Reply to Support a family of 4 on $55k/year

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]And to address the PP, across Virginia, cost of living varies widely.

My husband and I are struggling with this as well. We want to save and live a decent life, but it's hard -- we earn about $180,000 combined, have two children in daycare (about $2,000), pay $2950 in rent in NWDC in a good school district. We have very little savings outside our company retirement accounts.

I worry all the time; not saving enough for our chidlren's eduction, what if something happens to one of us.

We've made all the obvious cuts: only one car, no cable, take lunch, no Starbucks. We spend a lot on groceries, which we are working on trimming (easily $1,000 a month for 4), and booze. We go out to dinner or do takeout maybe three times a month, which isn't THE MOST FRUGAL, I know, but I don't think it's exorbitant. Any time we take a holiday it's to visit family on the east coast, we've flown once in the past, what, 6 years?

UGH.[/quote]

What are you spending on?  You make $180K, say about 23% for taxes, 10% for retirement, that's still $120K or about $10K take home a month.  Take out your $2950 and $2000 and even your $1K for groceries (I agree with others, how can you pay that much!?!? unless you have two teenage boys eating $200/wk of junk) maybe $400 for utilities, you still have $3600.  What do you spend $3600 a month on that you are scraping by with so little savings?  At your current incomes, you should be able to save $1000-2000 per month (at least).

You need to get counseling because someone(s) in your household have no concept of basic budgeting.  You need to reevaluate what needs vs wants are and learn to live within your means and not try to live up to the Jones who make more money than you do because you should not be straining financially the way you are on what you make. [/quote]

Well, I'm not PP but there are a number of expenses you didn't address at all that she could be spending on.  Car payment, car maintenance, gas, transportation costs if taking metro, dry cleaning, kids clothes/shoes/diapers/wipes, maybe kids activities, utilities, entertainment, healthcare, dental work, hair appointments, etc.  Maybe PP can cut costs in those areas, or eliminate costs, but to say that she has 3600 per month extra without even considering these things isn't realistic.[/quote]

But those are not necessities, but luxuries of having over median income.  If you have median or below median income, i.e. the original $55K annual income for a family, you can't afford dry cleaning.  You buy your clothes and the kids clothes at consignment and thrift stores.   You do free activities for the kids.  You probably don't have a car, or if you do, you have an old car with no car payment (buy used).  You don't pay for hair appointments.

The point is that someone with all of those things, living on $180K annually is an upper middle class family that has enough extra for luxuries.  And what luxuries you choose to spend your money on comes out of your disposable income.  For $3600 extra per month, not including food and shelter, you should be able to live on about $2000 per month of extras and still save $1600 a month.  Or even spend $2600 and save $1000.  To be living paycheck to paycheck at that income level (which is essentially what the PP said when she said that they have virtually no savings) is ridiculous.  They are trying to live beyond their means with many luxuries.  [/quote]

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