Does your mortgage eat up 40% of your monthly income? (daycare, how much)

[Squeamish]

I don't think that 40% of income on housing is all that unusual in today's America. It's a horrible idea, but the system is practically set up to suck people in to mortgages they can hardly afford.

I just downgraded to a room in a friend's basement for about $400 utilities included, and I feel remarkably liberated. More weekend trips will be happening!

[polo_golf_guy]

Originally Posted by Clasher

That's good information to know. I didn't factor any extra checks (twice a year) and tax refund into my budget and just consider them to be a bonus. I guess another thing I could do is increase my withholding, because I've gotten refund in the past and just treating them as a bonus. $500 for utilities?? Can that be right? in my little 1.50 story house I pay $219 a month.

Utilities can vary greatly. If you make energy improvements like led lights, minimize AC usage only when dew points are above 61°, and don't leave unused electronics on that can help tremendously.

Our home is just under 3k sf and our electricity bill is usually $65 to $70 per month for a family of 4 with 2 WiFi networks and 3 TiVo's that run 24/7. However, when using AC our bill doubles.

Natural gas is $94/month on budget plan. Water bill averages about $125/ quarter and includes recycling. Garbage can be tricky but if you switch haulers and pay annually you can get some good savings. We were being quoted about $20/ month but then I switched and got new customer incentives and prepaid for a year at $165 saving $55 for the year.

[polo_golf_guy]

For us, we spend about 40% on our PITI with escrow as a basis of take home. Works out to $1950/monthly with additional principal. We are already contributing 25% to the 401k. Our other big expense is childcare but we are only 2 years from school and our oldest being able to watch little brother after. Then we can really ramp up the savings

If you read blogs like Frugal woods or Money Mustaches you may feel like you are overspending. Focus on your life and savings goals and go from there. Hack your bills and use prepaid cell phone plans. Smaller things can make a nice offset to compensate for the higher housing cost.

We spend most of our time at home so it was important to find a place we liked even if it was towards the top of our budget.

[laxster]

How married are you to the idea of living in Minneapolis? There are some great deals to be had if you modify your search a bit.

For instance:

Living in St. Paul will cost less than Minneapolis (plus you get to live in a prettier, more family-friendly city! )
Living in Maplewood will cost a bit less than St. Paul (plus the schools and property taxes are better than in St Paul!)

I personally have a fondness for postwar bungalows. They are at the point where they will usually have many updates - new windows, air conditioning, updated electrical, etc. Como Park and Hillcrest neighborhoods in St Paul have many of these, and they represent a great value!

[MN-Born-n-Raised]

Originally Posted by polo_golf_guy

For us, we spend about 40% on our PITI with escrow as a basis of take home. Works out to $1950/monthly with additional principal. We are already contributing 25% to the 401k. Our other big expense is childcare but we are only 2 years from school and our oldest being able to watch little brother after. Then we can really ramp up the savings
.

Don't count on it. Other categories get substituted instead of daycare. Shelling out thousands per year for MOST involved parents continues till post college. Then there is the wedding! Eventually it settles down but surely not post daycare.

[ellysbelly]

Originally Posted by MN-Born-n-Raised

Don't count on it. Other categories get substituted instead of daycare. Shelling out thousands per year for MOST involved parents continues till post college. Then there is the wedding! Eventually it settles down but surely not post daycare.

Exactly where I'm at right now-- sports, (fees, camps/clinics/training, gear), clothing, activities, birthday parties, camp (for all of the school holidays AND the summer), orthodontia, vehicles (not a necessity, but pretty common), auto insurance, college, etc... I, too, thought that childcare was expensive-- that is, until my kids discovered hockey-- and almost simultaneously discovered that all three need extensive orthodontia (maybe the hockey will remove the need for orthodontia!)

[MN-Born-n-Raised]

Originally Posted by ellysbelly

Exactly where I'm at right now-- sports, (fees, camps/clinics/training, gear), clothing, activities, birthday parties, camp (for all of the school holidays AND the summer), orthodontia, vehicles (not a necessity, but pretty common), auto insurance, college, etc... I, too, thought that childcare was expensive-- that is, until my kids discovered hockey-- and almost simultaneously discovered that all three need extensive orthodontia (maybe the hockey will remove the need for orthodontia!)

Yep^^. $245K per kid from 0-18 years of age. After inflation, the grand total will be $304K per kid for an average middle income USA family (see This Is How Much It Costs To Raise A Child In The U.S. ). Having a son in hockey and visiting a lot of summer camps like MN Made, traveling summer leagues etc, cost a lot of $$'s. I'd do it all over again as it was a great journey. But I spent a whole lot more than average.

Back to daycare and if it lightens up ones budget.... If you take $245K/18 years we are taking about $13.6K per year. For daycare alone, the average is around $10K a year. So potentially daycare is heavier spending than later years. But as we both know, hockey has to be the most expensive sport and it increases the money burn rate.

[polo_golf_guy]

Originally Posted by MN-Born-n-Raised

Yep^^. $245K per kid from 0-18 years of age. After inflation, the grand total will be $304K per kid for an average middle income USA family (see This Is How Much It Costs To Raise A Child In The U.S. ). Having a son in hockey and visiting a lot of summer camps like MN Made, traveling summer leagues etc, cost a lot of $$'s. I'd do it all over again as it was a great journey. But I spent a whole lot more than average.

Back to daycare and if it lightens up ones budget.... If you take $245K/18 years we are taking about $13.6K per year. For daycare alone, the average is around $10K a year. So potentially daycare is heavier spending than later years. But as we both know, hockey has to be the most expensive sport and it increases the money burn rate.

Our childcare costs have been at a high of $18,000 one year to close to 13,000 this year. This is for 2 children and includes one's before school care. Also, we only attend part time for 3 days a week.

There is no way I will spend close to that on activities for them.

Hockey is out. We don't like the cold and it is too expensive. Our boys play soccer. I would allow them to play other sports but nothing that will eat up the budget like hockey. Seriously, they can do MMA if they want to blow off steam and be rough.

As far as driving goes, my oldest isn't even 10 but they will only be allowed a permit. Once they are 18 they can get a full license. I have safety concerns and refuse to pay for the increased insurance costs that a young driver would bring.

Now some of our daycare savings will go to college funding but again not to the tune of 12-18k per year.

My point is one can find more Frugal alternatives. Also, childcare expenses are very high in Minnesota.

[uptown_urbanist]

the costs depends on the family and the kid. The costs don't disappear once they hit school (and younger kids will still either need daycare/camp in the summer, and after-school care in the school year, assuming the parents are working), but it can still be much cheaper than full-time childcare for an infant, toddler, or preschool age child. Some sports or hobbies are more expensive than others, just as even within activities there can be a wide range of levels or cost of involvement.

And you can bet there's no way we're buying a car for our kid or paying for car insurance. Maybe some assistance with a bus pass or the purchase of a bike.

[MN-Born-n-Raised]

Originally Posted by uptown_urbanist

And you can bet there's no way we're buying a car for our kid or paying for car insurance. Maybe some assistance with a bus pass or the purchase of a bike.

I took a different approach. If our kids were deadbeats, then the approach would be to go work to pay for their own car and insurance. So our parenting style was for the kids to focus on academics. The goal for them was to kick butt in school and get scholarships. Basically lay-down a foundation of high performance. There is plenty of time to work in life. Our style worked for our kids. I saved thousands via college scholarships. I wouldn't do anything different.