“Rich” but Broke - What can we cut?

[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.

Agreed. If you’re 35, you were at peak first time homeowner age during the housing crisis and bought cheap. In fact, had you been even a few years older it’s more likely you would’ve gotten burned by buying before the housing crisis, so you likely dodged a bullet there. You also could’ve bought at low interest rates in 2019 etc—you’re 35 not 25 for crying out loud. If you missed out on these opportunities that’s on you, but don’t act like they weren’t available to you. Signed someone close to your age.

[Anonymous]

Our take home is similar to yours ($14k) and we also have 2 kids under 3. Our mortgage is $3k, nanny is $4k, and we have one car with a payment of $650 that we bought on a 3 year loan a year ago. We live in a nice house we bought for only $700k but it’s a little further from the city than I’d like. I had hoped to upgrade to a better neighborhood when we were done paying for a nanny, but with interest rates doubling since we bought, I think we’re stuck. So if you ask me, you did it right. You could reduce retirement contributions if you need breathing room. Talk to a financial planner. Ours said that since our pre-baby savings were great, we’d be fine with reduced savings during the nanny years. We will increase retirement and 529 savings after our kids start school.

[Anonymous]

Since you mentioned a lot of your income goes to insurance, I think you need to look into cheaper alternatives. Your car insurance sees expensive. I bundle with Erie and my car insurance is only $600/yr (1 car, worth $40k). Also, you mentioned you’re a Fed- open season is almost here. GEHA is very affordable. The only annoying thing about GEHA is that labcorp is not in network so I always have to remind the doctors office to send it to Quest. But it’s totally worth the lower premium. The HDHP is an especially good value if you don’t mind keeping track of paying bills. I haven’t found it too onerous, even during pregnancy when there are lots of bills. If you’re not already doing a dependent care FSA, sign up during open season!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You aren't doing anything wrong. Childcare is expensive. Once you don't have that expense you will be in great shape.

Kids get more expensive as they get older. Because of their large mortgage they will be house poor for awhile.

Not for someone spending 60k a year on childcare.

Even if OP signs her kids up for tons of activities, pricey summer camp and expensive clothing it’s 20k each max. And all of this stuff is optional. OP has to spend 60k to go to work.

But for the OP, it wont be "optional". They want to keep up with everyone in their expensive neighborhood. [url]Camps alone will run them $15K-20K for the 2 kids. Add in all the other expenses and sports/music/karate/ and they will likely still spend $40K+ easily.

What kind of camps?

I hope there is such a thing as Accounting Camp.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You aren't doing anything wrong. Childcare is expensive. Once you don't have that expense you will be in great shape.

Kids get more expensive as they get older. Because of their large mortgage they will be house poor for awhile.

Not for someone spending 60k a year on childcare.

Even if OP signs her kids up for tons of activities, pricey summer camp and expensive clothing it’s 20k each max. And all of this stuff is optional. OP has to spend 60k to go to work.

But for the OP, it wont be "optional". They want to keep up with everyone in their expensive neighborhood. [url]Camps alone will run them $15K-20K for the 2 kids. Add in all the other expenses and sports/music/karate/ and they will likely still spend $40K+ easily.

What kind of camps?

I hope there is such a thing as Accounting Camp.

Not the op, but camps cost $750 per week with sleepaway costing $2k. 2 kids, 10 weeks...

[Anonymous]

Not OP but have similar income and kids in elementary. I thought things would get better as they got older but it really hasn’t. We have extended day $340/mos for my youngest. The oldest walks home afterschool because of sports, etc. $5k a year on sports. $9k/yr per kid for sleepaway and other camps in summer. I grew up in New England and everyone went away for sleepaway for 8 weeks. My oldest started last summer but I’m another year both will be at sleepaway. Then piano lessons, tae kwon do, art classes. I get this is a very privileged childhood we’re providing. We sacrifice on other stuff like simple vacations and beater cars. I thought it’d get better once kids were in public school but it didn’t.

[Anonymous]

Couldn't agree more. Elementary and middle school kids. Club sports. Travel. They eat a lot. It all costs a lot.

[Anonymous]

Anonymous wrote:Not OP but have similar income and kids in elementary. I thought things would get better as they got older but it really hasn’t. We have extended day $340/mos for my youngest. The oldest walks home afterschool because of sports, etc. $5k a year on sports. $9k/yr per kid for sleepaway and other camps in summer. I grew up in New England and everyone went away for sleepaway for 8 weeks. My oldest started last summer but I’m another year both will be at sleepaway. Then piano lessons, tae kwon do, art classes. I get this is a very privileged childhood we’re providing. We sacrifice on other stuff like simple vacations and beater cars. I thought it’d get better once kids were in public school but it didn’t.

Eight weeks of sleepaway sounds like a lot!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You aren't doing anything wrong. Childcare is expensive. Once you don't have that expense you will be in great shape.

Kids get more expensive as they get older. Because of their large mortgage they will be house poor for awhile.

Not for someone spending 60k a year on childcare.

Even if OP signs her kids up for tons of activities, pricey summer camp and expensive clothing it’s 20k each max. And all of this stuff is optional. OP has to spend 60k to go to work.

But for the OP, it wont be "optional". They want to keep up with everyone in their expensive neighborhood. [url]Camps alone will run them $15K-20K for the 2 kids. Add in all the other expenses and sports/music/karate/ and they will likely still spend $40K+ easily.

What kind of camps?

I hope there is such a thing as Accounting Camp.

Not the op, but camps cost $750 per week with sleepaway costing $2k. 2 kids, 10 weeks...

#RichPeopleProblems

Heaven for it your kids be exposed to peers who attend the $400 per week camps…

[Anonymous]

*forbid

[Anonymous]

Anonymous wrote:

Anonymous wrote:How old are you? How in demand and/or stable are your jobs? How much do you expect your comp to rise?

You bought too much house too quickly. Should have stuck it out somewhere cheap until 1st kid in public K. The nanny is also an indulgence, get your kids into a daycare.

Other than that, you have to grind it out for just a few more years.

33, lawyer working for fed so pretty stable. Worked the big law life many years to pay off school debt, it wasn’t working for me with 2 young kids. Comp will raise however President decides / congress agrees to every year.

I’m gathering that we overspent on house and cars. House ended up being a worthwhile “investment”, but cars are of course just depreciating assets. Will consider selling a car, and/or renting out our house and moving to dc for a bit to help with childcare costs. Kids are currently in FT daycare, but it’s really expensive… we are not Christian and don’t prefer a catholic preschool.

Thanks for all the helpful advice. Lots to think about.

You didn’t overspend on a house. A $900,000 SFH in Chevy Chase is a bargain, especially with the equity you have. You would be lucky to get a newer townhouse in Burke or Rockville for $5,000/month these days. Don’t listen to anyone who tells you you overspent for your home. People are ridiculously ignorant about the DC real estate market on here. You mad a good decision.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Similar story and it’s an exhausting grind.

We make more money at 450k in salaries and 150k bonus.

The childcare, housing and car expenses kill us. At this point we can’t sell the house since we locked in such a low rate and we’d pay the same amount monthly for a smaller and not as nice house.

Whenever I get stressed I try to remember we are living paycheck to paycheck, but investing at least 100k in 401ks every year plus a similar amount in deferred stock.

I don’t know what the solution is except to keep at it. Everyone is going to say sell the house, but that won’t make us better off financially! Two in daycare is almost the same cost as a nanny.

In no way, shape, or form is someone putting away over $8k a month, living “paycheck to paycheck”.

Boomers cut pensions so it's a necessary self funded pension, so it's valid

No it’s not. Saving $100k per year for a 401k in your 30s would give you $15-$20 million in retirement with the standard S&P yearly ROI and compound interest. No one needs that much money to retire.

[Anonymous]

Anonymous wrote:Since you mentioned a lot of your income goes to insurance, I think you need to look into cheaper alternatives. Your car insurance sees expensive. I bundle with Erie and my car insurance is only $600/yr (1 car, worth $40k). Also, you mentioned you’re a Fed- open season is almost here. GEHA is very affordable. The only annoying thing about GEHA is that labcorp is not in network so I always have to remind the doctors office to send it to Quest. But it’s totally worth the lower premium. The HDHP is an especially good value if you don’t mind keeping track of paying bills. I haven’t found it too onerous, even during pregnancy when there are lots of bills. If you’re not already doing a dependent care FSA, sign up during open season!

I don't think this is quite right We have GEHA HDHP and my labcorp tests have been covered, with a small copay (like $4). Agree that GEHA is a great value for feds.

[Anonymous]

I think you made a great choice with the house. It sounds big enough for a family and you locked in a great rate.

Given that, it is tough right now with the PITI, car notes, and daycare. It will get easier once the latter two are done.

Since you're a fed, you get access to many good health insurance options. I've used a less obvious and less sexy-named health insurance, MHBP. It's very affordable esp compared with popular choices like BCBS. It uses the Aetna network which has a large in-network presence in the DMV. I've had it for 5+ years and it's been a fantastic plan, covering many service both in- and out- of network. You might save quite a bit with that.

[Anonymous]

Anonymous wrote:Not OP but have similar income and kids in elementary. I thought things would get better as they got older but it really hasn’t. We have extended day $340/mos for my youngest. The oldest walks home afterschool because of sports, etc. $5k a year on sports. $9k/yr per kid for sleepaway and other camps in summer. I grew up in New England and everyone went away for sleepaway for 8 weeks. My oldest started last summer but I’m another year both will be at sleepaway. Then piano lessons, tae kwon do, art classes. I get this is a very privileged childhood we’re providing. We sacrifice on other stuff like simple vacations and beater cars. I thought it’d get better once kids were in public school but it didn’t.

I have no idea why you’d forgo nice family vacations to bond as a family to fund sleepaway camp so that your child can bond with strangers and potentially be exposed to older creeps. My brain must be wired differently.