.

We are so privileged and fortunate. $5K? Good grief.

New poster. I wouldn't have said anything if you'd simply said "We give to charity about $5k per year usually." But you specifically added "an amount that I think is generous."

We're also at the same income, similar children ages, similar mortgage costs, etc., and have been gradually upping charitable giving to $15,000, which is still only about 5% of our gross income. One recommendation (https://www.thelifeyoucansave.org/take-the-pledge) is 7.5% at that income level.

The recommended percentage on this site is insane. It has mine at over 13% or around $130K - yeah OK

By the way, if PP thinks $5K is generous, then it is. Its a personal choice.

If you're earning $1 million a year, it's not SO crazy to think you could give $130,000 of it to charity. I earn about what that site is suggesting you should be giving to charity, and I usually aim to give around $10,000 a year.

[Anonymous]

Anonymous wrote:OP, do you budget every month/keep track of spending categories or do you just generally try to keep costs down save whatever is left?

Moreso the latter. Our expenses have stayed pretty constant for years, so it's pretty predictable and I can usually tell if something is off. But we don't really prescribe a monthly budget and stick to it. The spending categories are more descriptive, looking back, if that makes sense.

[Anonymous]

Anonymous wrote:oP, thanks fo posting.
My spouse is periodically considering getting a lower paid job and I’ve had trouble thinking through what our budget would be. I’m really interested to see how little you pay in taxes. We currently pay 50-60% of income in taxes so that takes a big swath. We have 3 kids and they are older so more expensive (we definitely couldn’t get by on 900/month in groceries unless we were seriously coupon clipping!!) but your post makes me feel like 350 or 400 would be do-able.

As some posters have pointed out, the big problem with any family budget is that there are so many unknown factors. For us, we didn’t anticipate certain special needs our kids have, so we pay a lot of money in unreimbursed therapies plus we really can’t use the cheapest after-cares and camps. We’ve managed to stick with public school so far but I’m no longer so confident that will be a good idea for the long-term.

Op here. Wow, 60% taxes has me confused. Anyway, I do understand our current groceries bill will be unrealistic as the kids get older. Then again, the 21k in daycare will go away. So I hope things even out as certain child related expenses rise and fall with age. We don't clip coupons.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

No one would force you to move both kids so that you now had to pay 70K in additional tuition. If you're wealthy enough to afford private for 1, you move kid1 who is being bullied, and keep kid2 where they are presumably doing fine. If you choose to move both, because it's too much trouble/morally troubling to have them in two schools, presumably you can afford 70K in additional tuition.

NP here but if the choice is between putting both kids in a new private school wouldn't it make more sense to just move to a different house and pay one-time transaction costs rather than ongoing private school expenses?

But what if you move and your child is bullied at the new public school? One of the reasons you choose private is for the (more) controlled social environment (read: poorly behaved children and bullies can be kicked out)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I see so much confusion on here, and I thought I'd try to clear some stuff up. My central point is that life is easy, downright cushy even, on $300k per year gross income in the DC area. My wife (38) and I (40) raise our two kids (6 and 3) in upper NW DC and our gross income in 2016 was $300k. People who suggest they are scraping by at this income are either deluding you or deluding themselves.

I am happy to answer any questions and dispel any other related myths you may see on DCUM.

Some of our details:
- ~$300k gross income
- $about 70k in total income and payroll taxes
- PITI is about $3500 (we bought a 4 BR house near AU park in 2012 for low $800s. Before that we owned a small condo in Logan Circle)
- Public school (but we did daycare for both kids from 4 months - 3 years)
- I graduated from law school in 2004 with about $150k in student loans. Those are all paid off now.
- We don't do fancy luxury cars, but it's not bargain basement either. The last car we bought was in 2012 and it cost about $30k.
- We eat at nice restaurants weekly, travel several times a year, and buy more consumer goods (clothes for her, gadgets for him) than we probably should
- We save amply $36k per year in the 401k/TSP, $10k per year in the 529s, and $30-40k in the taxable brokerage account. Our savings balances include $750k in retirement accounts, $60k in 529s (kids are still young), and $250k in taxable brokerage accounts.
- We give to charity an amount that I think is generous, about $5k per year usually.

Imagine one of your kids were constantly bullied at school, so after a while had to send her (and her sibling, so they stay together) to private school.

How would the financial picture change if you had to pay $70k in tuition year after year?

This is a one-off scenario, extremely rare. Not only being bullied, but move both kids. What is one spouse gets sick, what if the neighborhood burns down.

No one would force you to move both kids so that you now had to pay 70K in additional tuition. If you're wealthy enough to afford private for 1, you move kid1 who is being bullied, and keep kid2 where they are presumably doing fine. If you choose to move both, because it's too much trouble/morally troubling to have them in two schools, presumably you can afford 70K in additional tuition.

NP here but if the choice is between putting both kids in a new private school wouldn't it make more sense to just move to a different house and pay one-time transaction costs rather than ongoing private school expenses?

But what if you move and your child is bullied at the new public school? One of the reasons you choose private is for the (more) controlled social environment (read: poorly behaved children and bullies can be kicked out)

I don't think private school is some sort of panacea. Bullying exists everywhere.

[Anonymous]

Anonymous wrote:

Anonymous wrote:oP, thanks fo posting.
My spouse is periodically considering getting a lower paid job and I’ve had trouble thinking through what our budget would be. I’m really interested to see how little you pay in taxes. We currently pay 50-60% of income in taxes so that takes a big swath. We have 3 kids and they are older so more expensive (we definitely couldn’t get by on 900/month in groceries unless we were seriously coupon clipping!!) but your post makes me feel like 350 or 400 would be do-able.

As some posters have pointed out, the big problem with any family budget is that there are so many unknown factors. For us, we didn’t anticipate certain special needs our kids have, so we pay a lot of money in unreimbursed therapies plus we really can’t use the cheapest after-cares and camps. We’ve managed to stick with public school so far but I’m no longer so confident that will be a good idea for the long-term.

Op here. Wow, 60% taxes has me confused. Anyway, I do understand our current groceries bill will be unrealistic as the kids get older. Then again, the 21k in daycare will go away. So I hope things even out as certain child related expenses rise and fall with age. We don't clip coupons.

me too -- care to explain why your taxes are so high PP?