Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

You ave a serious spending issue.

Did the math 2.8 percent of gross pay. Not sure about take home.

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Why the heck don’t you have more saved for retirement??? What are you spending it on??

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Of course you can afford it but you clearly have a spending issue.

+1. Have your incomes more than doubled in the past 1-2 years? Otherwise your lack of savings are baffling.

Yes, income essentially doubled in 2020 when we moved here for my spouse’s job. We moved from a much higher cost of living market, so despite aggressively saving what we could, housing, taxes and childcare costs all made it difficult. We ended up buying a more expensive house here than we were planning to because the market was going up so quickly (and we have an elderly parent who will likely live with us soon and so needed more space for that). Nevertheless, I’m 31 and my spouse is 36 and until these responses, I felt pretty good about our savings .

To the other poster asking about student loans, these are law school loans and the conventional wisdom I’ve heard is it makes more sense to invest the money than pay these off since the interest rate is <3% and we’ve been able to invest for better returns.

For the time being, tuition would come out of the $100k (after tax) in bonuses, which aren’t included in the monthly $25k, and are essentially guaranteed. Eventually if we phased out the nanny it would come from there. In the meantime we’d still be saving/investing roughly $60-80k/year.

That context helps. Conventional wisdom is you should have at least 2x annual salary saved by 35 and 3x by 40, which is why people are giving you a hard time, but obviously that formula doesn’t account for massive sudden spikes in income. You should be more than fine to both pay for private school and up savings moving forward.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Of course you can afford it but you clearly have a spending issue.

+1. Have your incomes more than doubled in the past 1-2 years? Otherwise your lack of savings are baffling.

Yes, income essentially doubled in 2020 when we moved here for my spouse’s job. We moved from a much higher cost of living market, so despite aggressively saving what we could, housing, taxes and childcare costs all made it difficult. We ended up buying a more expensive house here than we were planning to because the market was going up so quickly (and we have an elderly parent who will likely live with us soon and so needed more space for that). Nevertheless, I’m 31 and my spouse is 36 and until these responses, I felt pretty good about our savings .

To the other poster asking about student loans, these are law school loans and the conventional wisdom I’ve heard is it makes more sense to invest the money than pay these off since the interest rate is <3% and we’ve been able to invest for better returns.

For the time being, tuition would come out of the $100k (after tax) in bonuses, which aren’t included in the monthly $25k, and are essentially guaranteed. Eventually if we phased out the nanny it would come from there. In the meantime we’d still be saving/investing roughly $60-80k/year.

You will be fine, OP.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Of course you can afford it but you clearly have a spending issue.

+1. Have your incomes more than doubled in the past 1-2 years? Otherwise your lack of savings are baffling.

Yes, income essentially doubled in 2020 when we moved here for my spouse’s job. We moved from a much higher cost of living market, so despite aggressively saving what we could, housing, taxes and childcare costs all made it difficult. We ended up buying a more expensive house here than we were planning to because the market was going up so quickly (and we have an elderly parent who will likely live with us soon and so needed more space for that). Nevertheless, I’m 31 and my spouse is 36 and until these responses, I felt pretty good about our savings .

To the other poster asking about student loans, these are law school loans and the conventional wisdom I’ve heard is it makes more sense to invest the money than pay these off since the interest rate is <3% and we’ve been able to invest for better returns.

For the time being, tuition would come out of the $100k (after tax) in bonuses, which aren’t included in the monthly $25k, and are essentially guaranteed. Eventually if we phased out the nanny it would come from there. In the meantime we’d still be saving/investing roughly $60-80k/year.

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Of course you can afford it but you clearly have a spending issue.

+1. Have your incomes more than doubled in the past 1-2 years? Otherwise your lack of savings are baffling.

Yes, you can afford private school but I think the question is whether you should do it. As another poster said, you need to look at your current spending to make this work. When will your student loans be paid off? I can't imagine spending money on private school tuition while you are still paying off your student loans. Have you started saving for college for your kids? Are there things that you want to do, such as travel, that will be restricted if you are paying private school tuition? Are there other trade offs? Do you have access to good public schools? We had one kid who went all the way through public school and did very well. He's now at a private college (close to $80k per year) and we were happy to have saved that money for college tuition. Our younger son moved to private school after some time in public and we can afford it but I still try not to think about how much we will pay for him to go to school over 8 years (high school and college). I know plenty of people who spent a lot of money to send their kids to private school and then had to tell their kids that they couldn't go to the college they wanted because it was too expensive. All that said, if you think your kids need private school (or have some other reason to choose private), then you shouldn't worry about how you will look compared to other private school families. As with everything in life, there will be people with more and a lot more people with less.

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

Of course you can afford it but you clearly have a spending issue.

Anonymous wrote:We are the exception to the rule, but our $50,000 tuition a year makes no impact on our financial situation as we are high net worth. But I grew up LC so I do wonder about people that sacrifice retirement and travel for private school. I’m not sure it’s worth it. In particular, I would do public elementary till 4th, at least. If you are in APS or Fairfax.

We also have about $60K in tuition and it hasn't really changed our financial situation either. We're still saving for retirement and college. We travel and do what what we want without regard to cost most of the time. One of our kids has learning disabilities so private was really needed for the extra attention. We also already have one kid in college but we have the completely covered already (some will actually be able to roll over to the younger kids).

Tuition is about 8% of income.

I’d consider saving tuition money now and actually putting it in savings to pay for middle school and/or hs if you think you need it. We have lower income than you (about 500k) but our 1950s Bethesda house is paid off, we buy our cars in cash, and are now paying 1 private tuition from savings. We have one kid in Public and one that needed smaller classes. The 40k tuition is easy for us to manage, but we appear much poorer than many students. We live comfortably but are big savers rather than big spenders.

You could easily afford it, OP, but you might have to adjust how you're spending money.

You currently bring home $25k and spend at least $22.5k of that, leaving you with $2.5k per month, or $30k per year.

Where are you planning to adjust your budget in order to afford $40k-$80k in tuition, plus potentially summer camps and other extra-curriculars?

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

You can afford it. As you note, you'll be able to convert the nanny expense to tuition expense as you the kids get older. We let go of our nanny after the youngest was in K, for example.

I disagree. Their NW is really low, and their spending is really high for that HHI. A couple of years ago in our mid-30s we had an HHI of $2m (not including $600k primary home equity) on a $400k HHI. Our HHI has since tripled and our spending has largely not increased so we put some of the extra $ towards private.

OP should only go private if they can severely curtail spending.

What do you find are the benefits of having a NW of $6m vs. $2m?

Thinking about it from another viewpoint, my DC is/are FA recipient/s. Most FA offers came in with a family contribution at 15-20% of net HHI, but we chose a school that offered a family contribution of about 8%.

There are a lot of additional expenses related to going to private school and a lot of ways that that money could be spent.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:This is OP. Our gross annual is ~$850k including bonuses, and I forgot ~$70k in cash, though doubt that moves the needle on most peoples' opinions. Thanks for the input so far.

You can afford it. As you note, you'll be able to convert the nanny expense to tuition expense as you the kids get older. We let go of our nanny after the youngest was in K, for example.

I disagree. Their NW is really low, and their spending is really high for that HHI. A couple of years ago in our mid-30s we had an HHI of $2m (not including $600k primary home equity) on a $400k HHI. Our HHI has since tripled and our spending has largely not increased so we put some of the extra $ towards private.

OP should only go private if they can severely curtail spending.

They are only in their 30s. They have income investment and are maxing out on retirement investment? How high should their NW be to afford private schoo? Shouldn't they also expect that their income will only go up in the coming years, given their age? If a family with a gross income that is in the top 1 percent of all household incomes can't afford private school, then who can?

Agree. Their HHI is $850k!!!! They could have a net worth of $0 at their age and still be more than fine with paying for private for two kids and saving from scratch for everything else.