Private School - financially irresponsible?

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retire57
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Re: Private School - financially irresponsible?

Post by retire57 »

oldfort wrote: Mon Feb 22, 2021 6:20 pm
retire57 wrote: Mon Feb 22, 2021 6:03 pm I know you've considered this, but can't the SAH mom homeschool the kids? Investing that $$$ instead will have a massive impact on your savings over the next 18 years.

Given the opportunity costs, do the math and let us know what the actual price tag is for private school.
I wouldn't consider homeschooling. There's a huge social aspect to school, which can be as important if not more so than the academics.
This is a common misconception supported by many credible studies. Do some research before you make such assumptions.
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Watty
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Re: Private School - financially irresponsible?

Post by Watty »

anon_investor wrote: Mon Feb 22, 2021 3:40 pm How good or bad is the public school where they would go otherwise?
+1000

And how good or bad is the private school that you could send them too.

It would be a big mistake to assume that a private school was good just because it was private. There are lots of bad private schools and they have a lot of incentive to try to hide that so that they look better. Many parents may also say they are better than they actually are just because they spent a lot of money on the school.

Figuring out the quality of schools is fiendishly difficult.

You can of course figure out schools that have lots of problems with crime and gangs and rule those out but after that how do you rate the rest? (Rich public high schools may have lots of problems with drugs too, but it is often just better hidden.)

It was a lot different situation but one time I was relocating for a job so I needed to fly into a city I did not know and buy a house. We had a kid in middle school so picking an area with a good high school was one of our main criteria for our house hunting. The logical area for us to look was in a very large suburban school district which had about 15 large high schools that have a Great School ranking of about 4 to 10. The better ranked schools were in the more affluent area and the lower ranked schools were in the less affluent area but they were not real bad parts of town.

It talking to the school counselors about the schools was that all the high schools in the school district had very similar programs and resources and the big difference between them was the demographics of the kids.

By buying in the more affluent area we would not have gotten a better school, just higher achieving classmates. Apparently an important predictor of how kids will do in school is the education level of their parents and in general that was correlated to how affluent the area was.

In our house hunting we visited a number of high schools and we happened to drive through the student parking lot of at one of the more affluent high schools. In the parking lot there were a noticeable number of Mercedes and BMWs and even one late model Corvette! Even if you can easily afford it who in their right mind gives a 17 year old a Corvette to drive. That made us not like that high school and later on we did hear stories about how there were cliques of "rich kids" that had their own problems.

One other thing to watch out for is that some very demanding schools(private and public) put too much pressure on kids and some schools have gotten the grim nickname "Suicide High" since so many kids have commited suicide .
head wrote: Mon Feb 22, 2021 3:25 pmIncome: ~400k
You make what should a high income but after high taxes, high rent, paying for private school, and the high cost if you want to buy a house some day I can image that your budget might be a bit tight.

If you don't have strong family or career ties that require you to be in NYC then you might consider if moving to a much less expensive area would be an option.
Last edited by Watty on Mon Feb 22, 2021 7:06 pm, edited 1 time in total.
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JoeRetire
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Re: Private School - financially irresponsible?

Post by JoeRetire »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income
You want to spend 25% of your income on kindergarten? :shock:

I guess we each decide our priorities.

I'm glad we decided to live in a locale with a good public school system.
Last edited by JoeRetire on Mon Feb 22, 2021 7:09 pm, edited 1 time in total.
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afan
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Re: Private School - financially irresponsible?

Post by afan »

KlangFool wrote: Mon Feb 22, 2021 6:31 pm

My statement is accurate to a certain group of people. And, those group of people picks where they live based on the quality of the public school. Hence, they formed rich neighborhoods with good public schools.


Meanwhile, some other folks do not care about public education. They formed rich neighborhoods with lousy public schools.

To each its own. Pick the neighborhood that is consistent with your philosophy.


KlangFool
And again, neighborhoods do not control the quality of their schools. Those decisions are far more centralized.
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Jags4186
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Re: Private School - financially irresponsible?

Post by Jags4186 »

In NYC you don’t necessarily go to the school nearest you. This is done on purpose so the “haves” and the “have nots” mix. Moving but staying in the city doesn’t fix any problems.
Beachey
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Re: Private School - financially irresponsible?

Post by Beachey »

celia wrote: Mon Feb 22, 2021 3:56 pm But you can now spend 529 withdrawals to pay for the education part.
New York State does not allow 529 withdrawals for K-12 education.
KlangFool
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Re: Private School - financially irresponsible?

Post by KlangFool »

afan wrote: Mon Feb 22, 2021 7:07 pm
KlangFool wrote: Mon Feb 22, 2021 6:31 pm

My statement is accurate to a certain group of people. And, those group of people picks where they live based on the quality of the public school. Hence, they formed rich neighborhoods with good public schools.


Meanwhile, some other folks do not care about public education. They formed rich neighborhoods with lousy public schools.

To each its own. Pick the neighborhood that is consistent with your philosophy.


KlangFool
And again, neighborhoods do not control the quality of their schools. Those decisions are far more centralized.
afan,


The parents get to decide where to live. Do you disagree with that statement? Or, the quality of the public schools is never part of your deciding factor on where to live?

To each its own.


KlangFool
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dkdoy
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Re: Private School - financially irresponsible?

Post by dkdoy »

Also, Oregon does not allow
retire2022
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Re: Private School - financially irresponsible?

Post by retire2022 »

retire57 wrote: Mon Feb 22, 2021 6:58 pm
oldfort wrote: Mon Feb 22, 2021 6:20 pm
retire57 wrote: Mon Feb 22, 2021 6:03 pm I know you've considered this, but can't the SAH mom homeschool the kids? Investing that $$$ instead will have a massive impact on your savings over the next 18 years.

Given the opportunity costs, do the math and let us know what the actual price tag is for private school.
I wouldn't consider homeschooling. There's a huge social aspect to school, which can be as important if not more so than the academics.
This is a common misconception supported by many credible studies. Do some research before you make such assumptions.
While I cannot speak on behalf of OP, who lives in NYC and is a high income family, me thinks home schooling, is not in the running.

There are lots of charter schools and nest schools in NYC.
neverpanic
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Re: Private School - financially irresponsible?

Post by neverpanic »

I'm not sure anyone outside of NYC can answer this question if they've never been a student or parent there.

It would be different if you lived in south Jersey, or Princeton, or Fairfax County (VA), someplace known for having great public schools where a good number of parents choose to buy homes primarily for the schools. For posters living in those places, it's easy for outsiders to say that the typical student would get plenty of learning opportunities without having to go to private school.

NYC is entirely different. Anecdotally, my NYC peers all factored private school into their calculations when deciding to live and work in the City and the percentage of income going to tuition was about what you're looking at.
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NS_Bane
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Re: Private School - financially irresponsible?

Post by NS_Bane »

Beachey wrote: Mon Feb 22, 2021 7:13 pm
celia wrote: Mon Feb 22, 2021 3:56 pm But you can now spend 529 withdrawals to pay for the education part.
New York State does not allow 529 withdrawals for K-12 education.
This is not correct. You can use 529 withdrawals to pay for K-12 education in NY. However, NY will not give you a tax break if you do so.

https://www.nytimes.com/2017/12/21/your ... tner=IFTTT
PowderDay9
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Re: Private School - financially irresponsible?

Post by PowderDay9 »

The OP makes $400k and wants to spend 25% of net pay on elementary school? This sounds a little crazy. But maybe after spending enough time in a VHCOL area, these types of ideas seem more reasonable.
afan
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Re: Private School - financially irresponsible?

Post by afan »

KlangFool wrote: Mon Feb 22, 2021 7:16 pm
afan wrote: Mon Feb 22, 2021 7:07 pm
KlangFool wrote: Mon Feb 22, 2021 6:31 pm

My statement is accurate to a certain group of people. And, those group of people picks where they live based on the quality of the public school. Hence, they formed rich neighborhoods with good public schools.


Meanwhile, some other folks do not care about public education. They formed rich neighborhoods with lousy public schools.

To each its own. Pick the neighborhood that is consistent with your philosophy.


KlangFool
And again, neighborhoods do not control the quality of their schools. Those decisions are far more centralized.
afan,


The parents get to decide where to live. Do you disagree with that statement? Or, the quality of the public schools is never part of your deciding factor on where to live?

To each its own.


KlangFool
They get to decide where to live. They can make the quality of local public schools a factor. But if the only place where they can work does not have good public schools, they may not have a choice. It may be wholly unrealistic to give up a career to get good local public schools. Parents still need to work.

I was objecting to the assertion that parents in a neighborhood have some control over the quality of the schools.
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Katietsu
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Re: Private School - financially irresponsible?

Post by Katietsu »

neverpanic wrote: Mon Feb 22, 2021 8:06 pm I'm not sure anyone outside of NYC can answer this question if they've never been a student or parent there.

It would be different if you lived in south Jersey, or Princeton, or Fairfax County (VA), someplace known for having great public schools where a good number of parents choose to buy homes primarily for the schools. For posters living in those places, it's easy for outsiders to say that the typical student would get plenty of learning opportunities without having to go to private school.

NYC is entirely different. Anecdotally, my NYC peers all factored private school into their calculations when deciding to live and work in the City and the percentage of income going to tuition was about what you're looking at.
I do not live in NYC. But a very close relative does. The household income is similar to the OP. Education is important to them. Advanced degrees from top schools. And they paid $25k for pre-K with no public school option. But, they moved to an apt with a guarantee of a “good” elementary school. So, I am not so familiar with the guaranteed zoned school system/cachement areas that I can discuss all the potential successes and problems. But, I do know it can be a viable option to private school even in Manhattan.
Last edited by Katietsu on Mon Feb 22, 2021 11:24 pm, edited 1 time in total.
Wrench
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Re: Private School - financially irresponsible?

Post by Wrench »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income (after taxes and after maxing out 401(k) and back door IRA contributions). I live in a HCOL (NYC). 25% feels like a lot but perhaps this is normal for NYC? What % of net income do folks spend on private school tuition for their child(ren), if any?

Age: 32 (same for spouse who is stay at home)
Income: ~400k
401(K): ~200k
IRA: ~81K
Spouse IRA: ~72k
Cash Savings: ~200k
Taxable Investments: ~300k
Debt: ~10k (car loan)
529: ~55k (between two accounts)

Currently renting. Cash savings and taxable investments earmarked for home purchase within next few years.
Here's my take based on experience from three children: we live in a suburban community outside a medium size city where forced busing was mandated decades ago. About 3/4 of our neighbors sent their kids to private school. We resisted. Sent out kids to public school, including having them bused into a rough neighborhood in the city for some years. We also made sure they had many educational opportunities outside school. When they were old enough, all three applied to, and were accepted into public Charter Schools. All three got into excellent colleges, one is now a successful lawyer, one is a computer scientist and the third is pursuing a Ph.D. after attending an Ivy League school. Not only did their public education prepare them well academically, but they also learned about diversity, working with others from different backgrounds, and how others people live. IMHO those life skills are also an important part of education, one that may be lacking in some private schools. Oh - and the neighbors kids? Some did great, and some are tending bar while their parents are still in debt from paying the private school tuition.

Every child and every situation is different. You need to do what you believe is best for your kids. That may be private school, or it may be public school. But, don't be afraid of public education just because you think it may be bad. Check it out and make choices that you believe are right for you and for your child.

Wrench
retire57
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Re: Private School - financially irresponsible?

Post by retire57 »

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Small Savanna
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Re: Private School - financially irresponsible?

Post by Small Savanna »

I'd encourage you to shop around for both price and quality. Visit the local public school and see if they are interested in your business and if it's a place you would be comfortable having your kids attend. Do the same at a few private and parochial schools too. Even if you're not Catholic, Parochial schools tend to have lower tuition than private secular schools.
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JoeRetire
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Re: Private School - financially irresponsible?

Post by JoeRetire »

chenzi wrote: Mon Feb 22, 2021 7:51 pm Our family has a good annual income (>1M$)

Decided to bite the bullet and send my kids to the Christian school even though I am an atheist/agnostic, it is way cheaper for me to teach them evolution and other science stuff at home than the 25K cost difference ;)
I am liking all the other character-building stuff they teach. Was shocked and threw up a bit when my kid came back one day telling me that a couple of his friends told that the then-presidential candidate "kills babies" and I had to explain to my kid!
You have >$1M income and you like a $15k difference sway you? :oops:
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winterfan
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Re: Private School - financially irresponsible?

Post by winterfan »

Personally, we send our daughter to private school. We love it and she is thriving. It isn't expensive though, comparatively. We plan to send her to the college prep HS too. The K-8 cost is about 10% of our take home. It's not too bad. She likes it and is thriving, so that's what is important to me. We could easily spend the money on extravagant vacations, clothing or restaurant meals, but that isn't important to us. We meet our savings goals too, so that isn't an issue.

How secure is your income? 25% of a huge salary isn't that much in actual dollars. It seems like you would still have enough to fund everything else. It just depends on your spending priorities.
Veni Vidi Decessi
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Re: Private School - financially irresponsible?

Post by Veni Vidi Decessi »

KlangFool wrote: Mon Feb 22, 2021 4:24 pm
Tingting1013 wrote: Mon Feb 22, 2021 4:14 pm
KlangFool wrote: Mon Feb 22, 2021 4:00 pm OP,

The bigger picture question is


Why would you choose to live in a neighborhood that the public school is not good enough for your kids? Besides the school, the neighborhood will influence your kids too. In fact, it may be much more than the school.


It is cheaper and better to use the money of the private school to move into a better neighborhood.


KlangFool
Public school and neighborhood quality are not always correlated
Tingting1013,


That is your opinion. I would not live and raise my family in a neighborhood without good public schools. The quality of the public schools is a good indication of the kind of people who live in the neighborhood. Aka, whether they care about public education.


KlangFool
That’s not just his opinion. There are many areas in the South that have neighborhoods (LCOL) with home values $300k-$500k+ feeding to the same school as trailer parks. It is quite common to have a hodgepodge of student socioeconomic statuses in each school. When every school close by has this mixture, there is no clear delineation between the “good” school and “bad” school. Schools are instead set apart by their magnet programs, which do not require you to live in a certain location.
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winterfan
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Re: Private School - financially irresponsible?

Post by winterfan »

KlangFool wrote: Mon Feb 22, 2021 7:16 pm
afan,


The parents get to decide where to live. Do you disagree with that statement? Or, the quality of the public schools is never part of your deciding factor on where to live?

To each its own.


KlangFool
I agree parents get to decide where they live, but after we purchased our house, the attendance zones were changed twice. I understand that this is a local issue based on demographics though.
z3r0c00l
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Re: Private School - financially irresponsible?

Post by z3r0c00l »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income (after taxes and after maxing out 401(k) and back door IRA contributions). I live in a HCOL (NYC). 25% feels like a lot but perhaps this is normal for NYC? What % of net income do folks spend on private school tuition for their child(ren), if any?

Age: 32 (same for spouse who is stay at home)
Income: ~400k
401(K): ~200k
IRA: ~81K
Spouse IRA: ~72k
Cash Savings: ~200k
Taxable Investments: ~300k
Debt: ~10k (car loan)
529: ~55k (between two accounts)

Currently renting. Cash savings and taxable investments earmarked for home purchase within next few years.
My parents were in a comparable economic position when I was a kid and they sent me to public school (321) K-5 and then private for MS/HS. Granted the private school was cheaper then, about $14,000 a year vs over $30,000 today. I wouldn't trade it for the world and do think starting out at a good public school was important and the private school support leading up to college was equally important later on. So again I don't recommend it for K-5. See how the kids do through 4th/5th grade and then their prospects for MS should inform the next move. If they are academically able to swing a top public school, self- motivated, then you might save the money and finish in the public school system. If they would benefit from a small private school the way I did (needed more academic support) then go that way.

Who knows, by then you may have moved to NJ or CT! In the meantime you can continue to save money. Kids these days generally need heavy economic support through their 20's so save up now for college and beyond.
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dziuniek
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Re: Private School - financially irresponsible?

Post by dziuniek »

I mean....

Your rent expense + private education cost would probably buy you a house in Greenwich, CT....

Not that I am recommending it, but I'd probably go that route myself in your situation.
stoptothink
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Re: Private School - financially irresponsible?

Post by stoptothink »

Veni Vidi Decessi wrote: Tue Feb 23, 2021 7:38 am
KlangFool wrote: Mon Feb 22, 2021 4:24 pm
Tingting1013 wrote: Mon Feb 22, 2021 4:14 pm
KlangFool wrote: Mon Feb 22, 2021 4:00 pm OP,

The bigger picture question is


Why would you choose to live in a neighborhood that the public school is not good enough for your kids? Besides the school, the neighborhood will influence your kids too. In fact, it may be much more than the school.


It is cheaper and better to use the money of the private school to move into a better neighborhood.


KlangFool
Public school and neighborhood quality are not always correlated
Tingting1013,


That is your opinion. I would not live and raise my family in a neighborhood without good public schools. The quality of the public schools is a good indication of the kind of people who live in the neighborhood. Aka, whether they care about public education.


KlangFool
That’s not just his opinion. There are many areas in the South that have neighborhoods (LCOL) with home values $300k-$500k+ feeding to the same school as trailer parks. It is quite common to have a hodgepodge of student socioeconomic statuses in each school. When every school close by has this mixture, there is no clear delineation between the “good” school and “bad” school. Schools are instead set apart by their magnet programs, which do not require you to live in a certain location.
This is the case in many places. While there is no "bad neighborhood" in my Utah suburb, there is everything from a trailer park (literally under a bridge) to $2M+ homes that feed into the elementary that my kids attend. There are also several charter options; we actually tried the highest ranked one in the county for my daughter for kindergarten and it was a joke compared to the local public (which somehow, is ranked lower). I can only imagine the socioeconomic diversity that exists in schools in NYC.
Aged Maduro
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Re: Private School - financially irresponsible?

Post by Aged Maduro »

Private prep schools serve the same societal function as private colleges. They groom young people to have the tastes, attitudes and aspirations of the American upper class. Academics are only a part of it. It is the network that counts. People can pretend that this does not matter, but it does. We rise to the level of the people that we spend the most time with, and this is particularly true for children. This is why people at that level bend over backwards to make sure that their kids get into the same elite schools that they did. Personally, i think that living in a nice upper middle class neighborhood with great public schools pretty much accomplishes the same thing. I would only spend $30,000 plus on private day school if we lived in a questionable neighborhood and thought it would be a bad influence on my children. Then again, i would never subject my family to living in a bad neighborhood.
Beachey
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Re: Private School - financially irresponsible?

Post by Beachey »

NS_Bane wrote: Mon Feb 22, 2021 8:11 pm
Beachey wrote: Mon Feb 22, 2021 7:13 pm
celia wrote: Mon Feb 22, 2021 3:56 pm But you can now spend 529 withdrawals to pay for the education part.
New York State does not allow 529 withdrawals for K-12 education.
This is not correct. You can use 529 withdrawals to pay for K-12 education in NY. However, NY will not give you a tax break if you do so.

https://www.nytimes.com/2017/12/21/your ... tner=IFTTT

This is directly from the nysaves.org website (NY 529)
*Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. In addition, withdrawals used to pay expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school are subject to recapture of any New York State tax benefits that accrued on contributions. Tax and other benefits are contingent on meeting other requirements. We encourage account owners to consult a qualified tax advisor.

**Up to $10,000 is deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. May be subject to recapture in certain circumstances such as rollovers to another state's 529 plan, nonqualified withdrawals, or withdrawals used to pay expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
I won't tell you I completely understand what the full tax implications are and it might be possible that for some people in New York State it still makes sense to do the withdrawal, but I think it is fair to say that this should not figure in the decision.
vested1
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Re: Private School - financially irresponsible?

Post by vested1 »

I would encourage the OP to pay for private schooling if they can afford it, which they obviously can. The decision is subjective, depending on the quality of public education options. I'll add my anecdotal experience.

My previous wife and I sent our two daughters to parochial school for a cost of about 7k a year, something we could ill afford, until we divorced at their ages 6 and 9. I couldn't afford that added expense while eating ramen and renting a room at a friend's house due to alimony and child support, so the girls were transferred to public school, where they were tested as being far above their peers. That changed within a couple of years when their testing ranked them as average.

My stepdaughter, from age 12, of my next (and final) marriage of nearly 30 years, attended public schools entirely. She also tested average among her peers. All public schools that they were allowed (zoned) to attend were rated as below average. All three of our daughters are all now successful adults and the two with children have good incomes, but it has been a struggle at times.

The oldest of my own two daughters, who now runs her own business, decided to send her two daughters to private K-12 school, mainly based on her own experiences with public school. Tuition is 39k each for my granddaughters, currently 8 and 14. That amount is about 50% of her and her husband's combined income. Their education is outstanding and they both are at the top of their classes. My other daughter, who is an underpaid private parochial high school teacher, has no children.

My stepdaughter sent both of her daughters to private school when she could afford it and home schooled them when she couldn't, while holding down full time jobs. She now runs her own successful business. Both of her daughters excelled and were at the top of their respective classes when they were not being home schooled. The oldest now runs her own successful business. The younger one, a junior, now attends a very highly rated charter high school (during the last year) and is at the top of her class.

All four of our granddaughters have never gotten less than an A in any course. This was not only due to their innate intelligence but because their parents were committed to their education, regardless of the cost. That commitment has paid dividends in the opportunities it has provided for the future success of our granddaughters. We are very proud of our daughters for their sacrifices.

In retrospect I wish my current wife and I could have somehow managed to send our children to private school while living paycheck to paycheck and both working more than full time. Fortunately, they found a way where we didn't.
skime
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Re: Private School - financially irresponsible?

Post by skime »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income (after taxes and after maxing out 401(k) and back door IRA contributions). I live in a HCOL (NYC). 25% feels like a lot but perhaps this is normal for NYC? What % of net income do folks spend on private school tuition for their child(ren), if any?

Age: 32 (same for spouse who is stay at home)
Income: ~400k
401(K): ~200k
IRA: ~81K
Spouse IRA: ~72k
Cash Savings: ~200k
Taxable Investments: ~300k
Debt: ~10k (car loan)
529: ~55k (between two accounts)

Currently renting. Cash savings and taxable investments earmarked for home purchase within next few years.
Goldwater85
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Re: Private School - financially irresponsible?

Post by Goldwater85 »

These threads seem to focus on educational quality. If we are talking about a reasonably elite private school, the real value is that it is full of kids whose parents survived a selection process and pay $35,000/yr to send them there.

Of the people I know with phenomenal networks and who have leveraged them for lucrative careers, most picked them up in prep school. They grew up playing at Jack’s house and Jack’s dad is CIO of a large hedge fund. Further down the road, Jack is CEO of a large company. Someone may get to know Jack in college well enough to stay connected, but probably not Jack’s dad.

Benefits obviously vary by child. And it’s not like someone who does well at a good public school can’t have a great career. But the $35,000/yr does buy your kids a leg up.
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Re: Private School - financially irresponsible?

Post by TomatoTomahto »

Goldwater85 wrote: Tue Feb 23, 2021 9:06 am These threads seem to focus on educational quality. If we are talking about a reasonably elite private school, the real value is that it is full of kids whose parents survived a selection process and pay $35,000/yr to send them there.

Of the people I know with phenomenal networks and who have leveraged them for lucrative careers, most picked them up in prep school. They grew up playing at Jack’s house and Jack’s dad is CIO of a large hedge fund. Further down the road, Jack is CEO of a large company. Someone may get to know Jack in college well enough to stay connected, but probably not Jack’s dad.

Benefits obviously vary by child. And it’s not like someone who does well at a good public school can’t have a great career. But the $35,000/yr does buy your kids a leg up.
Wut! Lots of Jacks but no Jills? :D
I get the FI part but not the RE part of FIRE.
skime
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Re: Private School - financially irresponsible?

Post by skime »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income (after taxes and after maxing out 401(k) and back door IRA contributions). I live in a HCOL (NYC). 25% feels like a lot but perhaps this is normal for NYC? What % of net income do folks spend on private school tuition for their child(ren), if any?

Age: 32 (same for spouse who is stay at home)
Income: ~400k
401(K): ~200k
IRA: ~81K
Spouse IRA: ~72k
Cash Savings: ~200k
Taxable Investments: ~300k
Debt: ~10k (car loan)
529: ~55k (between two accounts)

Currently renting. Cash savings and taxable investments earmarked for home purchase within next few years.
Have you considered leaving NYC? Think about the tax rates you currently pay and the fact that the public school system is terrible and you're forced to spend 40-60k on school starting in kindergarten all the way through 12th grade.

Then think about the fact that most of the Fortune 500 CEOs went to state school.

NYC private school tuition is robbery and creates huge social problems and pressure on parents to do stupid things - like spend 40-60k on kindergarten after they had a "try-out interview" to be accepted. I know someone that donated $1mm to the school just to get their kid into kindergarten.

I know a lot of family and friends that went to those schools and didn't turn out any better than anyone else I know. The only difference is that their parents spent about $600k per child to do something that others don't.

And by the way, your taxes are eventually going up again in the near future due to pandemic deficit.

Good luck in your decision.
KlangFool
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Re: Private School - financially irresponsible?

Post by KlangFool »

Veni Vidi Decessi wrote: Tue Feb 23, 2021 7:38 am
KlangFool wrote: Mon Feb 22, 2021 4:24 pm
Tingting1013 wrote: Mon Feb 22, 2021 4:14 pm
KlangFool wrote: Mon Feb 22, 2021 4:00 pm OP,

The bigger picture question is


Why would you choose to live in a neighborhood that the public school is not good enough for your kids? Besides the school, the neighborhood will influence your kids too. In fact, it may be much more than the school.


It is cheaper and better to use the money of the private school to move into a better neighborhood.


KlangFool
Public school and neighborhood quality are not always correlated
Tingting1013,


That is your opinion. I would not live and raise my family in a neighborhood without good public schools. The quality of the public schools is a good indication of the kind of people who live in the neighborhood. Aka, whether they care about public education.


KlangFool
That’s not just his opinion. There are many areas in the South that have neighborhoods (LCOL) with home values $300k-$500k+ feeding to the same school as trailer parks. It is quite common to have a hodgepodge of student socioeconomic statuses in each school. When every school close by has this mixture, there is no clear delineation between the “good” school and “bad” school. Schools are instead set apart by their magnet programs, which do not require you to live in a certain location.
Veni Vidi Decessi,


1) FYI. 5% of my high school student qualify for free lunch. 3% of my high school students qualify for reduced-price lunch.

<<Schools are instead set apart by their magnet programs, which do not require you to live in a certain location.>>


2) The difference here is between great and the best. The magnet school here is TJ. The county paid 30K per year to send the kid there if you are qualified. The #1 high school in the USA.


https://en.wikipedia.org/wiki/Thomas_Je ... Technology


KlangFool
NS_Bane
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Re: Private School - financially irresponsible?

Post by NS_Bane »

Beachey wrote: Tue Feb 23, 2021 8:43 am
NS_Bane wrote: Mon Feb 22, 2021 8:11 pm
Beachey wrote: Mon Feb 22, 2021 7:13 pm
celia wrote: Mon Feb 22, 2021 3:56 pm But you can now spend 529 withdrawals to pay for the education part.
New York State does not allow 529 withdrawals for K-12 education.
This is not correct. You can use 529 withdrawals to pay for K-12 education in NY. However, NY will not give you a tax break if you do so.

https://www.nytimes.com/2017/12/21/your ... tner=IFTTT

This is directly from the nysaves.org website (NY 529)
*Earnings on nonqualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. In addition, withdrawals used to pay expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school are subject to recapture of any New York State tax benefits that accrued on contributions. Tax and other benefits are contingent on meeting other requirements. We encourage account owners to consult a qualified tax advisor.

**Up to $10,000 is deductible annually from New York State taxable income for married couples filing jointly; single taxpayers can deduct up to $5,000 annually. May be subject to recapture in certain circumstances such as rollovers to another state's 529 plan, nonqualified withdrawals, or withdrawals used to pay expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private, or religious school.
I won't tell you I completely understand what the full tax implications are and it might be possible that for some people in New York State it still makes sense to do the withdrawal, but I think it is fair to say that this should not figure in the decision.
The bolded part simply restates what I said above. If NY State gives you a tax break on your 529 contributions, and then you use the 529 to pay for K-12 private school, they are going to recapture the tax break they gave you. There is no penalty for 529 withdrawals in NY State. You just don't get a tax break, and if they gave one to you previously they are going to take it back.
TN_Boy
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Re: Private School - financially irresponsible?

Post by TN_Boy »

winterfan wrote: Tue Feb 23, 2021 7:40 am
KlangFool wrote: Mon Feb 22, 2021 7:16 pm
afan,


The parents get to decide where to live. Do you disagree with that statement? Or, the quality of the public schools is never part of your deciding factor on where to live?

To each its own.


KlangFool
I agree parents get to decide where they live, but after we purchased our house, the attendance zones were changed twice. I understand that this is a local issue based on demographics though.
I have no particular opinion on the OP's question, but I did want to +1 winterfan's post.

The area I live is desirable and growing rapidly. School districts change. New schools are being built, etc. The school your kids would attend when you move in might not be the school they are assigned to when the kids are ready for that level. And we are also going through the "year round" versus "traditional" school year. Which might change on you from one year to another if a school switches, if that matters.

So while I don't disagree with KlangFool's assertion that ideally you would move to a house around good schools, the fact is things can change around you and it would be impossible to move every time the school situation changes. And it may change more than you'd like. You move and your kids are slated for a "great" school, then they redistrict and you are in an "okay" school. And while you can be involved and participate in elections and the school, you have no ultimate control over this.
bloom2708
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Re: Private School - financially irresponsible?

Post by bloom2708 »

My friend in a good school area will spend north of $750k for K thru 12 for their 2 boys. Then college.

Can they afford it? I guess so. The sad thing is, they are in one of the nicest areas of their city with great schools.

Personal choice. Can he retire? Not for a long time.

A good student with parents that care and monitor and coach will excel in a poor, mediocre or great school district.
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BarbBrooklyn
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Re: Private School - financially irresponsible?

Post by BarbBrooklyn »

qwertyjazz wrote: Mon Feb 22, 2021 4:29 pm
KlangFool wrote: Mon Feb 22, 2021 4:24 pm
Tingting1013 wrote: Mon Feb 22, 2021 4:14 pm
KlangFool wrote: Mon Feb 22, 2021 4:00 pm OP,

The bigger picture question is


Why would you choose to live in a neighborhood that the public school is not good enough for your kids? Besides the school, the neighborhood will influence your kids too. In fact, it may be much more than the school.


It is cheaper and better to use the money of the private school to move into a better neighborhood.


KlangFool
Public school and neighborhood quality are not always correlated
Tingting1013,


That is your opinion. I would not live and raise my family in a neighborhood without good public schools. The quality of the public schools is a good indication of the kind of people who live in the neighborhood. Aka, whether they care about public education.


KlangFool
OP lives in NYC. NYC can be very different than any where else
+1

NYC is a very different animal when it comes to public schools. I say that as a parent of 2 grown kids, all of whom went to public school k-12 (in one case, Prek-12).

I would encourage the OP to actually visit and tour the school his/her child is zoned for. And not to make judgements based on hearsay or the ethnic/racial mix.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."
MMiroir
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Re: Private School - financially irresponsible?

Post by MMiroir »

BarbBrooklyn wrote: Tue Feb 23, 2021 11:19 amNYC is a very different animal when it comes to public schools. I say that as a parent of 2 grown kids, all of whom went to public school k-12 (in one case, Prek-12).

I would encourage the OP to actually visit and tour the school his/her child is zoned for. And not to make judgements based on hearsay or the ethnic/racial mix.
Given that NYC is ditching their magnet schools, I would not want want my kids in that system.

https://www.washingtonpost.com/educatio ... story.html
wootwoot
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Re: Private School - financially irresponsible?

Post by wootwoot »

Yes 25% of net income for kindergarten is financially irresponsible.
Valuethinker
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Re: Private School - financially irresponsible?

Post by Valuethinker »

head wrote: Mon Feb 22, 2021 3:25 pm I'm trying to decide whether it would be financially irresponsible of me to send my two children to private school in the fall (would be starting Kindergarten and plan to stay through 8th grade). The combined cost will be ~25% of net income (after taxes and after maxing out 401(k) and back door IRA contributions). I live in a HCOL (NYC). 25% feels like a lot but perhaps this is normal for NYC? What % of net income do folks spend on private school tuition for their child(ren), if any?

Age: 32 (same for spouse who is stay at home)
Income: ~400k
401(K): ~200k
IRA: ~81K
Spouse IRA: ~72k
Cash Savings: ~200k
Taxable Investments: ~300k
Debt: ~10k (car loan)
529: ~55k (between two accounts)

Currently renting. Cash savings and taxable investments earmarked for home purchase within next few years.
It's really a parental call. There's no hard and fast rule.

You need to understand your own likely career progression. Are you likely to make more than this? Do 50 year olds in your field of work often leave & drop down to far lower incomes? (that's very typical in banking - I had a friend at age 55, IT in banking, he was the oldest person on his floor (800 people) by at least 5 years, he took redundancy and retired at 57).

25% of net income, or 12.5% per child, sounds about right to me. As they progress there will be ancillary costs (school trips etc) which will grow, too.
neverpanic
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Re: Private School - financially irresponsible?

Post by neverpanic »

Katietsu wrote: Mon Feb 22, 2021 8:25 pm
neverpanic wrote: Mon Feb 22, 2021 8:06 pm I'm not sure anyone outside of NYC can answer this question if they've never been a student or parent there.

It would be different if you lived in south Jersey, or Princeton, or Fairfax County (VA), someplace known for having great public schools where a good number of parents choose to buy homes primarily for the schools. For posters living in those places, it's easy for outsiders to say that the typical student would get plenty of learning opportunities without having to go to private school.

NYC is entirely different. Anecdotally, my NYC peers all factored private school into their calculations when deciding to live and work in the City and the percentage of income going to tuition was about what you're looking at.
I do not live in NYC. But a very close relative does. The household income is similar to the OP. Education is important to them. Advanced degrees from top schools. And they paid $25k for pre-K with no public school option. But, they moved to an apt with a guarantee of a “good” elementary school. So, I am not so familiar with the guaranteed zoned school system/cachement areas that I can discuss all the potential successes and problems. But, I do know it can be a viable option to private school even in Manhattan.
Indeed. And also, it should be noted that they've got some of the best public charter schools in the nation. The ones I've heard of are quite competitive to access, but it speaks to the fact that there is significant demand for top quality, public education in the city.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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oldcomputerguy
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Re: Private School - financially irresponsible?

Post by oldcomputerguy »

Several posts discussing religious education have been removed. As a reminder, see Politics and Religion:
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited.
Please keep the discussion centered on the financial aspects of public vs private schools.
KlangFool
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Re: Private School - financially irresponsible?

Post by KlangFool »

TN_Boy wrote: Tue Feb 23, 2021 11:06 am
winterfan wrote: Tue Feb 23, 2021 7:40 am
KlangFool wrote: Mon Feb 22, 2021 7:16 pm
afan,


The parents get to decide where to live. Do you disagree with that statement? Or, the quality of the public schools is never part of your deciding factor on where to live?

To each its own.


KlangFool
I agree parents get to decide where they live, but after we purchased our house, the attendance zones were changed twice. I understand that this is a local issue based on demographics though.
I have no particular opinion on the OP's question, but I did want to +1 winterfan's post.

The area I live is desirable and growing rapidly. School districts change. New schools are being built, etc. The school your kids would attend when you move in might not be the school they are assigned to when the kids are ready for that level. And we are also going through the "year round" versus "traditional" school year. Which might change on you from one year to another if a school switches, if that matters.

So while I don't disagree with KlangFool's assertion that ideally you would move to a house around good schools, the fact is things can change around you and it would be impossible to move every time the school situation changes. And it may change more than you'd like. You move and your kids are slated for a "great" school, then they redistrict and you are in an "okay" school. And while you can be involved and participate in elections and the school, you have no ultimate control over this.
TN_Boy,

Location matters. I live in one of the richest neighborhoods within a rich county. In this case, even with rezoning, you are never out of a "great" school. And, this is specific to this area. Folks in this rich county support great public education. Meanwhile, in some other places, this is not true.


The fundamental question comes down to this.


A) Spend a lot of money live in a rich neighborhood with lousy public schools. Hence, you spend even more money to send your kids to private schools.


B) Spend a lot of money live in a rich neighborhood with good public schools.


Which one has a better ROI of your money? Which one is a better environment to raise your family?

To each its own.


KlangFool
Tanelorn
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Re: Private School - financially irresponsible?

Post by Tanelorn »

Let me try to rephrase my lost post.
MMiroir wrote: Tue Feb 23, 2021 11:39 am Given that NYC is ditching their magnet schools, I would not want want my kids in that system.

https://www.washingtonpost.com/educatio ... story.html
The above is a good point. I agree that the value you’re getting from a public school given the above changes is less good than it was, and given those changes are only primarily effecting public schools vs private schools, the value proposition for private looks better.

In addition, if you wanted to get your child access better schooling that catered to their better abilities, ie gifted and talented programs, schools that let in students based in demonstrated academic tests or performance, etc, those will soon not be offered in the NYC public school system, so seeking a private school option that would cater to those aspects might be your only choice.

You can see the changes they’re making - phasing out gifted programs, removing admissions that use grades or test scores, allowing people from all over the city to lottery into what were, until recently, good selective public schools, etc, below.

https://www.schools.nyc.gov/docs/defaul ... ry-22-2021

Because of the latter, ie the wide open application process and lottery system for public school admissions rather than the old one which prioritized local students and sometimes better academic students first, moving to a “good school district” to try to get a good public school for your child is less possible than it was previously in NYC due to these policy changes. Again this makes the value proposition of moving for a good public school worse and makes considering other options better - private, maybe homeschool, maybe moving outside of NYC where schools are not governed the same way.
Last edited by Tanelorn on Tue Feb 23, 2021 3:16 pm, edited 2 times in total.
Admiral
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Re: Private School - financially irresponsible?

Post by Admiral »

I would not say it's "financially irresponsible" because who am I to judge how people spend their money? People where I live send their kids to pretty bad public schools but drive two very expensive cars. That's their choice, not my choice.

Public schools where I live generally are terrible.

We pay 55k per year for two kids (but that's high school not for younger kids.) It's about 34% of our take-home but we also save 50-60k per year. It is a beat down, no question about it, but we feel it's worth it and we're on track to meet our financial goals so I try not to think about it too much. We've been paying it for over a decade (though of course it was less back in the day).

It was either that or move, and we like where we live and we feel it's been a good investment. Does not really impact our day to day lives in terms of preventing us from doing anything as our other costs are pretty low.

So short answer is "it depends." :happy Nothing is locking you into private education forever. Our initial thought was for elementary only but the kids were thriving so we figured if it ain't broke, don't fix it.

What I CAN tell you is over the past year kids in public schools where I live have gotten little to no education. Mine have gotten very good education. What's the price (or cost) of losing a year of learning for a young person?

And I want to make it clear that I am not knocking public education. It is important and often very good. It just was not my choice based on the system where I live. NYC has a pretty solid public education system. If I lived there I would likely use it.
nydoc
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Re: Private School - financially irresponsible?

Post by nydoc »

We are paying 21K a year for our daughter. She just started preschool. We live in NYC. By the time she reaches elementary, will move to suburbs with excellent schools.
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HomerJ
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Re: Private School - financially irresponsible?

Post by HomerJ »

Admiral wrote: Tue Feb 23, 2021 3:01 pm I would not say it's "financially irresponsible" because who am I to judge how people spend their money? People where I live send their kids to pretty bad public schools but drive two very expensive cars. That's their choice, not my choice.

Public schools where I live generally are terrible.

We pay 55k per year for two kids (but that's high school not for younger kids.) It's about 34% of our take-home but we also save 50-60k per year. It is a beat down, no question about it, but we feel it's worth it and we're on track to meet our financial goals so I try not to think about it too much. We've been paying it for over a decade (though of course it was less back in the day).

It was either that or move, and we like where we live and we feel it's been a good investment. Does not really impact our day to day lives in terms of preventing us from doing anything as our other costs are pretty low.
Man you could have moved and spent another $500,000 on a house in a good school district.

And then when the kids graduated, you could have sold the house, and kept all that money you paid to the private school (or even given it to your kids)

Moving would have a been a far better "investment", financially. Whatever your financial goals are, you would have reached them earlier by moving.

But you'll be fine, still on track to reach your goals, and the kids are good (of course, now THEY will have to get really good paying jobs to put THEIR kids through private school - that's their new normal).

So your choices were still solid, and who knows if the other house would have been that much nicer, or if the kids would had the same good life they've had in the private school.
So short answer is "it depends."
True enough.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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HomerJ
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Re: Private School - financially irresponsible?

Post by HomerJ »

wootwoot wrote: Tue Feb 23, 2021 12:28 pm Yes 25% of net income for kindergarten is financially irresponsible.
This is a good way to put it... :)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
mighty72
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Re: Private School - financially irresponsible?

Post by mighty72 »

OP, you are 32 and have 850k in savings. You are far ahead of many, many people in terms of savings for your age.
You also earn 400k which is again a pretty high income; probably top 1%.
You state school will be 25% after you pay taxes and put ~25k in retirement savings (max 401k and roth).
The biggest risk I see in your situation is that you are a single income family.
IMHO, no it is not financially irresponsible to put your kids in private school if that is what you think is best for them.
We have the same discussion in our household. We are 2 income household with combined salary a little more than yours. We are about a decade older than you. We have similar level of savings adjusted for age. We are in an excellent school district. We sent our kids to a montessori school till kindergarten. 1-5 is public and older one will start private school from 6th grade. The level of opportunities, discussion and focus on private school is not matched by our public schools. Kids have to compete for classes and courses they want. The schools are overcrowded. This is not an issue in elementary but becomes a problem in middle school
Admiral
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Re: Private School - financially irresponsible?

Post by Admiral »

HomerJ wrote: Tue Feb 23, 2021 3:15 pm
Admiral wrote: Tue Feb 23, 2021 3:01 pm I would not say it's "financially irresponsible" because who am I to judge how people spend their money? People where I live send their kids to pretty bad public schools but drive two very expensive cars. That's their choice, not my choice.

Public schools where I live generally are terrible.

We pay 55k per year for two kids (but that's high school not for younger kids.) It's about 34% of our take-home but we also save 50-60k per year. It is a beat down, no question about it, but we feel it's worth it and we're on track to meet our financial goals so I try not to think about it too much. We've been paying it for over a decade (though of course it was less back in the day).

It was either that or move, and we like where we live and we feel it's been a good investment. Does not really impact our day to day lives in terms of preventing us from doing anything as our other costs are pretty low.
Man you could have moved and spent another $500,000 on a house in a good school district.

And then when the kids graduated, you could have sold the house, and kept all that money you paid to the private school (or even given it to your kids)

Moving would have a been a far better "investment", financially. Whatever your financial goals are, you would have reached them earlier by moving.

But you'll be fine, still on track to reach your goals, and the kids are good (of course, now THEY will have to get really good paying jobs to put THEIR kids through private school - that's their new normal).

So your choices were still solid, and who knows if the other house would have been that much nicer, or if the kids would had the same good life they've had in the private school.
So short answer is "it depends."
True enough.
I live in the city. No desire to live in suburbs, ever. Don't need a bigger or a nicer house. Life's not just about dollars and cents.
bi0hazard
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Re: Private School - financially irresponsible?

Post by bi0hazard »

No way would I pay even remotely close to 25% income on elementary school (or college). To me personally, that's absurd. I recommend moving to a place where public school is acceptable.

How about White Plains or Scarsdale? Pretty nice in my youth, not sure about now.
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