400k salary and creep factor we never really have much left

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live a fairly modest lifestyle but with $400k salary and we do reasonable travel (not international or anything, like 4 star domestic trips, half drive half fly, public schools, just paid off cars but before payment was $600 a month, 567k mortgage balance (house worth 1.4 from appreciation), childcare is about $7k a year total, camps/activities for kids add up to several thousand but run of the mill team stuff… What’s the thing that had the biggest impact for everyone on just cutting down on spending? We spend on everything! A lot is charity, at least $15k a year for that and then it seems like endless other expenses and emergency expenses related to kids, pets and home. Advice needed. I would love to be more meaningful with our money and at least have something more to show for it like doing an amazing trip every year.

Where on earth is all your money going? You clearly don't have a modest lifestyle especially given your income. A 1.4 million dollar house is not modest.

It’s a 4bedroom/2.5 2500 sf house in a really good area for schools but it’s not extravagant or updated. It’s really just a good location. We also didn’t even pay half that.

Spent 700k on house but your mortgage is currently 567k. How much was the downpayment?

Anyways, seems the OP buys lots of gifts and pays for birthday dinners. Did The OP say 50 birthday parties a year? OP, please make a spreadsheet called birthday spending and keep track for six months. You can go through your previous credit card bills and tally up the birthday spending,

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So, we have 465k left on our mortgage. Have two teens. HHI is 130k. My husband maxes out his 401k, we put away 6k for college each year. Two cars, paid off. Have about fifty thousand in savings outside of 401k and 529s. About 250k equity in house.

You are doing something wrong if you can’t save more on that HHI.

You aren't doing any better than OP and overspent on a house.

Yup. With late teens, that means they are in their forties. 465k mortgage with 250k equity is pretty bad at that age. Hopefully the 401k is in the 1-2 million range.

Why is it bad?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

True. Also, I think they are probably thinking their take home is about half but that is after retirement, health insurance, and other deductions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

True. Also, I think they are probably thinking their take home is about half but that is after retirement, health insurance, and other deductions.

OP is in the “bitter” spot for AMT as well which is why those with lower income can have a similar lifestyle to OP.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We live a fairly modest lifestyle but with $400k salary and we do reasonable travel (not international or anything, like 4 star domestic trips, half drive half fly, public schools, just paid off cars but before payment was $600 a month, 567k mortgage balance (house worth 1.4 from appreciation), childcare is about $7k a year total, camps/activities for kids add up to several thousand but run of the mill team stuff… What’s the thing that had the biggest impact for everyone on just cutting down on spending? We spend on everything! A lot is charity, at least $15k a year for that and then it seems like endless other expenses and emergency expenses related to kids, pets and home. Advice needed. I would love to be more meaningful with our money and at least have something more to show for it like doing an amazing trip every year.

Where on earth is all your money going? You clearly don't have a modest lifestyle especially given your income. A 1.4 million dollar house is not modest.

It’s a 4bedroom/2.5 2500 sf house in a really good area for schools but it’s not extravagant or updated. It’s really just a good location. We also didn’t even pay half that.

Spent 700k on house but your mortgage is currently 567k. How much was the downpayment?

Down payment was only 7%?
Our income went up about 2x since we bought it.

Anyways, seems the OP buys lots of gifts and pays for birthday dinners. Did The OP say 50 birthday parties a year? OP, please make a spreadsheet called birthday spending and keep track for six months. You can go through your previous credit card bills and tally up the birthday spending,

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

True. Also, I think they are probably thinking their take home is about half but that is after retirement, health insurance, and other deductions.

OP is in the “bitter” spot for AMT as well which is why those with lower income can have a similar lifestyle to OP.

AMT?

[Anonymous]

Anonymous wrote:I am a meticulous budgeter and we still over spend lol. A budget is helpful but it isn't a silver bullet.

Fwiw, restaurants and eating out are always the line item that shocks me the most. I do not think of us as people who eat out a lot by any stretch, and NEVER delivery (prices are obscene IMO) and yet every month, somehow we've spent $800 on restaurants. One date night and one meal out for the whole family, maybe an afternoon at a brewery or something, and boom, our budget is hit. As a person with a spreadsheet that could tell you how much I spent on Starbucks in September of 2014 (seriously), I am still surprised by it every month. It adds up fast.

Yes definitely. This is it. I think for our mental sanity because I’m horrible at meal planning we overspend.

[Anonymous]

Why are you donating $15k a year to charity? That’s excessive.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

True. Also, I think they are probably thinking their take home is about half but that is after retirement, health insurance, and other deductions.

OP is in the “bitter” spot for AMT as well which is why those with lower income can have a similar lifestyle to OP.

These folks never seem to have heard of AMT.

[Anonymous]

Anonymous wrote:Why are you donating $15k a year to charity? That’s excessive.

No, it's not. It is not even close to near enough on that income. We make about $300,000 (give or take $15k), and we donate over $35k every year. It's called being a good human being, and helping those who are in greater need than yourself.

I agree with everyone else, track your spending for a month. You'll be surprised at where it goes and it'll be easy to cut back

[Anonymous]

50 birthday parties a year?! and do you buy gifts for all of them? Every kids birthday party in my circle has a "no gift" policy.

[Anonymous]

Anonymous wrote:Why are you donating $15k a year to charity? That’s excessive.

? Really? I was thinking it was on the low end. Our income is closer to $200k and we donate around $10k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's easy to spend 400k when taxes takes almost half

Please explain how taxes would take up half. Also please read up on how we have a progressive tax system in the US.

I was just coming to say that if you a paying almost half in taxes, then you are doing your taxes wrong.

At the basic tax rates of the progressive tax system, the taxes on $400,000 would be $85,664, which is a 21.4% tax rate. Even if you were to use the highest tax bracket that OP is paying, that rate is 32%, but 32% is only on the top 36K of the income. Everything below $364,200 is paid at a lower variable tax rate. And that is with absolutely no adjustments or deductions.

OP has retirement contributions which are deducted before taxes. Also a mortgage interest deduction and charitable contributions. OP also has childcare deductions and probably several other deductions. OP probably has enough deductions to avoid the standard deduction and with itemized deductions will probably drop most of the income paid at 32% rate.

It is most likely that OP is paying around 19-21% taxes on that income. If not, they are doing something wrong and should get an accountant to review their taxes.

I agree with PP that the first PP really needs to read up on the progressive tax system.

Not the PP. Forgetting the FICA and state income taxes. In MD both of those would be 13-14% total.

19-21% plus FICA and Maryland tax makes it closer to 1/3 of income, not 1/2.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why are you donating $15k a year to charity? That’s excessive.

No, it's not. It is not even close to near enough on that income. We make about $300,000 (give or take $15k), and we donate over $35k every year. It's called being a good human being, and helping those who are in greater need than yourself.

I agree with everyone else, track your spending for a month. You'll be surprised at where it goes and it'll be easy to cut back

So many people at this income expect financial aid for college. If you are able to give this much don’t expect aid. You can afford college.