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Yup, I can certainly understand why you'd say that. So:
Monthly take-home, after maxing out 401ks, is about $25,000-$26,000.
Mortgage/taxes: $4500
Health insurance: $2000 (no workplace contribution) 529s for two kids: $1200
Car-related expenses + train/parking: $1500
Utilities: $1000
Misc. home expenses/maintenance: $1000
Childcare: $3000
Extra-curriculars: $500
Food/leisure -- I don't add this up usually... maybe $1500-$2000, depending on how much entertaining we're doing and how much we're working too much and ordering in? Extra retirement saving: $1200
General saving: $3000
Then there's a vacation or two each year, and camp.
After that, there's a couple thousand left, which we easily blow on clothes, etc. for all four of us. Nothing out of line for our income level. Today I ordered some Old Navy pajamas for my kids, some diapers, a new water bottle for my son because he keeps losing the damn thing, and a new carseat.
So where's the crazy spending?
That's $7,400 of savings/investments you can do every month that hardly anyone else except the top 1% can do. You just have a first world problem of the 1 percenter, that very few people can relate to.
Mtge/taxes of $4500 seems off..I'm assuming your taxes are less than 24k, so your mortgage of 2500/month at mid 2000 rates means your principal is over 600k..so you should refi..
$1500 for car/train..seems like you have 2 cars being leased/financed for 400/month means you have something a lot nicer than a Honda Civic or Prius.
demographer - I hear exactly what you're saying. Our HHI isn't as high as yours, but we still do extremely well- yet I feel like we're always struggling. There are some things we spend money on that I know are contributing to this - i.e. we usually go on one big, expensive vacation every year, as well as one smaller one. We also send our kids to expensive day camp and sleepaway camp, plus other activities which all add up. We save a little bit - but have a long list of home improvement projects queued up, which are waiting to take a lot of that savings away.
It's very frustrating making a salary that would be considered extremely wealthy anywhere else in the country, but scraping by here in Westchester. I suppose it's all relative though.
demographer - I hear exactly what you're saying. Our HHI isn't as high as yours, but we still do extremely well- yet I feel like we're always struggling. There are some things we spend money on that I know are contributing to this - i.e. we usually go on one big, expensive vacation every year, as well as one smaller one. We also send our kids to expensive day camp and sleepaway camp, plus other activities which all add up. We save a little bit - but have a long list of home improvement projects queued up, which are waiting to take a lot of that savings away.
It's very frustrating making a salary that would be considered extremely wealthy anywhere else in the country, but scraping by here in Westchester. I suppose it's all relative though.
Yes, and therein lies the frustration, and the dilemma: Lots of people have posted about how we save well already--but the day we upgrade to a higher-end school district, a lot of that savings goes out the window and we're suddenly living almost month-to-month. For what? I'm not sure. At our income levels, taking a couple of vacations, sending kids to camp and renovating a kitchen should not be a big deal. Not to mention having a two-car garage that keeps us out of the rain.
I'll just put it out there: My spouse and I have a HHI of about $650k. We are considering leaving Westchester because of the insane cost of living. Simply put, after mortgage, taxes, retirement saving and college saving for our kids, we are comfortable, but by no means living large. And that's living in a school district many people consider inferior. We've been looking at homes in some of the "fancier" districts, but paying $30k in property taxes in perpetuity -- for a house that needs work -- is starting to feel like something only crazy people do.
What we always ask ourselves is: Does everyone else just make more money than we do? Have grandparents footing the bill for their kids' college? Have an inheritance that they're counting on to fund retirement? Because it seems to me that you need to pull in about $1M or more to really live well in one of southern Westchester's highly-regarded school districts.
VERY curious what others think.
Go check out the LI forum
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"The man who sleeps on the floor, can never fall out of bed." -Martin Lawrence
Actually his problem is more common than you think. We pull in over $500k and our expenses are so high, yet we live a middle class lifestyle... well maybe not that middle-class after all. I am amazed to watch HGTV property brothers and they often work with Joe the engineer and Sally the accountant who are in their mid thirties, and their house-hunting budget is between $900k and $1.1million. I wonder how the heck do they do that?
For us our expenses are very high around housing and kids expenses. We dont send them off to sleep away camp or the like. They go to the cheap camps that our town offers and which is actually a great value by Westchester standards.
Here’s a sense of our expenses:
$5500 Mortgage and taxes
$2500 childcare, camp, babysitter, etc...
$2000 food, restaurants, wine, bars, lunch, etc...
$900 parking, metro-north pass, gas
$ 800 helping mother in law
$1000/mo for two yearly vacation weeks. Noth8ng fancy. We usually do a week on the beach and a second week somewhere we can drive. Westchester has a lot to offer within a 5 hr. Drive so we’ve been taking advantage...
$1000 utilities, phones, yard maintenance, rtc...
We normally save $5-10 per month via 401ks, IRAs, 529s, brokerage, etc...
I know it feels middle class bc you think “jeez im not splurging, but i really cant afford all those luxury-brand whatevers,”. And you’re right, we cant spend on a boat, or a yacht or a yearly trip to Europe. But the reality is that we can afford all these things, so looking at it from the outside this is not middle class, it just feels that way...
Life in Westchester is not cheap and we too have considered moving... Maybe one day we will... in the meantime theres much to love here... schools, commute, proximity to the city, amenities, parks... enjoy while it lasts and save!
I will take a different angle on this one and say this sounds less like a financial problem and more like a mix of the childcare years and maybe a need to prioritize?. $1k/mo on utilities, $2K/mo on clothes and $500/mo in extracurriculars for young children... is that really how you want to be spending your money?
Monthly take-home, after maxing out 401ks, is about $25,000-$26,000.
Mortgage/taxes: $4500
Health insurance: $2000 (no workplace contribution)
529s for two kids: $1200
Car-related expenses + train/parking: $1500
Utilities: $1000
Misc. home expenses/maintenance: $1000
Childcare: $3000
Extra-curriculars: $500
Food/leisure -- I don't add this up usually... maybe $1500-$2000, depending on how much entertaining we're doing and how much we're working too much and ordering in?
Extra retirement saving: $1200
General saving: $3000
So where's the crazy spending?
I'm assuming you both work given your childcare costs and you say 401k's. So by my math: $25,500
-$4,500
-$2,000
-$1,500
-$1,000
-$1,000
-$3,000
-$500
-$2,000 -$1,500 (estimating your miscellaneous expenses like clothes, etc.) $8,500 unspent + 401ks: $3,000 $11,500 monthly savings/investments
I agree that you don't have any crazy expenses. I make less money and spend more in some of those categories (and less in others obviously), but I also think you are unnecessarily stressing yourself out. You have a buffer of 45% of your take-home pay. You say you don't want to work until you're 80 but you're saving like you don't want to work for more than another 5-10 years. If spending an extra $1,000/month on something would make you happier or your life easier then based on these numbers you can easily do that without jeopardizing your retirement/financial stability.
OP, our household income is less than yours, but I think it sort of evens out once you factor in the childcare costs and college savings. We don't have kids, so I can't relate to that, but I think a sizeable portion of your income (like many in Westchester) is going towards expenses in those areas.
In other respects, our budget looks similar to yours, with less healthcare premiums and + $700/mo in dog daycare expenses. Are you on a 15 year or 30 year mortgage? We switched to a 15 year so our payments are about $5500 but the nice part is most of that is going towards principal. The not-so-nice part is that we have less disposable income to work with every month since such a large portion is going towards the house. Have you made any large home upgrades/repairs/renovations/etc that are eating into your budget further?
Finally re: college savings, I know many parents today consider it a given that they will be paying for college tuition; however I just wanted to offer some reassurance that my own parents didn't give or lend me a red cent towards tuition (I'm a millennial) and I was still able to go to a good school, graduate and pay for college and here I am today. So I guess my point is that don't let the anxiety over affording college tuition (which continues to inflate) be a source of undue stress down the road! You can also partially contribute or supplement with scholarships, etc. Best of luck.
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