“Rich” but Broke - What can we cut?

[Anonymous]

Hi OP, we have similar HHI and mortgage. Two kids too. Here is what we do to make room for saving and vacation:
1. Make the basement a separate rental that brings in 1800/Mo rent.
2. Bought two rental properties that bring in about 1000 cash flows after mortgage and expenses.
3. Got solar panels so electricity is zero.
4. Bought cheap but functional cars with cash.
5. Kids go to cheap church preschool and free public schools. Excellent education, and not much keeping up with Johnese.

In this way, we can max all retirement account, have nice vacations, support kids activities, and also save around 100k per year outside retirement. You can do it too.

No one in our million dollar

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

Not OP, but I don’t understand this. What student has $60-70K each year to pay private school tuition? Who graduates with 20-30K of student debt after 7-8 years of college and grad school? I’m a lawyer myself and have many, many, friends who went fed just to get their crippling loans forgiven after 10 years. And please don’t start with “should’ve gone to public school.” Anyone who works in Law knows Big Law firms only hire from top private law schools. Who knows what the circumstances were around that debt, but it doesn’t surprise me at all that 2 people had $500K student debt.

If one is "smart enough to be a lawyer" and go to a private law school in order to go into Big Law, then one should be smart enough to stay in big law until they pay off the loans. Me personally, I wouldn't have kids until I had paid off most of the loans and found a job that I could do while managing a family---not that difficult to realize that big law and being a very involved parent do not easily mix (I suspect the big law is the woman and she decided she wanted a more relaxed lifestyle with kids).

If you choose to take on that debt then you need a good plan to pay it off, and that means working in big law until you do ideally. It may mean putting off having kids for another 2-3 years. Whatever it means, you should have a plan, and their plan was not very good on many levels/choices financially

Sexist!!!

Grow up!


They stated they wanted/needed a more relaxed lifestyle during the pandemic with the kids...nothing sexist about that. They stated "their husband had been in a major accident before and wanted the big Acura MDX for vehicles", so it's quite logical to assume it's a women. Majority of the posts read that way.

+1 The sexist part is that in our society it's usually the woman sacrificing her career to be the default parent. Actually discussing it is the opposite of sexist.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

You spend $5k/month on childcare. Not saying you can do much better with tiny kids. These will just be lean years. It is what it is. We have a similar budget, but no childcare costs. It makes a huge difference.

While it gets better, not by much as childcare expenses are replaced with activities (sports/music/dance...camps). Perhaps by the time you get to that--you would have increased your HHI and/or mortgage is paid off...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

You spend $5k/month on childcare. Not saying you can do much better with tiny kids. These will just be lean years. It is what it is. We have a similar budget, but no childcare costs. It makes a huge difference.

While it gets better, not by much as childcare expenses are replaced with activities (sports/music/dance...camps). Perhaps by the time you get to that--you would have increased your HHI and/or mortgage is paid off...

I have two teens in travel sports. Its about $5k per year, not per month. Even with 2 kids ($10k/year) it only works out to just over $800/month. So way way less.

[Anonymous]

Anonymous wrote:Hi OP, we have similar HHI and mortgage. Two kids too. Here is what we do to make room for saving and vacation:
1. Make the basement a separate rental that brings in 1800/Mo rent.
2. Bought two rental properties that bring in about 1000 cash flows after mortgage and expenses.
3. Got solar panels so electricity is zero.
4. Bought cheap but functional cars with cash.
5. Kids go to cheap church preschool and free public schools. Excellent education, and not much keeping up with Johnese.

In this way, we can max all retirement account, have nice vacations, support kids activities, and also save around 100k per year outside retirement. You can do it too.

No one in our million dollar

Your tip for saving money is to buy two rental properties?!?

[Anonymous]

Anonymous wrote:These rich but poor threads are getting so old.

I still remember the guy spending $1000 in "GAMBLING" like some people need to learn on how to bet..

[Anonymous]

We were in a similar bucket as you until our kids finally went to public school and our childcare costs stopped. If you aren't budgeting, you could read You Need a Budget or some other home budgeting books. You Need a Budget was a fabulous read for my husband and me and we started actively tracking every expense and then after 30 days or so you can analyze what you're spending and continue. We've been tracking every expense now for over 5 years and it's been a game changer. It's amazing what you'll notice when you look at every transaction. You find areas where you're able to cut your expenses and also determine what you have to prioritize (diapers, for example). It also pushed me to get a higher paying job if it's an income problem.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

You spend $5k/month on childcare. Not saying you can do much better with tiny kids. These will just be lean years. It is what it is. We have a similar budget, but no childcare costs. It makes a huge difference.

This. Between house and nanny or daycare, you’re basically on 5K per month for food, travel, health, etc. It’ll get easier unless you put the kids in private school.

[Anonymous]

I hear fire stations will take kids no questions asked.

Could be difficult finding a basket big enough for them if they're beyond toddler stage but not impossible. Dunno how you'd keep them from wandering off, maybe a dog crate?

That's $5K free every month and no college savings necessary.

[Anonymous]

OP is a fed lawyer - fellow fed lawyer here, it’s a great gig for being a parent. I’m assuming you are a 15 already? So very limited raises…but have I missed you saying what the spouse does? Is there a chance of more substantial raises for them? That would obviously give you more breathing room.

We are a dual fed family who live in Mclean and I don’t care about keeping up with the Joneses but you will find your friends and kids friends are constantly going on fancy trips, think nothing of dropping lots in dinner out etc, kids outings are spendy etc I think it will be challenging for you.

We are ok and able to pay for lots of “wants” because we never had school debt, bought a long time ago (kids are teens), mortgage is about 2200, never had car payments, had a good savings cushion before having kids…I say that not to gloat because we’ve had some advantages but I don’t think I’d be comfortable with your life at your income level. If the spouse could earn more, in some ways that might be the easiest way to get more of a cushion.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hi OP, we have similar HHI and mortgage. Two kids too. Here is what we do to make room for saving and vacation:
1. Make the basement a separate rental that brings in 1800/Mo rent.
2. Bought two rental properties that bring in about 1000 cash flows after mortgage and expenses.
3. Got solar panels so electricity is zero.
4. Bought cheap but functional cars with cash.
5. Kids go to cheap church preschool and free public schools. Excellent education, and not much keeping up with Johnese.

In this way, we can max all retirement account, have nice vacations, support kids activities, and also save around 100k per year outside retirement. You can do it too.

No one in our million dollar

Your tip for saving money is to buy two rental properties?!?

You forgot the solar panel purchase.

[Anonymous]

How about an au pair instead of $60,000 for childcare? If you have the space for an extra person in your house...

[Anonymous]

Anonymous wrote:Your mortgage/tax/insurance and childcare costs are too high. That's what you are doing wrong.

+1

[Anonymous]

Anonymous wrote:How about an au pair instead of $60,000 for childcare? If you have the space for an extra person in your house...

Au pair is not full time nanny. They work max 4-5 hours a day. You need both preschool/school and au pair

[Anonymous]

It sounds like in less than two years they'll have at least $3000 month back, as the cars will be paid off and one kid will be out of daycare (fudging numbers somewhat to account for things like extended day for public school).

Just stick with it as you're doing, try to make small savings where you can (Amazon sells "open box" diapers for example, still in unsealed plastic. Buy used kids clothing, strollers etc-- we saved thousands of dollars on this stuff over the years) and enjoy the toddler years for what they are until expenses go down. I finally have two kids in public school and it's been amazing on our finances.