You probably have a good reason for it, but $900 for child care when your wife works at home at a business that hasn't yet seen a profit seems a bit illogical to me. Would it be possible to cut down there where maybe she works while you are home and baby goes to daycare part-time?
Also, it is small but the $25/month for books when you go to the library frequently seems like it could be saved instead.
Good on you for cycling to work!
dont ask me, if you're saving 40% sounds like you're doing pretty well. I'm in a DINK household and we don't save anywhere near that much. We make around 2x tho, so perhaps my overall savings is slightly better. I modeled my spending to have averaged $10-$11k/month all-in, so I would love to be able to spend only $8k or so like you are. All that matters is that you're getting to where you want to be in the timeframe you hope for. I'm a little concerned that your networth appears to be only about 1.5x your income. Perhaps you've recently started working, I dont know.
Two questions about taxes: Is your 40% savings rate based on not paying any---I didn't see them factor, but you're spending 60% of your income on the things you listed. Are you able to take the child care tax credit if your wife is working but not making money at it?
yea if income = 160k, total taxation [payroll, fed, state] is probably at least 25% aka 40k
so now we're at 120k
if spending is 8k/mo or about 100k per year, savings is close to 20k/yr
To me, 20/160 = 12.5% savings rate [not terribly different than the 401k contribs]
or 20/120 aka 16.66% savings rate, net after taxes. either way is fine
64k savings on 144k after-tax is a 44.x % rate :)
I would say you're doing awesome and enjoy life!
You're right about the books. Usually it goes something like this: I borrow a book and can't finish it before I have to return it but I waited months for my hold and don't want to wait months again to check it out to finish it, so I buy it (used) on amazon. I'm gonna have a talk with my wife after getting all the ideas here and propose Books as an area we can cut down on spending. Like you say, it's small but it can be a symbol of our renewed dedication to saving.
really? the ones I've tried [regardless of reader type/tech] utilize DRM and expire just like a normal book reservation [yes, can normally be extended once---just like the physical library experience]
unless I'm missing something..
Regarding medical expenses: do you have a high-deductible plan? If not, and one is available, I would see what your family's co-pays will be on that vs. your current one. You may then qualify for a health savings account with associated tax benefits. For your prescriptions, ask your physician about switching to generics. The vast majority of medications have a generic version that is significantly cheaper and equally effective (otherwise they would not be approved). There are some exceptions that your physician should know about. Also, ask for 90-day prescriptions and a recommendation on a mail order pharmacy.
The $260/week on eating out seems a bit much. I'd try to cook a little extra and take that for lunch the next day. It is hard to remember to do so initially, but I trained myself by just not eating lunch if I left it at home (my wife helped remind me too). You will eventually tire of the cafeteria or restaurant food and like your own better.
Category | Old spending - monthly | Target spending - monthly |
Groceries | $850 | $800 |
Healthcare | $593 | $300 |
Auto/Transport | $362 | $300 |
Restaurants | $260 | $200 |
Donations/Gifts | $220 | $100 |
Entertainment | $150 | $100 |
Clothing | $140 | $125 |
Books | $25 | $15 |
Wife's business | $200 | $0 |
Category | Old spending - monthly | Target spending - monthly | Actual spending - May | Actual spending - June |
Groceries | $850 | $800 | $1,084 | $804 |
Healthcare | $593 | $300 | $318 | $16* |
Auto/Transport | $362 | $300 | $996 | $221 |
Restaurants | $260 | $200 | $82 | $178 |
Donations/Gifts | $220 | $100 | $77 | $116 |
Entertainment | $150 | $100 | $168 | $50 |
Clothing | $140 | $125 | $0 | $35 |
Books | $25 | $15 | $0 | $0 |
Wife's business | $200 | $0 | $443 | $113 |
For my FSA, I pay for the expenses out of pocket and get reimbursed from the plan, so I can still track the expenses as they happen.
Also, looking back at your older posts about the high-deductible plan/HSA: That looks correct as far as it goes, but a high-deductible plan will usually have lower premiums as well. If your employer charges you the same premium for the high-deductible plan as the regular one, then you're right that the tax savings don't offset the deductible when you're sure to meet it.