Can we afford $45k/year private for 2 kids? Stats included

[Anonymous]

Anonymous wrote:I know this question has been asked time and time again, but wondering if the wise folks of DCUM can give some thoughts on if we can comfortably afford private school for 2 kids, ages 4 & 1. We are considering private K-12 for both children at $45k/kid and wondering if we can make it work for the long haul with tuition increases etc.. Both of us work and are fairly young in our careers (early 30s), so we don't have a substantial nest egg to fall back on.

Our stats:
HHI $650k, this is recent and very heavily on stock RSUs. $380k is salary/guaranteed bonus and the remaining is stock
401k: $400k (max out, both have access to mega back door)
529s: $75k (planning to continue to fund $16k/year total)
HSA: $50k (put in max every year and do not use it)
After tax brokerage: $30k
Cash savings / emergency fund: $45k
Home equity is roughly $700k, have about $800k mortgage at 4%; $7.4k / month. No other debt.

Biggest concern is our liquidity and heavy reliance on stock which is volatile. Also concerned with signing up for tuition payments so early on, and needing to maintain high earning power for the next 2 decades.

I always ask this about RSUs but are they vesting in the calendar year or are you counting grants that will vest 2-,3-, or even 4- years out in your annual HHI? That is a lot of money in stock and your base/bonus are low so I’m guessing you’re in tech in which case you are right about volatility.

Considerations: (1) What is your childcare situation? You will still need a nanny or some after care during elementary unless you or your spouse can dip out between 2-6 every day, summers, and holidays plus random school holidays. I know that people work with their kids at home in the afternoon but realistically this is difficult before kids are 8 or 9 and you are then probably using tv and committing to no after school enrichment or activities during the week. Many privates don’t have buses or aftercare. Can you afford a PT nanny on top of tuition? That will be $30K-40K (2) Tuition goes up. My kids’ tuition went up $5K in one year (it’s $50K now). (3) You don’t have enough in 529s to fund four years of private - plug it into a college cost calculator. (4) You don’t have a lot in 401Ks (5) How much is in your brokerage + HSA? You will be diverting most of that money to private school tuition in a year.

I would consider later entry years - 3rd or 4th. You need to build up your savings and 529s and 42% of your income is not guaranteed. That’s really high.

[Anonymous]

Anonymous wrote:You can afford but I wouldn't. It's a lot of money on your income.

We have a similar income ($550K) and two in high schools that cost $55K each. We feel it and resent it at times, especially when our kids get a super crappy teacher (which happens not infrequently) or the school does something really dumb (also the case).

We're also somewhere in the lowest 25% of income at the school. Which is crazy but true. It's never fun to make an absolute ton of money (by any reasonable, objective standard) and regularly feel poor or have your kids feel poor. It messes with your head.

Yes to the last part. A lot of family money and a lot of high incomes. And it’s hard to say “We’re paying for private so won’t do XYZ because so many other kids are doing XYZ.” And it only gets crazier as kids get older.

[Anonymous]

Anonymous wrote:keep in mind private schools also heavily pressure you to donate. You loook like a loser if you don’t donate and it’s all published for all to see.

Tuition is just the beginning. Pressure is high to donate.

[Anonymous]

You can't afford it, no. Also how you're savings makes no sense. I'd talk to a financial planner.

[Anonymous]

I make about what you make total but with less tied up in stock and cash bonus at 40-50% of salary. I have kept my kids in public and now spend about $35K for after school child care (mainly help driving) plus activities for my middle schoolers. And my kids don't play hockey That does not include summers.

[Anonymous]

Anonymous wrote:You can afford but I wouldn't. It's a lot of money on your income.

We have a similar income ($550K) and two in high schools that cost $55K each. We feel it and resent it at times, especially when our kids get a super crappy teacher (which happens not infrequently) or the school does something really dumb (also the case).

We're also somewhere in the lowest 25% of income at the school. Which is crazy but true. It's never fun to make an absolute ton of money (by any reasonable, objective standard) and regularly feel poor or have your kids feel poor. It messes with your head.

You actually have double the income - RSU takes 4 years to vest and if one of them is at Amazon good luck with that!

[Anonymous]

Anonymous wrote:How are you so rich and already have 2 kids in your early 30’s?

Almost certainly kids have not been born yet (or only one has been)

[Anonymous]

Anonymous wrote:No! Cash income is $380k and after tax likely under $300k. Spending $90k on private school is a bad idea. Get the kids started in public schools and see how it goes.

Exactly this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:frankly your after tax brokerage and cash savings is very low for your income level. With mortgage and tuition to gobble up 180k per year you better be in your knees praying each night for those RSUs to pan out. because without that and your extravagant expenses you’re gonna look dead ass broke. Many people who have kids in private school have family money that are the safety net.

They're in their early 30s. Their brokerage and cash savings are absolutely fine. You're just being a jerk.

Is this the OP? What are you doing for childcare. Do you both work? What are you doing for childcare? Did you just start contributing to your HSA and brokerage? With kids I’m shocked you haven’t touched your HSA usually healthcare plans with HSAs have high deductibles and are generally bad so you have to tap them.

And I’m not the PP but both your 529s and 401Ks are pretty low. I’m guessing you bought your house for $1m in 2021 and now Zillow says it’s worth $1.4 million which is how you got to $700K equity. If your income is new you should see what happens with the stock. I work in an industry where big stock grants are common but this mix seems weird if both you and your spouse work. If only you work and this is one income it would make more sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:frankly your after tax brokerage and cash savings is very low for your income level. With mortgage and tuition to gobble up 180k per year you better be in your knees praying each night for those RSUs to pan out. because without that and your extravagant expenses you’re gonna look dead ass broke. Many people who have kids in private school have family money that are the safety net.

They're in their early 30s. Their brokerage and cash savings are absolutely fine. You're just being a jerk.

Is this the OP? What are you doing for childcare. Do you both work? What are you doing for childcare? Did you just start contributing to your HSA and brokerage? With kids I’m shocked you haven’t touched your HSA usually healthcare plans with HSAs have high deductibles and are generally bad so you have to tap them.

And I’m not the PP but both your 529s and 401Ks are pretty low. I’m guessing you bought your house for $1m in 2021 and now Zillow says it’s worth $1.4 million which is how you got to $700K equity. If your income is new you should see what happens with the stock. I work in an industry where big stock grants are common but this mix seems weird if both you and your spouse work. If only you work and this is one income it would make more sense.

OP here. The above comment was not me.

We have a FT nanny. Both of us work, we have been contributing to the HSA for 6 years and have made a point to never touch it through two pregnancies so the money can grow and we use it in the future as a triple tax advantaged account.

We have contributed $8k per child per year to their 529s and plan to continue to do that, which is why we are at $75k now, and will be at >$90k by the end of this calendar year.

We put down $650k on our house 2 years ago. Mostly through savings (which is why our cash position is so low now) and some family help due to an inheritance . I am not counting on any/limited housing appreciation in my figures above.

[Anonymous]

OP, when does your stock vest? What is ratio of stock to cash bonus? How stable are your jobs/industries? Is one of you a doctor (and therefore has more job security)?

[Anonymous]

Anonymous wrote:I know this question has been asked time and time again, but wondering if the wise folks of DCUM can give some thoughts on if we can comfortably afford private school for 2 kids, ages 4 & 1. We are considering private K-12 for both children at $45k/kid and wondering if we can make it work for the long haul with tuition increases etc.. Both of us work and are fairly young in our careers (early 30s), so we don't have a substantial nest egg to fall back on.

Our stats:
HHI $650k, this is recent and very heavily on stock RSUs. $380k is salary/guaranteed bonus and the remaining is stock
401k: $400k (max out, both have access to mega back door)
529s: $75k (planning to continue to fund $16k/year total)
HSA: $50k (put in max every year and do not use it)
After tax brokerage: $30k
Cash savings / emergency fund: $45k
Home equity is roughly $700k, have about $800k mortgage at 4%; $7.4k / month. No other debt.

Biggest concern is our liquidity and heavy reliance on stock which is volatile. Also concerned with signing up for tuition payments so early on, and needing to maintain high earning power for the next 2 decades.

You forgot to mention anything about your obvious reliance upon family money. This is the only explanation for your financial stats (aside from being a drug dealer). Since you’re still operating at the good graces of the mommy and daddy pocketbook, you should press forward with private school all the way. While public is an option for some, it takes a parent of high character and discipline to make that work; sounds to me like you’re the type that can only succeed when others do all the heavy lifting.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:frankly your after tax brokerage and cash savings is very low for your income level. With mortgage and tuition to gobble up 180k per year you better be in your knees praying each night for those RSUs to pan out. because without that and your extravagant expenses you’re gonna look dead ass broke. Many people who have kids in private school have family money that are the safety net.

They're in their early 30s. Their brokerage and cash savings are absolutely fine. You're just being a jerk.

Is this the OP? What are you doing for childcare. Do you both work? What are you doing for childcare? Did you just start contributing to your HSA and brokerage? With kids I’m shocked you haven’t touched your HSA usually healthcare plans with HSAs have high deductibles and are generally bad so you have to tap them.

And I’m not the PP but both your 529s and 401Ks are pretty low. I’m guessing you bought your house for $1m in 2021 and now Zillow says it’s worth $1.4 million which is how you got to $700K equity. If your income is new you should see what happens with the stock. I work in an industry where big stock grants are common but this mix seems weird if both you and your spouse work. If only you work and this is one income it would make more sense.

OP here. The above comment was not me.

We have a FT nanny. Both of us work, we have been contributing to the HSA for 6 years and have made a point to never touch it through two pregnancies so the money can grow and we use it in the future as a triple tax advantaged account.

We have contributed $8k per child per year to their 529s and plan to continue to do that, which is why we are at $75k now, and will be at >$90k by the end of this calendar year.

We put down $650k on our house 2 years ago. Mostly through savings (which is why our cash position is so low now) and some family help due to an inheritance . I am not counting on any/limited housing appreciation in my figures above.

You have a FT nanny and now you want to outsource the remainder of your parenting responsibilities?!? So – in other words – the pregnancies you reference were both mistakes b/c you didn’t take the necessary precautions and now you’re scrambling to mitigate? Newsflash: the mega backdoor option isn’t always foolproof!

Recommending that you and your partner put the kids up for adoption so you can re-route your ill-gotten wealth towards further pleasurement and self-indulgency. You really take the cake, OP. So outrageous.

How does having a full time nanny equate to both pregnancies being mistakes? And sending them to school = outsourcing parenting? The kids need to go to a school, whether public or private.

Not sure what is so outrageous about that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I know this question has been asked time and time again, but wondering if the wise folks of DCUM can give some thoughts on if we can comfortably afford private school for 2 kids, ages 4 & 1. We are considering private K-12 for both children at $45k/kid and wondering if we can make it work for the long haul with tuition increases etc.. Both of us work and are fairly young in our careers (early 30s), so we don't have a substantial nest egg to fall back on.

Our stats:
HHI $650k, this is recent and very heavily on stock RSUs. $380k is salary/guaranteed bonus and the remaining is stock
401k: $400k (max out, both have access to mega back door)
529s: $75k (planning to continue to fund $16k/year total)
HSA: $50k (put in max every year and do not use it)
After tax brokerage: $30k
Cash savings / emergency fund: $45k
Home equity is roughly $700k, have about $800k mortgage at 4%; $7.4k / month. No other debt.

Biggest concern is our liquidity and heavy reliance on stock which is volatile. Also concerned with signing up for tuition payments so early on, and needing to maintain high earning power for the next 2 decades.

You forgot to mention anything about your obvious reliance upon family money. This is the only explanation for your financial stats (aside from being a drug dealer). Since you’re still operating at the good graces of the mommy and daddy pocketbook, you should press forward with private school all the way. While public is an option for some, it takes a parent of high character and discipline to make that work; sounds to me like you’re the type that can only succeed when others do all the heavy lifting.

I did mention in a follow up that we received some down payment help due to an inheritance, but the rest of our savings are ours. Sorry this is so difficult for you to believe. How sad that you are the type who lashes out at others. You certainly don’t seem to be a parent of good character with your response.

[Anonymous]

Anonymous wrote:OP, when does your stock vest? What is ratio of stock to cash bonus? How stable are your jobs/industries? Is one of you a doctor (and therefore has more job security)?

One person’s stock vests monthly, roughly $6-10k per month. The other person’s stock vests quarterly and is roughly $30-45k per quarter. Both stocks have done well hence the upper ranges. One bonus guaranteed at 18% of base. Both in tech, but different companies and industries within tech.