“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.

I would suck it up until then and then you should be able to have more of a cushion.

[Anonymous]

I just wanted to come on to say -- people on this list are cruel. You are doing fine-- the daycare years ARE ROUGH. I have 8 more daycare payments until financial freedom (yes, I'm counting) - and it has been a LONGGGGGGG road (three kids)

Sure, you could have bought a cheaper house, but considering your interest rate and equity - I would pat yourself on the back. I would definitely shop around for car insurance though, we only pay 120 a month in car insurance (one 3 year old car, one 10 year old car)

just grin and bear it -- in 2 years it sounds like you should have a 2500 decrease in daycare (one starts public) and cars will be paid off -- that would free up 3k a month which will make a huge difference.

[Anonymous]

Agree! We are a few years down the road from you, and if both people are working, incomes will also likely rise. We went from -350 joint to 550/600 from the time when our oldest was 4 to 8. Keep your low interest rate, most of that is actually savings. And after those cars, resist urge to buy a new one !!

[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.

Agree. It's not like once the kids start kindergarten the kids' expenses go to zero. Probably less than 5k/months, but could easily be half that with travel sports, camps, tutors.

I know some are saying you overpaid on your house, but you got into a great area that's appreciated a lot with a very low interest rate. If you had waited a few years you may well have been priced out of there.

[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.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

[Anonymous]

On the kid expenses -- just don't do travel sports, private school, tutors -- yes those add up so...decide hard if you want to do them. We do nice camps in the summer but no real activities in the school year aside from some public-school sponsored after school activities - minimal expenses.

I think your best bet is to actually track your spending to see where things are going. I know our biggest nice to have right now is eating out/delivery. Yes, we should cut it. But right now we're happy with where we are.

[Anonymous]

Anonymous wrote: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.

+1

Silver Spring PP here. DH and I drive Hyundais for which we paid cash.

[Anonymous]

Anonymous wrote:I think you made some good choices or got lucky, for example good job with the house! That rate and good schools can’t be beat.

It’s a matter of couple of years and then money will free up. Can one of you do some extra remote work on the side?

There are good schools throughout the area and ultimately what drives students' performance is their parents' SES and education levels. OP could have bought in Silver Spring and had a lot more breathing room.

It all looks 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.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

+1
You are living a way too lux life for your income IMO. The cars are a huge clue to your thought process. For comparison: When DH and I were grad students, we just forewent cars even though we had 1 kid and it was really hard to manage. Once we graduated we got a single 2 year old car that had been listed as the cheapest car to own. Not everyone needs to be as stringent as we were of course, but that kind of loan on large Acuras?! Makes me also question whether you are getting the best option on childcare/mortgage/other spending. You're digging through some past bad financial decisions now plus a known financial crunch time of life--you have a ways to go before you'll be able to live think you think you should/like your neighbors do. You're currently undersaving for retirement and I don't see mention of 529 plans/college savings for the kids too.

[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.

Just remember to save that money once the little ones go to public ES

[Anonymous]

Anonymous wrote: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.

Not OP, but yes MDXs are nicer as they are "luxury", but in reality they are not any safer. RAV4s or CRVs or similar size Subarus are equally safe. You don't need to be in a full size suv to be "safe".

[Anonymous]

FWIW I liked this article. I think a lot of the people we all think are rich are not - they're just showoffs and spending all their money.

https://www.ynab.com/three-factors-of-wealth/

[Anonymous]

Anonymous wrote:I just wanted to come on to say -- people on this list are cruel. You are doing fine-- the daycare years ARE ROUGH. I have 8 more daycare payments until financial freedom (yes, I'm counting) - and it has been a LONGGGGGGG road (three kids)

Sure, you could have bought a cheaper house, but considering your interest rate and equity - I would pat yourself on the back. I would definitely shop around for car insurance though, we only pay 120 a month in car insurance (one 3 year old car, one 10 year old car)

just grin and bear it -- in 2 years it sounds like you should have a 2500 decrease in daycare (one starts public) and cars will be paid off -- that would free up 3k a month which will make a huge difference.

No, they are not "doing fine" and need to adjust their mindset. Nobody should take a car loan for 7 years! Nobody. If that is the only way to get affordable payments, then you cannot afford that vehicle. There are many many many cheaper safer choices back when they made that decision. SO now they need to drive those cars into the ground and change mindset so they purchase vehicles they can afford to pay off in 3 years next time....then when you drive them for 10 years you continue saving the last 7 and could pay cash for the new car.

They need to change their mindset and realize they are not big law and cannot keep up with the jones

[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.

Wait, you purchased Acuras as students with a long-term loan? What on earth?

OP, you need a reality check.

Our HHI is the same as yours but we live in Silver Spring and our mortgage is $2800/month.

Your mindset needs adjusting.

One was big law originally and obviously didn't think of the implications of dropping to being a fed when they had purchased the big law lifestyle already.

Ideally they should have spent $10K each on a vehicle 7-8 years ago, never bought the home they did until loans were paid off, emergency fund was set up, etc. Once you purchase the "lifestyle of a big law family" you cannot just expect to drop out and not change the lifestyle without financial consequences.

[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.

Just remember to save that money once the little ones go to public ES

It will need to mostly go to college funds. The lifestyle will always be hard to support. In 10-15 years they will be on the College page complaining that they cannot afford college and it's not fair that they were not able to save anything on their $300K+ income.