Help find balance between saving vs spending: married and 3 young kids

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JB2013
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Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 9:18 am

Hi all. I'm wanting to get some feedback from folks regarding my struggle of saving money vs spending it with my family. I typically have been the only one working making around 105K a year, but my wife just recently went back to work one day a week working as a hair stylist. She receives no benefits. With her added work, we now are projected to make around 130K this year.

We are both 35 years old, have three children ages 6, 4, and 1. I know it's very little compared to most around here, but we just broke the 100K for our retirement accounts so felt really excited about that. I just maxed out both her and my Roth IRAs for 2019, and just contributed $3,500 into my Roth for 2020. I'm hoping to have both of them filled within the next 6 months.

At my job my company matches me 50% up to 4% of pay which I take. I know this needs to be increased with my wife working now. They also give me a lump sum in March of each year around $4,000 that they deposit into the account. I have very good vanguard options in my plan.

Where I struggle is that growing up I went on many vacations to the Caribbean which I loved doing, and it was largely possible with my mom working in the airline industry. To me, I would love to be able to do these with our kids as well where they are at an age where they still love being around us, and my wife can't stand cold weather.

The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.

I get two payouts each year, one in February and the other in July where they pay me money that I earned the company, but I haven't seen the money yet. This is anywhere from $5000-6000. When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."

In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older. I know these are first world problems since some can't even afford food so I hate to sound like a snob.

Any help on how to go about finding some sense of balance with this? Thanks so much for your help and looking forward to the responses.

e5116
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by e5116 » Fri Feb 14, 2020 9:33 am

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Hi all. I'm wanting to get some feedback from folks regarding my struggle of saving money vs spending it with my family. I typically have been the only one working making around 105K a year, but my wife just recently went back to work one day a week working as a hair stylist. She receives no benefits. With her added work, we now are projected to make around 130K this year.

We are both 35 years old, have three children ages 6, 4, and 1. I know it's very little compared to most around here, but we just broke the 100K for our retirement accounts so felt really excited about that. I just maxed out both her and my Roth IRAs for 2019, and just contributed $3,500 into my Roth for 2020. I'm hoping to have both of them filled within the next 6 months.

At my job my company matches me 50% up to 4% of pay which I take. I know this needs to be increased with my wife working now. They also give me a lump sum in March of each year around $4,000 that they deposit into the account. I have very good vanguard options in my plan.

Where I struggle is that growing up I went on many vacations to the Caribbean which I loved doing, and it was largely possible with my mom working in the airline industry. To me, I would love to be able to do these with our kids as well where they are at an age where they still love being around us, and my wife can't stand cold weather.

The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.

I get two payouts each year, one in February and the other in July where they pay me money that I earned the company, but I haven't seen the money yet. This is anywhere from $5000-6000. When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."

In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older. I know these are first world problems since some can't even afford food so I hate to sound like a snob.

Any help on how to go about finding some sense of balance with this? Thanks so much for your help and looking forward to the responses.
I think prioritizing travel and experiences over "stuff" is a good thought. Studies have shown that buying fancier/more things doesn't lead to more happiness but spending money on experiences does. Here's my suggestion. Get a travel rewards credit card and use that to defray some of the cost of travel. You can then perhaps fly free and only have to spend on the hotel, or vice versa. Sign up bonuses are plentiful and as you spend money, it goes in the "travel fund" rather than cash back. There are lots of threads here and elsewhere on that.

I similarly love traveling and have two small children. My son is 3 and has been to 5 countries and probably flown on 30 flights. (Not that he'll necessarily remember those trips, but we enjoyed it.) My wife and I made a decision to buy a not as nice house as we could have potentially afforded in order to keep up the travel. I also have expenses for work and can use credit card for daycare so it adds up quickly.

My other suggestion is to not go overboard on accomodations. It blows my mind how expensive some hotels people stay at when their are still nice affordable options. Carribean might be a bit different because it's more resorts (depends on country), but check out sites like Airbnb and VRBO for other options. I stayed on the ocean in a townhouse in Curacao for something like $120/night. I really don't see the need to spend $400+/night on same fancy hotel. When in Europe, my goal is to not be in the hotel at all and just use it as a place to sleep. Ditto for food sometimes - street food and eating like a local can reduce costs.

While I'm all about saving and being frugal, you only live once. But when you travel, stretch your dollar if you can. I will say with 5 airfares, it adds up quickly....

KlangFool
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by KlangFool » Fri Feb 14, 2020 9:44 am

OP,

It is very simple.

A) How much do you spend on housing? That is usually the largest component of your expense. And, if you live among the Jones, there are the extra implicit expenses to keep up with the Jones.

B) You spend first and save later. So, you have no money to save.

C) If you believe taking a vacation is important, you can find money to make it happen by cutting expenses elsewhere.

<<The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.>>

D) I disagreed with that statement. Your saving rate is low. At your current saving rate, you will have to work until 65 to 70.

KlangFool

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Watty
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Watty » Fri Feb 14, 2020 9:56 am

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Any help on how to go about finding some sense of balance with this?
I retired a few years ago and never broke $100K so stop comparing yourself to what you image other people make. The median household income in the US is only around $60K.

An all inclusive in the Caribbean is a high bar with three kids.

The kids will have just as good, and maybe better, trip if you go to a condo near a beach in Florida or a cabin in the woods a couple of hours drive from your house.

For the most part it just about going out and doing stuff with your family, not some expensive destination resort.

You also did not mention anything about college savings and you only have about 12 years until your oldest kid starts college. If you could get into a time machine and talk to your grown up kid then do you think that your grown up 6 years old would rather have smaller student loans or have taken an expensive vacation that they barely remember when they were 6?

One thing to keep in mind too it that the Caribbean destinations that you went to 30 years ago likely are unrecognizable now so if you go back to them now you may have a very different experience.

One your savings one thing that I did when I was about your age was that evenever I got a raise I put half the raise into savings. That was painless and if you do this then by the time you are 45 ten years from now you will be saving a high percent of your income.

Texanbybirth
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Texanbybirth » Fri Feb 14, 2020 9:57 am

OP,

Similar situation to you, a little younger and a little further ahead, and our kiddos are younger and more tightly-packed age-wise. My wife's family lives in The Sunshine State so we never hesitate to take a beach vacation. Our kids love the beach, and I'd move there in a heartbeat. We save 15% of gross income (not including my company's 5% match), and we spend the rest. We will not retire rich without a huge stroke of luck. I don't expect to retire rich; it's very freeing to be content with that expectation.

Like another poster said, like so many things in life it's about balance. It's good that you at least are asking how to give your kids similar experiences to what you had (or, are YOU just in need of a beach vacation?? that's okay, too.), but you acknowledge that your mom's job probably made it easier for your family to do those things. Even the fact that your wife isn't working as much as your mom will mean your family situation will be different. Saving up for a trip is a great idea, especially a year away. You can easily sock away cash for that trip. Maybe you split your bonuses 50/50 between long-term and short-term travel savings?

(Btw, congrats on maxing both Roths and hitting that $100k mark. It's all breezey from here on out. The first $100k is the hardest! :beer )
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daheld
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by daheld » Fri Feb 14, 2020 9:57 am

I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.

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Artful Dodger
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Artful Dodger » Fri Feb 14, 2020 10:10 am

I'm not going to tell you to never take your kids to the Caribbean, but I would encourage you to seek out less expensive options for the next few years. Maybe take the suggestion for the travel rewards card, and build up some points, save $X per month, and plan something in 3 or 4 years.

You've made a good start on your retirement savings. You didn't mention kid's college, but hopefully you have started something for that as well.

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CyclingDuo
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by CyclingDuo » Fri Feb 14, 2020 10:48 am

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Hi all. I'm wanting to get some feedback from folks regarding my struggle of saving money vs spending it with my family. I typically have been the only one working making around 105K a year, but my wife just recently went back to work one day a week working as a hair stylist. She receives no benefits. With her added work, we now are projected to make around 130K this year.
One day a week of your wife working will boost your income $25K annually? Dang, that's $480 a day x 52 = $25K

Maybe she should seriously consider working 2 days a week!!!!!

:sharebeer
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
We are both 35 years old, have three children ages 6, 4, and 1. I know it's very little compared to most around here, but we just broke the 100K for our retirement accounts so felt really excited about that. I just maxed out both her and my Roth IRAs for 2019, and just contributed $3,500 into my Roth for 2020. I'm hoping to have both of them filled within the next 6 months.
Breaking $100K is not insignificant at all. Although, Fidelity's journey which is based on retiring at your FRA of 67, receiving SS, contributing 15% of your income per year, and living until age 93 suggests that at age 35, you should already have 2x your salary saved by this point. $210K based on your $105K salary, and bump that up to $300K if you include your wife's new income.

Image
https://www.fidelity.com/viewpoints/ret ... -to-retire
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
At my job my company matches me 50% up to 4% of pay which I take. I know this needs to be increased with my wife working now. They also give me a lump sum in March of each year around $4,000 that they deposit into the account. I have very good vanguard options in my plan.

Where I struggle is that growing up I went on many vacations to the Caribbean which I loved doing, and it was largely possible with my mom working in the airline industry. To me, I would love to be able to do these with our kids as well where they are at an age where they still love being around us, and my wife can't stand cold weather.
Let's unpack the "struggle" and the implications. Your mother worked in the airline industry, so you received discounted tickets - or perhaps even free vouchers - to make it affordable. Did your mother or father also have jobs that included a company pension plan? You are in the scenario of having to create your own pension with retirement savings - so there is a stark difference if they had pension plans compared to your scenario. What amount, or percentage of your parents' income was directed at a vacation?

Unfortunately, most Americans are taking vacations they cannot afford. What is the percentage one should spend on a vacation? Is it built into your budget? Although your childhood memories of these vacations is understandable, you need to weigh your own situation, household cashflow, savings, budget and whether or not the patience of riding out the continental climate for three months is more prudent than an expensive brief week or ten day escape to warmer weather for a spouse that claims she cannot stand cold weather. Buying a warm coat/hat/gloves/boots and turning up the heat will always cost less during those three months than a trip to a tropical location. I think if your accumulated assets were already more in line with the Fidelity journey for your retirement assets, your education funds were up to speed for your three children, and you had saved enough in your remaining budget to afford the travel - then go for it. However, it looks like you have some catching up to do on the retirement savings front if you want to fund your retirement phase years.
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.

I get two payouts each year, one in February and the other in July where they pay me money that I earned the company, but I haven't seen the money yet. This is anywhere from $5000-6000. When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."

In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older. I know these are first world problems since some can't even afford food so I hate to sound like a snob.

Any help on how to go about finding some sense of balance with this? Thanks so much for your help and looking forward to the responses.
The balance is important. If you can set aside for your retirement, the education funds, cut household expenses and save enough to plan for 2021 vacation - do it. March 2021 is 13 months away. Going with your $5500 estimate, sock away $423 each month between now and then in your budget without backing off on your retirement and education account savings to accomplish it. Find ways to make cuts in the rest of your budget to do it.

In the meantime, we'd champion your wife working a second day a week to pick up an additional $480 a week for sure.

:sharebeer

CyclingDuo

Edit: Although it is not linear, after the first $100K and continued contributions (example shows $10K a year) - you can see the math of how things advance...

Image
https://fourpillarfreedom.com/the-math- ... DMwzsQ8gTY
Last edited by CyclingDuo on Fri Feb 14, 2020 10:55 am, edited 1 time in total.
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Caduceus
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Caduceus » Fri Feb 14, 2020 10:55 am

You can spend time on fun trips with your kids without spending that much money though. I'm sure the other forum members will chime in, but I'm not sure if kids really remember that much in the way of specific details of their trips from when they are before 10 or so. I know my younger sibling has almost no memory - apart from having the photos to prove it happened - of trips taken when he was 5 and 8 years old. Just all money down the drain. :P

Why not just go somewhere nearer/local - doesn't have to be fancy.

Lalamimi
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Lalamimi » Fri Feb 14, 2020 11:03 am

We made less than you do for many years. We camped and water skied on Spring Breaks and in the summer for many years. Cheap and the kids loved it. (well, our daughter hates heat and bugs now). Does your mother still get any flight perks for family? All inclusive is not that great when you are not drinking all day and have to watch 3 kids. We have been going to Cabo the past 5 yrs and really love it, but we are in Houston and its a short flight. Agree can your wife work one more day a week? Hairdressers here are expensive, easily making $3-400 a day.
Is there a resort near you to try for a long weekend or a week, no air fare and see how the kids do?

cheapindexer
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by cheapindexer » Fri Feb 14, 2020 11:13 am

as a 49 year old physician with 3 kids ages 16,13,10 I say go on vacation

sounds to me like you guys are doing great , working , planning, etc.

I am in shock my oldest is a high school junior, a little over a year from heading off to college.

We are grateful for every single vacation we have taken with our kids. Reminisce about them all the time- truly

incredible experiences for us all!!!!!

agree with the comments about looking for deals ( ie once we went to caymans on spring break but left on Monday instead of a Saturday cheaper flight and stayed 5 nights instead of 7 etc)

and with expenses IMO cars are usually the problem. I literally embarrass the kids with my old chevy and I love it. WOULD RATHER HAVE $$ for vacation and retirements than a BMW ANYDAY

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by surfstar » Fri Feb 14, 2020 11:25 am

Start cycling through credit card signup rewards. You can get airline miles and hotel points worth hundreds of dollars for each card. This is a long game and would be more beneficial for travel next year, but its a good time to start.

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lthenderson
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by lthenderson » Fri Feb 14, 2020 11:41 am

Watty wrote:
Fri Feb 14, 2020 9:56 am
An all inclusive in the Caribbean is a high bar with three kids.

The kids will have just as good, and maybe better, trip if you go to a condo near a beach in Florida or a cabin in the woods a couple of hours drive from your house.
+1

We spent around 10 days a year for over a decade renting a house on the Gulf Coast and spent a fraction of what it costs to go with the all inclusive in the Caribbean. We have lots of great memories.

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dm200
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 11:50 am

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Hi all. I'm wanting to get some feedback from folks regarding my struggle of saving money vs spending it with my family. I typically have been the only one working making around 105K a year, but my wife just recently went back to work one day a week working as a hair stylist. She receives no benefits. With her added work, we now are projected to make around 130K this year.
We are both 35 years old, have three children ages 6, 4, and 1. I know it's very little compared to most around here, but we just broke the 100K for our retirement accounts so felt really excited about that. I just maxed out both her and my Roth IRAs for 2019, and just contributed $3,500 into my Roth for 2020. I'm hoping to have both of them filled within the next 6 months.
At my job my company matches me 50% up to 4% of pay which I take. I know this needs to be increased with my wife working now. They also give me a lump sum in March of each year around $4,000 that they deposit into the account. I have very good vanguard options in my plan.
Where I struggle is that growing up I went on many vacations to the Caribbean which I loved doing, and it was largely possible with my mom working in the airline industry. To me, I would love to be able to do these with our kids as well where they are at an age where they still love being around us, and my wife can't stand cold weather.
The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.
I get two payouts each year, one in February and the other in July where they pay me money that I earned the company, but I haven't seen the money yet. This is anywhere from $5000-6000. When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."
In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older. I know these are first world problems since some can't even afford food so I hate to sound like a snob.
Any help on how to go about finding some sense of balance with this? Thanks so much for your help and looking forward to the responses.
Now, with 20/20 hindsight (our one son is now 41), I am so glad we were able to take various family trips to various places all over the US. To my pleasant surprise, our son remembers these and seems to appreciate that we were able to do so.

Except for the one year old, I think such travel/vacations are very relevant to your children - do not wait!

While flying the whole family to the Caribbean might not be affordable, perhaps look for some lower cost alternatives - such a s cruise, trip by auto, etc. Try to make whatever you choose to do very memorable for the whole family.

It seems to me that you are doing ok with your saving/investing. it also seems that you and your wife have an upside potential for income in the future as well.

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bligh
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by bligh » Fri Feb 14, 2020 11:51 am

Here are my 2 cents worth as somebody with two kids under 10 ... :

1) One thing that helped me with get a better handle on vacation budgeting was calculating each vacation in terms of total cost per day. What I quickly realized is that the cost of airplane tickets for 4 (or 5 in your case) quickly add up to a lot. Especially for shorter vacations, you find that you spend so much on just the airplane travel. So optimize for this. How far do you live from some warm beaches in the summer? Either prioritize places you can fly to cheaply, or don't fly and do road trips, RV trips, camping with the kids instead. My kids LOVED camping out, they literally begged to go again and again.

2) Kids at that age don't really care about travel to exotic locations. Give them a warm pool with a slide and they are set! For example, when I took my little ones to Disney World, my 7 year old's favorite day was the one where we stayed in and she got to spend the entire day in the pool. :oops:
When I give my kids a choice of where to go, warm beaches and water parks almost always come out on top. It's not that they dont enjoy the other vacations and have a great time, its just that if they were to pick, it would be different. Also, kids do not make permanent memories until after age 7 or 8 anyway so its not like they are going to look back upon these vacations fondly.

My wife and I have settled on a cadence of one vacation for the kids and one for us. As you would expect, the kids vacation is where we are able to save a lot of money, and so we are able to splurge on the vacations that are for us.

In summary, my advice to you. Save your money for now, and keep your vacations cheap over the next 5-6 years. You are getting way less value for your money because your kids are so young. Your trips may even be less fun because you are having to deal with your young children, or more expensive because you are having to hire sitters to watch over your kids.

Once they are all over 6 or 7 years of age (I know it feels like a long time, but trust me, if anything.. it will go by too fast)... You can open up your wallet and start doing some of the fancier vacations. If it helps, create a brokerage account, call it your trip fund, then pick a number you want to contribute, say $200/month or $300/month and start transferring that into there. Every time you feel the urge to go, look at that balance and feel good that you are building it up. 5 or 6 years from now you will have a nice stash you can draw upon to take those more expensive vacations.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by psteinx » Fri Feb 14, 2020 11:56 am

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
We are both 35 years old, have three children ages 6, 4, and 1.
...
In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older.
6, 4, and 1 (or even 7/5/2) is still pretty young. The 7 year old might barely remember the vacation, the 5 year old - maybe, the 2 year old - not.

There's time to take more elaborate vacations as they grow up.

Where are you located? Is it realistic just to drive to a nice beach in Florida, the Carolinas, Texas, SoCal, etc? That might slice your cost by 50-70%.

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dm200
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 11:56 am

I recall reading a story about one family's choices and priorities about vacations/travel. This family chose to live in a more modest/small home in order to be financially able to take nice regular family vacations. After the children had grown up, the parents (then with 20/20 hindsight) concluded that the children still remembered so positively about the enjoyment of these family vacations -- and also concluded that the children would not have remembered so fondly, years later, that (instead of vacations) they had another bathroom in their home or bigger bedrooms, etc.

In our case as well, we were very fortunate that during the years when our son was age 3-12, I worked for a MegaCorp where we had the full Christmas/new years week off. I also had a job where I did some degree of regular traveling all around the US, where I could attach a week before or after my work to have the family meet me. So, my travel to and from was no cost to me - my employer paid it.

Dandy
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Dandy » Fri Feb 14, 2020 12:00 pm

Life balance is a key goal. You can't get the experiences with children back when you are richer and they are older. Some of our family's greatest memories were the nice vacations we had. While they were little a nice week or so at the beach at a motel with a pool worked well. We were lucky Grandma and Grandpa and cousins were also there. Small children got a thrill out of making sand castles, jumping in the surf, riding bikes, etc.

Later we often visited my parents in Florida. We drove vs flying, stayed in modest hotels, didn't splurge much on dining etc.

On occasion my wife and I would also have a nice second vacation -- just the two of us. I highly recommend it if you can
trust someone to mind your children.

When they were more like junior/high school age and we earned more we went to the islands -- even a Disney Cruise.
Once they reach that age they seem to really enjoy the islands.

Now that we are grandparents our children family vacation with us for a few days at the beach hotel we stayed in when they were little. Brings back old memories and new ones are created.

These vacations were a source of great bonding in the family. I was a very frugal guy but always valued these special times.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by decapod10 » Fri Feb 14, 2020 12:02 pm

bligh wrote:
Fri Feb 14, 2020 11:51 am
Here are my 2 cents worth as somebody with two kids under 10 ... :

1) One thing that helped me with get a better handle on vacation budgeting was calculating each vacation in terms of total cost per day. What I quickly realized is that the cost of airplane tickets for 4 (or 5 in your case) quickly add up to a lot. Especially for shorter vacations, you find that you spend so much on just the airplane travel. So optimize for this. How far do you live from some warm beaches in the summer? Either prioritize places you can fly to cheaply, or don't fly and do road trips, RV trips, camping with the kids instead. My kids LOVED camping out, they literally begged to go again and again.

2) Kids at that age don't really care about travel to exotic locations. Give them a warm pool with a slide and they are set! For example, when I took my little ones to Disney World, my 7 year old's favorite day was the one where we stayed in and she got to spend the entire day in the pool. :oops:
When I give my kids a choice of where to go, warm beaches and water parks almost always come out on top. It's not that they dont enjoy the other vacations and have a great time, its just that if they were to pick, it would be different. Also, kids do not make permanent memories until after age 7 or 8 anyway so its not like they are going to look back upon these vacations fondly.

My wife and I have settled on a cadence of one vacation for the kids and one for us. As you would expect, the kids vacation is where we are able to save a lot of money, and so we are able to splurge on the vacations that are for us.

In summary, my advice to you. Save your money for now, and keep your vacations cheap over the next 5-6 years. You are getting way less value for your money because your kids are so young. Your trips may even be less fun because you are having to deal with your young children, or more expensive because you are having to hire sitters to watch over your kids.

Once they are all over 6 or 7 years of age (I know it feels like a long time, but trust me, if anything.. it will go by too fast)... You can open up your wallet and start doing some of the fancier vacations. If it helps, create a brokerage account, call it your trip fund, then pick a number you want to contribute, say $200/month or $300/month and start transferring that into there. Every time you feel the urge to go, look at that balance and feel good that you are building it up. 5 or 6 years from now you will have a nice stash you can draw upon to take those more expensive vacations.
Our kids are exactly the same, lol. We go to Disney World periodically with our kids (8 and 6), and if you ask them what their favorite part of their vacation, the inevitable reply is "the swimming pool", lol. We go the parks for a couple hours, then they just complain how they want to go back to the hotel and go swimming. We could probably just stay at the Best Western in town and let them swim all day and eat chicken nuggets and they would be happy as a clam. We've actually done this before (stayed in a hotel with an indoor pool close by where we live) and they loved it honestly.

You don't need to spend a lot of money for the kids to have a great vacation.
Last edited by decapod10 on Fri Feb 14, 2020 12:27 pm, edited 1 time in total.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by SQRT » Fri Feb 14, 2020 12:03 pm

I say spend the money(within reason) now on building a “portfolio of family memories” that will last as long as your kids are alive. . I still treasure the vacations we took 30 years ago when my daughter was young. Was a bit of a stretch then but inconsequential in the overall scheme of things. Even as an adult we have taken her on many fabulous trips with us and other family members. Memories are priceless.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by FoolMeOnce » Fri Feb 14, 2020 12:04 pm

bligh wrote:
Fri Feb 14, 2020 11:51 am
Here are my 2 cents worth as somebody with two kids under 10 ... :

1) One thing that helped me with get a better handle on vacation budgeting was calculating each vacation in terms of total cost per day. What I quickly realized is that the cost of airplane tickets for 4 (or 5 in your case) quickly add up to a lot. Especially for shorter vacations, you find that you spend so much on just the airplane travel. So optimize for this. How far do you live from some warm beaches in the summer? Either prioritize places you can fly to cheaply, or don't fly and do road trips, RV trips, camping with the kids instead. My kids LOVED camping out, they literally begged to go again and again.

2) Kids at that age don't really care about travel to exotic locations. Give them a warm pool with a slide and they are set! For example, when I took my little ones to Disney World, my 7 year old's favorite day was the one where we stayed in and she got to spend the entire day in the pool. :oops:
When I give my kids a choice of where to go, warm beaches and water parks almost always come out on top. It's not that they dont enjoy the other vacations and have a great time, its just that if they were to pick, it would be different. Also, kids do not make permanent memories until after age 7 or 8 anyway so its not like they are going to look back upon these vacations fondly.

My wife and I have settled on a cadence of one vacation for the kids and one for us. As you would expect, the kids vacation is where we are able to save a lot of money, and so we are able to splurge on the vacations that are for us.

In summary, my advice to you. Save your money for now, and keep your vacations cheap over the next 5-6 years. You are getting way less value for your money because your kids are so young. Your trips may even be less fun because you are having to deal with your young children, or more expensive because you are having to hire sitters to watch over your kids.

Once they are all over 6 or 7 years of age (I know it feels like a long time, but trust me, if anything.. it will go by too fast)... You can open up your wallet and start doing some of the fancier vacations. If it helps, create a brokerage account, call it your trip fund, then pick a number you want to contribute, say $200/month or $300/month and start transferring that into there. Every time you feel the urge to go, look at that balance and feel good that you are building it up. 5 or 6 years from now you will have a nice stash you can draw upon to take those more expensive vacations.
This is great, start to finish.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by MrBeaver » Fri Feb 14, 2020 12:11 pm

With my young family, I prefer to spend $100-200 or so a month on 'everyday' experiences (museums, festivals, weekend camping, etc.), while restricting 'big' vacations to ~$1000/year. I prefer that to waiting 1-2 years for a 'big splurge' vacation.

Everyone is different and both are enjoyable and memorable. Everyone's priorities will be different.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 12:15 pm

Our kids are exactly the same, lol. We go to Disney World periodically with our kids (8 and 6), and if you ask them what their favorite part of their vacation, the inevitable reply is "the swimming pool", lol. We go the parks for a couple hours, then they just complain how they want to go back to the hotel and go swimming. We could probably just stay at the Best Western in town and let them swim all day and eat chicken nuggets and they would be happy as a clam. We've actually done this before (stayed in a hotel with an indoor pool close by) and they loved it honestly.
You don't need to spend a lot of money for the kids to have a great vacation.
We went to Disney World (in Florida) several times when our son was young.

I cannot recall how old or young he was when we did both EPCOT and the magic Kingdom. In the end, it all turned out well - BUT

My wife and I are both very "logical" about a lot of things. For this trip, my wife got all the information about each place and we also got some books about the best/optimum ways to get the most of our time and money. So, the plan (this worked out fine) was to go to EPCOT first, then in later day(s) see the Magic Kingdom. We had EPCOT all planned out. So, we go to the first ride/experience. We all enjoyed it - especially our son. At the end, as we started towards the next attraction on our list, our son wants to do this one again. We tried to explain - to no avail. We then get to the next one. We all like it - our son as well. At the end, he causes a scene to do this one again. OK - then we pull out a map/diagram of EPCOT, show him where we were and the two we had done and there were many more - moving around the big circle. We pointed out to him that when we reached the other side of the circle - we would see dinosaurs. Then, that initiated another scene - he wanted to see the dinosaurs NOW. At some point in this sequence, he told us (or accused us) of being completely selfish in doing just what my wife and I wanted to do - and did not care about his wishes and desires.

It went much better at the Magic Kingdom - and the overall time at Disney World was very good and he remembered it quite well.

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:17 pm

Watty wrote:
Fri Feb 14, 2020 9:56 am
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Any help on how to go about finding some sense of balance with this?
I retired a few years ago and never broke $100K so stop comparing yourself to what you image other people make. The median household income in the US is only around $60K.

An all inclusive in the Caribbean is a high bar with three kids.

The kids will have just as good, and maybe better, trip if you go to a condo near a beach in Florida or a cabin in the woods a couple of hours drive from your house.

For the most part it just about going out and doing stuff with your family, not some expensive destination resort.

You also did not mention anything about college savings and you only have about 12 years until your oldest kid starts college. If you could get into a time machine and talk to your grown up kid then do you think that your grown up 6 years old would rather have smaller student loans or have taken an expensive vacation that they barely remember when they were 6?

One thing to keep in mind too it that the Caribbean destinations that you went to 30 years ago likely are unrecognizable now so if you go back to them now you may have a very different experience.

One your savings one thing that I did when I was about your age was that evenever I got a raise I put half the raise into savings. That was painless and if you do this then by the time you are 45 ten years from now you will be saving a high percent of your income.
I agree now that I've thought of it more that the Caribbean could be a stretch. More in southern florida seems it could be doable. I like the idea of a Airbnb as well that someone else mentioned. I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 12:18 pm

I agree now that I've thought of it more that the Caribbean could be a stretch. More in southern florida seems it could be doable. I like the idea of a Airbnb as well that someone else mentioned. I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
The Florida Keys are wonderful!!

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:19 pm

daheld wrote:
Fri Feb 14, 2020 9:57 am
I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.
1.Gross income will now be around $130
2. I'm now saving 15% into my 401K with a 4% match, and a lump contributino from work of $4,000. Also maxing out both Roths.
3. I save money in a high yield savings account
4. Yes emergency fund in place of about 3 months
5. Very little saved for kids education. I've Read about this on the forearms and it seems that a 529 plan is mostly for high income earners. Do I not have this correct?

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:20 pm

dm200 wrote:
Fri Feb 14, 2020 12:18 pm
I agree now that I've thought of it more that the Caribbean could be a stretch. More in southern florida seems it could be doable. I like the idea of a Airbnb as well that someone else mentioned. I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
The Florida Keys are wonderful!!
So are people renting a car when they do this? It seems with 3 kids we would need some sort of transportation. We are coming from Minnesota so a 24 hr car ride to florida is not ideal....

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:22 pm

CyclingDuo wrote:
Fri Feb 14, 2020 10:48 am
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
Hi all. I'm wanting to get some feedback from folks regarding my struggle of saving money vs spending it with my family. I typically have been the only one working making around 105K a year, but my wife just recently went back to work one day a week working as a hair stylist. She receives no benefits. With her added work, we now are projected to make around 130K this year.
One day a week of your wife working will boost your income $25K annually? Dang, that's $480 a day x 52 = $25K

Maybe she should seriously consider working 2 days a week!!!!!

:sharebeer
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
We are both 35 years old, have three children ages 6, 4, and 1. I know it's very little compared to most around here, but we just broke the 100K for our retirement accounts so felt really excited about that. I just maxed out both her and my Roth IRAs for 2019, and just contributed $3,500 into my Roth for 2020. I'm hoping to have both of them filled within the next 6 months.
Breaking $100K is not insignificant at all. Although, Fidelity's journey which is based on retiring at your FRA of 67, receiving SS, contributing 15% of your income per year, and living until age 93 suggests that at age 35, you should already have 2x your salary saved by this point. $210K based on your $105K salary, and bump that up to $300K if you include your wife's new income.

Image
https://www.fidelity.com/viewpoints/ret ... -to-retire
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
At my job my company matches me 50% up to 4% of pay which I take. I know this needs to be increased with my wife working now. They also give me a lump sum in March of each year around $4,000 that they deposit into the account. I have very good vanguard options in my plan.

Where I struggle is that growing up I went on many vacations to the Caribbean which I loved doing, and it was largely possible with my mom working in the airline industry. To me, I would love to be able to do these with our kids as well where they are at an age where they still love being around us, and my wife can't stand cold weather.
Let's unpack the "struggle" and the implications. Your mother worked in the airline industry, so you received discounted tickets - or perhaps even free vouchers - to make it affordable. Did your mother or father also have jobs that included a company pension plan? You are in the scenario of having to create your own pension with retirement savings - so there is a stark difference if they had pension plans compared to your scenario. What amount, or percentage of your parents' income was directed at a vacation?

Unfortunately, most Americans are taking vacations they cannot afford. What is the percentage one should spend on a vacation? Is it built into your budget? Although your childhood memories of these vacations is understandable, you need to weigh your own situation, household cashflow, savings, budget and whether or not the patience of riding out the continental climate for three months is more prudent than an expensive brief week or ten day escape to warmer weather for a spouse that claims she cannot stand cold weather. Buying a warm coat/hat/gloves/boots and turning up the heat will always cost less during those three months than a trip to a tropical location. I think if your accumulated assets were already more in line with the Fidelity journey for your retirement assets, your education funds were up to speed for your three children, and you had saved enough in your remaining budget to afford the travel - then go for it. However, it looks like you have some catching up to do on the retirement savings front if you want to fund your retirement phase years.
JB2013 wrote:
Fri Feb 14, 2020 9:18 am
The trouble I have is that I"m so focused on piling money away in order to secure retirement and not work until I'm 65-70.

I get two payouts each year, one in February and the other in July where they pay me money that I earned the company, but I haven't seen the money yet. This is anywhere from $5000-6000. When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."

In essence I talk myself out of it as I'm very good at delaying gratification. We've very casually discussed possibly going somewhere in March 2021 to either Mexico or Caribbean which the kids would love and have seen the pricing around $4,500-5,500 for All inclusive and flight. Our current 1 year old would then be 2 so would feel more doable with her being slightly older. I know these are first world problems since some can't even afford food so I hate to sound like a snob.

Any help on how to go about finding some sense of balance with this? Thanks so much for your help and looking forward to the responses.
The balance is important. If you can set aside for your retirement, the education funds, cut household expenses and save enough to plan for 2021 vacation - do it. March 2021 is 13 months away. Going with your $5500 estimate, sock away $423 each month between now and then in your budget without backing off on your retirement and education account savings to accomplish it. Find ways to make cuts in the rest of your budget to do it.

In the meantime, we'd champion your wife working a second day a week to pick up an additional $480 a week for sure.

:sharebeer

CyclingDuo

Edit: Although it is not linear, after the first $100K and continued contributions (example shows $10K a year) - you can see the math of how things advance...

Image
https://fourpillarfreedom.com/the-math- ... DMwzsQ8gTY
Yeah, my wife at times makes $650 in one day but that does not include any taxes taken into account. Adding in a 2nd day probably won't happen until my youngest starts some form of preschool since it would require another day for our parents to help watch the kids.

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:24 pm

lthenderson wrote:
Fri Feb 14, 2020 11:41 am
Watty wrote:
Fri Feb 14, 2020 9:56 am
An all inclusive in the Caribbean is a high bar with three kids.

The kids will have just as good, and maybe better, trip if you go to a condo near a beach in Florida or a cabin in the woods a couple of hours drive from your house.
+1

We spent around 10 days a year for over a decade renting a house on the Gulf Coast and spent a fraction of what it costs to go with the all inclusive in the Caribbean. We have lots of great memories.
If you don't mind me asking where exactly did you bring your family? I prefer the Gulf side to the atlantic for sure. I like the idea of renting a place near the beach. Of course would have to rent a car I'd imagine...is that what you did in order to buy food and check in the sights?

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by FoolMeOnce » Fri Feb 14, 2020 12:25 pm

JB2013 wrote:
Fri Feb 14, 2020 12:17 pm
...
I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
A 529 is a good way to save and invest for college after you are sure you are taking care of your financial independence and retirement goals. Or if you plant to pay some or all of your kids' education regardless of derailing your retirement goals. It is especially good if you get a state income tax deduction for contributions.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by IMO » Fri Feb 14, 2020 12:33 pm

Caduceus wrote:
Fri Feb 14, 2020 10:55 am
You can spend time on fun trips with your kids without spending that much money though. I'm sure the other forum members will chime in, but I'm not sure if kids really remember that much in the way of specific details of their trips from when they are before 10 or so. I know my younger sibling has almost no memory - apart from having the photos to prove it happened - of trips taken when he was 5 and 8 years old. Just all money down the drain. :P

Why not just go somewhere nearer/local - doesn't have to be fancy.
There are 2 parts to taking younger kids on vacation:
a) To have them enjoy the experience (for example playing on the beach)
b) For the parents to have memories of the above.

Young kids don't remember vacations in any real manner and probably don't appreciate things like an adult. I know people will chime in and disagree and say how their 5 year old vividly remembers the unique architecture of ________ and the stunning views of _________.

I'm not against taking vacations with younger kids at all. But one has to keep things in balance with one's personal finances. Sure a great Caribbean beach is an ideal vacation, but a trip once can drive to the somewhere on the Gulf of Mexico/East or West coasts may be a better option if one has a more limited budget with the net same end result.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by daheld » Fri Feb 14, 2020 12:45 pm

JB2013 wrote:
Fri Feb 14, 2020 12:19 pm
daheld wrote:
Fri Feb 14, 2020 9:57 am
I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.
1.Gross income will now be around $130
2. I'm now saving 15% into my 401K with a 4% match, and a lump contributino from work of $4,000. Also maxing out both Roths.
3. I save money in a high yield savings account
4. Yes emergency fund in place of about 3 months
5. Very little saved for kids education. I've Read about this on the forearms and it seems that a 529 plan is mostly for high income earners. Do I not have this correct?
Do you expect to make more in retirement than you do now? Others can likely offer better insight, but if it were me, I think I'd contribute as much as possible to the 401k and only do Roth once I'm able to max the 401k. 15% of 130k likely gets you right around maxing your 401k, but if not that should be a priority.

529's are hotly debated around here. We use a 529 for our 1 year old son, but we also max 401k and Roths for both of us.

I would agree with other folks--you can do a beach vacation for a lot less if you go somewhere like the gulf. I don't know where you're located but my parents drove us every summer about 10 hours to Gulf Shores. It's not the Caribbean, but it's nice enough, the food is great, and it's affordable.

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 12:53 pm

daheld wrote:
Fri Feb 14, 2020 12:45 pm
JB2013 wrote:
Fri Feb 14, 2020 12:19 pm
daheld wrote:
Fri Feb 14, 2020 9:57 am
I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.
1.Gross income will now be around $130
2. I'm now saving 15% into my 401K with a 4% match, and a lump contributino from work of $4,000. Also maxing out both Roths.
3. I save money in a high yield savings account
4. Yes emergency fund in place of about 3 months
5. Very little saved for kids education. I've Read about this on the forearms and it seems that a 529 plan is mostly for high income earners. Do I not have this correct?
Do you expect to make more in retirement than you do now? Others can likely offer better insight, but if it were me, I think I'd contribute as much as possible to the 401k and only do Roth once I'm able to max the 401k. 15% of 130k likely gets you right around maxing your 401k, but if not that should be a priority.

529's are hotly debated around here. We use a 529 for our 1 year old son, but we also max 401k and Roths for both of us.

I would agree with other folks--you can do a beach vacation for a lot less if you go somewhere like the gulf. I don't know where you're located but my parents drove us every summer about 10 hours to Gulf Shores. It's not the Caribbean, but it's nice enough, the food is great, and it's affordable.
I doubt we would make more in retirement. I always thought I should max the Roth since that's growing tax free before maxing the 401K.

We live in Minnesota so a drive to the Gulf shores is a ways with three children. Ideally I think the Gulf coast would be ideal, but man, that's a hell of a drive for us and buying plane tickets sort of defeats the purpose if we could do an airbnb or something.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by daheld » Fri Feb 14, 2020 12:59 pm

JB2013 wrote:
Fri Feb 14, 2020 12:53 pm
daheld wrote:
Fri Feb 14, 2020 12:45 pm
JB2013 wrote:
Fri Feb 14, 2020 12:19 pm
daheld wrote:
Fri Feb 14, 2020 9:57 am
I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.
1.Gross income will now be around $130
2. I'm now saving 15% into my 401K with a 4% match, and a lump contributino from work of $4,000. Also maxing out both Roths.
3. I save money in a high yield savings account
4. Yes emergency fund in place of about 3 months
5. Very little saved for kids education. I've Read about this on the forearms and it seems that a 529 plan is mostly for high income earners. Do I not have this correct?
Do you expect to make more in retirement than you do now? Others can likely offer better insight, but if it were me, I think I'd contribute as much as possible to the 401k and only do Roth once I'm able to max the 401k. 15% of 130k likely gets you right around maxing your 401k, but if not that should be a priority.

529's are hotly debated around here. We use a 529 for our 1 year old son, but we also max 401k and Roths for both of us.

I would agree with other folks--you can do a beach vacation for a lot less if you go somewhere like the gulf. I don't know where you're located but my parents drove us every summer about 10 hours to Gulf Shores. It's not the Caribbean, but it's nice enough, the food is great, and it's affordable.
I doubt we would make more in retirement. I always thought I should max the Roth since that's growing tax free before maxing the 401K.

We live in Minnesota so a drive to the Gulf shores is a ways with three children. Ideally I think the Gulf coast would be ideal, but man, that's a hell of a drive for us and buying plane tickets sort of defeats the purpose if we could do an airbnb or something.
You're paying taxes on that Roth right now, at your current tax rate. If your tax rate in retirement will be lower (because you make significantly less), then it does not make sense to pay taxes at your current rate. https://www.bogleheads.org/wiki/Priorit ... nvestments

I understand about the distance, and yes that's a haul to get to a beach vacation. But I cannot imagine flying your entire family to the Caribbean more than once is something that makes a lot of financial sense in your current situation.

EDITED to add: You've not given a full accounting of your expenses. You might want to think about really looking hard at where you might be able to trim expenses as this will help you save for retirement and leisure.

decapod10
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by decapod10 » Fri Feb 14, 2020 1:09 pm

JB2013 wrote:
Fri Feb 14, 2020 12:53 pm
daheld wrote:
Fri Feb 14, 2020 12:45 pm
JB2013 wrote:
Fri Feb 14, 2020 12:19 pm
daheld wrote:
Fri Feb 14, 2020 9:57 am
I think it would be helpful to have a more clear sense of a couple things:

1. What is your yearly gross income?

2. How much are you saving for retirement yearly, and in what types of accounts are you saving (I know you mentioned Roths and 401ks, but this information will help people decide whether you even need to save in Roths or should just save more in 401k)?

3. Are you saving money elsewhere, like a money market or brokerage account?

4. Do you have an emergency fund?

5. Do you have anything saved for your kids' educations? Do you want to help them with college? It's fine if you say no, but this is another line item you need to save for if so.

In general, I agree that vacations are important memories for families to have if you're reasonably able to do so. We went on a modest vacation every year, and they're some of my favorite memories. My parents didn't make a ton of money, were very much blue collar, middle class folks, but they saved like mad and we were able to take a road trip every year.
1.Gross income will now be around $130
2. I'm now saving 15% into my 401K with a 4% match, and a lump contributino from work of $4,000. Also maxing out both Roths.
3. I save money in a high yield savings account
4. Yes emergency fund in place of about 3 months
5. Very little saved for kids education. I've Read about this on the forearms and it seems that a 529 plan is mostly for high income earners. Do I not have this correct?
Do you expect to make more in retirement than you do now? Others can likely offer better insight, but if it were me, I think I'd contribute as much as possible to the 401k and only do Roth once I'm able to max the 401k. 15% of 130k likely gets you right around maxing your 401k, but if not that should be a priority.

529's are hotly debated around here. We use a 529 for our 1 year old son, but we also max 401k and Roths for both of us.

I would agree with other folks--you can do a beach vacation for a lot less if you go somewhere like the gulf. I don't know where you're located but my parents drove us every summer about 10 hours to Gulf Shores. It's not the Caribbean, but it's nice enough, the food is great, and it's affordable.
I doubt we would make more in retirement. I always thought I should max the Roth since that's growing tax free before maxing the 401K.

We live in Minnesota so a drive to the Gulf shores is a ways with three children. Ideally I think the Gulf coast would be ideal, but man, that's a hell of a drive for us and buying plane tickets sort of defeats the purpose if we could do an airbnb or something.
Maybe opening up a can of worms here, but if you can do it responsibly, lots of people use credit card bonuses in order to offset their vacation expenses. Sign-up bonuses for credit cards can be worth $500 or even $1000 or more sometimes. As long as you are not going to buy a house or something anytime soon, something to consider.

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dm200
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 1:14 pm

We have never been able to catch these and use them when they are announced - and they seem to have very short windows - but Southwest airlines offers super low fares to lots of the places they serve. Earlier, for example, the had unbelievably low fares to and from Hawaii!

Jags4186
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Jags4186 » Fri Feb 14, 2020 1:21 pm

If your wife can make $650 a day she should work full time and you can hire a nanny. And afford to save a boatload of money into retirement. And go on family vacations to the Caribbean.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by sailaway » Fri Feb 14, 2020 1:26 pm

The only international travel I had growing up was crossing into Canada.

However, a wonderful weekend vacation that we enjoyed once I had young nieces and nephews was to find a hotel with an indoor pool. It cuts way back on costs, they are usually kept very warm and it is simplicity itself compared to international travel with a toddler.

If you think outside the box, you can have all kinds of options.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by getthatmarshmallow » Fri Feb 14, 2020 1:26 pm

It's tough to figure out the balance. We make around what you do, and every year I set a retirement savings target of roughly a year's expense. The rest gets spent or saved as we will, and we typically budget for "big projects" in February (coincidentally with spouse's bonus/annual review.) So that might be a project for the house, or a vacation-with-plane-tickets, depending on the year and our interests.

Given your income, savings rate, and so forth, it might be helpful to budget aggressively. You probably can swing a Gulf vacation, but probably not every year, and not without managing lots of other expenses. I'm not much of a vacation person, and we discovered that the kids *love* camping, and that three or four weekend trips during the summer were a blast.

I disagree with the consensus that the vacation memories aren't important, or only important if the kids can recite when they're grown what they saw. The kids won't remember the details in 30 years, but they'll remember them while they're growing up, and the sense of adventure and family connection is hard to beat. But it's also the case that those connections don't require plane tickets or exotic locations. My kids would be happy anywhere that they can a) climb on big rocks or b) go in a pool. YMMV, but I'd think about making some of those vacation memories in Minnesota.

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dm200
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by dm200 » Fri Feb 14, 2020 1:53 pm

I disagree with the consensus that the vacation memories aren't important, or only important if the kids can recite when they're grown what they saw. The kids won't remember the details in 30 years, but they'll remember them while they're growing up, and the sense of adventure and family connection is hard to beat. But it's also the case that those connections don't require plane tickets or exotic locations. My kids would be happy anywhere that they can a) climb on big rocks or b) go in a pool. YMMV, but I'd think about making some of those vacation memories in Minnesota.
Absolutely!! If you take photos/videos of the highlights of such trips - with photos of everyone in the family, these will refresh the children's memories.

Even some vacation "disasters" can be notable and, with 20/20 hindsight even "enjoyable".

On one of our family trips to California when our son was little, I attended a work conference there and met my wife and son at the Los Angeles airport - where we rented a car for a one week auto trip around the state. it was in the fall - and we did not make hotel/motel reservations. We drove up the coast to San Francisco - then down through the more interior areas of the state. When we got to Bakersfield and looked for accommodations, everything was booked up - there was some kind of farmers convention going on. Finally, we found a place that had one room/suite available and that was "The Bridal Suite". There was one, very large oval shaped bed -- more than big enough for the three of us. :happy :happy

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by mmmodem » Fri Feb 14, 2020 2:14 pm

OP, our household income was $125k last year. We maxed out an HSA, 2 Roth IRA's, and a 401k with DW stay at home with 4 children. It has never been a binary decision on whether we go on vacation or decrease our retirement savings. We keep our expenses low enough such that we can do both. We last went on an Alaskan cruise 5 years ago and we we're planning an Asian cruise this year. But that will be postponed due to current events and not from funding. I suggest you look into your monthly budget and see where you can cut to get a vacation. Bogleheads are an excellent community to help you trim the fat.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by lthenderson » Fri Feb 14, 2020 2:52 pm

JB2013 wrote:
Fri Feb 14, 2020 12:24 pm
lthenderson wrote:
Fri Feb 14, 2020 11:41 am
Watty wrote:
Fri Feb 14, 2020 9:56 am
An all inclusive in the Caribbean is a high bar with three kids.

The kids will have just as good, and maybe better, trip if you go to a condo near a beach in Florida or a cabin in the woods a couple of hours drive from your house.
+1

We spent around 10 days a year for over a decade renting a house on the Gulf Coast and spent a fraction of what it costs to go with the all inclusive in the Caribbean. We have lots of great memories.
If you don't mind me asking where exactly did you bring your family? I prefer the Gulf side to the atlantic for sure. I like the idea of renting a place near the beach. Of course would have to rent a car I'd imagine...is that what you did in order to buy food and check in the sights?
We went off season (late December) to Panama City Beach, Florida which apparently is a spring break town. As a result, it has tons of beach side rentals. We used this as a family reunion of sorts so we always rented a house and split the cost between the three families. We also drove our own vehicles so we didn't rely on public transportation. Since it was a reunion, we spent lots of time cooking for each other, playing games, walking on the beach, swimming in the pool, taking in a movie or going out to eat at a nice seafood place on occasion. On a few trips we rented a deep sea boat to go fishing for the day. Being a spring break destination, there were lots of museums and other amusements for the kids around town. I can't imagine being there during spring break but judging upon all the available stuff around town, they must get massive crowds.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by gr7070 » Fri Feb 14, 2020 3:15 pm

Pick a reasonable percent of gross income to save for retirement (15-25%, more if you're a nut like most of us here).

Do some protections, retirement calculators, budget forecasting to ensure that's enough to retire with at the age desired.

"Spend" the rest!

Some of that spent might need to be for college savings and saving for a new roof, car, etc.

researcher
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by researcher » Fri Feb 14, 2020 3:20 pm

JB2013 wrote:
Fri Feb 14, 2020 12:53 pm
We live in Minnesota so a drive to the Gulf shores is a ways with three children. Ideally I think the Gulf coast would be ideal, but man, that's a hell of a drive for us and buying plane tickets sort of defeats the purpose if we could do an airbnb or something.
Why is the only vacation destination you're considering a pricey trip to the Caribbean or the Gulf coast of Florida?

There are dozens of interesting places to visit nearby. You could take several trips in Wisconsin alone...
https://www.tripadvisor.com/Attractions ... onsin.html
Your own state appears to have plenty of beautiful and interesting sights...
https://www.tripadvisor.com/Attractions ... esota.html

Without doing any research, other places close enough for family trip/vacation/getaway include St. Louis, Chicago, Indianapolis.
All of these cities have lots of interesting things for kids and parents to see and do.
If you really want a beach, go to southwest Michigan, where you will find lots of sandy beaches and dunes.

Pick some of these destination, rent a cabin/Airbnb, and start making memories.
Vacations don't have to be expensive or exotic.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by Pomegranate » Fri Feb 14, 2020 3:26 pm

JB2013 wrote:
Fri Feb 14, 2020 9:18 am
When I get these deposits I immediately think to save and invest it since I think, "Well sure we could go on a vacation, but if you invested the money it would be worth XXX in 25 years."
Is this return guaranteed? Will your health be good enough for travelling? Will you be alive in 25 years?

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by e5116 » Fri Feb 14, 2020 4:45 pm

JB2013 wrote:
Fri Feb 14, 2020 12:17 pm

I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
Basically, conventional wisdom says a 401k and IRA are more advantageous. So, if you're not maxing those out, probably doesn't make sense to have a 529. If you are maxing those out, then a 529 is likely more advantageous than taxable. Sounds like you're not maxing those though ($19k/year to 401k) so if you have excees cash that should likely be applied to retirement accounts to get closer to the max rather than the 529. So it's not necessarily that a 529 is more advantageous to wealthy people (might be marginally...), it's that usually only wealthy people can max out all other options (401ks, IRA, HSA, etc.) and still have cash left over to contribute to a 529.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by ZMonet » Fri Feb 14, 2020 5:07 pm

As others have mentioned, if you want the exotic warm vacation and don't want to have to pay a ton you need to look into travel hacking (i.e., credit card signup bonuses). Look into the Southwest Companion Pass as well as the Chase Saphire cards. Your wife being a hairdresser will likely qualify you easily for some business cards. You'll have to put in a little bit of work but you'll get the vacation you want for a much smaller sum. It takes some of the guilt out of taking some great trips, although my savings rate is closer to 35%-40% (wife works FT and only one kid will do that).

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JB2013
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by JB2013 » Fri Feb 14, 2020 6:55 pm

e5116 wrote:
Fri Feb 14, 2020 4:45 pm
JB2013 wrote:
Fri Feb 14, 2020 12:17 pm

I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
Basically, conventional wisdom says a 401k and IRA are more advantageous. So, if you're not maxing those out, probably doesn't make sense to have a 529. If you are maxing those out, then a 529 is likely more advantageous than taxable. Sounds like you're not maxing those though ($19k/year to 401k) so if you have excees cash that should likely be applied to retirement accounts to get closer to the max rather than the 529. So it's not necessarily that a 529 is more advantageous to wealthy people (might be marginally...), it's that usually only wealthy people can max out all other options (401ks, IRA, HSA, etc.) and still have cash left over to contribute to a 529.
I think with steered me away from the 529 plan is that I read that you then don’t qualify for some financial aid if you have a certain amount in the account. And that a taxable account is more flexible. These thoughts wrong?

e5116
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Re: Help find balance between saving vs spending: married and 3 young kids

Post by e5116 » Fri Feb 14, 2020 7:36 pm

JB2013 wrote:
Fri Feb 14, 2020 6:55 pm
e5116 wrote:
Fri Feb 14, 2020 4:45 pm
JB2013 wrote:
Fri Feb 14, 2020 12:17 pm

I briefly started a 529 for my kids but I've also read those are more applicable to higher income earners so I stopped contributing that lately. Does a 529 plan seem to be the way to go other than a taxable account?
Basically, conventional wisdom says a 401k and IRA are more advantageous. So, if you're not maxing those out, probably doesn't make sense to have a 529. If you are maxing those out, then a 529 is likely more advantageous than taxable. Sounds like you're not maxing those though ($19k/year to 401k) so if you have excees cash that should likely be applied to retirement accounts to get closer to the max rather than the 529. So it's not necessarily that a 529 is more advantageous to wealthy people (might be marginally...), it's that usually only wealthy people can max out all other options (401ks, IRA, HSA, etc.) and still have cash left over to contribute to a 529.
I think with steered me away from the 529 plan is that I read that you then don’t qualify for some financial aid if you have a certain amount in the account. And that a taxable account is more flexible. These thoughts wrong?
A 529 is treated the same as a taxable account for financial aid calculations (considered a parental asset). No difference. You're expected to contribute a certain percentage of total assets. A taxable account is more flexible on spending because it has no restrictions. 529s must be used for education.

I'd beef up my contributions to 401k before as you get a larger deduction (federal marginal rate), but a 529 does offer tax free growth and possibly a state tax deduction depending on the state. So if you're going to spend money on your children's college, 529 can save you some money over taxable but likely isn't as advantageous as a 401k/IRA and restricts the monies to educational spending.

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Re: Help find balance between saving vs spending: married and 3 young kids

Post by BradJ » Fri Feb 14, 2020 8:47 pm

Vacations are important to my family as well, and we are close in many ways, economically. Here are my rules for a cheap vacation:
1) travel in late August, early September if possible.
2) Only drink alcohol you buy at grocery store, never order at restaurant.
3) At the very least, eat breakfast and lunch at the condo
4) stay across the street from the beach, aim for nice pool
5) set budget and tell wife she can have whatever is left over as shopping money (puts skin in the game for her).
6) split plates when eating out.
7) use any tax refund toward vacation

Our vacations probably run about $2500

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