dividend
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Post by dividend on Apr 8, 2011 9:48:50 GMT -5
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Post by Deleted on Apr 8, 2011 10:09:46 GMT -5
Maybe that's true for a HCOL area, but I stopped reading the article when I got to the part about 12K a year for car insurance and 12K a year for childcare. Same with 9K in taxes. After all the childcare, retirement contributions and mortgage interest was deducted we ended up only paying about $2500 in taxes.
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AgeOfEnlightenmentSCP
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Post by AgeOfEnlightenmentSCP on Apr 8, 2011 10:14:00 GMT -5
Yep. What is $68K after taxes? Even with two kids, you're looking at $54K give or take depending on state income taxes.
If you've got a $250K house in the markets I'm familiar with- you're looking at $4K to $6K in property taxes.
Now, you're down to $50K to $48K.
If you spend a modest $1,100 a month on the mortgage assuming you put 20% down and financed $200K at 5% for 30 years (just the mortgage- taxes are above, and I'm not counting homeowner's insurance),
you're down to $34,000.
Let's say you own one car free and clear, and another you have a very modest payment on- $300/mo.
Now you have $30,400 left.
You have a very modest $150 a week in groceries, including various sundry items-- you now have
$22,600 left.
You don't have insurance yet in my scenario, we haven't saved a nickel yet, you haven't had a "life happens" moment, you haven't gone on vacation...
You see how quickly the money runs out-- and I was probably conservative on taxes, so the reality is that you don't even have $22,600 to work with at the end of all this.
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Post by Deleted on Apr 8, 2011 10:20:07 GMT -5
Sounds pretty reasonable to me. The 12k for was probably for two cars, insurance, maintenance and gas. Phil would add depreciation but I'm not sure the study was that sophisticated.
12k for childcare for two schoolaged kids sounds reasonable in a low or medium COLA. I'm guessing it includes summer camps and childcare, after school care, care during spring and winter breaks. In a high COLA it's just care for one child.
There's also sales tax, property tax, state and local taxes.
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giramomma
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Post by giramomma on Apr 8, 2011 10:21:24 GMT -5
I actually thought that the child care was very low. I have friends that spent 17K in childcare for two kids, 4 and 2ish one year. In our fly-over state, infant care runs 1500/month. When you get to the toddler/preschool years, it goes down to about 1K a month. Cheap full time care for school aged kids in the summer is going to set you back 800/month.
I also thought the 12K per year was on all car costs. Which, I think is reasonable. We don't have car loans, and don't drive much. But, I could see, based on others here, how 400/month car loans are not unreasonable. Plus, insurance at 50/month. Plus a few hundred dollars/month for gas..and that's just for one car. Even if the family has one paid off car, one car loan, insurance and gas on two cars will push you close to 1K. And, regular maintenance hasn't been factored in yet.
I can't comment on the taxes, because we don't ever have enough deductions to take anything past the standard deduction. Plus, we definitely make a lower middle class income, so we pay less in taxes because of that.
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dividend
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Post by dividend on Apr 8, 2011 10:24:07 GMT -5
Here are the numbers from the source research for a single person : Basic Economic Security Tables, 2010 (Workers with Employment-based Benefits) United States Monthly Expenses for: 1 Worker Housing $688 Utilities $149 Food $244 Transportation $495 Child Care $0 Personal & Household Items $291 Health Care $136 Emergency Savings $75 Retirement Savings $73 Taxes $384 Tax Credits -$34 Monthly Total $2,501 Annual Total $30,012 Hourly Wage $14.21 Note: “Benefits”” include unemployment insurance and employment-based health insurance and retirement plans.
None of that seems particularly extravagant to me, except maybe the transportation expenses, but my car costs $450/month between gas, maintenance, repairs, insurance, and saving for a replacement.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Apr 8, 2011 10:28:44 GMT -5
$12k isn't unreasonable for daycare depending on where they live. I know people paying close to $2k a month for daycare, just go over to the WIR pregnancy board. The price of daycare swings wildly depending on where you live.
I'll be paying a little over $7k a year for daycare.
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Deleted
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Post by Deleted on Apr 8, 2011 10:29:22 GMT -5
I don't see student loan or credit card debt repayment on here - that takes a big chunk out of a lot of people's budgets.
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Clever Username
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Post by Clever Username on Apr 8, 2011 10:37:15 GMT -5
Author: The Rent Is Too Damn High
I'm surprised this mandatory budget doesn't list mustache barbers and karate classes.
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midjd
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Post by midjd on Apr 8, 2011 10:40:15 GMT -5
Yeah, that seems pretty reasonable. DH and I are SINKs making $55K a year in a LCOLA and certainly aren't rolling in it... I'd imagine adding 2 kids to the mix would stretch things much further.
I'm not sure exactly how much daycare costs around here, but I know my mom was paying $200/wk for 2 kids in the mid-90s, and $150 a week for after-school care until they were 8 or 9. It's probably at least $1K a month by now, if not higher.
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whoisjohngalt
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Post by whoisjohngalt on Apr 8, 2011 10:43:40 GMT -5
I had to re-read it 3 times but $12K/yr on car insurance and car payments - are you kidding me? ? Lena
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Post by Deleted on Apr 8, 2011 10:46:28 GMT -5
Well, our income is about 60K for a family of 4. Childcare around here is at MOST $130/week for an infant. We pay $560/month for an infant and after school care for the older child.
We pay $90/month for full coverage on one vehicle and liability on two others. We don't borrow money for cars. If we only have 2K to spend on one that's all we spend. So with $300/month in gas and maybe 1500 a year in maintenance (high end) transportation is more like 6K and that's with 3 vehicles.
We had $4600 withheld for federal taxes, but got $5400 back. Don't remember what the state was for witholding, but the refund was $750.
We still go on vacations, send the older son to camps in the summer, max our Roth's, contribute $2400/year to the kids 529 plans, have a horse and a bunch of other critters, eat out occasionally...
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Post by Deleted on Apr 8, 2011 10:47:36 GMT -5
I had to re-read it 3 times but $12K/yr on car insurance and car payments - are you kidding me? ? Lena I think that was for all car expenses, if I add all mine I am just at $2650 but that does not count a car payment. If I was to run out and get Toyota Sienna that would be another $5550/year, it would make sense if you have two car. Sense but not frugal.
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giramomma
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Post by giramomma on Apr 8, 2011 10:49:11 GMT -5
However, if one lived in a medium COLA, making 68K/year, with little to no debt, and had a SAHP, then, I think it is very doable. We make less than that, and we have room to pay for private school for our kids, a nice vacation every year, and we are saving for retirement. Obviously, we aren't make 16K worth of retirement contributions a year. But, we are saving enough to end up at least with a million. Plus, I'll still work after I retire from my day job, and I well, I still get a pension, but that may change in the next few years.
It's the debt though, that kills people. If we had car loans, student loans, consumer debt, and a 200K mortgage, we'd be beyond strapped.
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Post by Deleted on Apr 8, 2011 10:52:29 GMT -5
We don't borrow money for cars. That makes you unusually wise compared to the average american family. I know some people that have a 1k car payment for one car. When DH and I were commuting we spent around $600 a month for gas. Tags and registration cost us $600 a year for our two cars in CA.
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giramomma
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Post by giramomma on Apr 8, 2011 10:53:02 GMT -5
Well, our income is about 60K for a family of 4. Childcare around here is at MOST $130/week for an infant. We pay $560/month for an infant and after school care for the older child. Do you live in a rural place? I don't live that far away from you, in a bigger city, and well, we'd never pay 130 for an infant for a week. Maybe a half a week. I'd be hard pressed to believe that daycare in the twin cities for an infant is 130/week. I also have a friend that lives in rural MO, meaning about 1-1.5 hours away from major city, and she pays the same rates that you do for day care.
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Post by Deleted on Apr 8, 2011 10:53:10 GMT -5
Lena [/quote] I think that was for all car expenses, if I add all mine I am just at $2650 but that does not count a car payment. If I was to run out and get Toyota Sienna that would be another $5550/year, it would make sense if you have two car. Sense but not frugal.[/quote]
Exactly. It's about living within your means. If you can only afford a 3K car, than so be it. Families of 4 on 68K probably shouldn't carry a car payment.
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Angel!
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Post by Angel! on Apr 8, 2011 10:54:49 GMT -5
Maybe that's true for a HCOL area, but I stopped reading the article when I got to the part about 12K a year for car insurance and 12K a year for childcare. Same with 9K in taxes. After all the childcare, retirement contributions and mortgage interest was deducted we ended up only paying about $2500 in taxes. Even for a MCOL area & I totally buy the numbers. 12K for two vehicles isn't that high when you include maintenance, insurance, & the study assumed car payments. 12K in childcare is actually low. I pay over 16K/yr & have really good rates for my area. 9K in taxes would include FICA & state tax, FICA alone would run you 5K on 68K income, so add in some state tax & a little federal & it is pretty easy to hit 9K. Some more frugal people wouldn't necessarily spend the way the study suggested (car payments), but it is a pretty realistic average.
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Post by Deleted on Apr 8, 2011 10:58:24 GMT -5
Don't folks with kids get a substantial child credit on their income taxes?
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Angel!
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Post by Angel! on Apr 8, 2011 10:59:56 GMT -5
Well, our income is about 60K for a family of 4. Childcare around here is at MOST $130/week for an infant. We pay $560/month for an infant and after school care for the older child. Ack... That is insanely low. I pay $165/wk for my 2.5 yr old & that is only so low because they base rates on income. If I had a higher income the standard rate is almost $200/wk. Couldn't find infant under $225/wk in the area, so I pay a neighbor $150/wk to watch DD. You may not realize it, but rates in your area are way, way below average.
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Post by Deleted on Apr 8, 2011 11:01:13 GMT -5
Well, our income is about 60K for a family of 4. Childcare around here is at MOST $130/week for an infant. We pay $560/month for an infant and after school care for the older child. Do you live in a rural place? I don't live that far away from you, in a bigger city, and well, we'd never pay 130 for an infant for a week. Maybe a half a week. I'd be hard pressed to believe that daycare in the twin cities for an infant is 130/week. I also have a friend that lives in rural MO, meaning about 1-1.5 hours away from major city, and she pays the same rates that you do for day care. Well, I guess I'm more than an hour and a half away from a major city as Minneapolis and St.Paul is all I would consider major in MN, but I wouldn't consider our area desolate. My town is 34K and I'm within 45 miles of Rochester and 20 miles of Lacrosse. Both decent sized.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Apr 8, 2011 11:03:12 GMT -5
Don't folks with kids get a substantial child credit on their income taxes?
We got a $1k credit and then a % of the daycare costs were applied as a deduction but it is a very small % (I can't remember the exact amount).
Not near enough to compensate for the cost of daycare.
I pay $160/week which is about middle ground when I did my research. Highest I personally looked at was $820 a month.
If I hop across the river the prices jump up more but I wanted her closer to home and to other family members who can pick her up in case of emergency.
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whoisjohngalt
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Post by whoisjohngalt on Apr 8, 2011 11:05:08 GMT -5
The article said "you have to spend $12K a year on insurance and car payments" - so, I'll say it again - are you kidding me??
Last yr we lived in a VERY HCOL area and our insurance, for 3 cars (one was brand new) , full coverage on all three was about $2000/yr. Let's pretend that they pay as much in car insurance as we did. That means that their car payments were $833/mo. Are.... you..... kidding me???
I am pretty sure, not 100% that most people don't even think about other "car" costs, their main focus is insurance and car payments. Unfortunate, but probably true.
Lena
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Post by Deleted on Apr 8, 2011 11:05:50 GMT -5
I know this is controversial, but I dont't think you should be compensated for child care by the government. Of course, I am a curmudgeon.
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Post by Deleted on Apr 8, 2011 11:08:58 GMT -5
Don't folks with kids get a substantial child credit on their income taxes? Last year we got a $1200 credit on 6K of childcare expenses, so really only had to pay $4800. Then the 1K/child credit.
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swamp
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Post by swamp on Apr 8, 2011 11:09:10 GMT -5
I know this is controversial, but I dont't think you should be compensated for child care by the government. Of course, I am a curmudgeon. Neither do I, and I pay for daycare. But the gov thinks I should be, so I'm taking the credit. If the feds decide to cut it, fine, whatever.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Apr 8, 2011 11:09:21 GMT -5
Considering how small it was, I didn't see much of the point, but I am not passing up a deductible. I am a horrible person, I know.
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dividend
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Post by dividend on Apr 8, 2011 11:10:14 GMT -5
I had to re-read it 3 times but $12K/yr on car insurance and car payments - are you kidding me? ? Lena The number sounds high until you break it down. I posted above that my car costs me $450/month. That includes saving to be able to buy about a $17k car in cash to replace my current car (that's a little more than what this one cost) at 250k miles. DBF is in essentially the same place, only his car that he bought used will need replacing (i.e. hit $250k miles) much sooner. So he'll need less total, but more per month. So that's $900/month total true cost of ownership for 2 cars. It seems to me that car payments wouldn't really change the cash-flow that much. Either I save it ahead of time (essentially paying myself a payment), or I make payments on it afterwords. I'm pretty sure that, minus the interest you'd pay on a car loan, it all works out about the same on a dollars saved (or borrowed) towards replacement per mile driven basis.
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Post by Deleted on Apr 8, 2011 11:14:04 GMT -5
A family of 4 making 68K probably shouldn't be driving a 17K car. There's plenty of reliable transportation to be had for way cheaper than that.
Plus you can't stop making your car payment on the tough months, but a car replacement fund can be put on hold during those times.
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giramomma
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Post by giramomma on Apr 8, 2011 11:16:53 GMT -5
A family of 4 making 68K probably shouldn't be driving a 17K car. There's plenty of reliable transportation to be had for way cheaper than that. I dunno. We drive cars worth more than that. But, we don't drive a ton. My car is 10 years old and doesn't have 100K on it yet. I joke, that we'll be giving it to my oldest to drive when he's 16. At that point, it may have 150K on it. What's the difference if you buy a 20K car and hold onto it for 15-20 years or buy a used car for 10K every 8-10 years? I hold on to my cars forever. I drove around a 17 yo car. Gave it up because it was getting more expensive to maintain. And, because we drive cars around forever, we have a ton of time to save up for new cars. Realistically, we only need to set aside 2K/year/new car.
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