“Rich” but Broke - What can we cut?

[Anonymous]

Anonymous wrote:84 month lease at the time, we were both students with lots of student debt. That’s the one thing we’ve prioritized paying off. Keeping the cars until they die is the plan! 11 months left on one, 13 months on the other.

Well at this point you keep the cars and drive them into the ground. But WTH, you took an 8 year lease on 2 cars?!?!?! You overpaid for cars and a house.
Only thing you did right was pay off the student loans, which I hope are gone at this point.

Seriously, what type of cars are they? What are they worth if you sold one? Can you manage with only 1 car for a few years? That would free up a bit of cash

[Anonymous]

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

Lies. Summer camps. Sports. Music lessons. It’s a small savings.

[Anonymous]

A little extreme but if you rent your house out for a few years and rent a place in Silver Spring or North Kensington, you could net almost $2K on the rent differential. Putting your kids in local daycares in those areas could potentially net another $1500/month.

[Anonymous]

We make more than you but drive a 10 year old Honda we bought for cash. Who spends $1k/month on cars? Do you have 4 drivers in your family and need 4 cars?

[Anonymous]

Anonymous wrote:I don’t understand what we are doing wrong. What can we change/cut out?

Family of 4: 2 kids under 3
Gross income: 350K (net after taxes is approx $15K/month)
House Mortgage, Home Insurance, and Property Taxes: $5300/month (900K at 2.6% interest, Chevy Chase, MD). House has appreciated 500K since we bought it. Really good public schools so not inclined to move.
Childcare: $5000/month
Car payments and insurance: $1000/month for 2 cars

Between these fixed expenses, mobile phone bills, utilities, kids’ activities, diapers and other necessities for kids, groceries, healthcare expenses, house maintenance, etc. we are living paycheck to paycheck. We don’t buy anything we don’t immediately need. Dining out consists of fast food eaten at home, at most 1/week. Free activities on weekends with kids. What are we doing wrong?

To start, with kids under age 3, I would definitely cut any kids activities you are doing.
You could try to start YNAB if you really have the mental energy to make real changes. There is a free 34 day trial.
Offhand, $5K a month in childcare sounds high - but my kids are 14, 11, and 8 and I've been out of the full time childcare

This is me in April:

https://www.dcurbanmom.com/jforum/posts/list/1128137.page

And I really have made some changes but I really went on a personal finance journey that has required some amount of effort on my part. These are things that are different from me than you:
I have a cheaper house and cheaper car payments. If you're not willing / able to do anything cheaper with your house or cars, or reduce childcare expenses - I think it is what it is and you'll be strapped until you can drop childcare. You can try to cut slight things on the margins like dining out and try to cook cheaper things at home.

I haven't read any of the other comments yet.

[Anonymous]

You can absolutely reduce childcare expenses. LOOK.

[Anonymous]

Anonymous wrote:We make more than you but drive a 10 year old Honda we bought for cash. Who spends $1k/month on cars? Do you have 4 drivers in your family and need 4 cars?

They have two cars. OP's already said that the cars are too expensive but they are almost paid off now. Cars are really expensive - if you haven't bought a car for a decade, you might not realize HOW expensive. We're looking at having to replace our 11 year old Kia Soul and WOW are we having some sticker shock.

[Anonymous]

Anonymous wrote:Send them to 5 day a week preschool. You can go to a well-regarded program that is 9-2:30 for around 1K a month/kid and then supplement with an afternoon sitter for a couple hours. That will save you easily 2K a month and then you won't need to pay for additional activities for your kid because they are getting plenty of enrichment at school. Nannies are a luxury and totally unnecessary.

Example: http://allsaintschurchpreschool.net/programs/

These mythical, well qualified, part-time sitters are very difficult to find. When you find them, they command a higher hourly rate. Proceed with caution.

[Anonymous]

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.

Lies. Summer camps. Sports. Music lessons. It’s a small savings.

Not lies! Are you shelling out 5k a month now for activities and camp for loke 8 and 10 year olds? Are they in all travel sports and Bryn Mawr camp? Very few people are shelling out that much with two children.

[Anonymous]

You guys will be fine; the hard part will be living in a keeping up with the Jones’s neighborhood. Resist the temptation to replace them when paid off. Also don’t replace the childcare costs with trips to Costa Rica and Paris.

[Anonymous]

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.

Lies. Summer camps. Sports. Music lessons. It’s a small savings.

Not lies! Are you shelling out 5k a month now for activities and camp for loke 8 and 10 year olds? Are they in all travel sports and Bryn Mawr camp? Very few people are shelling out that much with two children.

DP. It is a good warning for OP to heed though - with those car payments and house payments - I think the kids absolutely end up in expensive camps and activities if you don't watch the lifestyle creep.

[Anonymous]

Anonymous wrote:These rich but poor threads are getting so old.

This is very common. A lot of 'rich' people are one disaster away from losing a lot. Not everyone with a high income is good with money, like not every low income person is bad with money. If these threads are getting old, show yourself out.

[Anonymous]

You're not really living paycheck to paycheck - I am guessing you are saving a good amount in your 401(k)s, for example, right? The years of 2 in daycare are tough. You just have to deal with it until your older one starts K and then life will be a lot easier.

[Anonymous]

Anonymous wrote:OP here: retirement savings are just what employer matches (8% me, 4% husband). Health insurance is a huge cut, plus I work for fed and have 4.4% of my pay cut for govt pension. Both kids are in FT daycare; we don’t have space for an au pair. Cars were purchased before we got married 6 years ago / had kids + insurance is very expensive.

Helpful to know it’s just a season in life…

What kind of cars do you own that you are still paying $500/month after 6 years???

[Anonymous]

At 350k annual income and only taking home 15k a month, you’ve basically got 15k going to taxes, retirement, and health insurance. That seems like a lot.