Mourning the loss of savings rate

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kinetic2255
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Mourning the loss of savings rate

Post by kinetic2255 » Sun Mar 17, 2019 10:55 am

In January we reduced our household savings rate from 38% of gross to approximately 25%. I'm really struggling with this. Five years ago we implemented a boglehead strategy and have made some amazing progress! The final phase of a five year gut/remodel farmhouse project is finished and we added three children to the mix. Post children my wife's reduced hours have resulted in a 75% reduction of her pay. In order to balance the books we have reduced my 457(b) contribution and cut to the bone expense wise. I'm struggling with this for the following reasons:
  • Succumbing to lifesytle creep with housing. We entered into the situation "flush" and no children (with two other major house projects under our belt) but came out the other end humbled by the loss of income. This realty hit half way through the project but at the time we were at a point of no return. (read: exposed 2nd floor joists and insulation in every baby picture). We have about 60% equity in the house and it's in a desirable area.
  • We have more tax deferred space than we can fill. The reduction of the 457b may put us into the 22% bracket. I plan on a separate post to address this.
  • Goal was FIRE at 55 but that seems a bit further out of reach. Thoughts of a financial hamster wheel, especially with the long term forecast of expenses (cars, insurance, college).
  • Anticipated loosening the purse strings in our 40's after building a really solid foundation (37 now). So, this reduction in savings feels to soon for survival only.
Side note: No other aspects of our lives are extravagant other than the occasionally splurge on local craft beer. We haven't gone on a vacation in 5 years, our car fleet consists of a 2010 corolla and 2012 odyssey, we cook all meals at home etc.

I anticipate this will change 5 years from now with the kids all in school but right now that seems far off. Can anyone who is/was in a similar position provide insight or a strategy to think about this differently?

SleepCity
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Re: Mourning the loss of savings rate

Post by SleepCity » Sun Mar 17, 2019 10:57 am

Only 25%.....geez, you may never retire.....

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willthrill81
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Re: Mourning the loss of savings rate

Post by willthrill81 » Sun Mar 17, 2019 11:00 am

More details about your income and spending would be helpful. Unless you live in a high cost of living area, it seems that you should be able to achieve a higher savings rate than 25% if you're as motivated as you seem to be with your apparent income (i.e. in the 22% bracket and should have child-tax credit x 3).

If you were starting from scratch, a 25% savings rate would result in you becoming FI (i.e. 4% withdrawals) in about 34 years.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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RickBoglehead
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Re: Mourning the loss of savings rate

Post by RickBoglehead » Sun Mar 17, 2019 11:02 am

My recommendation? Stop focusing on absolutes. Things change.

I smile when I see people writing detailed plans and coming up with exact forecasts. Life changes. Especially if you don't have kids yet, or just got kids. Many haven't a clue how much kids cost.

Here's my guidance, take it for what it's worth. Worked for me, may not for anyone else.

Set broadbased goals along the lines of the Boglehead philosophy. Be thrifty, but not ridiculously cheap. Save, and put your savings into the right type of accounts (maxing company match, then IRAs, ...). Pick the right kinds of investments (3 fund portfolio). Then sit back and enjoy your life.

When we had our first, my wife stopped working. She started volunteering when the youngest went to school, and then eventually started working again, but in the school system. Her pay is absurdly low. We put all of it into her 403b.

The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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Kenkat
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Re: Mourning the loss of savings rate

Post by Kenkat » Sun Mar 17, 2019 11:03 am

I would focus less on the actual percentage rate and more on whether you are saving enough to meet your goals. I started saving very early, married someone who did the same, and so I save a lower percentage now that I am in what I call the expensive years of kids in college, etc. That’s ok because at 55 I am still in good shape to meet my retirement goals. It would have been great to save even more but the fact is that I am close to financial independence if not already there and you’ve got to live life along the way as well.

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smarcus3
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Re: Mourning the loss of savings rate

Post by smarcus3 » Sun Mar 17, 2019 11:08 am

RickBoglehead wrote:
Sun Mar 17, 2019 11:02 am
My recommendation? Stop focusing on absolutes. Things change.

I smile when I see people writing detailed plans and coming up with exact forecasts. Life changes. Especially if you don't have kids yet, or just got kids. Many haven't a clue how much kids cost.

Here's my guidance, take it for what it's worth. Worked for me, may not for anyone else.

Set broadbased goals along the lines of the Boglehead philosophy. Be thrifty, but not ridiculously cheap. Save, and put your savings into the right type of accounts (maxing company match, then IRAs, ...). Pick the right kinds of investments (3 fund portfolio). Then sit back and enjoy your life.

When we had our first, my wife stopped working. She started volunteering when the youngest went to school, and then eventually started working again, but in the school system. Her pay is absurdly low. We put all of it into her 403b.

The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
This ^^^^

I don't have kids yet either but am expecting my nicely laid plans to be destroyed but be replaced with something even better. I'd like the fiance to be able to stay at home with the kids. Clearly this is going to radically change my savings rate of 50%+

The early contributions are important and those are already in the books for you. It may not affect the overall portfolio much reducing late contributions.
This is my personal opinion. I'm an engineer not a financial advisor.

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ruralavalon
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Re: Mourning the loss of savings rate

Post by ruralavalon » Sun Mar 17, 2019 11:26 am

A 25% savings rate is very good.

Having children changes everything.

Stop agonizing over finances (you are doing fine), and enjoy life and your family.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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MillennialFinance19
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Re: Mourning the loss of savings rate

Post by MillennialFinance19 » Sun Mar 17, 2019 11:31 am

I have the same issue as you. We now have two kids and spend $1500 a month on childcare. To date, I still can’t wrap my head around my lesser savings rate and higher CC bill. My wife tells me this will subside when our 2-year old starts school in 2021 :sharebeer

sambb
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Re: Mourning the loss of savings rate

Post by sambb » Sun Mar 17, 2019 11:34 am

i wouldnt invest in the market, i would invest in yourself to raise your income via promotions or other factors and get a better ROI.

trustquestioner
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Re: Mourning the loss of savings rate

Post by trustquestioner » Sun Mar 17, 2019 11:38 am

Take a vacation.

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kinetic2255
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Re: Mourning the loss of savings rate

Post by kinetic2255 » Sun Mar 17, 2019 12:46 pm

willthrill81 wrote:
Sun Mar 17, 2019 11:00 am
More details about your income and spending would be helpful. Unless you live in a high cost of living area, it seems that you should be able to achieve a higher savings rate than 25% if you're as motivated as you seem to be with your apparent income (i.e. in the 22% bracket and should have child-tax credit x 3).

If you were starting from scratch, a 25% savings rate would result in you becoming FI (i.e. 4% withdrawals) in about 34 years.
We have been squarely in the current 12% bracket for the last 4 years with a combined $95k - $110k income. So, 2019 will be a test case on if we end up breaking into the 22% bracket with my wife's variable income and a recent raise. Last year expenses: 78k including maxing both Roths. We live in a MCOL, reasonable housing with good schools tend to be between $400k-$600k.

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kinetic2255
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Re: Mourning the loss of savings rate

Post by kinetic2255 » Sun Mar 17, 2019 12:56 pm

RickBoglehead wrote:
Sun Mar 17, 2019 11:02 am
My recommendation? Stop focusing on absolutes. Things change.

I smile when I see people writing detailed plans and coming up with exact forecasts. Life changes. Especially if you don't have kids yet, or just got kids. Many haven't a clue how much kids cost.

Here's my guidance, take it for what it's worth. Worked for me, may not for anyone else.

Set broadbased goals along the lines of the Boglehead philosophy. Be thrifty, but not ridiculously cheap. Save, and put your savings into the right type of accounts (maxing company match, then IRAs, ...). Pick the right kinds of investments (3 fund portfolio). Then sit back and enjoy your life.

When we had our first, my wife stopped working. She started volunteering when the youngest went to school, and then eventually started working again, but in the school system. Her pay is absurdly low. We put all of it into her 403b.

The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
ruralavalon wrote:
Sun Mar 17, 2019 11:26 am
A 25% savings rate is very good.

Having children changes everything.

Stop agonizing over finances (you are doing fine), and enjoy life and your family.
Thanks for the perspective. Frankly, we are lucky my wife can work weekends and some nights and we can avoid the high costs of daycare. I do recognize that I need to relax on the number crunching. Sometimes I think if i run the numbers enough it will change the outcome. Similar to when you open your fridge 20x hoping something you are really craving will magically show up.

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kinetic2255
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Re: Mourning the loss of savings rate

Post by kinetic2255 » Sun Mar 17, 2019 1:03 pm

Kenkat wrote:
Sun Mar 17, 2019 11:03 am
I would focus less on the actual percentage rate and more on whether you are saving enough to meet your goals. I started saving very early, married someone who did the same, and so I save a lower percentage now that I am in what I call the expensive years of kids in college, etc. That’s ok because at 55 I am still in good shape to meet my retirement goals. It would have been great to save even more but the fact is that I am close to financial independence if not already there and you’ve got to live life along the way as well.
Like you, my spouse is on board which is great. I'm hoping on being in the similar position as you at 55. It's hard to not have the 'max everything' mentality after reading this board but focusing on the amount to meet goals instead would be helpful.

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Re: Mourning the loss of savings rate

Post by cherijoh » Sun Mar 17, 2019 2:44 pm

kinetic2255 wrote:
Sun Mar 17, 2019 10:55 am
In January we reduced our household savings rate from 38% of gross to approximately 25%. I'm really struggling with this. Five years ago we implemented a boglehead strategy and have made some amazing progress! The final phase of a five year gut/remodel farmhouse project is finished and we added three children to the mix. Post children my wife's reduced hours have resulted in a 75% reduction of her pay. In order to balance the books we have reduced my 457(b) contribution and cut to the bone expense wise. I'm struggling with this for the following reasons:
  • Succumbing to lifesytle creep with housing. We entered into the situation "flush" and no children (with two other major house projects under our belt) but came out the other end humbled by the loss of income. This realty hit half way through the project but at the time we were at a point of no return. (read: exposed 2nd floor joists and insulation in every baby picture). We have about 60% equity in the house and it's in a desirable area.
  • We have more tax deferred space than we can fill. The reduction of the 457b may put us into the 22% bracket. I plan on a separate post to address this.
  • Goal was FIRE at 55 but that seems a bit further out of reach. Thoughts of a financial hamster wheel, especially with the long term forecast of expenses (cars, insurance, college).
  • Anticipated loosening the purse strings in our 40's after building a really solid foundation (37 now). So, this reduction in savings feels to soon for survival only.
Side note: No other aspects of our lives are extravagant other than the occasionally splurge on local craft beer. We haven't gone on a vacation in 5 years, our car fleet consists of a 2010 corolla and 2012 odyssey, we cook all meals at home etc.

I anticipate this will change 5 years from now with the kids all in school but right now that seems far off. Can anyone who is/was in a similar position provide insight or a strategy to think about this differently?
My advice would be to put a moretorium on life-style creep via further home purchases or remodel projects. It has been my observation that people underestimate the impact of their housing choice on their future finances andthey overestimate their ability to save once they start a family. But since you are still able to save 25% with a 75% reduction in your wife's salary I don't think you took it too far.

However, if you are making extra principal payments on the mortgage (not clear from original post but a possibility with that amount of home equity), I would cut those out and focus on maxing out retirement funds for now.

I do think you may need to reconsider FIRE at 55 (i.e., 18 years from now) because you have now have 3 kids, several of whom will likely still be dependent on you at that time. (But I think you could easily do so by 60). Retiring before you are empty nesters is going to be a challenge unless you leave the kids on their own to pay for college.

delamer
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Re: Mourning the loss of savings rate

Post by delamer » Sun Mar 17, 2019 2:51 pm

kinetic2255 wrote:
Sun Mar 17, 2019 12:56 pm
RickBoglehead wrote:
Sun Mar 17, 2019 11:02 am
My recommendation? Stop focusing on absolutes. Things change.

I smile when I see people writing detailed plans and coming up with exact forecasts. Life changes. Especially if you don't have kids yet, or just got kids. Many haven't a clue how much kids cost.

Here's my guidance, take it for what it's worth. Worked for me, may not for anyone else.

Set broadbased goals along the lines of the Boglehead philosophy. Be thrifty, but not ridiculously cheap. Save, and put your savings into the right type of accounts (maxing company match, then IRAs, ...). Pick the right kinds of investments (3 fund portfolio). Then sit back and enjoy your life.

When we had our first, my wife stopped working. She started volunteering when the youngest went to school, and then eventually started working again, but in the school system. Her pay is absurdly low. We put all of it into her 403b.

The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
ruralavalon wrote:
Sun Mar 17, 2019 11:26 am
A 25% savings rate is very good.

Having children changes everything.

Stop agonizing over finances (you are doing fine), and enjoy life and your family.
Thanks for the perspective. Frankly, we are lucky my wife can work weekends and some nights and we can avoid the high costs of daycare. I do recognize that I need to relax on the number crunching. Sometimes I think if i run the numbers enough it will change the outcome. Similar to when you open your fridge 20x hoping something you are really craving will magically show up.
With all due respect, what did you think would happen to your finances when you decided to have 3 children and your wife cut back her work hours? :wink:

As ruralavalon said, enjoy your life and your family. You can’t have it all (or at least all at the same time).

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Re: Mourning the loss of savings rate

Post by StandingRock » Sun Mar 17, 2019 2:53 pm

delamer wrote:
Sun Mar 17, 2019 2:51 pm

With all due respect, what did you think would happen to your finances when you decided to have 3 children and your wife cut back her work hours? :wink:
LOL that's what I was thinking, dang.

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Re: Mourning the loss of savings rate

Post by willthrill81 » Sun Mar 17, 2019 3:03 pm

StandingRock wrote:
Sun Mar 17, 2019 2:53 pm
delamer wrote:
Sun Mar 17, 2019 2:51 pm

With all due respect, what did you think would happen to your finances when you decided to have 3 children and your wife cut back her work hours? :wink:
LOL that's what I was thinking, dang.
Indeed. Such major financial events have consequences. With my wife having stayed at home my entire career, having a child didn't impact our finances in a meaningful way. But losing income and increasing expenses via childcare can be a significant blow, as the OP's case demonstrates. He should get some relief once the kids are school age and his wife can increase her income again.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Michael Patrick
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Re: Mourning the loss of savings rate

Post by Michael Patrick » Sun Mar 17, 2019 3:07 pm

RickBoglehead wrote:
Sun Mar 17, 2019 11:02 am
The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
This. My wife was able to find a job that was less than full time that allowed her to be home when the kids got home. This was great for our older daughter, but it really paid off for our younger daughter who has autism. There really aren't any after school programs for kids with the significant challenges of our daughter. Plus all of the extra doctor's appointments, therapy sessions, IEP meetings... that flexibility my wife has is priceless.

My plan is that I save what I can. My projections show that we won't be living in a refrigerator box under a bridge in our old age.

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ruralavalon
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Re: Mourning the loss of savings rate

Post by ruralavalon » Sun Mar 17, 2019 3:28 pm

kinetic2255 wrote:
Sun Mar 17, 2019 12:56 pm
Thanks for the perspective. Frankly, we are lucky my wife can work weekends and some nights and we can avoid the high costs of daycare. I do recognize that I need to relax on the number crunching. Sometimes I think if i run the numbers enough it will change the outcome. Similar to when you open your fridge 20x hoping something you are really craving will magically show up.
That's the right attitude :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

chevca
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Re: Mourning the loss of savings rate

Post by chevca » Sun Mar 17, 2019 3:46 pm

Congrats on finishing your house project and having three lovely children over the last 5 years! And, being in a position to have your wife stay home mostly with the kids... and still save 25% of your income. As mentioned, get some perspective and enjoy your life. :sharebeer
kinetic2255 wrote:
Sun Mar 17, 2019 12:46 pm
willthrill81 wrote:
Sun Mar 17, 2019 11:00 am
More details about your income and spending would be helpful. Unless you live in a high cost of living area, it seems that you should be able to achieve a higher savings rate than 25% if you're as motivated as you seem to be with your apparent income (i.e. in the 22% bracket and should have child-tax credit x 3).

If you were starting from scratch, a 25% savings rate would result in you becoming FI (i.e. 4% withdrawals) in about 34 years.
We have been squarely in the current 12% bracket for the last 4 years with a combined $95k - $110k income. So, 2019 will be a test case on if we end up breaking into the 22% bracket with my wife's variable income and a recent raise. Last year expenses: 78k including maxing both Roths. We live in a MCOL, reasonable housing with good schools tend to be between $400k-$600k.
You were already in the 22% bracket ($77,401 to $165,000). And, with the wife's income going down, you may make it down to the 12% bracket. I'm not sure what you are worried about with the tax bracket thing. With the wife's pay going down 75%, I certainly don't think you have to worry about bumping up to the next tax bracket just because you can't max out your 457b. You seem to be letting your mind blow things out of proportion with all this.

staythecourse
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Re: Mourning the loss of savings rate

Post by staythecourse » Sun Mar 17, 2019 3:54 pm

Honestly, your goals were probably not very attainable. Not many folks who are ER at 55 with a huge, paid off home, 3 kids, and the costs of those 3 kids (college education) WITHOUT a pension. I think you are just figuring out what most would have known from the beginning. No bid deal just need to reassess your goals that are more realistic.

This is a good reminder for other folks though that EVERYTHING changes when you start having kids. The decision to have kids AND more important how many will directly impact your own retirement plan. As I have said there are only really 3 big costs in life (your big boy home, kid's education (college education and/ or private school before), and your own retirement). The decisions to those will impact your financial life so best to plan it out AHEAD of time.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Mourning the loss of savings rate

Post by Amadis_of_Gaul » Sun Mar 17, 2019 7:05 pm

Honestly, it sounds like you have a lot more to celebrate than to mourn: a wife, three kids, a nice house, and a job that allows you to save a quarter of your income! I certainly appreciate the allure of FIRE (I ended up on Bogleheads via a number of FIRE sites), but I think it's a mistake to deprive yourself for 20 years so you can retire five years earlier. It's good to prepare for the future, but it's good to live in and enjoy the present too. Children are undeniably expensive, but I find that the enjoyment mine bring me is cheap at the price. Life is good. Relax! :happy

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Re: Mourning the loss of savings rate

Post by azFF » Sun Mar 17, 2019 7:23 pm

trustquestioner wrote:
Sun Mar 17, 2019 11:38 am
Take a vacation.
This^^^^^

blueman457
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Re: Mourning the loss of savings rate

Post by blueman457 » Sun Mar 17, 2019 7:31 pm

delamer wrote:
Sun Mar 17, 2019 2:51 pm
kinetic2255 wrote:
Sun Mar 17, 2019 12:56 pm
RickBoglehead wrote:
Sun Mar 17, 2019 11:02 am
My recommendation? Stop focusing on absolutes. Things change.

I smile when I see people writing detailed plans and coming up with exact forecasts. Life changes. Especially if you don't have kids yet, or just got kids. Many haven't a clue how much kids cost.

Here's my guidance, take it for what it's worth. Worked for me, may not for anyone else.

Set broadbased goals along the lines of the Boglehead philosophy. Be thrifty, but not ridiculously cheap. Save, and put your savings into the right type of accounts (maxing company match, then IRAs, ...). Pick the right kinds of investments (3 fund portfolio). Then sit back and enjoy your life.

When we had our first, my wife stopped working. She started volunteering when the youngest went to school, and then eventually started working again, but in the school system. Her pay is absurdly low. We put all of it into her 403b.

The value of her being home with the kids when they were young, and being there when they got home from school, can't be measured by an Excel spreadsheet or calculator. We gave up hundreds of thousands of dollars in compensation. Money isn't everything.
ruralavalon wrote:
Sun Mar 17, 2019 11:26 am
A 25% savings rate is very good.

Having children changes everything.

Stop agonizing over finances (you are doing fine), and enjoy life and your family.
Thanks for the perspective. Frankly, we are lucky my wife can work weekends and some nights and we can avoid the high costs of daycare. I do recognize that I need to relax on the number crunching. Sometimes I think if i run the numbers enough it will change the outcome. Similar to when you open your fridge 20x hoping something you are really craving will magically show up.
With all due respect, what did you think would happen to your finances when you decided to have 3 children and your wife cut back her work hours? :wink:

As ruralavalon said, enjoy your life and your family. You can’t have it all (or at least all at the same time).
Yep. Welcome to having kids.

P.S. You're doing fine.

1year23
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Re: Mourning the loss of savings rate

Post by 1year23 » Sun Mar 17, 2019 7:50 pm

Enjoy the greatest wealth you will ever experience: 3 kids. Money can't hold a candle to the richness of having a family. I predict you will look back on your post one day and see this clearly.

MathWizard
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Re: Mourning the loss of savings rate

Post by MathWizard » Sun Mar 17, 2019 7:59 pm

1year23 wrote:
Sun Mar 17, 2019 7:50 pm
Enjoy the greatest wealth you will ever experience: 3 kids. Money can't hold a candle to the richness of having a family. I predict you will look back on your post one day and see this clearly.
+100

Your lowered savings rate is still good.

At. 25% , your expenses are 75%, so every 3 years you are saving a year's expenses. You should be fine

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greg24
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Re: Mourning the loss of savings rate

Post by greg24 » Sun Mar 17, 2019 8:09 pm

You've won the game! You have a great family, with a solid financial base, your wife not working too much but still with a career, all the while saving 25% of your income.

If 55 doesn't work, or 58, who knows. That is a long ways off.

Enjoy what you have now. :sharebeer
Last edited by greg24 on Sun Mar 17, 2019 8:11 pm, edited 1 time in total.

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greg24
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Re: Mourning the loss of savings rate

Post by greg24 » Sun Mar 17, 2019 8:10 pm

chevca wrote:
Sun Mar 17, 2019 3:46 pm
You were already in the 22% bracket ($77,401 to $165,000).
He listed their raw income, not their AGI, which is probably below $77k.

KingRiggs
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Re: Mourning the loss of savings rate

Post by KingRiggs » Sun Mar 17, 2019 8:20 pm

With three kids at home, you’ll probably WANT to work longer just to get out of the house! Trust me, I’ve been there... :sharebeer
Advice = noun | Advise = verb | | Roth, not ROTH

togb
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Re: Mourning the loss of savings rate

Post by togb » Sun Mar 17, 2019 8:57 pm

Dear OP,
Forgive me but you sound like you're wound up pretty tight over the inevitable impact of changes you chose for your life. You were on one track, and when you decided to have 3 kids that put you on a different track-- and all that goes with it.

As others have stated, 25% is a great savings rate. But it sounds like you are also cutting expenses to the bone, perhaps to the extent of not enjoying life as much as you should. And not building the memories with your children that you should. I did not have children, but am told that they are only young once. You miss the chance for their activities, the family vacations-- and yes, those cost $$$--- you can't make it up later.

Forget about retiring at 55. You're on a different track now. And realistically, after a break from working your wife may not be able to ever reattain her prior earning level. But you have three kids, you're raising little humans! Be happy you are off to a strong start for your retirement and now reassess based on your new track. I know that seems scary-- I've been there. (I was forced to change my goals when I had to take a new path after a divorce. So I'm past my original planned retirement age, and still working. Meh. It is what it is.)

It will be different, but that doesn't mean it won't be good.

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sergeant
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Re: Mourning the loss of savings rate

Post by sergeant » Sun Mar 17, 2019 10:01 pm

Look at the silver lining. Your 457b sucks (based on previous posts) and now you're sending a bit less to it.
In all seriousness you're doing fine at a 25% savings rate.
Lincoln 3 EOW! AA 40/60.

chevca
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Re: Mourning the loss of savings rate

Post by chevca » Sun Mar 17, 2019 10:20 pm

greg24 wrote:
Sun Mar 17, 2019 8:10 pm
chevca wrote:
Sun Mar 17, 2019 3:46 pm
You were already in the 22% bracket ($77,401 to $165,000).
He listed their raw income, not their AGI, which is probably below $77k.
I assumed he listed taxable income. Either way, they weren't square in the middle of the 12% bracket, as OP said, and there's likely no worry about making it to the 22% bracket with the wife taking a 75% pay cut.

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celia
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Re: Mourning the loss of savings rate

Post by celia » Sun Mar 17, 2019 10:32 pm

You now have something much better than a lower savings rate. You have a freshly remodeled home and 3 little ones.

Even if you ignore all new savings for the next 5 years, you will have saved much more than the majority who are your age. The amount you can save when you are young (just starting your independent adult life) is the biggest factor in your future wealth because it has more time to compound than if you started later. So enjoy your compounding years (and your new situation)!

vss317
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Re: Mourning the loss of savings rate

Post by vss317 » Sun Mar 17, 2019 11:43 pm

I'm in the same boat. I'm expecting kiddo number two and have gone through the finance numbers as well, numerous times. My wife and I both work so we're full time day care and that's the biggest shock to me, especially when we get the end of year document for tax time.

I will say this though, as sappy as it sounds, when I pick my kiddo up from day care and see her playing, talking to other kiddos, and running up to me, all those finance concerns go out the window. Like you, we're still saving, maybe not as much as before, but still at it.

So as others have already said, enjoy life, enjoy those moments, I'm finding they fly by.

mancich
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Re: Mourning the loss of savings rate

Post by mancich » Mon Mar 18, 2019 4:07 am

Amadis_of_Gaul wrote:
Sun Mar 17, 2019 7:05 pm
Honestly, it sounds like you have a lot more to celebrate than to mourn: a wife, three kids, a nice house, and a job that allows you to save a quarter of your income! I certainly appreciate the allure of FIRE (I ended up on Bogleheads via a number of FIRE sites), but I think it's a mistake to deprive yourself for 20 years so you can retire five years earlier. It's good to prepare for the future, but it's good to live in and enjoy the present too. Children are undeniably expensive, but I find that the enjoyment mine bring me is cheap at the price. Life is good. Relax! :happy
+1 Enjoy what sounds like a very fortunate life with your family! It is cliche to say it, but life truly is short. :sharebeer

Flyer24
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Re: Mourning the loss of savings rate

Post by Flyer24 » Mon Mar 18, 2019 4:15 am

Most people dream of a 25% savings rate. You are doing awesome. Take vacations every year and enjoy life. Your kids will be grown before you know it.

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Psyayeayeduck
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Re: Mourning the loss of savings rate

Post by Psyayeayeduck » Mon Mar 18, 2019 5:29 am

This is the equivalent of mourning the loss of the A+ where a passing grade is good enough. 25% is not something to be sad about at all.

z3r0c00l
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Re: Mourning the loss of savings rate

Post by z3r0c00l » Mon Mar 18, 2019 6:47 am

I am single, frugal, and not sure I do better than 30% each year... Married with kids I'd be happy with 15%.

StlIllini
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Re: Mourning the loss of savings rate

Post by StlIllini » Mon Mar 18, 2019 6:55 am

OP,

I have had very similar feelings. I routinely saved 40-50%, but at age 39 now have a toddler and another on the way. I'm now closer to 20-25%, which has stressed me out at times. Daycare is a killer and I really hate to think about next year when we will have two expenses. I have had to take a step back and look at the bigger picture, which eases the stress. The years of saving have built a foundation that will allow us to live a comfortable life with a smaller savings rate. I planned on retiring at 55, but now 62 seems much more realistic.

The joys of family sure look better than seeing an extra 5% on a spreadsheet :)

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