Raising a family on one income in DC (Springfield, Fredericksburg: daycare, how much)

[PolandSprings]

Originally Posted by slclady

My bad. He's not doing the max dollar contribution. He's doing the 5% so he can get the matching contribution.

For life insurance, it has been forever since I looked at how they do that, but we do the optional additional insurance, as much as we can for his income level (he's young, so it's a pretty good deal).

If something should happen to your husband, will the insurance be enough for you to continue life as you do now? We met with a financial planner to figure out how much was enough. For us, it is close to 10 times my husband's salary. We have two kids under 4 and I work, but we would not be able to live on my salary. Insurance would pay off the house, cover college, and leave me with several hundred thousand in the bank to live off of.

Will you be working soon to add to the family savings? Even with a new house, there are expenses to consider. Will you be able to furnish the house? Put curtains on the windows? Cover the cost of moving?

[slclady]

Originally Posted by michgc

SLCLady,

It seems like you do very well. And I agree that you can be frugal and live on one income in DC. One question I wonder, however, is what you will do for emergencies. You said you don't have anywhere near $20K in an account. With a house, three young children, things can come up at any time. I know the LDS chuch is very helpful to their members in times of need, but I wonder if you have any financial plan if something unexpected comes up. I'm also curious about what is the rush to buy a home. I would personally save up a lot more money before I'd buy a house. Can you not keep on renting and build up your savings?

I guess everyone chooses to buy a home at different times and for different reasons. Some people would argue that renting for several more years would be financially unwise. As for emergencies, we don't have $20K, but we do have some savings for home maintenance emergencies and whatnot.

[tgbwc]

[quote=michgc;27779074]SLCLady,

It seems like you do very well. And I agree that you can be frugal and live on one income in D.C[\QUOTE]

I'm finding what people consider to be "living in DC" to be much broader than my definition. The title of this thread is "Raising a family on one income in DC". I'm in Springfield and I have never considered myself to be living in DC. This thread is talking about living even further out.

[CaliTerp07]

Originally Posted by hilsmom

CaliTerp, did you see this article?

http://www.nytimes.com/2013/01/15/ed...?smid=fb-share

I was a little taken aback by it, because it wasn't my reality (parents paid for my undergrad and I still graduated with honors), but the part at the end was what I think makes the difference. If you pay for your kids, it can't just be a blank check - they need guidelines. I had one not stellar semester (a few C's), and my parents threatened to bring me home. I still maintain that it wasn't anything I did wrong (it wasn't like I was partying too hard, just had a bad set of classes/instructors), but I still never had another "bad semester." There would have been consequences, and I was VERY clear on that.

Oh yes, a blank check is not going to happen! I was the kid who absolutely SOBBED my eyes out at my first (and only!) B in high school (which I got from a class I dual-enrolled in at the local university). My parents knew they had nothing to worry about with my grades suffering. I would have dropped out of college before I let a low grade appear on my transcript.

You have to know your kid. Some kids need boundaries and clear rules, others are really good at self regulating. My parents told me, "You have $xx,xxx. You can go to Harvard and afford a year and a half, or a state school and do 4 years. If you blow it, there is no more. Use it wisely." I did.

Bottom line: I would rather have the money set aside and choose not to give it to the child who couldn't be responsible for it, rather than have a kid who did everything right and not be able to pay for them.

[ChristineVA]

Originally Posted by slclady

For life insurance, it has been forever since I looked at how they do that, but we do the optional additional insurance, as much as we can for his income level (he's young, so it's a pretty good deal).

You might want to check out independent life insurance. I am a federal employee and I found the additional life insurance to cost way more per month than going out and getting myself another life insurance policy. I know it's the easy thing to do but it sure wasn't cheaper.

Also, not to continue to harp on retirement savings but since you don't work, your husband is building retirement for two people. You need to take that into account since you are a stay-at-home parent. You aren't building a 401K, he needs to build one that can support two people. Your contributions aren't doing that now. By the time you rejoin the workforce, if you ever do, you are way behind the power curve for saving money and realizing the beauty of compounding interest.

[CaliTerp07]

Originally Posted by slclady

Well, yeah. Even in Utah most state schools aren't as cheap as BYU. We would love for our kids to go to BYU, but even if they chose a place like Virginia, we just don't see that as a huge burden. By then, we expect to have a higher income. We DEFINITELY expect our kids to work their tails off during the summers to pay part of their tuition, and to work part-time during the school year to pay their rent (that's what I did). In the end, we do feel a certain responsibility to pay for our kids' college tuition at a reasonably priced school, but it's not the end of the world if they have to take out some loans. My husband's parents didn't pay for a dime of his education, and some might argue that he's better off for it.

Tangent, but I am a strong believer in not working low-paying jobs during summers (unless it's an internship with future job-gaining potential), and take extra classes instead to graduate early. In a summer, working 40 hours a week at $10/hour, you could make maybe $5,000 assuming you have a really long break and get a job right away. If instead you take a few classes, you can graduate a full year early. Not only will you save on a year of tuition and associated costs, but you'll start making significantly more than $10/hour a year sooner to start paying off loans MUCH faster. Same thing in high school. Take classes at NOVA in the summer instead of working at target. You'll start college with a semester or two under your belt, saving a lot of money and getting you to potential earnings faster.

[slclady]

[quote=tgbwc;27780261]

Originally Posted by michgc

SLCLady,

It seems like you do very well. And I agree that you can be frugal and live on one income in D.C[\QUOTE]

I'm finding what people consider to be "living in DC" to be much broader than my definition. The title of this thread is "Raising a family on one income in DC". I'm in Springfield and I have never considered myself to be living in DC. This thread is talking about living even further out.

Really? I guess I did assume that people would generalize "living in DC" to encompass living in the DC area while working in DC.

[metclubin]

Just texted my wife Express jeans only and tops from Target or Kohl's and no Boden for our 2 yr old.

Anyways, I appreciate the way you guys manage your money. I'm definitely going to steal a few ideas from you in our budget. I think you guys need to redo the math on retirement savings.

The way we do is at the end of the year calculate the average monthly expenses (includes everything mortgage, car payments etc.) and and calculate 70% of that number. That is what we would need to live the current lifestyle after retirement assuming that we won't have a mortgage payments in retirement. I use the calculators available in 401k accounts to calculate how much to contribute based on the current 401k balance, monthly retirement income required and average of 8% gains.

[tgbwc]

[quote=slclady;27780568]

Originally Posted by tgbwc

Really? I guess I did assume that people would generalize "living in DC" to encompass living in the DC area while working in DC.

Really.
Do others who live in Reston say they live in DC? Neither of us work in DC and as I said, we live in Springfield, but I've never described myself as "living in DC". Only my coworkers who actually live in DC say that. To me, stating, "It's possible to raise a family on one income of $XXk in DC" and "building a home in Fredericksburg" are two totally different things.

[ACWhite]

I don't mean to pile on, but your retirement savings rate is NOT high enough. Check out reputable financial sites and I think you will see some agreement that your savings should be at least in 10% per year PLUS generous employer contributions and good returns (which unfortunately we haven't had on avg. since 2000). If you use calculators as to what income you will need to replace income (with changes over time) at retirement, you can also confirm this.

Most people save far too little for retirement.

I also agree about the emergency fund and that you will have higher expenses in a house than in a condo.

My point is not to criticize you but rather to give reasons why people say you need a higher income to live in this area.

You could also write to Suze Orman to participate in "how am I doing?" :-)