Why can't I save enough to have decent vacation or restaurant meal

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saddle_up
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Why can't I save enough to have decent vacation or restaurant meal

Post by saddle_up » Wed Mar 01, 2017 3:26 pm

Hello all, I am 40 yr old male and I along with my wife part time job (38 yr) earn 130K p.a + 10% Bonus. The issue we have is we hardly save anything for family to earn a decent vacation or a restaurant meals

We term our expense as pretty ordinary with -
401 K (nearing to 18K since we started to save in late 30s) - i.e 1.5k /month with 5 % ESPP to make up for retirement i.e 0.5K/month
529 for 2 kids @ .35k/month/child equalling 0.7k per month
Mortgage and Escrow for 30 yrs @ 3K/month
Credit Card , Utilities, Oil, Gas @ 2.5k/month ( I know this seems high but we have enrolled kids for activities all around the year + after school program + Summer clinics so have put the average per month)
rest goes to federal /state Tax/ssn and medicaid taxes.

Question is am i being too aggressive in my saving, should I curtail down to enjoy life now or should i be worried that the average salary for our household is too low to make any savings. We don't have any inherited monetary support from our ancestors. Please advise.

livesoft
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by livesoft » Wed Mar 01, 2017 3:43 pm

You could stop the 529 contributions and increase the 401(k) contribution and thus reduce your taxes.

If you don't have a 2% (minimum) cash back credit card, get one, because that would give you $50 a month which is a restaurant meal.

Of course, you didn't really give us your budget, but if you do I suspect I could find some more tax savings and expense savings.
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bloom2708
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by bloom2708 » Wed Mar 01, 2017 3:49 pm

How old are the kids? $350 each per month/per kid is a pretty good chunk if they are 3 and 5.

Your mortgage at $3k/month is higher than we ever had, but not out of bounds. This plus utilities, insurance, repairs would have killed our budget with a similar income.

Give each dollar a purpose and purposefully set aside money for eating out and a vacation fund at various times per year. We have savings accounts for "fun" and "vacations". If they have money we go. If not, we save.
Last edited by bloom2708 on Wed Mar 01, 2017 5:09 pm, edited 1 time in total.
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mhalley
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by mhalley » Wed Mar 01, 2017 3:50 pm

You probably are like most people and don't actually know where the money is actually going. You need to be on a tight budget, using mint, or every dollar or ynab. You will be surprised at how much is being "mis-spent".

Jack FFR1846
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Jack FFR1846 » Wed Mar 01, 2017 3:56 pm

What are you doing with your ESPP? It's on my mind since mine is being issued to me today :) and my "sell all shares when released" order was in a week ago, so that money, including the gain is going to be in my credit union account about a week from today. If you're "saving" the shares and not selling them, stop it. That's speculating. My old ESPP story is that I bought at $48 a share and when I left the company, it was $12 a share. Never again did I hold ESPP stocks.

If you're maxing the retirement accounts, you're way ahead of most people. I make less than you, have a son in college (full boat private) and another in private high school (full pay) and we go out for nice meals at least weekly. We do use coupons like maniacs and frequent eater programs and neither my wife or I drink alcohol. Outback on Sunday before discounts was $61 bill. After coupon AND discount, including a $12 tip was $41. This was my wife and one son. We told the son to upgrade his rack of ribs from half a rack to a full rack for the extra $4. Wife and I split the porterhouse, loaded baked potato and wedge salad (we got 2 side dressings). Of course a doggie bag went home to make at least one future meal.
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sls239
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sls239 » Wed Mar 01, 2017 4:15 pm

It's the mortgage.

That mortgage is 25% of your gross pay, the very top of what is considered do-able.

And you haven't mentioned what you pay for cars.

maria00200
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by maria00200 » Wed Mar 01, 2017 4:16 pm

3k a month for mortgage?? My suggestion is downsize and get a smaller house. That's outrageous. I'd much rather have a smaller, cozy house with a mortgage under $1k/month, and have more money in my pocket.

alaskantraveler
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by alaskantraveler » Wed Mar 01, 2017 4:18 pm

saddle_up wrote:Hello all, I am 40 yr old male and I along with my wife part time job (38 yr) earn 130K p.a + 10% Bonus. The issue we have is we hardly save anything for family to earn a decent vacation or a restaurant meals

We term our expense as pretty ordinary with -
401 K (nearing to 18K since we started to save in late 30s) - i.e 1.5k /month with 5 % ESPP to make up for retirement i.e 0.5K/month
529 for 2 kids @ .35k/month/child equalling 0.7k per month
Mortgage and Escrow for 30 yrs @ 3K/month
Credit Card , Utilities, Oil, Gas @ 2.5k/month ( I know this seems high but we have enrolled kids for activities all around the year + after school program + Summer clinics so have put the average per month)
rest goes to federal /state Tax/ssn and medicaid taxes.

Question is am i being too aggressive in my saving, should I curtail down to enjoy life now or should i be worried that the average salary for our household is too low to make any savings. We don't have any inherited monetary support from our ancestors. Please advise.
I think you should get a better understanding of what is hitting your credit cards and what your tax liability is. Any adjusted gross income over $75,300 is taxed at 25% in income tax plus you will have to pay payroll taxes of 7.65% for most of your income. And this doesn't include state income taxes if you have them. So a portion of your income is being taxed at about 33%. Do some research and calculate your average tax rate. Your average tax rate is probably somewhere are 20% of your income.

Take a look at your total montlhy housing expense including the mortgage, utilities, cap ex, and maintenance. Your montlhy housing expense is probably over $3800/month which is fairly high for your income level. The money goes quick. then consider cell phones, car payments, car insurance, gas, food. If you live in a high cost of living area which your mrtg payment would suggest, your income is not that high for a family of 4. You are going to have to find ways to reduce your expenses.

Maxing out a 401k, and Traditional IRAs should probably take precedence over the 529 plans as 401k/Traditional IRA contributions will reduce your taxes by 25% (depending on your marginal tax bracket) of whatever is contributed. Do you have access to an HSA? Max it out.

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Toons
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Toons » Wed Mar 01, 2017 4:20 pm

Set Up a Budget with categories.
Stick to it.
Done Deal :happy
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Billionaire
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Billionaire » Wed Mar 01, 2017 4:22 pm

What is the net result when you file taxes? Balance due or refund? If it's a refund, make sure it isn't too large. The money is better off in your pocket paycheck to paycheck.

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climber2020
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by climber2020 » Wed Mar 01, 2017 4:27 pm

saddle_up wrote:Hello all, I am 40 yr old male and I along with my wife part time job (38 yr) earn 130K p.a + 10% Bonus. The issue we have is we hardly save anything for family to earn a decent vacation or a restaurant meals
What was the price you paid for the house you live in?

Jags4186
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Jags4186 » Wed Mar 01, 2017 4:36 pm

Your monthly income is $10,833 (excluding bonus). Your mortgage payment on a 30 year note is $3000/mo. That is a 28% front end ratio which is generally the maximum a bank will lend you on a conventional mortgage. Most people would recommend not borrowing the maximum a bank will lend you.

You have a couple of options:

1) Make more money. Get a raise, get a new job, wife works full time.
2) Pull back savings for children from $700/mo to $200/mo. That gives you $500 a month in discretionary income.
3) Downside your home.
4) Don't go out to eat. Don't go on vacations.

You have the money right now to do more. It's just that you've chosen to save for your children. Not the worst decision in the world. Looks like you're saving about 18% of your base salaries towards retirement. Not an insane amount but certainly better than most and will most likely get you to your retirement goals.

Think about what you want and what's important to you. If you really are just looking to go on vacations or go out to 1 nice restaurant a month you can always accomplish that by signing up for a few credit cards/bank accounts a year.

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celia
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by celia » Wed Mar 01, 2017 4:43 pm

I would track ALL my our spending for a month or two, find out what your once- or twice-a-year expenses are (homeowners, car insurance, etc) and build a budget. Include eating out and vacations as categories you want to spend.

Then track expenses for another three months to see if it is really going where you think it is. Update budget.

The point is to KNOW where every dollar is going. You can't change anything if you don't know what you have. There are no right or wrong answers. It is what you, as a couple, want it to be. Obviously, your spouse needs to want to participate in this project too.

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White Coat Investor
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by White Coat Investor » Wed Mar 01, 2017 4:51 pm

saddle_up wrote:Hello all, I am 40 yr old male and I along with my wife part time job (38 yr) earn 130K p.a + 10% Bonus. The issue we have is we hardly save anything for family to earn a decent vacation or a restaurant meals

We term our expense as pretty ordinary with -
401 K (nearing to 18K since we started to save in late 30s) - i.e 1.5k /month with 5 % ESPP to make up for retirement i.e 0.5K/month
529 for 2 kids @ .35k/month/child equalling 0.7k per month
Mortgage and Escrow for 30 yrs @ 3K/month
Credit Card , Utilities, Oil, Gas @ 2.5k/month ( I know this seems high but we have enrolled kids for activities all around the year + after school program + Summer clinics so have put the average per month)
rest goes to federal /state Tax/ssn and medicaid taxes.

Question is am i being too aggressive in my saving, should I curtail down to enjoy life now or should i be worried that the average salary for our household is too low to make any savings. We don't have any inherited monetary support from our ancestors. Please advise.
Everyone thinks their own expenses are "ordinary" and has their own ideas of what a "decent vacation" and "restaurant meal" is. As you might imagine, there is a dramatic range between what these are when people are actually pinned down on them.

For example, let's look at your mortgage. You're spending $36K a year on it, or about 25% of your gross income. I think that is a monstrously large expenditure. I spend about 1/10th of that as a percentage of income. As a percentage of your income net of taxes and retirement savings, it really limits what else you can spend money on.

You've simply got to decide what is important to you and makes you happiest and prioritize those expenditures. If a comfy (or even early) retirement matters, then better prioritize retirement savings. If having a nice house in a nice neighborhood matters, then prioritize that. If it's all about vacation and fancy restaurant meals, then put less toward retirement, move to a smaller house in a not as nice neighborhood and take the kids out of some of their activities. On $130K you can have anything you want but not everything you want.
Last edited by White Coat Investor on Wed Mar 01, 2017 4:54 pm, edited 1 time in total.
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Texanbybirth
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Texanbybirth » Wed Mar 01, 2017 4:52 pm

It seems like the mortgage is high for your income. What's the remaining term? Rate? Could you re-fi?

We've got the same income, but don't max out 401k. Our PITI (principal + interest + taxes + insurance, which I'm assuming equals your "Mortgage and Escrow") is $1700, and I think that's a high % of our income. However, we love our house/neighborhood, and aren't lamenting not having enough vacations, etc. We go about 2 places per year, one is guaranteed to be my wife's side of the family in FL.

We also have two small children and don't have an HSA for them.

michaeljc70
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaeljc70 » Wed Mar 01, 2017 5:15 pm

People have hit on it already: Housing costs are high and that 2.5k on credit cards/utilities needs to be more carefully tracked. That is almost $100 a day!

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 5:45 pm

maria00200 wrote:3k a month for mortgage?? My suggestion is downsize and get a smaller house. That's outrageous. I'd much rather have a smaller, cozy house with a mortgage under $1k/month, and have more money in my pocket.
You're assuming that the OP's house is not small and cozy. Maybe you're correct, maybe not. In my neighborhood an 800 sq ft apartment goes for $750k. A 350 sq ft studio apartment went recently for $400k according to Zillow. The monthly rent on a 1 bedroom apartment is higher than the OP's mortgage. There are plenty of neighborhoods in this city that are even more expensive.

OP, am I right in thinking you live in a high cost of living area?

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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by KlangFool » Wed Mar 01, 2017 5:55 pm

OP,

1) You are "House Poor". After spending $3K per month on the house, it does not matter what else you do. You choose to have the house versus decent vacation and nice restaurant meal.

2) I spend less for my house. Hence, I could save a lot of money plus vacation and nice restaurant meal. This is very common among my peers. They buy a 500K to 600K house. Then, they have to pack their lunches and stop dining at restaurants.

3) Stop the 529 and ESPP, max up your 401K contribution and put the rest into Roth IRAs. Keep more money in your pocket.

KlangFool

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 6:05 pm

KlangFool wrote:OP,

1) You are "House Poor". After spending $3K per month on the house, it does not matter what else you do. You choose to have the house versus decent vacation and nice restaurant meal.

2) I spend less for my house. Hence, I could save a lot of money plus vacation and nice restaurant meal. This is very common among my peers. They buy a 500K to 600K house. Then, they have to pack their lunches and stop dining at restaurants.

KlangFool
I don't know if this is the OP's situation, but in some places, you literally cannot buy a $500k to $600k home because they're all more expensive.

Like I said, $400k for a 350 sq ft studio apartment in a recent sold listing on Zillow. Over $3k rent for a 1 bedroom apartment.

I don't even have the option of a $3k mortgage because I spend so much on rent that it's impossible to save for a down payment. It took years for my husband to find this job as his work is specialized, and we've looked into moving to a lower cost area but couldn't find a job.

If you have children like the OP does and want them to be in a safe neighborhood with good schools, what are you supposed to do?

I think a lot of people here are out of touch with the housing burden in high cost areas.

michaeljc70
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaeljc70 » Wed Mar 01, 2017 6:08 pm

sawhorse wrote:
KlangFool wrote:OP,

1) You are "House Poor". After spending $3K per month on the house, it does not matter what else you do. You choose to have the house versus decent vacation and nice restaurant meal.

2) I spend less for my house. Hence, I could save a lot of money plus vacation and nice restaurant meal. This is very common among my peers. They buy a 500K to 600K house. Then, they have to pack their lunches and stop dining at restaurants.

KlangFool
I don't know if this is the OP's situation, but in some places, you literally cannot buy a $500k to $600k home because they're all more expensive.

Like I said, $400k for a 350 sq ft studio apartment in a recent sold listing on Zillow. Over $3k rent for a 1 bedroom apartment.

I don't even have the option of a $3k mortgage because I spend so much on rent that it's impossible to save for a down payment. It took years for my husband to find this job as his work is specialized, and we've looked into moving to a lower cost area but couldn't find a job.

If you have children like the OP does and want them to be in a safe neighborhood with good schools, what are you supposed to do?

I think a lot of people here are out of touch with the housing burden in high cost areas.
Not eat out...not take vacations....move....cut out other things...

HCOL areas usually means higher salary.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 6:14 pm

michaeljc70 wrote: Not eat out...not take vacations....move....cut out other things...

HCOL areas usually means higher salary.
The OP already doesn't eat out or take vacations. That's the point of this thread.

Your suggestion to move isn't always feasible because of employment. Lower cost areas usually have fewer jobs available. I used to live in a low cost area, and we had to move because my husband couldn't get a job for years.

Higher income in higher cost areas doesn't offset the higher costs. The housing cost difference can easily be over 6 times in low versus high cost areas, but the salaries sure aren't 6 times higher.

jjface
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by jjface » Wed Mar 01, 2017 6:20 pm

What do you pay for cell phones, cable, internet?

I imagine you can get you a decent meal a week from trimming these.

stoptothink
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by stoptothink » Wed Mar 01, 2017 6:22 pm

sawhorse wrote:
michaeljc70 wrote: Not eat out...not take vacations....move....cut out other things...

HCOL areas usually means higher salary.
The OP already doesn't eat out or take vacations. That's the point of this thread.
So what exactly is the $2.5k/month on credit cards going towards other than the states utilities? Man, that is a ton of kid activities. I bet that could be cut in half with little effort.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 6:24 pm

stoptothink wrote:
sawhorse wrote:
michaeljc70 wrote: Not eat out...not take vacations....move....cut out other things...

HCOL areas usually means higher salary.
The OP already doesn't eat out or take vacations. That's the point of this thread.
So what exactly is the $2.5k/month on credit cards going towards other than the states utilities? Man, that is a ton of kid activities. I bet that could be cut in half with little effort.
I'd like to know too. I'm not saying this is the case for the OP, but I can easily see medical related expenses, including insurance premiums, costing more than that. Property taxes can also be really high in some places.

If the bulk of it is kids' activities, then that's a lot to be spending on kids' activities. I know a high level gymnast whose parents spend $50k a year on gymnastics :shock:

My bigger point was that many people mentioned housing assuming the OP has a large house and it would be easy to downsize. Maybe this is true. But in some parts of the country, it's not, and people need to realize that.
Last edited by sawhorse on Wed Mar 01, 2017 6:34 pm, edited 2 times in total.

michaeljc70
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaeljc70 » Wed Mar 01, 2017 6:26 pm

sawhorse wrote:
michaeljc70 wrote: Not eat out...not take vacations....move....cut out other things...

HCOL areas usually means higher salary.
The OP already doesn't eat out or take vacations. That's the point of this thread.

Your suggestion to move isn't always feasible because of employment. Lower cost areas usually have fewer jobs available. I used to live in a low cost area, and we had to move because my husband couldn't get a job for years.

Higher income in higher cost areas doesn't offset the higher costs. The housing cost difference can easily be over 6 times in low versus high cost areas, but the salaries sure aren't 6 times higher.
I know...that was my point. Something has to give and in their case they chose vacations and eating out. It's not magic....you have to make more or spend less.

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Watty
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Watty » Wed Mar 01, 2017 6:27 pm

saddle_up wrote:Credit Card , Utilities, Oil, Gas @ 2.5k/month ( I know this seems high but we have enrolled kids for activities all around the year + after school program + Summer clinics so have put the average per month)
Unless you are paying interest or annual fees then you are like spending $0 a month on credit cards. That is pretty much like saying you spend $5,000 a month on checking.


You really need to break that out to what the money is actually being spent on.

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HomerJ
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by HomerJ » Wed Mar 01, 2017 6:47 pm

Jags4186 wrote:Your monthly income is $10,833 (excluding bonus). Your mortgage payment on a 30 year note is $3000/mo. That is a 28% front end ratio which is generally the maximum a bank will lend you on a conventional mortgage. Most people would recommend not borrowing the maximum a bank will lend you.

You have a couple of options:

1) Make more money. Get a raise, get a new job, wife works full time.
2) Pull back savings for children from $700/mo to $200/mo. That gives you $500 a month in discretionary income.
3) Downside your home.
4) Don't go out to eat. Don't go on vacations.

You have the money right now to do more. It's just that you've chosen to save for your children. Not the worst decision in the world. Looks like you're saving about 18% of your base salaries towards retirement. Not an insane amount but certainly better than most and will most likely get you to your retirement goals.

Think about what you want and what's important to you. If you really are just looking to go on vacations or go out to 1 nice restaurant a month you can always accomplish that by signing up for a few credit cards/bank accounts a year.
Great post.

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HomerJ
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by HomerJ » Wed Mar 01, 2017 6:56 pm

sawhorse wrote:I don't know if this is the OP's situation, but in some places one place, you literally cannot buy a $500k to $600k home because they're all more expensive.
Fixed that for you. :)
I think a lot of people here are out of touch with the housing burden in high cost areas.
Possibly true. I would suggest moving. If the OP is indeed living in the Bay Area, he should move. He's not making enough to live there.

If he's living somewhere else, he's chosen to spend extra for a nice house, and that's okay.

OP, I would suggest cutting back on the kids 529s for a year or two. As you get new raises, you can start increasing contributions to 529s again. When they actually enter college, you will be probably be making more, and you can cash-flow some college expenses. Or they can get loans.

It would be tough being 40 and not having a little spending money.

Also, of course, start tracking your spending. You may find several hundred dollars a month that you can stop wasting instead of cutting back on the 529s.

michaelsieg
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaelsieg » Wed Mar 01, 2017 7:03 pm

HCOL areas usually means higher salary.
That is not always true. For instance in medicine, many specialists in HCOLA urban areas often get paid significantly less than in more rural areas.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 7:05 pm

HomerJ wrote:
sawhorse wrote:I don't know if this is the OP's situation, but in some places one place, you literally cannot buy a $500k to $600k home because they're all more expensive.
Fixed that for you. :)
I think a lot of people here are out of touch with the housing burden in high cost areas.
Possibly true. I would suggest moving. If the OP is indeed living in the Bay Area, he should move. He's not making enough to live there.

If he's living somewhere else, he's chosen to spend extra for a nice house, and that's okay.

OP, I would suggest cutting back on the kids 529s for a year or two. As you get new raises, you can start increasing contributions to 529s again. When they actually enter college, you will be probably be making more, and you can cash-flow some college expenses. Or they can get loans.

It would be tough being 40 and not having a little spending money.

Also, of course, start tracking your spending. You may find several hundred dollars a month that you can stop wasting instead of cutting back on the 529s.
There is definitely more than one place where all the houses are well over $600k. I'm not in the Bay Area, and I typed my zip code into Zillow. The cheapest house for sale is $1.85 million, and it's a semi-detached. The cheapest single family house is $2.40 million. Like I said, a recently sold 350 sq ft studio apartment went for $400k. Not exactly a home for a couple with two kids.

This thread shows the housing disparities between places. I found it very interesting.

viewtopic.php?f=11&t=196038

And the "why don't you just move" suggestion isn't always practical. Believe me, I would love to move back to the low cost area I used to live, but my husband couldn't find steady work for 2 years.
Last edited by sawhorse on Wed Mar 01, 2017 7:07 pm, edited 1 time in total.

yellowgirl
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by yellowgirl » Wed Mar 01, 2017 7:06 pm

You make 10k more than us but our house payment is less than $600. We also have 2 kids. We don't take a lot of vacation but we do dining out.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 7:10 pm

yellowgirl wrote:You make 10k more than us but our house payment is less than $600. We also have 2 kids. We don't take a lot of vacation but we do dining out.
A parking space in New York City, not a luxury lot or anything, is $749 a month. The one across the street is $812.

You can't just look at income.

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HomerJ
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by HomerJ » Wed Mar 01, 2017 7:12 pm

sawhorse wrote:There is definitely more than one place where all the houses are well over $600k. I'm not in the Bay Area, and I typed my zip code into Zillow. The cheapest house for sale is $1.85 million, and it's a semi-detached. The cheapest single family house is $2.40 million.
So look at the zip-code next to you. There's no place on Earth where the cheapest single family house in a 30 mile radius is $2.4 million.

How do you afford to live in that zip-code?

maria00200
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by maria00200 » Wed Mar 01, 2017 7:22 pm

My mortgage (with taxes and escrow included), is under $700/month. It's a 1200 square foot house (house is from the 1950s), and its in decent shape. We live in an decent neighborhood with a good school system and low crime rate. There's no way in the world I would pay 3k/month for a mortgage. Just sayin.

RoadHouseFan
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by RoadHouseFan » Wed Mar 01, 2017 7:24 pm

Great meals are available for <$7 per person at Cracker Barrel and Chick-fil-A in a family friendly environment.

michaeljc70
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaeljc70 » Wed Mar 01, 2017 7:40 pm

michaelsieg wrote:
HCOL areas usually means higher salary.
That is not always true. For instance in medicine, many specialists in HCOLA urban areas often get paid significantly less than in more rural areas.
Actually, it is always true that it "usually" means a higher salary.

HIinvestor
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by HIinvestor » Wed Mar 01, 2017 7:42 pm

I guess a question is what is "decent" meal out and "decent" vacation? Most of our married life until recently, H was our sole breadwinner and made under $100,000. We still were able to have "decent" meals out from time to time and what we considered "decent" vacations. We also saved for retirement and our kids' educations.
Our "decent" meals out were often "ethnic" restaurants and neighborhood diners, which provided OK food at reasonable prices. Our vacations often were connected with any work-related travel for H, since then his plane fare and hotel and car would be paid for and we would tag along. We would add a few days at the end of the trip where he wouldn't be working so we could all enjoy. We'd often stay with family or friends, so there would be no lodging cost and we could spend time with loved ones. We considered the meals and vacations "decent." Also, if you eat out for lunch instead of dinner, prices can be lower.
I do agree that if you feel that all your expenses are appropriate for you, you and your spouse need to figure out how to make more money or move to a lower cost of living area. Taking higher paid jobs, work more hours, switch to a field that pays better, pare down expenses, bring your own meals whenever possible, etc.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 7:59 pm

HomerJ wrote:
sawhorse wrote:There is definitely more than one place where all the houses are well over $600k. I'm not in the Bay Area, and I typed my zip code into Zillow. The cheapest house for sale is $1.85 million, and it's a semi-detached. The cheapest single family house is $2.40 million.
So look at the zip-code next to you. There's no place on Earth where the cheapest single family house in a 30 mile radius is $2.4 million.

How do you afford to live in that zip-code?
Okay, I checked Zillow. The zip code next to mine on the west is 2.00 million. On the east is 2.35 million. On the south (super rich area) is 3.8 million. There's also a listing for an apartment there that says, I kid you not, "Wonderful opportunity to own your own place for less than $1.5 million." On the north (sort of bad area with very limited public transportation access) is 1.25 million. If you go to the less desirable areas, you can find cheaper houses. They're mostly bought by investors and rented out to groups of young roommates, often students.

People "afford" to live here by renting instead of buying because they can't save for a down payment. This drives up the rent prices, so people put more and more of their money toward rent. Another effect of not being able to save for a down payment is that moving to an outer suburb is difficult without financial assistance from, say, a family member. In the suburbs it's hard to find houses for rent, and the ones available cost as much as the apartments in the city because they're bigger; the price per square foot is much cheaper but the total price is similar. The only real option is to buy, and that requires a down payment. In addition, when you take into account property taxes, which can easily be 1-2k a month from what I've heard from people who own houses, and the additional commute cost, you wouldn't save so much in absolute terms.

I'm annoyed of posters, when they hear of a large mortgage or rent from someone living in the area, jumping to the conclusion that these people must be living in lavish houses they can easily downsize. People in these areas are just as likely living in small non-house homes and using public transportation. Most single people live with roommates.

Maybe the OP is living in a lavish home that he can easily downsize. Maybe not. It's impossible to know.

And the "why don't you move" suggestion is easier said than done. Believe me, I would love it if my husband could find a steady job in the low cost area we used to live. But there's a reason it's low cost. The jobs aren't there. We reluctantly left after he couldn't find steady work for two years.

I absolute hate living here for many reasons, but we're kind of stuck for the foreseeable future since I'm unable to work due to a serious medical problem, and my husband's job is really good with flexible hours so he can take me to appointments.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 8:08 pm

HIinvestor wrote:I guess a question is what is "decent" meal out and "decent" vacation?
This is a great point. To me, the Cheesecake Factory is a decent restaurant. Other people have different standards. For some Bob Evans might be decent. For others a Michelin restaurant is decent.

SamB
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by SamB » Wed Mar 01, 2017 8:11 pm

I am 70 years old, and I am sure glad that when I was 40 we went camping for vacation, and the restaurant meals fell into the category of almost never. In fact, since both my wife and I cook, restaurants are one perpetual disappointment.

Looked at from a financial perspective, life is one big trade off between present and future consumption. Be very careful about what you consider "decent" present consumption, especially if it is discretionary.

Here is an example for you. My wife's parents were immigrants from eastern Europe after WWII. It was leave or die. They settled in Chicago, about three miles from a steel mill. Her father got a job as a laborer at the mill. It was unionized, and the mill was at full capacity his whole career.

Her parents managed to pay for a modest house, and I mean completely pay off the mortgage, send both their children to college, one to the U of Chicago, and there were no scholarships. They did not own a car, and her father took the bus to work. When they both passed away their assets consisted of the house, $30K in US savings bonds, and $80K in a time savings account.

They were losers, right? Never went out to eat, and they did not comprehend what a vacation was. And they cerntainly never ventured into the equity markets or knew the least thing about finance or economics. Or did they? You decide.

michaeljc70
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by michaeljc70 » Wed Mar 01, 2017 8:12 pm

sawhorse wrote:
HomerJ wrote:
sawhorse wrote:There is definitely more than one place where all the houses are well over $600k. I'm not in the Bay Area, and I typed my zip code into Zillow. The cheapest house for sale is $1.85 million, and it's a semi-detached. The cheapest single family house is $2.40 million.
So look at the zip-code next to you. There's no place on Earth where the cheapest single family house in a 30 mile radius is $2.4 million.

How do you afford to live in that zip-code?
Okay, I checked Zillow. The zip code next to mine on the west is 2.00 million. On the east is 2.35 million. On the south (super rich area) is 3.8 million. There's also a listing for an apartment there that says, I kid you not, "Wonderful opportunity to own your own place for less than $1.5 million." On the north (sort of bad area with very limited public transportation access) is 1.25 million. If you go to the less desirable areas, you can find cheaper houses. They're mostly bought by investors and rented out to groups of young roommates, often students.

People "afford" to live here by renting instead of buying because they can't save for a down payment. This drives up the rent prices, so people put more and more of their money toward rent. Another effect of not being able to save for a down payment is that moving to an outer suburb is difficult without financial assistance from, say, a family member. In the suburbs it's hard to find houses for rent, and the ones available cost as much as the apartments in the city because they're bigger; the price per square foot is much cheaper but the total price is similar. The only real option is to buy, and that requires a down payment. In addition, when you take into account property taxes, which can easily be 1-2k a month from what I've heard from people who own houses, and the additional commute cost, you wouldn't save so much in absolute terms.

I'm annoyed of posters, when they hear of a large mortgage or rent from someone living in the area, jumping to the conclusion that these people must be living in lavish houses they can easily downsize. People in these areas are just as likely living in small non-house homes and using public transportation. Most single people live with roommates.

Maybe the OP is living in a lavish home that he can easily downsize. Maybe not. It's impossible to know.

And the "why don't you move" suggestion is easier said than done. Believe me, I would love it if my husband could find a steady job in the low cost area we used to live. But there's a reason it's low cost. The jobs aren't there. We reluctantly left after he couldn't find steady work for two years.

I absolute hate living here for many reasons, but we're kind of stuck for the foreseeable future since I'm unable to work due to a serious medical problem, and my husband's job is really good with flexible hours so he can take me to appointments.
There are big cities that arent real hcol with a lot of jobs in a wide variety of fields. There are few jobs that can only be done in one particular city. I live in the Chicago area. You can find housing in just about any price range and there are a lot of jobs. Many big companies are headquartered here- McDonalds, Abbott, Baxter, Walgreens, Boeing, Kraft, United Airlines, etc. That is just an example. Look at the 10 biggest cities. Some aren't hcol.
Last edited by michaeljc70 on Wed Mar 01, 2017 8:15 pm, edited 2 times in total.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 8:13 pm

To the OP, it seems like a major expense is activities for your kids. Have you looked into community center programs? They often have art classes, exercise classes, etc for an affordable price. What about school clubs (yearbook, newspaper, debate team) if they're older?

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ClevrChico
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by ClevrChico » Wed Mar 01, 2017 8:14 pm

Middle Class Life = Fine line between saving a lot and spending it all.

You seem to be doing fine with the 401k and 529, so good work on those! Your HCOL mortgage and credit card seem to be big opportunities to cut costs if you wanted to.

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 8:16 pm

michaeljc70 wrote: There are big cities that arent real hcol with a lot of jobs in a wide variety of fields. There are few jobs that can only be done in one particular city. I live in
the Chicago area. You can find housing in just about any price range and there are a lot of jobs. Many big companies are headquartered here- McDonalds, Abbott, Baxter, Walgreens, Boeing, Kraft, United Airlines, etc.
His field is quite location specific. He could completely change job fields, but he trained over a decade in this field and loves it. We've talked about changing fields (no idea what he would change it to as he's very specialized), and I think he would do it if I insisted on leaving, but I vetoed it because I don't want to bear the guilt of knowing that he left a job he loves simply because I hate living here.

Mr.BB
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Mr.BB » Wed Mar 01, 2017 8:24 pm

If you really want to learn where all your money is going, spend one year tracking ALL your expenses in Quicken. The key is everything counts. If you spend $3.00 cash at drive through, it counts, if you give pay cash for a couple of gallons of gas it counts. Credit cards, mortgages, all pretty easy to track. It is a bit of a pain in the ass but it is a real eye opener once you do it, and knowing your expenses is the other half of the retirement equation.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Grt2bOutdoors
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Grt2bOutdoors » Wed Mar 01, 2017 8:41 pm

Reduce 529 savings by $300 month, put it in a savings account, end of year you will have $3,900. Find something economical in vacation category, visit a national park, take a nearby vacation (not Europe or Carribean), or save for two years then go someplace you really want to go. Last good vacation, we saved for years, short of having Daddy Warbucks money, most people are making choices on how and where and when they spend those resources. The inference of having or not having inheritance money, most folks are not living off of inheritances, they are living on employment income, societal benefits (which many would rather not have to do if they had a choice), debt (that can only go so long before jig is up), or family assistance. Those living off of windfalls like inheritances is very small part of population.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Grt2bOutdoors
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Grt2bOutdoors » Wed Mar 01, 2017 8:46 pm

SamB wrote:I am 70 years old, and I am sure glad that when I was 40 we went camping for vacation, and the restaurant meals fell into the category of almost never. In fact, since both my wife and I cook, restaurants are one perpetual disappointment.

Looked at from a financial perspective, life is one big trade off between present and future consumption. Be very careful about what you consider "decent" present consumption, especially if it is discretionary.

Here is an example for you. My wife's parents were immigrants from eastern Europe after WWII. It was leave or die. They settled in Chicago, about three miles from a steel mill. Her father got a job as a laborer at the mill. It was unionized, and the mill was at full capacity his whole career.

Her parents managed to pay for a modest house, and I mean completely pay off the mortgage, send both their children to college, one to the U of Chicago, and there were no scholarships. They did not own a car, and her father took the bus to work. When they both passed away their assets consisted of the house, $30K in US savings bonds, and $80K in a time savings account.

They were losers, right? Never went out to eat, and they did not comprehend what a vacation was. And they cerntainly never ventured into the equity markets or knew the least thing about finance or economics. Or did they? You decide.
That's a rare and winning combination. Kudos to your in-laws.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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MossySF
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by MossySF » Wed Mar 01, 2017 8:50 pm

In a country as large as the United States, surely there are "decent" vacation spots close by to anybody which won't cost an arm & a leg?!?!

Grt2bOutdoors
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by Grt2bOutdoors » Wed Mar 01, 2017 8:51 pm

sawhorse wrote:
HIinvestor wrote:I guess a question is what is "decent" meal out and "decent" vacation?
This is a great point. To me, the Cheesecake Factory is a decent restaurant. Other people have different standards. For some Bob Evans might be decent. For others a Michelin restaurant is decent.
My kitchen! Not only is it cost effective, but we find our cooking is as good, if not better than most "good restaurants". Very few have different or outstanding meals, some have poor service that ruins the whole experience.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

sawhorse
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Re: Why can't I save enough to have decent vacation or restaurant meal

Post by sawhorse » Wed Mar 01, 2017 8:54 pm

MossySF wrote:In a country as large as the United States, surely there are "decent" vacation spots close by to anybody which won't cost an arm & a leg?!?!
I agree. I'm really fond of the National Park Service. This includes not just national parks but also national historical landmarks, etc.

A lot of state parks are good for day trips.

Museums often have discounts for children and families.

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