What would you do with that budget ?

[Anonymous]

DH and I are 38 yo. we used to have a HHI of 190 and both got a raise this month and reach 249 HHI.

We have a small home (1000sqt with 500 sqft addition) that we like, in a neighborhood we love with what we consider very good public schools. It is a bit too small for us (2 kids boy/girl 4 and 6yo) because kids have to share a small room. The third bedroom is not ideal for kids and best kept for guests (not same floor, not enough natural light). It is not an impressive house for sure, a small bungalow with a tiny yard. DH is starting to dream about bigger home in same neighborhood (think 800/900k home around TKPK/SS). I think we should enjoy our reasonable mortgage and build up our savings/retirement/529. Advice?

Big ticket items
- 630K home; 400K mortgage. 2700$ PITI (for another 25 years or so)
- daycare: 2300 for now (1 in day care, 1 in B/after care)
- 1000$ DH student loan reimbursement (he has 50K left to repay)
- one 2009 car paid in cash, will need replacement in coming 5 years
- 500$ every month in the 559 of the 6 yo since he started kindergarten in Sept (current level 7500 as we had put some before)
- 200$ in 529 for the other child until she starts public school
- emergency fund 40K
- I have a pension and max my contribution in that pension (15% of my salary)
- my DH is really behind on his retirement (we are 36/38), I am getting him to put 15% of his salary at least in 401k
Total big ticket items: 8500

Lifestyle and small expenses
- our grocery shopping is 1000 a month (organic, fair trade blala..) and after a lot of debates I am ok with that (we minimize as much as possible with costcoe, cook from scratch don't buy package food but I enjoy not compromising on the quality of our veggies and meat)
- dining out 500 a month (restaurant with kids once a week for brunch + drinks and diner out once a month with babysitter)
- plane tickets: we save between 500/1000 a month to cover our 2/3 annual trips. frugal otherwise (no hotels, camping etc.) but we travel to see family abroad and across US and that's another lifestyle choice that we don't want to sacrifice (will go down to 500 a month soon as we can only fly out twice with first grader holidays)
- health insurance (300)
- kids activities, language school, clothes (350)
- gym membership and fitness classes on average 150$ for both
- phones paid by work, no TV, but internet and Netflix (~70)
- house insurance + auto insurance (150)
- Metro card for both (200$) Gas (50$)
- utilty, gas, electricty, water: around 150
- we don't buy much stuff, clothes, toys etc.. (the advantage of the tiny house..no storage makes us embrace minimalism)
Total L and SE: 3920

Total : 12420 for a new monthly income of 15000. I think our margin is perfect for additional investment but not enough to add another 1K or 1.5K in mortgage. My husband thinks the change a bigger house would bring to our life is worth it... WWYD?

[Anonymous]

Anonymous wrote:DH and I are 38 yo. we used to have a HHI of 190 and both got a raise this month and reach 249 HHI.

We have a small home (1000sqt with 500 sqft addition) that we like, in a neighborhood we love with what we consider very good public schools. It is a bit too small for us (2 kids boy/girl 4 and 6yo) because kids have to share a small room. The third bedroom is not ideal for kids and best kept for guests (not same floor, not enough natural light). It is not an impressive house for sure, a small bungalow with a tiny yard. DH is starting to dream about bigger home in same neighborhood (think 800/900k home around TKPK/SS). I think we should enjoy our reasonable mortgage and build up our savings/retirement/529. Advice?

Big ticket items
- 630K home; 400K mortgage. 2700$ PITI (for another 25 years or so)
- daycare: 2300 for now (1 in day care, 1 in B/after care)
- 1000$ DH student loan reimbursement (he has 50K left to repay)
- one 2009 car paid in cash, will need replacement in coming 5 years
- 500$ every month in the 559 of the 6 yo since he started kindergarten in Sept (current level 7500 as we had put some before)
- 200$ in 529 for the other child until she starts public school
- emergency fund 40K
- I have a pension and max my contribution in that pension (15% of my salary)
- my DH is really behind on his retirement (we are 36/38), I am getting him to put 15% of his salary at least in 401k
Total big ticket items: 8500

Lifestyle and small expenses
- our grocery shopping is 1000 a month (organic, fair trade blala..) and after a lot of debates I am ok with that (we minimize as much as possible with costcoe, cook from scratch don't buy package food but I enjoy not compromising on the quality of our veggies and meat)
- dining out 500 a month (restaurant with kids once a week for brunch + drinks and diner out once a month with babysitter)
- plane tickets: we save between 500/1000 a month to cover our 2/3 annual trips. frugal otherwise (no hotels, camping etc.) but we travel to see family abroad and across US and that's another lifestyle choice that we don't want to sacrifice (will go down to 500 a month soon as we can only fly out twice with first grader holidays)
- health insurance (300)
- kids activities, language school, clothes (350)
- gym membership and fitness classes on average 150$ for both
- phones paid by work, no TV, but internet and Netflix (~70)
- house insurance + auto insurance (150)
- Metro card for both (200$) Gas (50$)
- utilty, gas, electricty, water: around 150
- we don't buy much stuff, clothes, toys etc.. (the advantage of the tiny house..no storage makes us embrace minimalism)
Total L and SE: 3920

Total : 12420 for a new monthly income of 15000. I think our margin is perfect for additional investment but not enough to add another 1K or 1.5K in mortgage. My husband thinks the change a bigger house would bring to our life is worth it... WWYD?

And adding: no CC debts and annual charitable donations 2000$ so ~ 170 a month

[Anonymous]

$15k take home on $249k?

That sounds too high.

[Anonymous]

$50k in student loans and a bit behind in both college and retirement savings? Stay where you are.

[Anonymous]

Anonymous wrote:$15k take home on $249k?

That sounds too high.

It is because my take home is net (work for international org), I convert to Gross HHI to make it easier for others to compare but it also means our taxes are low. My net take home is 10K and my DH income tax bracket is still low

[Anonymous]

Anonymous wrote:$50k in student loans and a bit behind in both college and retirement savings? Stay where you are.

OP here, thanks for the reality check. I agree...

[Anonymous]

Anonymous wrote:$15k take home on $249k?

That sounds too high.

+1

[Anonymous]

Anonymous wrote:$50k in student loans and a bit behind in both college and retirement savings? Stay where you are.

+1

Use the extra to pay down debt and build a big cushion.

[Anonymous]

Anonymous wrote:$50k in student loans and a bit behind in both college and retirement savings? Stay where you are.

+1 If your DH wants a bigger house he should concentrate on paying off his student loans. Also agree with PP that $15k take home sounds high on $250k HHI -- but maybe you have a great deal on insurance or something? Your savings rate is really low right now; if you were aggressively paying down debt that would make sense but you're essentially just filling up sinking funds to get spent throughout the year, and your retirement and college aren't where they should be. This is a chance to get ahead instead of staying on the same paycheck-to-paycheck mentality.

[Anonymous]

Anonymous wrote:

Anonymous wrote:$15k take home on $249k?

That sounds too high.

+1

OP here: what would you say my DH take home is with a 89K salary? I assumed it would be 5K but maybe too high indeed? Mine is 10k for sure

[Anonymous]

Another vote to stay where you are. You don't have enough margin at this point with all your other desires/commitments.

I would recommend spending time to really design an effective room sharing design for your kids. Ikea and other inexpensive lines have really been innovating in this sphere and there are so many cool approaches with lofts, room dividers with desks and shelves etc. Look on line for ideas. This would likely buy you 3 more years of peaceful room sharing at which point it's probably about right to give separate rooms for different gender kids. At that point you can reassess whether the third bedroom is usable for a 9 year old and/or whether your finances are good for a move or a renovation that would create more space.

[Anonymous]

Could you add another floor?

[Anonymous]

Anonymous wrote:Another vote to stay where you are. You don't have enough margin at this point with all your other desires/commitments.

I would recommend spending time to really design an effective room sharing design for your kids. Ikea and other inexpensive lines have really been innovating in this sphere and there are so many cool approaches with lofts, room dividers with desks and shelves etc. Look on line for ideas. This would likely buy you 3 more years of peaceful room sharing at which point it's probably about right to give separate rooms for different gender kids. At that point you can reassess whether the third bedroom is usable for a 9 year old and/or whether your finances are good for a move or a renovation that would create more space.

+1

I would also look around at similar hoses to see how they added the third bedroom. That is was we did. We went to open houses all around and found different design details that we liked and incorporated into our eventual redo.

Don't move from neighborhood and house you like.

[Anonymous]

Anonymous wrote:

Anonymous wrote:$50k in student loans and a bit behind in both college and retirement savings? Stay where you are.

+1 If your DH wants a bigger house he should concentrate on paying off his student loans. Also agree with PP that $15k take home sounds high on $250k HHI -- but maybe you have a great deal on insurance or something? Your savings rate is really low right now; if you were aggressively paying down debt that would make sense but you're essentially just filling up sinking funds to get spent throughout the year, and your retirement and college aren't where they should be. This is a chance to get ahead instead of staying on the same paycheck-to-paycheck mentality.

OP here, thanks! So with our HHI what would your goal be?
- I asked my DH to put at least 1K a month on his student loan
- put 15% of his salary in his retirement
- contribute 250$ a month to his children's 529 (and I put 1000$)
=> on his salary it is a bit hard to do more and still contribute to the rest of our expenses (he contributes 1/3 , I contribute 2/3 for the rest - mortgage, daycare). I could help him more with student debt or retirement but I don't like his relationship with money and don't want to enable his idea that "we have money". I'd rather make sure he prioritizes the big expenses first. I know it sounds patronizing but to give you an idea I have bailed his CC debts twice in the past, so he is not allowed to carry a CC debt anymore .. (and he is doing great on that front, but I still check his cc level every other month)

For myself:
- my retirement is on track and my pension is good. I could put more but I think it would make more sense to help my DH with his
- I'd love to increase my savings to 15% a month ie 1500$ (pure savings not savings for future expenses as you said). I am good at saving that amount but on our previous HHI we ended up using it for travel or house renovations

[Anonymous]

Anonymous wrote:

Anonymous wrote:Another vote to stay where you are. You don't have enough margin at this point with all your other desires/commitments.

I would recommend spending time to really design an effective room sharing design for your kids. Ikea and other inexpensive lines have really been innovating in this sphere and there are so many cool approaches with lofts, room dividers with desks and shelves etc. Look on line for ideas. This would likely buy you 3 more years of peaceful room sharing at which point it's probably about right to give separate rooms for different gender kids. At that point you can reassess whether the third bedroom is usable for a 9 year old and/or whether your finances are good for a move or a renovation that would create more space.

+1

I would also look around at similar hoses to see how they added the third bedroom. That is was we did. We went to open houses all around and found different design details that we liked and incorporated into our eventual redo.

Don't move from neighborhood and house you like.

Thank you both, good idea about open houses. I think we could convert part of our lower level into a bedroom for us, and leave the 2 kids upstairs in 2-3 years when they start complaining about sharing a room.

Right now I even enjoy the coziness, we are all next to each others and it feels right. I need to stop looking at big open kitchens on Pinterest .
To the PP who asked about adding a floor: we looked into it. Our house is a historic house so hard to do, but on top of it : the cost is not negligeable, we would also be looking at adding another 100-200K to our mortgage I think?