Earning Well but Drowning in Debt...how to dig out?

[Anonymous]

Anonymous wrote:"Our house is extremely modest and too small for a family of 5" -- yet it's worth $800K.

I don't understand this. How can something be "extremely modest" and cost $800K? We are a family of 5 living in a 3BR condo in Columbia Heights like this one, on the market for $325k, and we're doing ok.
https://www.redfin.com/DC/Washington/1429-Girard-St-NW-20009/unit-305/home/96098202

I can't wrap my head around the numbers the OP is saying. Holy moly, you earn more than three times what we do and you burn through SO MUCH every month.

I agree. Our house cost $640k, has four bedrooms, and is metro accessible. We have a smaller mortgage payment than op and one car. Similar income but no debt. One sacrifice we made was living on a busy road - for us it was worth it. But op does not seem to want to make any sacrifices.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My bet is that OP went out and bought all 3 kids brand new boots, snow pants, jackets, mittens, hats, new sleds, new shovels just their size and blew $250 because it's snowing and the kids wanted to go outside for 15 minutes

Impossible to buy all of the above for 3 kids for $250.

Agreed, and for the record, my two have been outside for hours and hours. I have the dryer running non stop.not od wet into dry and repeat.

I'm certainly not going to hate on patents who want to warmly clothe their children.

You can warmly clothe your child for much less. I got snow pants for $5 and boots for $3 at a consignment sale. I think that was pp's point.

Get those bargains at a consignment sale/thrift store requires:
1) Being there when the store's open (they often close @ 5)
2) Happening to see something in your kids' sizes -- you won't go 3-for-3, but maybe 1-for-3 and 2-for-3. So then there's 2-3 trips to different stores
3) Beating out Everyone Else for the stuff in your desired sizes and that isn't horribly inappropriate for whatever reason (e.g. something from 1985).

Maybe doable for a SAHM with a preschooler or whose kids are all in school. But a woman working 40+ hours a week is supposed to do her consignment/thrift shopping when, exactly? I hardly think most dual-income families want to spend their weekends combing over thrift stores.

This is something where the time spent looking for bargains can really add up.

Exactly! There is no way in hell I'm going to take the time to drive out of my way and browse through a giant (or tiny but jam packed) store on the off chance I might find a pair of boots in the correct size that are not too worn out.

Not to mention that a lot of second hand things (either at consignment or yard sales) are higher-end things that I would not have purchased in the first place and the price is higher (much higher sometimes) than what I can get at The Children's Place, especially with coupons and free shipping.

[Anonymous]

I realize that 24 pages in, this might be a repeat of info. But here's what I'd do:

1) Sell the SUV and get a used sedan, assuming that makes sense based on the FMV and loan balance. Keep the minivan. I have 3 DCs and my DH drives a very small sedan with 3 carseats in the back and I drive the minivan. He's capable of driving the kids where they need to go, but obviously for longer trips we always take the van.

2) What's your interest rate on the mortgage? Did you refinance back when rates were low?

3) No child in daycare needs activities. I have plenty of money and no debt and I don't waste my time/income on activities for kids until they are at least 5. I will give your older DC a pass if he really is that good at a musical instrument.

4) Why can't you take out a loan (not cash out) from your 401K to pay off the cc debt, assuming the interest rates on the cc are high?

5) Take whatever money you would have spent on activities, camps, etc. and put that towards your debt. Use the exact amount.

6) When you're dealing with as many kids as you are, I have to assume a summer nanny would be cheaper than camps. Otherwise, your standard for a camp should only be a place that keeps your kids alive. It doesn't have to be the best.

7) Stop with the vacations. Use some of your vacation time to stay home with the kids (and save on summer daycare costs). Use the other time to do something cheap but fun -- go to campground and get a stripped down cabin for a long weekend. Or just don't vacation. Growing up, my usual vacations were spent visiting grandparents and that was fine with me. We did fun things in the towns around where the grandparents lived. When my parents were more financially secure, we started taking vacations. I think that happened around middle school.

OP needs to get in the mindset that short term pain is necessary for her family's long term health. You know the stress and problems that comes from having financial problems. Your kids are going to be more affected by that then skipping out on soccer for a few years.

[Anonymous]

Op has 3 kids, 2 of whom will be in public school next year. Its better for her to stay outside DC in the long term to avoid private school costs.

OP, can you rent out your home for a short while (say until DC3 goes to KG) and rent something cheaper, maybe in a different location? perhaps you could find a bungalow somewhere like Germantown/Gaithersburg (not sure if you are MD or Va) and rent-out your close-in home for a few years, then come back to it? A friend of mine did this when she became a SAHM for a few years - they rented out their place in Arlington and temporarily rented in Herndon. They were able to save a lot of money. When it was time for the youngest to start school and she returned back to work, they moved back to their more intown neighborhood.

it might be something to consider for a few years to help you have additional savings.

another thing is - and I don't mean to insult you - but I grew up in a 3bedroom in MoCo with 7 people, 1600 sq feet. I think you feel like you are bursting because you may have too many things. You might feel less stressed about where you live if you purge a bit and only keep what is essential. You can try and sell some of the unnecessary items on CL for some added money.

definitely get a nanny for the summer - its much cheaper than camp. might be able to get a college student.

[Anonymous]

Anonymous wrote:"Our house is extremely modest and too small for a family of 5" -- yet it's worth $800K.

I don't understand this. How can something be "extremely modest" and cost $800K? We are a family of 5 living in a 3BR condo in Columbia Heights like this one, on the market for $325k, and we're doing ok.
https://www.redfin.com/DC/Washington/1429-Girard-St-NW-20009/unit-305/home/96098202

I can't wrap my head around the numbers the OP is saying. Holy moly, you earn more than three times what we do and you burn through SO MUCH every month.

You pay a similar HOA?

[Anonymous]

Regarding family size, did anyone see the Oprah years ago when Suze Orman was on with the Octomom? Suze said something along the lines of, here we are all judging Octomom, and yet how many people have a third child when they can't really afford the two they have, or have two when they can't afford one? Having more children than you can afford is irresponsible regardless of how many you have, but MANY people don't look at it that way. If dh and I bought a mcmansion, given our finances (even though we would qualify for the mortgage we'd be hanging on by a thread), people would think we were insane. If we had another child, no one would bat an eye.

[Anonymous]

Anonymous wrote:Regarding family size, did anyone see the Oprah years ago when Suze Orman was on with the Octomom? Suze said something along the lines of, here we are all judging Octomom, and yet how many people have a third child when they can't really afford the two they have, or have two when they can't afford one? Having more children than you can afford is irresponsible regardless of how many you have, but MANY people don't look at it that way. If dh and I bought a mcmansion, given our finances (even though we would qualify for the mortgage we'd be hanging on by a thread), people would think we were insane. If we had another child, no one would bat an eye.

Stop with the kid bashing. It's obnoxious and irrelevant because op can afford her kids and address her debt with simple lifestyle changes.

[Anonymous]

Anonymous wrote:"Our house is extremely modest and too small for a family of 5" -- yet it's worth $800K.

I don't understand this. How can something be "extremely modest" and cost $800K? We are a family of 5 living in a 3BR condo in Columbia Heights like this one, on the market for $325k, and we're doing ok.
https://www.redfin.com/DC/Washington/1429-Girard-St-NW-20009/unit-305/home/96098202

I can't wrap my head around the numbers the OP is saying. Holy moly, you earn more than three times what we do and you burn through SO MUCH every month.

Here is an example of how this happens:

https://www.redfin.com/VA/Arlington/5109-27th-St-N-22207/home/11227499

1300 sq ft, 3BR and 2Ba

See, not tough at all to get "extremely modest" and cost of $800K

tiny bedrooms, tiny kitchen (which by the way appear to have outdated cabinets so the owner added cabinet pulls as a way to make them appear updated), outdated bathrooms

[Anonymous]

Anonymous wrote:

Anonymous wrote:"Our house is extremely modest and too small for a family of 5" -- yet it's worth $800K.

I don't understand this. How can something be "extremely modest" and cost $800K? We are a family of 5 living in a 3BR condo in Columbia Heights like this one, on the market for $325k, and we're doing ok.
https://www.redfin.com/DC/Washington/1429-Girard-St-NW-20009/unit-305/home/96098202

I can't wrap my head around the numbers the OP is saying. Holy moly, you earn more than three times what we do and you burn through SO MUCH every month.

You pay a similar HOA?

Columbia Heights? When you factor in private school costs and out-of-state university tuition, you are paying WAY more than OP in housing/education (because housing is really a proxy for school quality).

Maybe you are in a good charter, but basically that means you won a lottery, just like OP could play the powerball.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

Oh please. DC has a relatively low col compared to European capital cities. There have been articles about how difficult it is for French women to work and get promoted due to the childcare situation. Having three children is expensive in every developed county. If anything, housing is expensive and children require bedrooms. Children do not require two newish cars and activities, which the OP has spent money on.

Sorry but you are delusional. I used to live in Paris and can tell you very clearly I could afford 3 kids there and not here. The housing situation is not the issue (except that here people think they need a bedroom per child and 2000sqft to survive and in Paris you would end up thinking it is perfectly fine to be 5 in 800sqft because ll your friends are doing it, but in the end in both cities you tend to spend at least 30% of your income on housing).
The diffenrece is
- daycare : I pay 2500 for 2 kids in daycare here, which is already cheaper than last year when I had to pay 3500$ with one kid in day care and the other in a nanny share (and I had to put the older in day care to avoid losing my spot and making sure the sibling gets in the year after). In France if I get a spot in daycare I would pay ~400 euros per kid until they are 2 (800/1000 euros if they end up in a nanny share) , then free full day PS starting at 2.5 years old. That's a HUGE difference. I cannot afford 3 kids in daycare, period, I am strangled with 2 already.
- aftercare: in France schools stop at 5pm. you don't have the same aftercare costs
- healthcare: no idea how much the extra cost was in France because it was so low i didn't factor it in.
- university: you don't have to save for university, zero, nada. The only schools that you need to pay for (business schools for ex.), the cost is still low enough that you can pay as you go or take non-soul crushing student debts. I cannot afford to help 3 kids with their tuition here so I wont have a third child because I dont want to hurt the chances of the other 2. I would never have to take that factor into account in France.

As for the articles on women in France. I read them. I disagree with your conclusions. I don't think the US is in any way more family friendly or that women's career suffer less. Yes when you have children your career tends to suffer at least temporarily. How can that be surprising? In the US my friends tend to think that it is everything or nothing, I have the high pace lawyer who will never have kids, the business woman who is so adamant not to hurt her career that she never says no and doesn't see her only child and the highly educated mom who feels like she cannot have it all and so prefers to opt out and be a SAHM. In France i think my friends don't worry so much. They work and have 3 kids and yes their careers slows down for 3-4 years and then it goes back up.

I have a very good career, I love my job, i work long hours. Since I had my kids I cannot work as long as other women with no kids (or other men with no kids). I am less flexible. I am tired. I have a great life outside of work i want to get back too. My husband is exactly the same. And our coworkers can see that. We don't get the hottest projects, biggest praise or fast track. But we are fine with that, in 2-3 years when our kids are a bit more independent we will be back into it. Or not if it feels good to be on a slower but enjoyable track.

Ok we have the solution. OP should move her family to France

Can we get back to the subject please?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Side note: a foreigner perspective on the 3 kids debate => as a French person I am always struck by how negative Americans are towards people who have 3 children. It is so often portrayed as a crazy, selfish, financially and environmentally irresponsible choice. I think in France we would think the same way about someone who chooses to have 5 or 6 children but 3?? we need some 3 kid families to ensure natural reproductive rate of the population (2.1 given the number of people who don't have kids or only 1).

Not judging. I am actually stopping at 2 myself because I understand it would be too hard for me to afford 3 children while living in the US. But I never thought 3 children would feel impossible. In France with subsidized day care, free education and full day schools you mostly choose your family size based on what seems the best balance in terms of time and love. It is too hard to raise a 3 kids family here.

And to finish my thought: people end up criticizing the 3 kids choice almost as a moral failure. From an outsider's perspective it looks more like a society failure..

What?! My brother is in the EU, pays 45+% taxes, 600 euros per month during the winter to warm up his 2 bed, 1.5 bath condo, double the price for gas, food, high interest rates etc etc. He also has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors. He can only afford one child. My SIL has been unemployed for months despite a good education and great work history.

"has to purchase private health insurance because the nationalized one comes with huge waiting times and no access to good doctors" in that case he is not in France as that's not how the system works.

But I will add that for the rest I wont contradict you, Europe is certainly not cheap and unemployment is a big issue. There are a lot of people who cannot really afford having children. HOWEVER, it won't be such a catastrophic drain on their budget. If you are financially in trouble you will actually get a lot of free stuff (daycare could end up being almost completely free for ex. and that includes meals), your kids will have health insurance and their chances at higher education are not ruined. You receive a monthly stipend per child (family allocation). It is not the factor that will make you go bankrupt.. And for sure, in the situation of OP, with 2 working parents it wouldn't be an issue.

All this back and forth: why don't people realize that for the average person, it's six of one or half dozen of the other? You're either spending money on childcare here or taxes/housing there. Where it does make a big difference is if you are high income. Then it is much better to be in the US which is why we have the system we do (it's obviously skewed in favor of the rich).

[Anonymous]

Wait. Did op say she bought the house when they got engaged, like three kids ago? If oldest is later elementary, is this pre-bubble pricing? How much equity do you have??

[Anonymous]

Anonymous wrote:

Anonymous wrote:Regarding family size, did anyone see the Oprah years ago when Suze Orman was on with the Octomom? Suze said something along the lines of, here we are all judging Octomom, and yet how many people have a third child when they can't really afford the two they have, or have two when they can't afford one? Having more children than you can afford is irresponsible regardless of how many you have, but MANY people don't look at it that way. If dh and I bought a mcmansion, given our finances (even though we would qualify for the mortgage we'd be hanging on by a thread), people would think we were insane. If we had another child, no one would bat an eye.

Stop with the kid bashing. It's obnoxious and irrelevant because op can afford her kids and address her debt with simple lifestyle changes.

Well, yes she can. But Op has got to stop throwing money around like they have it. They don't. And they do have 3 kids so they need to budget accordingly.

[Anonymous]

Anonymous wrote:OP is competing for resources with highly educated, driven people in this area who have made either smarter or tougher choices. She does not understand the competitive environment in which she operates. Or she refuses to acknowledge it.

yup

[Anonymous]

Anonymous wrote:Wait. Did op say she bought the house when they got engaged, like three kids ago? If oldest is later elementary, is this pre-bubble pricing? How much equity do you have??

The bubble burst ten years ago. I think OP bought at the top of the market.