Private school -- what portion of income are people spending?

[Anonymous]

OP here. I didn’t mean for this to become a critique of our spending decisions, but that’s on me for including our budget info. Now that it has, though, just want to be clear that our savings isn’t only the $70k I put in a later post. I just forgot to include that $70k in my original post detailing our savings, which also includes $250-300k in 401k (depending on the market), $200k in stock and alternative investments, and $600k in home equity. Is that still pitiful? My spouse and I both went to grad school and are 31 and 36, so haven’t even been in our careers that long. Considering our income was around $450k until a few years ago and we came from a high cost of living area, I don’t know what we could have done differently to save more.

Ultimately I understand we have to decide what we’re comfortable with and weigh other non-financial factors, but to bring it back to the reason for my post, it’s helpful to get context from other people on the cost.

[Anonymous]

IMO it is quite pitiful but maybe I am more conservative financially than you? Personally, I consider private a great luxury. I would not have put my kids in private school without being very confident I could give them a couple million each not including college, and be financially independent myself by age 55. Those things are very important to me. Others are less conservative and willing to bank on working forever.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have an HHI of $420K with one kid. The private school DD will be starting in the fall costs $35K for K and goes up from there. We can afford it, but if we had more than one kid, it would be a big stretch and we’d definitely have to significantly cut back on other expenses.

Is this net or gross?

Before tax.

[Anonymous]

You mention law school student loans - are you both associates in big law firms? Is that how you get that high salary? If so, that would be a big factor for me. We didn’t send our kids to private school until we made partner. The golden handcuffs are very real and you don’t want to have to pull them if/when you don’t make partner in 4 years.

[Anonymous]

Anonymous wrote:OP here. I didn’t mean for this to become a critique of our spending decisions, but that’s on me for including our budget info. Now that it has, though, just want to be clear that our savings isn’t only the $70k I put in a later post. I just forgot to include that $70k in my original post detailing our savings, which also includes $250-300k in 401k (depending on the market), $200k in stock and alternative investments, and $600k in home equity. Is that still pitiful? My spouse and I both went to grad school and are 31 and 36, so haven’t even been in our careers that long. Considering our income was around $450k until a few years ago and we came from a high cost of living area, I don’t know what we could have done differently to save more.

Ultimately I understand we have to decide what we’re comfortable with and weigh other non-financial factors, but to bring it back to the reason for my post, it’s helpful to get context from other people on the cost.

At $450k you should have far more savings and the loans paid off. You have a spending issue.

[Anonymous]

I definitely feel poor based on this post but honestly don’t feel it. My HHI ~$250K (depending on self employed income). We have one kid in private at $35K. I’m lucky that I had some inheritance to put toward a more expensive house but carry about the same mortgage (~$550K) as I would if I lived elsewhere but pay significantly more property tax. We pinch pennies but it works for us.

And for OP, you definitely need more in savings. As I said we make less than half of what you do and have ~$700K in retirement and another $200K in taxable/liquid savings (plus a college fund). I started contributing in grad school even with a pitiful graduate assistant salary. I’m 36 now.

[Anonymous]

Anonymous wrote:OP here. I didn’t mean for this to become a critique of our spending decisions, but that’s on me for including our budget info. Now that it has, though, just want to be clear that our savings isn’t only the $70k I put in a later post. I just forgot to include that $70k in my original post detailing our savings, which also includes $250-300k in 401k (depending on the market), $200k in stock and alternative investments, and $600k in home equity. Is that still pitiful? My spouse and I both went to grad school and are 31 and 36, so haven’t even been in our careers that long. Considering our income was around $450k until a few years ago and we came from a high cost of living area, I don’t know what we could have done differently to save more.

Ultimately I understand we have to decide what we’re comfortable with and weigh other non-financial factors, but to bring it back to the reason for my post, it’s helpful to get context from other people on the cost.

You should see a financial advisor. Not pitiful, but honestly not good.

DH and are are roughly the same age as you (both 34). He is also in law, I am in tech. 3 kids, 2 in private (K and 1st), one home with a nanny who also helps older kids after school, etc. our savings are 3x what you’ve said here. I’m not making your math work at all unless you are burning cash in your spending.

I would honestly say unless you are willing to take a lifestyle cut on wherever you are spending, I would hold on private for a couple more years.

[Anonymous]

I call troll. The numbers don’t make any sense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

You can afford it. As you note, you'll be able to convert the nanny expense to tuition expense as you the kids get older. We let go of our nanny after the youngest was in K, for example.

I disagree. Their NW is really low, and their spending is really high for that HHI. A couple of years ago in our mid-30s we had an HHI of $2m (not including $600k primary home equity) on a $400k HHI. Our HHI has since tripled and our spending has largely not increased so we put some of the extra $ towards private.

OP should only go private if they can severely curtail spending.

What do you find are the benefits of having a NW of $6m vs. $2m?

Is this a real question?

[Anonymous]

OP I think the people who are criticizing your savings are trolling. You’re doing fine for your income level and age (as you said, your careers didn’t get started until after graduate school), and of course your income is very high. There are other factors that matter here, including how stable your jobs are, your family background (as in, would you be on the streets if something horrible happened, or do you have parents who would help you out) etc.

Notice that on DCUM everyone always says “oh the money at DC private schools is crazy, of course WE are not rich, but everyone else is…” I genuinely think you would be perfectly average for a full pay family. Which means you’d be wealthier than the 20-30% of families who get financial aid. Yes there are people who are wealthier, but that doesn’t mean YOU can’t afford it.

I happen to think private school is 100% worth it as long as the trade off is additional luxuries/savings and not basic retirement, college funds, etc, and you would fit in this category.

[Anonymous]

Anonymous wrote:OP I think the people who are criticizing your savings are trolling. You’re doing fine for your income level and age (as you said, your careers didn’t get started until after graduate school), and of course your income is very high. There are other factors that matter here, including how stable your jobs are, your family background (as in, would you be on the streets if something horrible happened, or do you have parents who would help you out) etc.

Notice that on DCUM everyone always says “oh the money at DC private schools is crazy, of course WE are not rich, but everyone else is…” I genuinely think you would be perfectly average for a full pay family. Which means you’d be wealthier than the 20-30% of families who get financial aid. Yes there are people who are wealthier, but that doesn’t mean YOU can’t afford it.

I happen to think private school is 100% worth it as long as the trade off is additional luxuries/savings and not basic retirement, college funds, etc, and you would fit in this category.

OP has an HHI of $850k and you think that they are only wealthier than the families on financial aid.

What happened to all the "feds but grandparents pay," "fac brats with tuition remission," or "we scrimp and save to make it work" referred to in other posts?

[Anonymous]

Anonymous wrote:OP here. I didn’t mean for this to become a critique of our spending decisions, but that’s on me for including our budget info. Now that it has, though, just want to be clear that our savings isn’t only the $70k I put in a later post. I just forgot to include that $70k in my original post detailing our savings, which also includes $250-300k in 401k (depending on the market), $200k in stock and alternative investments, and $600k in home equity. Is that still pitiful? My spouse and I both went to grad school and are 31 and 36, so haven’t even been in our careers that long. Considering our income was around $450k until a few years ago and we came from a high cost of living area, I don’t know what we could have done differently to save more.

Ultimately I understand we have to decide what we’re comfortable with and weigh other non-financial factors, but to bring it back to the reason for my post, it’s helpful to get context from other people on the cost.

Hi OP- look you guys are are still young and have an excellent nest egg by most measures. What many of us are noticing is that you have a very high spend rate for your income and your savings goals are too low. You and your spouse have phenomenal salaries and you could be saving so much more than you do.

If I were in your shoes- go public until middle. In the meantime put all that money into savings and investments. Then by middle you will have a more sizable cushion and more options. If you send two kids to private now and don’t make partner and/or don’t cut back on spending your savings will remain pitiful.

[Anonymous]

Anonymous wrote:OP here. I didn’t mean for this to become a critique of our spending decisions, but that’s on me for including our budget info. Now that it has, though, just want to be clear that our savings isn’t only the $70k I put in a later post. I just forgot to include that $70k in my original post detailing our savings, which also includes $250-300k in 401k (depending on the market), $200k in stock and alternative investments, and $600k in home equity. Is that still pitiful? My spouse and I both went to grad school and are 31 and 36, so haven’t even been in our careers that long. Considering our income was around $450k until a few years ago and we came from a high cost of living area, I don’t know what we could have done differently to save more.

Ultimately I understand we have to decide what we’re comfortable with and weigh other non-financial factors, but to bring it back to the reason for my post, it’s helpful to get context from other people on the cost.

I think everyone is focused on the savings because if you add in $80k more of spending, then you will not increase your savings relative to your income. Your income can clearly afford it, but given the low for your salary savings numbers, then the priority should be elsewhere. If it helps, we are also in a similar income range with 2 young kids in private and have a little over a million saved in investments and a little over a million in retirement accounts. We also have no car payments and our student loans were paid off years ago. If you pick private school, it would be at the expense of savings (which it is for everyone of course), but for you, it would be at a greater expense.

[Anonymous]

I think the problem is that people aren't answering the question, the question was what proportion of income are people spending... People are treating this like the money forum, but the OP specifically didn't ask that.

People who could have helpfully answered have run away from the thread.

[Anonymous]

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Frankly, on that income and only $450k in investments, I’d push it to later years. You’re not financially secure enough to float tuition if someone loses a job, you barely have retirement savings, you’re still paying off significant student loan debt, and you’re clearly used to spending a lot if you aren’t saving more on $850HHI. The nanny money turns into sports, tutor, summer camp, etc money. You already made the big spend on your house. Get yourself on really solid footing before you hop in to private school tuition for 13+ years.

So yes, you can certainly afford it, but not with your current spending habits based on your net worth vs income. (Unless you graduated from med school within the past couple of years, let’s say).