Anonymous
07/29/2021 17:22
Subject: Budget Frustration
Anonymous wrote:So we live in an old sheet shack w/addition close in to be close to spouse's work, which has a big mortgage because of that "premiere" location.
Spouse's job has taken a nosedive under new management, and looking for new work but likely would take a paycut from $250k to $100k; I make $150k, so this is not a hardship except for huge mortgage. We have about $100k in cash/stocks we could apply towards mortgage, but I liked having cash around for emergencies.
Here's our budget, is there anyway spouse can take new job without necessitating us moving? I don't think so, but let us know if our budget could be tweaked in a way I'm not seeing. We travel a bit, 1 week to see family at holidays (flights), one week to the beach, and usually some other kind of vacation, like a national park trip or a new city like Denver or something.
Income: Self $6,200.00
Spouse $14,400.00 (would drop to $4500 I think)
Expense
House -$5,100.00 ($1.2M house)
Daycare -$1,688.00 (ends Sep 2022)
Insurance -$400.00
Internet -$50.00
Mobile -$300.00 (Pay for our phones and our parents)
Beach Week -$416.67
Home Repair -$1,166.67 (Old house, we expect 1% repairs a year)
Streaming -$40.00
Groceries -$1,500.00
Family Trip -$250.00
Vacation -$666.67
Camps -$500.00 (3 kids 8 weeks, mostly academic enrichment)
Med -$133.33
Shop -$625.00
Kids Activities -$166.67 (rec sports and academic enrichment)
Cleaner -$300.00
Cars -$200.00 (Paid off, this is just maint and gas for short commutes)
Utils $375.00
The albatross around our neck is mortgage. We already financed down to a 2.75%. I wish we had known spouse would need to change careers before we moved here, but what can you do; I guess better to own now than to have been renting still and dealing with pandemic price spikes.
Any options here, I'm beyond frustrated to have to disrupt kids and move to some far exurb to something we can afford after the year they had, but I think that is our only play.
$250K income with a $5100 monthly mortgage is going to be tight. Doable, but tight. Say goodbye to vacations and camps, they're a luxury you can do without for the next couple/few years.
I haven't read any of the responses and maybe someone already asked this question - Why is your DH's income dropping 60%? I get that he's under new management but I've never heard of that happening when under new management. Unless he's making a complete change in his career?
Anonymous
07/29/2021 17:15
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:If your HHI drops to 250k, then your 14k /month expenses will be about 67% of your gross. That is not sustainable. Once daycare goes away, things might be ok, but it will still be tight.
The mortgage will be 25% of gross. That is a perfectly reasonable number. If you paid off 100k, it would be even more reasonable.
The 16k a year for travel works out to about 6.5% of gross. That is on the high side. Coupled with the 8 weeks of camp, you could cut someplace there.
You can do everything and not save a lot. You you want to be able to save, you need to move, cut your travel down and watch your smaller expenses, OR have DH keep his job.
I personally would use up the 100k buffer and not save for a year or two while trying to cut expenses and see what happens.
This is what is puzzling me, the rule of thumb was 1/3 of gross income, and we are well below that, but once we add everything up its crushing.
I wish we could boot spouse's parents off mobile plan, that would save $100/month right thereWe should look at Cricket I think or something...
Travel is like our one splurge, I will try to talk spouse into more camping... and when kids are older I think a beach vacation where we have a longer walk to beach would be more feasible.
Spouse won't keep job, that is clear. Either change jobs or eventually will be pushed out.
How could we use the $100k to reduce our mortgage payment, is that refactoring?
Travel is your one splurge? Cleaners are a splurge, camps are a splurge, that much shopping is a splurge, organic food is a splurge. All trips should be cut if you want to keep the house.
How are camps a splurge? We at least need childcare, how cheap can you get worthwhile camps?
What do you mean, "worthwhile" camps?
We had some cheap county camps where they spent most of the day in a trailer playing cards at what was billed “chess camp”. Not worthwhile. Same time a bike camp was outside for the entire day. On asphalt. Good times.
JFC - your expenses are going to exceed your income by around $36,000 each year. You're not in a position to be picky.
Anonymous
07/29/2021 17:14
Subject: Budget Frustration
Anonymous wrote:OP— I think if you don’t want to cut travel and spending the only option is to move. How old are your kids? I think the financial pressure of trying to stay in that house will cause you a lot of stress. And if you move to something more affordable you can still enjoy shopping/travel etc.
But your camp prices are fine, that’s just what it costs if you need childcare during the summer.
How much equity is in your home?
Shorter OP: "Our income is being cut significantly, and out expenses are going to exceed out income. How do we make this work without changing any of our spending habits?"
Unless someone is going to give you a money tree, you have to move.
Anonymous
07/29/2021 17:13
Subject: Budget Frustration
Can you really live anywhere? And are your kids pretty young? If so, I’d move. Maybe Anne Arundel County or Henrico. Move somewhere with decent public schools and community pools. You will live a far more relaxed life and build up a new community of friends.
Anonymous
07/29/2021 17:07
Subject: Budget Frustration
Anonymous wrote:Here are things I would cut.
Anonymous wrote:
House -$5,100.00 ($1.2M house)
Daycare -$1,688.00 (ends Sep 2022)
Insurance -$400.00
Internet -$50.00
Mobile -$300.00 (Pay for our phones and our parents)
Beach Week -$416.67 - where do you go? We rented a really nice house in Bethany for $2000 and mostly cooked our own food. We did have to pay $15/day for parking but we found parking no more than a block from the beach every day.
Home Repair -$1,166.67 (Old house, we expect 1% repairs a year) - Sounds like you had the world's worse house inspector. I would hope that you wouldn't be spending $10K a year on expenses, but who knows.
Streaming -$40.00
Groceries -$1,500.00 - This is absurdly high for a family that has two children that are daycare-aged. Rethink your food budget and start planning your meals. You said you're vegetarian, start shopping at H-mart and other ethnic groceries instead of Whole Foods and Wegmans.
Family Trip -$250.00
Vacation -$666.67 - Where are you going? You can take closer or cheaper vacations.
Camps -$500.00 (3 kids 8 weeks, mostly academic enrichment) We spent $1000 per kid on camps this year. We did rec center camps. It's summer, stop with the academic enrichment, get over yourself.
Med -$133.33
Shop -$625.00 - Shop at cheaper places and do some price comparison before you buy. Where do you buy your kids' clothing, for example?
Kids Activities -$166.67 (rec sports and academic enrichment)
Cleaner -$300.00 - Consider dropping to once a month or once every two weeks instead of weekly.
Cars -$200.00 (Paid off, this is just maint and gas for short commutes)
Utils $375.00 - Not sure there's much you can do about this, but if you don't have a programmable thermostat, invest in one.
DP with an old house - we also end up with loads of home repairs. I think our first four years in the house they were in the range of $15k-20k a year. Our inspector was indeed terrible, and missed such small things as: 60 year old air conditioning ducts that were full or mold, not having an electrical box outside the house as has been code for decades, and a sewage pipe literally made out of tar paper that was almost closed up.
$10k a year for a $1.2 million house sounds downright reasonable to me.
That said I think they have to move. I would rather live in a smaller, worse house in a worse location than give up eating food I like or sending kids to camp. I think you can nickel and dime your way to less spending - you don't NEED a wheelbarrow - but I think you'd be happer with lower monthly costs.
Anonymous
07/29/2021 16:47
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote: Yeah, I'd sell and move. Go further out, spend WAY less than 1.2 mil and spouse can commute.
So how do I convince spouse about this? Super reluctant to move after only being here 3 years. We should have $400k to $550k in equity in house, but of course RE commission will bite.
“Darling spouse, we are no longer as affluent as we were. We have to move.”
Anonymous
07/29/2021 16:45
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote:I LOVE these threads. Woe is me, we're about to cut our income to $250K a year and we take $10,000 vacations every year. Help, how do we cut our budget so we can afford $1.2 Million Arlington home??
Funny - I'm usually the first one to comment when people say how they're "struggling" on $250k. Or how they're "middle class" or how "it's not possible to live in the DMV on less than $200k." Those types of comments drive me nuts. But this thread doesn't hit me the same way at all. Because the truth is - money is always going to be limited. Whether you make $50k or $250k or $500k or $3 million or $100 million a year, you have to make decisions about how to spend it, some of them may be difficult, and there are tradeoffs. Doesn't change the fact that at $250k per year, you're rich. If you're waiting to not have to make tough budgetary decisions to declare yourself rich, that's when you quickly become insufferable. The OP isn't here saying "gosh, woe is me," she's here saying "our income is dropping - is there a way to keep our outlandish mortgage, or should we move?" That's a super reasonable question. Doesn't change the fact that she's rich. And the fact that she's rich doesn't change the fact that she has to make a difficult decision about tradeoffs.
I would agree with you if she didn't have push back or an excuse for every outrageous expense. Or if she didn't call travel their "only splurge" while living in a $1.2M house and spending $18k/year on groceries for two adults and two little kids.
Anonymous
07/29/2021 16:45
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:If your HHI drops to 250k, then your 14k /month expenses will be about 67% of your gross. That is not sustainable. Once daycare goes away, things might be ok, but it will still be tight.
The mortgage will be 25% of gross. That is a perfectly reasonable number. If you paid off 100k, it would be even more reasonable.
The 16k a year for travel works out to about 6.5% of gross. That is on the high side. Coupled with the 8 weeks of camp, you could cut someplace there.
You can do everything and not save a lot. You you want to be able to save, you need to move, cut your travel down and watch your smaller expenses, OR have DH keep his job.
I personally would use up the 100k buffer and not save for a year or two while trying to cut expenses and see what happens.
This is what is puzzling me, the rule of thumb was 1/3 of gross income, and we are well below that, but once we add everything up its crushing.
I wish we could boot spouse's parents off mobile plan, that would save $100/month right there
Travel is like our one splurge, I will try to talk spouse into more camping... and when kids are older I think a beach vacation where we have a longer walk to beach would be more feasible.
Spouse won't keep job, that is clear. Either change jobs or eventually will be pushed out.
How could we use the $100k to reduce our mortgage payment, is that refactoring?
Travel is your one splurge? Cleaners are a splurge, camps are a splurge, that much shopping is a splurge, organic food is a splurge. All trips should be cut if you want to keep the house.
How are camps a splurge? We at least need childcare, how cheap can you get worthwhile camps?
What do you mean, "worthwhile" camps?
We had some cheap county camps where they spent most of the day in a trailer playing cards at what was billed “chess camp”. Not worthwhile. Same time a bike camp was outside for the entire day. On asphalt. Good times.
Uhh yeah man. That’s childcare. It’s fine.
Anonymous
07/29/2021 16:42
Subject: Budget Frustration
Anonymous wrote:I LOVE these threads. Woe is me, we're about to cut our income to $250K a year and we take $10,000 vacations every year. Help, how do we cut our budget so we can afford $1.2 Million Arlington home??
Funny - I'm usually the first one to comment when people say how they're "struggling" on $250k. Or how they're "middle class" or how "it's not possible to live in the DMV on less than $200k." Those types of comments drive me nuts. But this thread doesn't hit me the same way at all. Because the truth is - money is always going to be limited. Whether you make $50k or $250k or $500k or $3 million or $100 million a year, you have to make decisions about how to spend it, some of them may be difficult, and there are tradeoffs. Doesn't change the fact that at $250k per year, you're rich. If you're waiting to not have to make tough budgetary decisions to declare yourself rich, that's when you quickly become insufferable. The OP isn't here saying "gosh, woe is me," she's here saying "our income is dropping - is there a way to keep our outlandish mortgage, or should we move?" That's a super reasonable question. Doesn't change the fact that she's rich. And the fact that she's rich doesn't change the fact that she has to make a difficult decision about tradeoffs.
Anonymous
07/29/2021 16:34
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote: Yeah, I'd sell and move. Go further out, spend WAY less than 1.2 mil and spouse can commute.
So how do I convince spouse about this? Super reluctant to move after only being here 3 years. We should have $400k to $550k in equity in house, but of course RE commission will bite.
DP.
I don't think you "convince" spouse of anything. You weren't sure either, at the beginning of this thread. I think you point out that you don't see how you can balance your budget on $250k. I'd show some spreadsheets - current spending, one with some comfortable decreases, one with uncomfortable decreases. Point out that your new income won't even cover the budget with the uncomfortable decreases, and propose a potential solution of moving. Show a sample budget for what that would look like.
See what he says. Maybe there is a way he can stay where he is. Maybe he can make more by going in a different direction. Maybe he can see some flexibility in the budget that you don't (ex: maybe enough of your house systems have been replaced/overhauled in the last year that you can cut your home repairs budget safetly.) Maybe there's a more speedy path for him to increase his income than what you're seeing, and so there's an argument that this is temporary, etc, etc. I wouldn't think of it as convincing him as much as starting a conversation.
Anonymous
07/29/2021 16:28
Subject: Budget Frustration
I LOVE these threads. Woe is me, we're about to cut our income to $250K a year and we take $10,000 vacations every year. Help, how do we cut our budget so we can afford $1.2 Million Arlington home??
Anonymous
07/29/2021 16:26
Subject: Budget Frustration
Here are things I would cut.
Anonymous wrote:
House -$5,100.00 ($1.2M house)
Daycare -$1,688.00 (ends Sep 2022)
Insurance -$400.00
Internet -$50.00
Mobile -$300.00 (Pay for our phones and our parents)
Beach Week -$416.67 - where do you go? We rented a really nice house in Bethany for $2000 and mostly cooked our own food. We did have to pay $15/day for parking but we found parking no more than a block from the beach every day.
Home Repair -$1,166.67 (Old house, we expect 1% repairs a year) - Sounds like you had the world's worse house inspector. I would hope that you wouldn't be spending $10K a year on expenses, but who knows.
Streaming -$40.00
Groceries -$1,500.00 - This is absurdly high for a family that has two children that are daycare-aged. Rethink your food budget and start planning your meals. You said you're vegetarian, start shopping at H-mart and other ethnic groceries instead of Whole Foods and Wegmans.
Family Trip -$250.00
Vacation -$666.67 - Where are you going? You can take closer or cheaper vacations.
Camps -$500.00 (3 kids 8 weeks, mostly academic enrichment) We spent $1000 per kid on camps this year. We did rec center camps. It's summer, stop with the academic enrichment, get over yourself.
Med -$133.33
Shop -$625.00 - Shop at cheaper places and do some price comparison before you buy. Where do you buy your kids' clothing, for example?
Kids Activities -$166.67 (rec sports and academic enrichment)
Cleaner -$300.00 - Consider dropping to once a month or once every two weeks instead of weekly.
Cars -$200.00 (Paid off, this is just maint and gas for short commutes)
Utils $375.00 - Not sure there's much you can do about this, but if you don't have a programmable thermostat, invest in one.
Anonymous
07/29/2021 16:20
Subject: Budget Frustration
Anonymous wrote: Yeah, I'd sell and move. Go further out, spend WAY less than 1.2 mil and spouse can commute.
So how do I convince spouse about this? Super reluctant to move after only being here 3 years. We should have $400k to $550k in equity in house, but of course RE commission will bite.
Anonymous
07/29/2021 16:11
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Do you really love your house and neighborhood? You paid a premium to live close in but that’s often less personally valuable these days with more people working remotely. House prices are high and you could probably sell easily. I guess I’d be inclined to really think about where you want to live, bearing in mind that real estate transaction costs are high.
(We pay over $500/week for camp for our older kids and programs....)
we don’t care where we live, but disruption to kids and losing all their friends and neighborhood will be hard.
We have about $50k saved per kid for college so far. State school is plan.
I posted the longer post about how to cut expenses and be able to do this - I no longer think this is viable, as you need a line item for college savings as soon as daycare is done, and it'll have to be big. State school for three kids, you're probably still talking $40k per year per kid, so that's almost $500k, and you've got $150k. If your household income is going to drop to $250k, you'll need to move unless there is a very reliable path for your husband to increase his income rather quickly over the next 2-5 years (since you've noted that you are pretty capped).
Do most families have $160k saved per kid?
I'm the PP. Most families do not make $250k, and thus can rely more on aid. And yes, most families who make more than $75-100k are actively saving for college. The budget that the OP listed has zero dollars in college savings.
This is clearly getting off topic but you didn’t answer the question, so I will. NO. Most people do NOT have $160k saved for college for each kid. We certainly don’t, and yet we are “actively saving” for college 🧐
We save a reasonable amount each month. When the kids are ready to apply to schools they will know roughly how much we can contribute based on what’s in the 529, and they can plan accordingly. They also know this is our intention so they are free to work hard in high school to increase the possibility of merit scholarships. They can also apply to schools based on cost of attendance and how much they want to take in loans. They are also welcome to not pursue a college degree at all if it is just too ridiculously expensive by the time they’re ready.
Anonymous
07/29/2021 16:08
Subject: Budget Frustration
Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:Anonymous wrote:If your HHI drops to 250k, then your 14k /month expenses will be about 67% of your gross. That is not sustainable. Once daycare goes away, things might be ok, but it will still be tight.
The mortgage will be 25% of gross. That is a perfectly reasonable number. If you paid off 100k, it would be even more reasonable.
The 16k a year for travel works out to about 6.5% of gross. That is on the high side. Coupled with the 8 weeks of camp, you could cut someplace there.
You can do everything and not save a lot. You you want to be able to save, you need to move, cut your travel down and watch your smaller expenses, OR have DH keep his job.
I personally would use up the 100k buffer and not save for a year or two while trying to cut expenses and see what happens.
This is what is puzzling me, the rule of thumb was 1/3 of gross income, and we are well below that, but once we add everything up its crushing.
I wish we could boot spouse's parents off mobile plan, that would save $100/month right there
Travel is like our one splurge, I will try to talk spouse into more camping... and when kids are older I think a beach vacation where we have a longer walk to beach would be more feasible.
Spouse won't keep job, that is clear. Either change jobs or eventually will be pushed out.
How could we use the $100k to reduce our mortgage payment, is that refactoring?
Travel is your one splurge? Cleaners are a splurge, camps are a splurge, that much shopping is a splurge, organic food is a splurge. All trips should be cut if you want to keep the house.
How are camps a splurge? We at least need childcare, how cheap can you get worthwhile camps?
What do you mean, "worthwhile" camps?
We had some cheap county camps where they spent most of the day in a trailer playing cards at what was billed “chess camp”. Not worthwhile. Same time a bike camp was outside for the entire day. On asphalt. Good times.