how much $ do you need to make to live comfortable with just 1 parent working? (Alexandria: mineral rights, sales)

[KatOne]

I live in Fairfax County (Falls Church) in a TH with two kids, ages 1 and 3. My husband makes little over 100K. We don't have credit card debt and only 1 car payment. Our budget is tight, but we are comfortable. We don't eat out a lot, don't take fancy vacations, we bought our cars used. I mostly shop at Costco and Wal-Mart to save money. I clip coupons.

It's work to stay on a budget, but it's worth it. I would LOVE to have another child, but my husband thinks that would put us in dangerous territory financially, plus he is older than me and thinks his age is an issue.

I know eventually I will go back to work when the kids are older, but for right now we manage to make it work on one salary.

[jmarkd]

You guys are nuts. $100k a year on a "tight budget"? Give me a break!
If you choose to buy a big house, instead of rent, that's your choice and you are putting yourself on that tight budget. I have two kids, a third on the way, a brand-new mortgage of $2150, two car payments totaling $900, and we get by just fine on my $72k. I fund both our IRAs ($8k/yr.), the kids' Coverdell ESAs ($4k/yr.), and kick 6% into the 401(k). I commute 30-40 minutes each way.
OP, don't be scared by people saying you need 100 grand just to get by. Maybe in Arlington if you buy a house this year, but it's all driven by the choices you make.

[jb124]

Your expenses total 52.9k not including utilities, groceries, insurance, gas, acivities, etc. Assuming an overall tax hit of 15% equalling 10.8k, we're looking at 52.9 + 10.8 = 63.7k of your 72k, leaving 8.3k for the afforementioned expenses, or just shy of $700 a month. That does seem workable but tight.

[beeboah]

Alright, figured I'd chime in.

I make just under 60k. I have 2 kids and a 3rd is on the way.

I pay $437 per month in "child support". My mortgage is $1416.

I gave up contributing to my 401k @ 6%.

I have 2 beater cars so no payments.

I think we are squeaking by especially when it comes to house repairs.

[5stones]

we don't live in a big house etc... it's tight because we save as well.
we are living very comfortably and choose to buy our house because we had sold our old house and rentinbg was throwing money down the drain. had we not bought we would have had to pay taxes this year instead of getting a refund.

1600 per month covers all our household bills. gas prices have been a killer and even with my husband sharing a ride our monthly gas bill is around $400. (I don't drive outside of town much either and only fill up about 1x a week)
groceries are more expensive here...and beef and milk are going up. milk will be over 3.00 a gallon before long. Kids activites are $$$ swim team, tennis lessons, soccer. (so if your kids are young and don't do anything that will save you money)
then there's medical, dental... braces. yep with a 13 year old and 10 yearold we are done with phase 1 and the 7 year old is clear for awhile.
we don't go out that much to eat or entertainment...we save that money. for things like car repairs and medical..so having 15k in a savings is a nice coushin.

AGAIN...we carry no credit debt. that's why 100k (that salary not take home)minus the medical insurance and 7% retirement fun, 1% professional liability insurance etc... is tight. if you carry +4000k in debt (as the avg american is) then you are living above your means.

Costco and walmart are great for cutting grocery costs.


jmarked...

with 72k salary and a mortgage of 2150 and 2 car payments = 900/month your majpr expenses are more than 50% of your base salary (before taxes etc... (35,400 left) minus 8000 ira = 27,400 - 4,000 (fund?) = 23,400 - 4320 (7% 401)= 19080 left. PRE tax, pre med insurance I'd say... that's TIGHT!


with 2 kids I don't know how you can say on 700.00 a month you are living comfortably... with 3 school aged kids I spend almost 600 a month on groceries alone. with 2 cars if you fill the commute car up 1x a week and the other one 2x monththey get EXCELLENT gas miliage (40/fillup) you are still running $240 per month (very conservative) that leaves 460. cable/internet $60... 400. phone (2 cells...80 1 house line 40) that 280. electric 100...180...natural gas...40 that 140. water? 40/month?
that's 100. for groceries. and anything else!

For the OP... be realistic and really look at your budget. Better to have 5000k build up in savings on a too tight budget than end the years facing +5000k in credit card debt or line of credit debt etc....

[jmarkd]

with 72k salary and a mortgage of 2150 and 2 car payments = 900/month your majpr expenses are more than 50% of your base salary (before taxes etc... (35,400 left) minus 8000 ira = 27,400 - 4,000 (fund?) = 23,400 - 4320 (7% 401)= 19080 left. PRE tax, pre med insurance I'd say... that's TIGHT!

with 2 kids I don't know how you can say on 700.00 a month you are living comfortably... with 3 school aged kids I spend almost 600 a month on groceries alone. with 2 cars if you fill the commute car up 1x a week and the other one 2x monththey get EXCELLENT gas miliage (40/fillup) you are still running $240 per month (very conservative) that leaves 460. cable/internet $60... 400. phone (2 cells...80 1 house line 40) that 280. electric 100...180...natural gas...40 that 140. water? 40/month?
that's 100. for groceries. and anything else!

I don't know...we do fine. I don't budget so I can't itemize it very well. We have zero credit card debt. We spend a ton on groceries as well, $500/month easily. No cable, just $25 internet. No house phone. One cell, work provides the other, $50. House is small and all electric, $200 in winter and probably $150 in summer. Water/ sewer is $60 a month.

You might be failing to account for the tax savings on the house. That's a couple hundred a month. I claim 16 deductions and the fed takes around $6 out per paycheck.

It's a question of needs vs. wants. We don't need cable. We don't need a house phone. Your kids don't need to be in all the activities they're in; you choose to have them in them. So when you say your budget is tight, it's the choices you have made much more than any minimum standard of living required. You probably live in a house way bigger than the one you grew up in, which makes your utility bills much higher.

Of course the 800 pound gorilla of monthly expenses is housing, and in recent years housing has gotten expensive everywhere, particularly here. People used to pay 2-4x their income for a house max, now it's much higher. Some of it is caused by people wanting 2500sf homes with sun rooms, sitting rooms, 4 bathrooms, etc., but even the humblest little 3br rambler will run you upwards of $300k in Loudoun County.

It seems in this country "need" has become a very flexible word. Heritage Foundation did a good study a couple years ago...the majority of the 35m people categorized as "poor" by the gov't own 2 TVs, a DVD player, a car, a microwave, a dishwasher, 76% have air conditioning, and 46% own their own home. Understanding Poverty in America. And, as any heartless conservative like me will tell you, most poverty is caused by peoples' choices: chief among them having kids too young and outside of wedlock, which all morality aside, is the #1 cause of poverty.

5stones, I appreciate your insights! Maybe I am really outliving my means but my savings seems to keep climbing and I always pay off my credit cards, so I think we're okay. My wife and I are truly content with our standard of living. I'll think of some cheap-o tips and post them later.

[jmarkd]

Here are some tips that have worked well for me.

1. Get an internet savings account like EmigrantDirect, INGDirect, et al. They get you 4.5-5%. Look at your current savings account, you may be surprised to see you're getting 1-2%, which doesn't even beat inflation. Difference: $50 a month on a $20k balance.

2. Don't get "utilities" you don't need, like a house phone and cable or satellite, or even Internet if everyone has access to it at work. No point in having a cell and a house phone. Difference: $66 a month (assuming no Comcast phone or cable)

My family's visual entertainment is provided by the antenna on the roof, Blockbuster Online ($10 a month) and the local library.

3. Keep an eye out for opportunities. My credit card recently sent me "convenience checks" with a special 4.9% rate. I wrote the check to my savings account, which gets me 5.1%. Free money! Difference: $3.33 a month.

4. Always pay off your credit card before they charge you interest (unless you've got a deal like me in #3 above). Difference: depends on your interest rate, a $4000 balance at 15% costs you $50 a month.

5. Fill out a W4 tax form and minimize your withholdings (the amount of federal taxes taken out every month). You won't get as big of a refund next April, but you'll have more in your paycheck every month. Otherwise you're giving the federal gov't an interest-free loan with your money. Do you trust the government to manage your money better than you? Difference: varies, for me it's $200 a month.

6. Use gaspricewatch.com to find the cheapest gas stations near your home, office, or on your way to work. Difference: 10 cents a gallon, filling up a 12 gallon tank three times a month: $3.60 a month. Okay, maybe it ain't worth the effort

7. Don't pay $4 for a cup of coffee, sucker! Difference: $50 a month for 3 coffees a week.

8. Invest in solid, dividend-paying stocks like Wal-Mart, GE, or dividend funds by Vanguard or WisdomTree.

9. Use Flexible Spending Accounts for health care copays and child care expenses. Difference: assuming you're in the 15% tax bracket, it's $75 a month on $500 monthly child care, and $15 a month on $100 in copays, prescriptions, etc.

[5stones]

Your kids don't need to be in all the activities they're in; you choose to have them in them. So when you say your budget is tight, it's the choices you have made much more than any minimum standard of living required. You probably live in a house way bigger than the one you grew up in, which makes your utility bills much higher.

my kids get to choose 1 activity only but x 3 active kids it adds up.
we no longer do summer camps etc... that we did in PA. yes, the activites are choices, but my girls love sports and I don't want them to be couch potatoes...so I go with out alot so they can have thier activites.

I live in a smaller house than i grew up in. right now...(2400 sqft finshed basement has 4th bedroom and bath we lucked out) our house in pA was 2200sq ft 3 bed 2.5 bath.
I grew up in Mclean in a 5 bedroom 3.5 bath (finished basement) 3000-sqft farm in Chantilly...was simuliar moved to Texas (-2 brothers out of college) 4 bed 3 bath house with a pool...2700.

I am glad you can make it under 1000 per month. we did it on 1200 our first year here...but now we got a slight raise and bumped up to 1500 per month avg. it's much more comfortable and I am not dipping into savings.
my electric bill right now...summer is 185 (high) natural gas is 40 (low!) much lower than PA (newer house better AC unit) water sewar run 120 quartly (avg 40/month) we have cable...again don't need it but 30/month It's my entertainment!


anyway.... I truely feel after living here for almost 2 years...100k for a family is fine. but it will be tight.(unless you give 401k...etc) The housing market is much better than it was 2 years ago (we got burned) so finding rentals is easier. But you aren't going to find a SFH in NoVa for under 350k in a good family neighborhood. (for a family of 5) so mortage is going to eat up a huge part of your income. And those curious need to know that they will not have the same standard of living here as they did back in NE,IA,TX or wherever....

simply saying that we are overexaggerating and you make out fine on 72k with 2 plus kids may be underexaggerating.
I am truely trying to help by being very realistic about cost etc...

[jb124]

jmarkd:

Yeah I wasn't sure how many exemptions to take so I estimated the 15% tax hit as 7.5% Social Security and the other 7.5% as a combo of state & federal.

Your money savings ideas (and the ones others have mentioned) are all great. I'm reading The Millionaire Next Door now and it has a lot of that stuff in it. I recently switched over to a high interest rate checking and savings (ING Direct 4.0% checking and FNBO Direct 6% savings) and am debt free except for my mortgage. I have no land line either but do spend more than I need to on cable/internet. I have compact flourescent bulbs in every appropriate fixture (buy them on sale though) and drive a 10 year old car that's in great condition. I use a debit card instead of a credit card too (I have a credit card though for emergencies).

The big hurdle for me was training myself to bring my lunch to work. In NoVA even fast food will run $8 a pop. I also had to train myself to use the library instead of Amazon.com, heh. I'm single though so I have a bit more in the way of financial freedom than the typical NoVA family.

[jmarkd]

Originally Posted by 5stones

my kids get to choose 1 activity only but x 3 active kids it adds up.
we no longer do summer camps etc... that we did in PA. yes, the activites are choices, but my girls love sports and I don't want them to be couch potatoes...so I go with out alot so they can have thier activites.

How much are the activites? Growing up, I played baseball, football, and tennis with friends, plus school sports, and the only cost was rackets, cleats, ball gloves...summer camp was a couple hundred for wrestling but fortunately for my folks I was not good at any other sports

simply saying that we are overexaggerating and you make out fine on 72k with 2 plus kids may be underexaggerating.
I am truely trying to help by being very realistic about cost etc...

I know; you're being very helpful. The difference has got to be the house payment. I tried to stress in my first post that renting is an option. You might think renting is throwing money away, but last year I rented a brand new 3BR condo in Chantilly for $1600 plus utilities. The owner paid $420k for it, plus $350 a month condo fees. At the best rates, his monthly payment was well over $3000. Granted, you can buy the same place now for $350k, but even still we're talking $1600 vs. $2500. Unless a person is staying put for 5 years or more, buying is foolish. Take it from me- I bought a house and put down $10k in points this January, decided I hate my job, and now I'm moving this fall. I should have kept renting!

It could also be where we live- I live in western Loudoun while you're in eastern Fairfax where housing costs much more. I only have to drive to Herndon. I wouldn't recommend living somewhere like Leesburg and working inside the Beltway.

Renting is a great deal! Of all the very valid reasons to own a home, none are financial. After all, I basically rent my home from the mortgage company. What happens if I quit paying?