$14k net HHI - Budget Input

[Anonymous]

Anonymous wrote:Your grocery/food budget is the most obvious issue to me. $1000 a month, but not including eating out, entertaining, or normal household supplies?? That's crazy! I have an 18 month old and spend about $750 a month on all of those items combined. I buy my lunch about half of the week, and eat out for dinner once or twice a week. I don't even try to use coupons or read sales newspapers, but if I did I'm sure I could save another $100. But your hellofresh delivery on hold and evaluate the rest of your food shopping habits. Does your nanny cook or can she follow recipes? Try having her prep your dinners once a week. Or make casseroles and ask her to put them in the oven before you get home.

The rest of your budget is a little troubling, but this is the easiest place to cut back.

Groceries are not out of whack by much. We spend about $850 ourselves although there are 4 of us (and two teens!)

[Anonymous]

Anonymous wrote:

Anonymous wrote:You've gotten some good suggestions as to what to cut.

Once you cut them, start saving. Start an emergency fund. Start a 529 for your DD. Start a car fund so you can pay for your next car in cash.

Somewhere along the line you were lead to believe that debt is good. It's not good for you; it is good for the people lending you money! Yes, you can hold a reasonable mortgage and perhaps some student loans, but financing and leasing luxury cars is just ridiculous!

What is the plan for the investment property? Are you getting any benefit out of it whatsoever? Any though about selling it to cut your losses there?

Kudos to you for realizing that you are hemorrhaging money and trying to do something about it. Hunker down now while you have one young child. They only get more expensive! And then you have a second! Is your DH on board? You should be able to get things under control relatively quickly if you to a real spending diet for about 6 months and make some tough choices.

Appreciate the feedback. DH is on board for sure - I tend to be the spender. We have just been way too lax about where our money has been going and didn't start seeing the red flags until we added childcare into the mix as we were easily covering all before. I'm surprised how many people see the car expenses as so high, very much thought that was the norm as it seems to be with our friends. But that's exactly what I'm looking for here - What immediately seems unreasonable to someone with an outside perspective.

Investment Property can't be refinanced until we're under 75% LTV but as soon as we hit that mark, and current renters move out (time to increase rent) we should be able to get it back to being covered by rent. We like the idea of someone else paying into an investment for us. The mortgage went off an ARM last year which is why we are all of a sudden paying each month. In the past, it was always covered by rent. Definitely an area that needs to be addressed.

529 is on my to do list this week as grandparents are wanting to start putting funds in. Other savings are a top priority once we get a handle on things.

My dear OP, I had a $365 car note on my first vehicle and paid for the next two cars, the second one of which I am still driving, for cash. Okay you are right we drive Hondas and Toyotas, and we do make more than $280 now, but expensive cars are the devil's way of insuring you don't have two nickels to rub together. If we can drive inexpensive Japanese vehicles that are 8 to 10 years old, with a $500K income, you can do it too.

[Anonymous]

We make $580,000 and have never bought a luxury car. I spend way less on everything that are your extras. I would a nervous wreck to spend the way you do.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What does this work out to be as gross income?

Just curious.

OP here- Our base without bonuses is $280k, works out to ~ $14k after retirement/taxes/etc

Here is a car reality check for you OP. My DH makes $250k and I don't work (so no childcare expenses.) He drives a 2011 Hyundai Sonata sedan and I drive a 2014 Honda Pilot. Both were purchased in full with cash. No plans to car shop anytime soon.

Your "peers" with fancy cars either make more than you or are losing money like you. Or they don't have an investment property, etc.

THANK YOU for saying this. OP really sounds like typical keeping up with the Joneses. My brother is a partner at E&Y and clears well over 500k a year. They have a paid off 2015 Mazda CX9 and a 2014 Hyundai Sonata.

OP here - After going through this review of our own finances I'm guessing our peers are also losing money. We're clearing about $330k after bonuses but can barely seem to break even. I appreciate the reality check as I guess we need it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Your grocery/food budget is the most obvious issue to me. $1000 a month, but not including eating out, entertaining, or normal household supplies?? That's crazy! I have an 18 month old and spend about $750 a month on all of those items combined. I buy my lunch about half of the week, and eat out for dinner once or twice a week. I don't even try to use coupons or read sales newspapers, but if I did I'm sure I could save another $100. But your hellofresh delivery on hold and evaluate the rest of your food shopping habits. Does your nanny cook or can she follow recipes? Try having her prep your dinners once a week. Or make casseroles and ask her to put them in the oven before you get home.

The rest of your budget is a little troubling, but this is the easiest place to cut back.

Groceries are not out of whack by much. We spend about $850 ourselves although there are 4 of us (and two teens!)

But that doesn't include the eating out or the household supplies.

In reality OP is saying that they spend over $2k (1000 groceries, 150 lunches out, 500 eating out, 650 household items).

Generally food/household items comes in around 10-11% of take home. Maybe 12% max. They are spending 16%.

[Anonymous]

Anonymous wrote:Lifestyle creep is serious and it slips into your life so quietly that you don't realize it until it's too late.

We recognized that we were spending too much and not saving enough (we don't make as much as you at about $10k per month, but we have no debt, no student loans, no childcare costs and don't have to save for college, etc), so I took simple steps to reign in our budget and cut costs. I would suggest canceling Hello Fresh immediately (we had to do this) and start re-using some of the recipes you've already acquired.

Next, I made a commitment to only cook food we already had in our freezer and pantry, and not buy anything but the absolute essentials at the grocery store. I downloaded a shopping app, and only allowed myself to buy exactly what was on the shopping list. I've noticed that with lifestyle creep, you start buying more in bulk, or buying stuff that you already have at home because you aren't being bothered with tracking and are coasting on the confidence of having that disposable income.
We saved $800 in one month alone from doing this. It isn't this much every month, but our grocery budget has decreased substantially.

Not sure why you need new clothes and such every month, but we put ourselves on a shopping ban, and didn't buy anything new for six months. I unsubscribed from all department store email so that I wouldn't be tempted by sales and stayed far away from shopping centers.

We have cleaners that come twice a month, and honestly OP, I pretty much stopped buying most of our cleaning supplies outside of basics. You need to look at the household stuff and reexamine whether or not you really need to be blowing $600 on all of that. If this is impulsive spending, start buying paper towels, toilet tissue, and laundry detergent online and through a subscription at Target or Amazon, where not only will you save a few dollars, but it will keep you out of the store and not give you a chance to shop impulsively.
All of the candles and special soaps and body washes in pretty bottles that you're tricked into buying, it all adds up. Remove all of that temptation and I guarantee you will be able to save.

Lifestyle creep - so so true. It's not obvious that you're spending too much in any once place as it's everywhere and a slow creep to get there.

[Anonymous]

Sell the investment property, you're not good enough with money to be dabbling in real estate. Take the profit and drop it in your kids' 529s.

[Anonymous]

How are people spending so much on their yards?

I don't spend money on ours monthly.

We have a company do a "spring clean up" once in April, have a neighborhood kids do biweekly mowing in late Spring to Fall and then have leaves blown once in October.

What are you having someone do every month other month of the year?

[Anonymous]

You've gotten a lot of good suggestions, OP. But specific suggestions aren't really enough for you - you need a fundamental readjustment in your approach to money - perhaps some basic money management courses. Consider these points:

You aren't maxing out your retirement accounts, yet felt it OK to spend $700/month on a car LEASE. That's on top of your existing $500 month car payment.
You hired a nanny at $3000/month, plus additional groceries and classes, without considering whether you could afford it, or realizing that you would be $600 in the hole.
As many posters have pointed out, you have overlapping categories of expenses. This appears to be a way to inflate those categories while not really taking responsibility for it.

Someone else said it best - you make enough money to afford virtually anything, but not everything.

As an aside, clearing $14,000 on an income of $280,000 seems suspect. Our HHI is calculated on an annual salary of $280,000 per year. You are grossing $23,333 each month. 8% 401k (which is nowhere near maxing out) brings it down to $21466. OASDI brings it down to 20,095. My federal withholding (which may be high) brings it to $15813 and state brings it down to $14,200. That's before any insurance premiums, pre-tax parking, HSAs, etc. are withheld. Our monthly total is $10,800, and while our mortgage is more than yours, we don't; have a nanny, and I wouldn't DREAM of signing a $700/month car lease. I don't care what my friends are driving. And you are spending a combined $2700 on groceries/home supplies/personal care/shopping/entertaining.

Your husband may want to keep the investment property, but you have to recognize that doing so requires cutting back in other areas.

As first steps, you need to:
- rethink the nanny and look for cheaper childcare options
- sell back the Mercedes lease and get something affordable
- Cut that 2700 for groceries/home supplies/personal care/shopping/entertaining in half, or at lease by $1000

[Anonymous]

OP, my HHI is lower than yours- $250k- but your car bills are ridiculous! I can't imagine a lease that's $700 a month.

I have one car payment that's $225 a month, and I can't wait to pay that off.

I don't think your groceries are ridiculous- I spend about $1k in groceries a month- but we eat high quality food and make most of it ourselves, and that's worth it to me.

I agree that you should do a spending diet. My DH and I did this for the past two months and it's shocking how much can just slip away bc you aren't being intentional.

[Anonymous]

Anonymous wrote:You've gotten a lot of good suggestions, OP. But specific suggestions aren't really enough for you - you need a fundamental readjustment in your approach to money - perhaps some basic money management courses. Consider these points:

You aren't maxing out your retirement accounts, yet felt it OK to spend $700/month on a car LEASE. That's on top of your existing $500 month car payment.
You hired a nanny at $3000/month, plus additional groceries and classes, without considering whether you could afford it, or realizing that you would be $600 in the hole.
As many posters have pointed out, you have overlapping categories of expenses. This appears to be a way to inflate those categories while not really taking responsibility for it.

Someone else said it best - you make enough money to afford virtually anything, but not everything.

As an aside, clearing $14,000 on an income of $280,000 seems suspect. Our HHI is calculated on an annual salary of $280,000 per year. You are grossing $23,333 each month. 8% 401k (which is nowhere near maxing out) brings it down to $21466. OASDI brings it down to 20,095. My federal withholding (which may be high) brings it to $15813 and state brings it down to $14,200. That's before any insurance premiums, pre-tax parking, HSAs, etc. are withheld. Our monthly total is $10,800, and while our mortgage is more than yours, we don't; have a nanny, and I wouldn't DREAM of signing a $700/month car lease. I don't care what my friends are driving. And you are spending a combined $2700 on groceries/home supplies/personal care/shopping/entertaining.

Your husband may want to keep the investment property, but you have to recognize that doing so requires cutting back in other areas.

As first steps, you need to:
- rethink the nanny and look for cheaper childcare options
- sell back the Mercedes lease and get something affordable
- Cut that 2700 for groceries/home supplies/personal care/shopping/entertaining in half, or at lease by $1000

I was going to say something very similar. I do think that people like OP need a fundamental change in attitude; sadly, most of the people I know who spend like this never get better.

[Anonymous]

Op - Although i agree with the others on the cars, if you already have them and you want to keep them, do that. for me, the biggest things that jumped out were all your discretionary spending. Just take a look at your list and re-organize it a bit.

this is what you're spending on food and entertainment: $2,000 per month - I just can't even understand how you grocery shop and spend 1000 on food (that doesn't even include home supplies), then you do restaurants/take out for another 500, then eat out for work, spend more money to entertain. Honestly, when do you eat the groceries you buy each month?
Groceries - $1k per month
Restaurants/Take Out - $500 per month
Work Lunch - $150 per month
Entertaining - $200 per month (having guests over/parties)
Entertainment - $150 per month (going out for drinks/movies/etc)

this is what you're spending on just miscellaneous shopping, upkeep, gifts: $1,700 per month Agaain - here - you buy TP and non-food groceries and that's a huge amount of stuff. And then $500 on clothes and décor? it's almost like you're a hoarder. and your hair and nails cost you $350 per month? a color and cut is about 350 at a top place and that's every 2-3 months, right? the rest is some serious waxing and then $200 on gifts....each month?
Home Supplies - $650 per month
Personal Care - $350 per month (hair cuts/color, waxing, nails)
Shopping (Clothing/Accessories/Home Decor) - $500 per month
Gifts - $200 per month



honestly, if you cut back on the above you'd save yourself a ton of $$ and i can't even go into the rest below. nanny PLUS preschool PLUS activities? cut back on those. A good nanny can do activities with your kid without you having to pay for classes.

Nanny/PT Preschool for one child - $3k per month
Mortgage - $3100 per month
HOA Fee - $200 per month
Investment Property - $750 per month (what rent doesn't cover)
Home Insurance - $125 per month
Car Payments - $1200 per month (2 cars)
Car Insurance - $110 per month (2 cars)
Gas - $200 per month
Tolls - $35 per month
Student Loans - $350 per month
House Cleaner - $300 per month
Lawn Care - $135 per month
Kid's Activities/Lessons - $200 per month (swim class, music class, outings)
Doctor/Dentist - $150 per month
Pharmacy/Medications - $100 per month
Water Bill - $100 ($300 every 3 months)
Gas Bill - $140 (in winter, much less in summer months)
Electric Bill - $200
Cell Phones - $200
Pets - $100 earmarked per month for vet visits, meds etc every few months

Cash - $200
TOTAL ~ $14,600

[Anonymous]

Anonymous wrote:OP, we have just about the same take home but we have a family of 4.

First, the cars are ridiculous. Absolutely out of control. We have two cars, both paid off, both over 100k miles but we do great maintenance on them (Toyota and Ford) and there is a lot of life left in the. One kid will start driving soon so these cars aren't going anywhere.

Your food spending is weird too. Hello Fresh? Can't even imagine wasting money on that. We both work and I have limited time to cook but we get by. Our grocery bill including wine is about $150 a week. We do order out once a week but it is pizza on Friday nights. That is it though. Maybe we go out for our anniversary but other than that we eat what we have.

Costco -- we buy all our household items there and maybe it is $200/mo. Maybe since we don't even go every month.

My hair is pricey ($180) every two months and I get my nails done regularly but with a gel manicure I go every 2-4 wks.

Clothing/household goods -- what the WHAT?!? No, really. Come on. I do Stitchfix every other month and keep 1-3 items so my bill is about $120 every two months. DH rarely buys new clothes. Kids get new clothes each season but nothing crazy.

There are sooooo many ways for you to cut your costs. It seems as though you are living way beyond your income level. The comment about your friend's cars makes me think you are trying to keep up with the Jones when you aren't a Jones!

NP here. Just think it's a bit rich to say Hello Fresh is ridiculous when you use Stitch Fix. I mean you are literally paying a company to market fast fashion to you at full price. If a company wanted to tempt me with crap they want to buy, I would at the very least expect it to be free. Not shell out $20 a week or whatever it is these days. Mind bogglingly stupid.

[Anonymous]

What you bring home in 2 months is what I bring home in 12 months. And I wouldn't even use the word struggling to describe myself.

[Anonymous]

Anonymous wrote:How are people spending so much on their yards?

I don't spend money on ours monthly.

We have a company do a "spring clean up" once in April, have a neighborhood kids do biweekly mowing in late Spring to Fall and then have leaves blown once in October.

What are you having someone do every month other month of the year?

Totally agree. We have .25 acres and buy $120 worth of Boy Scout mulch in the spring and maybe $100 of annuals. a year. We do the work ourselves. We did invest in lawn equipment and some new shurbs when we bought the house, but those are not recurring expenses.