Case Study: Going off track due to young kids/exhaustion, too much or okay?

[engineerjourney]

Life Situation: MFJ, Ages 32 & 33 with a 2 and 4 year old and plans to have 1-2 more

Gross Salary/Wages: Promoted last week: 103K me, 98K DH, total $201K

2019 Individual amounts of each Pre-tax deductions:
Me Trad 401k - $19,000 + 6% match
DH Trad 401K - $19,000 + 6% match
HSA - $5,800 (Employer match for the rest to max)
Me Roth IRA - $6,000
DH Roth IRA - $6,000
Dependent Care FSA (for daycare) - $5,000
Med/Dental/etc - $4,500
Adjusted Gross Income: 147K (not counting Roth contributions since after tax)

Taxes: not sure, this year we backloaded our 401K (lowered our contributions for a house purchase earlier in the year and then upped them after closing) and also just got promoted so it’s all skewed. 
Fed: $12,017
SS: $11,043
Medicare: $2,583
State: $7,041
Take Home: $114K -> $9.5K/month

Current Expenses (monthly):
Mortgage P&I: $1,980
Mortgage Escrow (property tax & Insurance): $969
Daycare: $2,009
Groceries: $850 (includes diapers, wipes, household products, and Costco purchases)
Eating out/cafeteria: $411
Alcohol (been hosting parties): $31
Phones: $28 (airvoice wireless, two lines)
Electric: $196 (averaging out high summers – large new house with central air and pool)
Internet: $54
Oil: $100 (averaging out, usually concentrated in winter)
Water: $32 (on septic so no sewer charge)
Auto Gas: $122
Auto Maint: $85
Auto Insurance, Reg, & tax: $185
Life Insurance: $31
Cats: $100
Subscriptions: $34 (Netflix, amazon prime, kindle unlimited)
Hobbies: $125 (sewing and video games)
Clothing: $75 (once a year purchase for adults, replacement/sizing up for kids)
Travel: $100 (we dont really take vacations anymore but have to visit family, I hate travelling)
Misc Shopping: $500 (target, amazon, friends small businesses – gifts for birthdays, xmas, cat litter, emotional wants)
Total: $8,017/month

Assets:
Emergency Fund: $26.2K
Checking: $15.7K
Me 401K: $227.9K
DH 401K: $185.2K
Me Roth IRA: $58.8k
DH Roth IRA: $58.7K
Taxable: $10.4K
Me HSA: $10.4K
DH HSA: $19.7K
House Value: $562.5K
Total: $1,175.5K ($613K investments)
Plus a paid for car and truck

Liabilities:
Mortgage: $446K, 30 year loan started this year @3.375%

Net Worth: $729.5K

So obviously we have a fire house of cash coming in, and I think we do a good job of diverting a lot of it into savings before it gets to us... but we have definitely inflated our lifestyle.  We bought our dream house this year so our mortgage and utility costs went up.  This house was something we were saving for years for though so definitely part of the plan.  We also have two young kids and plan to have some more, also expected costs.  What I didn’t anticipate was the ease to which food and convenience items would significantly increase with young kids.  I knew costs would increase but we are definitely getting take out, or prepared foods, or stuff from amazon in an attempt to survive two working parents and young kids. 

I don’t want to inflate any further and have already taken some steps to de-inflate (we did have one of those meal subscriptions for months so we didn’t have to grocery shop as often, that’s done).  I think we have done really well in certain areas (we don’t hire out yard stuff or cleaning, cheap cells, no cable, etc) but our food and shopping categories are TERRIBLE.  In the last six months we have pretty much been spending our take home (had 401K contributions at 29% to catch up for 2019) but next year we should have extra cash.  We expect to need a larger vehicle once #3 comes (wont buy it until #3 is born just in case life throws us a curve ball in having more kids) and I always save throughout the year to max out our Roths at the beginning of the next year.  Is it worth the stress of getting the food and shopping categories down at this point in life so we can save more?  I do intend to tackle the shopping… I know its mostly emotional spending on my part and hope recognizing that will help lower it.  But the food… just struggling, we are both sooooo tired when we get home from work but also want a life on the weekends.  I would love the option to work part time if/when kid #3 or #4 comes but right now that would mean large decrease to our savings rate, thinking I need all the spending under control before thinking that would be an option?

Any sage advice? 

[affordablehousing]

I think the real question you're asking is, did we make a mistake buying a big expensive to maintain house this year? It sounds fine to me as long as you both are on board working. With two working professionals, you can accomplish a lot- the big expense is in one spouse not working.

We're in the same boat, and so perhaps I'm verbalizing my own concerns, but I think especially as you try for kid #3 and #4 you have to allow yourself a little slack with the groceries and stuff. I don't think you'll be retiring anytime soon, but it doesn't sound like you want to, and that's fine. Most people I think are on this forum not to try to FIRE but just to have an outlet for money and life decision anxiety.

Keep on keeping on!

[StarBright]

You've hit on the only things that REALLY stood out to me: The monthly miscellaneous shopping and the housing costs.

Since it sounds like you just bought your forever house, I'll leave that alone.

Otherwise, your monthly shopping, your hobbies and your food seem high. You should probably roll that hobby into the misc for a grand total of $500 if you can. In any case, spend the next few months being mindful about where the money is going.

That being said, if the food and the hobbies are the things keeping you from burnout, then I recommend keeping them. Our kids are a few years older than yours and we have found that our finances seem to follow a spending/saving pendulum more than we've found a sweet spot. At first it really bothered me, but now I think that is just how it is.

One thing I'm not seeing (maybe I've missed it), is what your goals actually are for early retirement or FI or what have you. If you have a specific goal in mind it might help us look at your spending more critically.

If you are just trying to save a lot, but don't have specific goals in mind, that is obviously okay too (and that is where my DH and I sort of are) but it does make a case study a bit more loosey-goosey.

I do agree with affordablehousing that you'll want to make sure you can cover your housing expenses in any cases of emergencies, deciding you hate your jobs, etc.

[engineerjourney]

Thanks affordablehousing and StarBright for the comments!

I definitely balked at the amount we spent on the house but we think we have managed to find a house that we can easily live in for 20 years while the kids are home and in a great school district (with great after school care options!).  We definitely plan to downsize once kids are out or half out (if we have four).  We also managed to find a house that has been amazingly maintained and updated so no temptation for big house projects and waaaay less stress in our lives for at least a couple years!

I do think I am overestimating the hobby cost but its seriously something that saves my sanity (the sewing one), its $25/month for the class/social interaction and materials are kinda all over the place depending on what projects I do so I took my highest months. 

And yes shopping and food is the WORST, I was ashamed to post the numbers :(

I think we are still far enough out from FIRE and with too many unknowns (how many kids, etc) that I think we are shooting for 2030ish?  43 is still so early to retire, I mostly save as much as we can so we have options- the option to go part time, to take unpaid time off, to have less stress in emergencies.  But I think thats part of the problem? In this stressful time in life, I dont have a specific money goal besides save as much as possible so the expense creep seems to have an easier in.  I am no longer trying to save for the house and every other goal is so far off its not really real?  hmm, this is turning into more of a journal muse post than a case study now :D  I also know I am NOT cut out to be a stay at home parent of non-school aged kids... holy shit is that hard, my job is waaay easier and pays way better.  Thus not really in a rush to FIRE since paying for almost full time daycare while retired is just ridiculous.

[Laura33]

You are in the thick of it now.  So if you need to do takeout to maintain your sanity, and you've concluded that's preferable to the other options and are willing to pay the costs, that's fine.

The one thing I would suggest, though, is to lower your standards.  The reality is that none of us need takeout or premade meals to "save time cooking" -- I can nuke a hot dog and throw it in a bun in less time than it takes even to decide what we want for takeout.  We do it because we don't want to eat boring hot dogs or chicken breasts or whatever day after day after day, and the takeout/premade meals give us a better variety of foods/flavors than we are willing/able to make ourselves.  I mean, I can make a damn good vindaloo (thanks to this site!) -- but it takes several hours.  So if I want vindaloo on a Wednesday night, that's coming from the Indian place down the street. 

If you want to cut back on the EZ-Meals spending, lower your standards for what "dinner" requires.  Have several nights a week that are just boring quick food that you can do at home (I grew up on English muffin pizzas, which are exactly what they sound like and take maybe 5 minutes in the toaster oven).  Make Sunday dinner at home because you have time, but make 2-3x what you need of the protein and veggies, so Tuesday night you can throw them on lettuce and call it salad, and Thursday night you can reheat everything for leftovers.  Have hot dogs or turkey dogs or veggie dogs or whatever suits your diet/preferences on-hand for when things get totally crazy.  And there's not a damn thing wrong with crackers and cheese and an apple, or a bowl of cereal, for the occasional dinner.  Etc.

Or just acknowledge that having a variety of interesting foods available to you with almost no effort is a priority for you and it's worth the extra money, and pay the difference and stop feeling guilty about it.  Just don't justify it as a "need" because life is so busy and you don't have the time/energy to cook.  You have plenty of time to cook something to feed yourself and your family -- you just don't have the time/energy to cook the kind of interesting meals you want to eat.  So if that's your priority, accept it for what it is, own it, and plan it into your budget.

I hope this isn't coming across as harsh -- I just happen to know this very, very well because I have the exact same issues and vices. ;-)

[LWYRUP]

I agree with everything Laura said. 

We have three young kids and it is wonderful and joyful and also HARD.  You are crunched for both time and money.  I also found a spike in expenses when we bought our house that has subsided a bit now that we've lived there for a few years.  Repairs have been made, furniture has been purchased, etc.  Hopefully you might see the same.

The goal for the little kid years I think is just to sheperd everyone through in a health and happy manner while making sure you are "keeping pace" with retirement, 529, mortgage payoff.  I don't think it's realistic for most people to expect massive taxable savings (or a house that looks like a magazine, or perfect home cooked meals every night, etc.).  When the kids are a bit older and things are more under control then you can start to worry about economizing creatively, etc.

I agree with Laura on the food thing too.  What I was going to recommend is batch cooking.  We try to double every recipe and then have leftovers for work lunches.  I'm learning to cook in bulk -- like, roast a whole chicken on Sunday night and cut it up for work lunches along with rice and veggies for a few days.  Chili works too.  Lasagna.  Don't look at the elaborate recipes.  Pick things that are REALLY simple and just knock them out again and again.  When you get bored, you can "graduate" to something fancier if you want.  This is small savings every week, but you are building habits for a lifetime and modeling efficient life strategies for your kids. 

Sanity is important too.  I spent a lot on golf lessons one year just because I needed something out of the house to keep me sane and I knew it was super expensive but I didn't have the energy or time for more serious exercise but I needed something that wasn't just work or commute or childcare to keep myself from going batty.  (I stopped after that year and joined a gym for way less $$ but no regrets on doing what I needed to do to keep myself sane.)  We also pay for our kids to do gymnastics, for no other reason than they like it and we can afford it.  If you try to have an iron will and beat yourself up all the time you'll be miserable.  If you look up next year and your kids are all happy and healthy and you are happy and healthy and you have more money in your pocket than you did the year before, then I think you need to take the win.

The only other big minefield down the road is higher education costs (apparently some schools are now about $100k rack rate -- literally insane).  But we have time to prepare for that.  I'm hoping the other shoe will drop before then, but if it doesn't at least I hope I'll have more time to try to solve it creatively. 

[engineerjourney]

This is why I will continue to post on these forums... great responses Laura and blinx!!  Not harsh at all!! You are soooo right, we do have some low standard/maintenance meals but then we "splurge" on fancier or expensive ones sometimes because I make enough money to get sushi if I want damn it.  I definitely see the truth in your words and think I need to accept and not feel guilty for some lower standards!  I already do so in the house cleaning and have no guilt associated with a house full of kid mess!  So I should apply that in other areas that don't decrease our happiness and could help the budget!

College is a whole other can of worms.  Both DH and I had no parental help for college and both have masters degrees.  I was lucky and got a lot of scholarship and only took on $15K of debt for 5.5 years of schooling while my DH was oblivious and his parents signed for 9% interest loans for him!!  So he had $100K+ plus of loans.  And we paid them all off aggressively.  I worked two jobs while studying, even with scholarships so I dont believe in fully paying my kids way through college.  We do have two 529s set up with a couple thousand in there though and I would like to help my kids to some extent.  I definitely hope the college landscape and cost has changed significantly once my kids are getting close though.  Plenty of time to adjust plans there, will be dependent on the kid a lot too, college isnt for everyone!

Great thoughts so far!  I have to admit that some major family health issues (both dad and brother have cancer) are causing more emotional buying and baggage right now.. but I also dont want to excuse bad habits during hard times (young kids and/or health problems) if they cause lasting habits to form.. I need to consciously choose to spend more.. not let the increase happen without noticing which would allow it to continue longer and increase further.

[Laura33]

I have to admit that some major family health issues (both dad and brother have cancer) are causing more emotional buying and baggage right now.. but I also dont want to excuse bad habits during hard times (young kids and/or health problems) if they cause lasting habits to form.. I need to consciously choose to spend more.. not let the increase happen without noticing which would allow it to continue longer and increase further.

Oh wow.  OK, I'm going to change my answer: let it go right now.  Seriously.  We just went through a month of losing a parent and a grandparent, and I gotta tell you, that is the time to focus only on getting through what you have to on any given day and being kind to yourself.  This is not the time to be putting pressure on yourself to "do better" or "improve" anything.

I agree that you need to make sure that you don't let this all become a habit.  But you don't need to worry about that right now.  Give yourself time to just do what you need to do to get through this giant steaming pile of shit that's been dumped on you.  The world will not end, you will not become addicted to Papa John's, you will not be forced to work for the rest of your life if you let yourself be lazy on this front while you deal with all the extra stuff on your plate.  Worry about your family and your job, do your best to get through the crappy stuff and enjoy your time with them as much as possible, and don't worry about the rest of it until you're out the other side. 

And I'm very sorry you're dealing with this.

[engineerjourney]

Thanks Laura, I am crying at work from your reply (good sad tears).  Dad finished radiation and seems to be in the all clear but Brothers tumor turned out to be stage 3 so he has chemo and radiation now and is expected to have the cancer come back and get removed/treated again and again until it eventually kills him.. But every year longer he lives the prognosis gets better with medical advances and they have seen patients going 9 years between surgeries! Its a lot but its also a lot of motivation to save money for options.. I may need to house him if he outlives my parents and is still unable to work. 

I think I am looking for things I can control to cope, and yet don't want to add more stress by over-controlling spending but also will get stressed if I see money flying out the door for no reason.  Sigh, engineering brain downsides. 

[former player]

I'm sorry about the family health issues and wish both your father and brother well.  Please be a bit kind to yourself at a difficult time as well as being kind to them.

In the slightly longer term, I think you need to think about finding answers to the stress and exhaustion.  Money is not your problem, stress and exhaustion is your problem.  I have seen a lot of friends struggle with working full time in difficult jobs (I'm betting you both earn those salaries) and bringing up young children at the same time.  Support systems, and back-ups to your support systems, are essential: they cost money but to raise a healthy and happy family something has to give -  I don't think it is good for anyone for you to try to muscle your way through stress and exhaustion for 20 years. 

I would just suggest that you don't have kids 3 and 4 until you have managing no.s 1 and 2 down pat.

[engineerjourney]

Thanks Former Player. Do you know anyone with kids under the age of 5 that aren't exhausted and/or stressed?  Maybe those that don't have to work, but even then I think young kids are just exhausting, even when they are good, haha.  Maybe thats just me though!   I was getting into a pretty decent happiness groove with some me-time and good sleep and I think the family health issues really de-railed that (all started in June).  We have a decent schedule, it just doesnt include saving money on food or shopping right now.  I think those categories just push me over mentally right now.  I think without the family issues that wouldnt be the case but cant know for sure!

[Linea_Norway]

For saving, you can quit (some of) your subscriptions. You have 3 of them, which is probably more than you need.

For clothing, you say you buy stuff once a year for the adults. And growing clothes for the children. The adults could do a year with using up what you have, only replacing stuff that is worn through, like socks. And maybe you could combine your sewing hobby by making some new clothes for the family. I know that sewing yourself is not necessarily cheaper than buying stuff, but hopefully it fits better. And if you learn to remake clothes, either your own or from the thrift store, you could make new things in a cheap way.

And for emotional wants-shopping it helps me to have a clear goal. Every purchase is delaying my early retirement, therefore I really hesitate before buying it. Could you try to develop an other reaction if you feel emotional and want to buy something? Like starting a thread on the forum about which things you are not going to buy?

And if you find having children a bit exhausting (which I can understand), then why would you consider to have 2 more?

Good luck.

[Cassie]

I think you need to give yourself a break. You are doing well and if you need convenience food at this time in your life that’s fine. Sorry to hear about your dad and brother.

[lampstache]

32/30 years old with three kids (6,4,2) and a 4th one on the way due in March. DW is an overnight RN too so her schedule is wacky every week.

First off, you're crushing it. We're nowhere near where you are financially so you're doing great from that perspective. Keep it up.

Right now it seems the kids are fighting non-stop about everything and some (most) days feel like an absolute s**t show right now. I've got three baskets of clean clothes that have been sitting in the living room for at least 3 days, a load of clothes that's been sitting in the wash for at least two days and needs to be rerun because it's got that musty smell now when it sits for too long, and probably another two loads of clothes that need to be washed sitting in closets. My mother in law watches our youngest some days and washed the pile of dishes in my sink this morning (thank God). I guess what I'm getting at is that we're in the grind right now and you are too. Due to this we also find ourselves eating out more than I'd like and doing more convenience spending because it's easy. But it's okay for the time being because life IS HARD with little ones running around and two working parents. We still do our best to make good buying decisions.

I guess what we're getting at is that we get it too. You're doing great.

[Platypuses]

You're doing great. To have a NW of $730k at 33/32 is killer!!

We're right in the thick of it as well. Both of us are working parents (36) with 4 little kids  (8,6,3,1). However I am not sure if I am the best to give advice as we have become super spendy pants once the 3rd came. A lot of it was due to a big raise for my DW, but it was mainly out of convenience that we let lifestyle creep set in. We were spending a similar amount to you when we had 2 kids, but that has now increased to almost $16k/month (outsourced yard work, weekly maid, weekly date nights, full time nanny, regularly eating out, 5-6 vacations/year). We have now been at this spend level for 3 years and it hurts to see the savings I am missing out on. It's a tough phase of life, but as long as we keep maxing out our tax advantaged accounts I have come to accept that I will have to work a little longer in order to spend quality time with the kids/DW now (plus I really enjoy not fighting about money).

You obviously have your finances under control and are conscious about what you spend your money on. Don't beat yourself up about having to spend more on food. It does get trickier after 2 as you are aware (vehicles, daycare), but I would focus on your relationship with your husband/ kids and maxing out tax advantaged accounts.

P.S. Sorry to hear about your dad and brother.

[freya]

Second many of the positive comments above!  (as well as condolences on the family situation).

Buying ANY house at your age is a major accomplishment, especially in this day and age of massive student loans.  You've already done very well!  Taking on that mortgage plus all the updating that tends to happen when you buy can feel daunting, but with your $1500 of breathing room per month you're doing ok.  And, you know that you can (and eventually will) improve that.

I think you could make some significant inroads on that $1200+ food budget by identifying some easy to cook foods that you can make in large amounts and either freeze or keep eating as leftovers, AND that appeal to your desire for comfort foods.  Ground beef or chicken casseroles, lasagna or spaghetti bolognese, stews etc.   A recipe I discovered over the summer:  cheeseburger casserole, which I found absolutely addicting and has to be as kid friendly as it gets.  And now that we're in winter, how about slow-roasting a pork butt/shoulder on the weekend, or making roast chicken in a skillet with lemon, potatoes, garlic and onions in the pan?  Super easy and intoxicatingly delicious.  You can do these things on the weekends in the oven; during the week, the slow cooker is your friend.  For a bit of time spent in the morning, you come home and dinner is not only ready, you don't even have to heat it up!  In other words, switch your approach to eating away from the idea that you have to cook every day, and you will find you have much less need for expensive convenience foods.

I also suggest carefully tracking your "misc shopping" and "hobbies" categories, as they total almost 10% of your spending - that's a bit much.  Just to see where it's all going, and to be mindful of each purchase.

Everything else looks pretty tight to me.  The electric bill is indeed high, and you might want to put weatherstripping, insulating, and maintenance or even upgrades of major appliances (A/C, fridge, hot water heater) on your todo list.  Also...please tell me that the pool is fenced off and safe from the little ones?