“Rich” but Broke - What can we cut?

[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.

I have a 6 and 8 year old. This summer we averaged 381.75 per kid per week of summer camp. If we had needed camp every single week this summer, that would have been a total of 381.75*2 kids*10 weeks = $7,635. Extended day at school is 340 each for 340*2 kids*10 months = $6,800. Total childcare is now up to $14,435, which is the same as 3 months of daycare for OP. I'm not sure what activities your kids are in, but our soccer, flag football, basketball, and one enrichment per session is not coming anywhere close to the other $45,000 OP is spending on daycare.

I guess if you have your kid in travel hockey and only send them to sleepaway camp you might not see any savings, but normal people get a big bump when daycare ends.

[Anonymous]

6 and 8 year olds are cheap. Everything gets expensive again as the kids get older. The lifestyle creep is real, especially in places like CC. Those car notes are brutal.

[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.

I have a 6 and 8 year old. This summer we averaged 381.75 per kid per week of summer camp. If we had needed camp every single week this summer, that would have been a total of 381.75*2 kids*10 weeks = $7,635. Extended day at school is 340 each for 340*2 kids*10 months = $6,800. Total childcare is now up to $14,435, which is the same as 3 months of daycare for OP. I'm not sure what activities your kids are in, but our soccer, flag football, basketball, and one enrichment per session is not coming anywhere close to the other $45,000 OP is spending on daycare.

I guess if you have your kid in travel hockey and only send them to sleepaway camp you might not see any savings, but normal people get a big bump when daycare ends.

+1. We saved a ton once daycare ended. If it were me I'd try to get the childcare expenses down a bit by looking at daycares, should be cheaper for older kids than infants. Worst case hopefully you've got some savings from biglaw and just tread water for the next year until the cars are paid off and there's an extra $1K per month. Try to hold off on buying a car at least until daycare is over.

[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?

You posted what you are doing wrong. Your lifestyle choices.

[Anonymous]

Silver lining - at least you make 350k and just need to budget a bit. Way better problem than an income problem

[Anonymous]

Anonymous wrote:6 and 8 year olds are cheap. Everything gets expensive again as the kids get older. The lifestyle creep is real, especially in places like CC. Those car notes are brutal.

You could also just NOT given into lifestyle creep. That’s 100% a preventable problem. Also, are you really spending $2500/month on your teenage? Every single month not counting college? I’d really like to see an itemized list because that’s wild.

[Anonymous]

Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

[Anonymous]

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

You bought the house while you were working big law. So if you are not willing to give that up (ie return to working big law or sell the house, which does not likely make sense currently), then something else has to give. You definately cannot "keep up with the jones" once daycare is over. There are plenty of very safe cars that are not as big as an MDX---you can get a new CRV for 30-33K currently. So in 2-5 years, when your MDXs are not reliable, you should plan to downgrade to something new like that and then drive them for 10+ years.

[Anonymous]

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Well soon you won't have the car payments then but I highly recommend trying something YNAB and really seeing where you are spending money and where you WANT to be spending your money - otherwise if you're anything like me - I wouldn't have made a real conscious spending plan with what to do with that newfound money.

In addition to YNAB, I liked Ramit Sethi's netflix show and his book - I will teach you to be rich. I think you can work with what you've got but you've got to go on a personal finance journey like me!

[Anonymous]

Anonymous wrote:

Anonymous wrote:6 and 8 year olds are cheap. Everything gets expensive again as the kids get older. The lifestyle creep is real, especially in places like CC. Those car notes are brutal.

You could also just NOT given into lifestyle creep. That’s 100% a preventable problem. Also, are you really spending $2500/month on your teenage? Every single month not counting college? I’d really like to see an itemized list because that’s wild.

No I am not spending $2500 on my teenager! But they can get expensive, with braces, tutoring, phones, shoes, clothes. An afternoon of ice skating and lunch with friends can be $40-50! Sure we say no a lot and invite friends on cheaper outings but teenagers can be very expensive. We live in a less prestigious part of the city so we have less lifestyle pressure than others. My sister lives in Arlington and her daughters spend an absolute fortune on clothes, manicures and highlights. It’s insane to me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Cars were admittedly expensive. Husband (then fiancé) had been in a bad accident some years prior and didn’t let us buy anything but a large SUV. We drive gently used Acura MDXs that came out to about $46K with taxes (very little down b/c students, hence the 84 month loan). The large cars ended up being the right car with 2 kids/car seats/stroller etc. Biking to work isn’t practical with 2 kids in daycare and coordinating pickup/drop off. Doesn’t make sense to sell car now, almost paid off. We drive to metro and use govt transit subsidy to get to work.

Yes we have some savings from my time in big law. Enough for a rainy day. Most was used to pay off school debt (approx 500K combined by the time we graduated).

We will be mindful of not keeping up with Jones’. Very aware of expensive house (bought when I was in big law) and cars. 2 young kids in this pandemic while I was in big law was not sustainable for me personally, so I took a giant paycut to work fed. Maybe the answer is also to go back to private…

Lots to think about. Thanks for the reality checks and helpful advice.

Well soon you won't have the car payments then but I highly recommend trying something YNAB and really seeing where you are spending money and where you WANT to be spending your money - otherwise if you're anything like me - I wouldn't have made a real conscious spending plan with what to do with that newfound money.

In addition to YNAB, I liked Ramit Sethi's netflix show and his book - I will teach you to be rich. I think you can work with what you've got but you've got to go on a personal finance journey like me!

Great tips, thank you!

[Anonymous]

I feel like you took a pay cut but didn’t change anything so you’re looking at either changing something big, like your house, or just tightening your belt while you have kids.

The cars make no sense to me. I have plenty of money but I just don’t get why you would buy Acuras over RAV4s or Subarus or whatever else. Are they that much nicer? I’m not a car person so I don’t know. But I also don’t worry about my food budget at all.

[Anonymous]

Anonymous wrote:

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.

$5k for FT childcare is reasonable. Maybe the older kid is PK aged, but if they go to a half day PK, you then need care for the other half of the day.

[Anonymous]

First problem is that you think you are rich, you are middle class and living pay check to paycheck. You need to drop the nanny and cars and live like the middle class with daycare and 15 year old shit cars

[Anonymous]

You mortgage is very high for your income.