Author Topic: Couple makes $142,000, saves $6000 for retirement ("needs" $143k to be happy)  (Read 20115 times)

dude

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That photo is hilarious.  Looks like the photographer is an MMM reader.

Agree! My first thought -- and I looked back to check the date -- is that this was an April Fool's article!  I mean, they show this crazy budget juxtaposed with a family sitting on railroad tracks!  The symbolism to me seemed more than coincidental!

golden1

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That article caught my eye, because that is almost EXACTLY what our household income is, and we are saving nearly 3X what they are saving for retirement. 

Certain things jumped out at me - the hair and nails budget - wow....  I get 2-3 haircuts a year at supercuts, and DH does about the same, and mani/pedis.  I can paint my own nails, if I choose to.  So our yearly budget is about $100. 

Housing.  They are currently paying $9000 and want to triple it to 27000?  Now, in the Boston area, where I live, 27000 a year gives you a modest home, but if they are staying in the same area, tripling your housing budget seems nuts!

golden1

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The "school" or daycare is actually cheap compared to around here.  Typical full time day care in MA will often run in the $2000 range.  Hell, after school care for my kids, when they were both in elementary, ran over $700 a month, and that was just for 2-3 hours a day after school.  And that was the program offered by the school district.  Private programs cost more than that.  I am dumping that cost for good next month! 

Thier weekly budget of ~$500 a week is also really high if that isn't including the mani/pedi budget.  They must be blowing through at least $200 a week in food.  What is the rest going to? 

RWD

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That article caught my eye, because that is almost EXACTLY what our household income is, and we are saving nearly 3X what they are saving for retirement.

You're only able to save ~15% with a ~$140k income?

Retired To Win

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It's obvious to me that these people are living strictly for the moment.  The amount of their income they are putting into savings is a token amount.  Even if they're in a position where that little will develop into a reasonable stash by the time they reach their 60's, it's still tokenism.

And they are living paycheck to paycheck.  Big paycheck to big paycheck.  Which would make it all the worse if those paychecks should get interrupted.

robotclown

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So their retirement savings are $6000, and they're $6000 over budget at the same time?  Are these things connected somehow? 

MrsPete

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They have the kid in private school and shes a teacher.
Well, I did that for a while, and it was a good choice for us at the time:

- We were already in the habit of paying day care, so it wasn't more money -- just a continuation of the same cost.  That was more of a rationalization, but it was also true. 

- When we started looking into school options, I liked that the Christian school where they started their educations taught old-fashioned phonics instead of sight-words, which were popular in public schools at that point.  While I'm not a reading teacher, I do know that phonics trumps everything.  From the very beginning, my kids trumped everyone else in reading, and I really do think it's partially because they had that phonics instruction. 

But the biggest reasons had to do with time management and location: 

- It meant we could put the oldest child in kindergarten AND the youngest in day care at the other end of the same building.  One drop off for my husband in the morning, one pick up for me in the afternoon; significant time saved each day = more family time. 

- We lived in one county, and I worked in another; thus, when our oldest started school, I would've been 30 minutes away from her.  I didn't like the idea of her being so far away.  By putting her into a private school nearer to my school, I was able to -- with advanced planning -- run over to see a mid-day play, or pop in on her class parties.  And if she became sick, I could be at her school in ten minutes.

- It also meant that instead of dropping the kids off, then making the drive to work, my husband had 30 minutes with them in the car every morning.  Lots of good chatting time.  They had certain little games that they played in the car, things that were private just between the three of them.  Later on, we largely skipped over the teenaged angst part of life, and both of us are very close with our kids -- I really do think it was the choices we made early on, the choice to interact with them in significant ways when they were young, that's made the difference.  So many of my students don't seem to know their parents. 

And we never felt hypocritical about it because:
 
- Since I teach high school, she couldn't have gone to school with me anyway.  We always intended to put our kids in public high school, which offers a much wider variety of options than the private high schools in our area.  They have, indeed, come to high school with me, which has turned out to be a good choice.  They've each pursued different details through school, but they've both been successful. 

MrsPete

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I'm single, come from a poor background, and have only ever had two full time jobs. But I'm going to be wealthy one day. MMM and a few others taught me how to be. I was always surprised at people that lived paycheck to paycheck, but had never thought about such high savings rates. I also had no clue about how the stock market works. I will probably never make six figures, and maybe not even high five figures. But I'll still retire early, because I don't like having a lot of things and know how to live simply. As it is, I still can't imagine how people live on so much.
See, you understand that you can "fake"  have it all now, yet underneath be in debt ... or you can really work towards financial stability, and -- in the not too distant future -- you really will have your at together.  But on a normal person's salary, you can't have both. 

MrsPete

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It's obvious to me that these people are living strictly for the moment.  The amount of their income they are putting into savings is a token amount.  Even if they're in a position where that little will develop into a reasonable stash by the time they reach their 60's, it's still tokenism.

And they are living paycheck to paycheck.  Big paycheck to big paycheck.  Which would make it all the worse if those paychecks should get interrupted.
Yep, and pretty much everyone I know who's old enough to have finished college and worked a couple years will tell you: EVERYONE will have a crisis of some sort at some time, and that crisis will involve money.  For some people it'll be a medical emergency, for others it'll be a parent who needs to come live with them, for others it'll be loss of a job, but EVERYONE will experience some type of emergency at some point -- and if you've been living paycheck to paycheck, it's tougher to weather that emergency. 

Retired To Win

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... pretty much everyone I know who's old enough to have finished college and worked a couple years will tell you: EVERYONE will have a crisis of some sort at some time, and that crisis will involve money.  For some people it'll be a medical emergency, for others it'll be a parent who needs to come live with them, for others it'll be loss of a job, but EVERYONE will experience some type of emergency at some point -- and if you've been living paycheck to paycheck, it's tougher to weather that emergency.

Do those people in the article even have an Emergency Reserve Fund?  Or just a rabbit's foot?

golden1

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Quote
You're only able to save ~15% with a ~$140k income?

I'm a work in progress.

Actually, now that I do the numbers, it's more like 30%.  I still have a ways to go though. 

Inevitable

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Maybe they have an emergency credit card.  I've used one as my emergency fund for years.  I even replaced my roof with it.  I can't think of a single thing I couldn't use it for, but I may be missing something.

Travis

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Maybe they have an emergency credit card.  I've used one as my emergency fund for years.  I even replaced my roof with it.  I can't think of a single thing I couldn't use it for, but I may be missing something.

Did you have the means to pay off that credit card in a reasonable amount of time?  That might be an issue with this family.

Inevitable

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Maybe they have an emergency credit card.  I've used one as my emergency fund for years.  I even replaced my roof with it.  I can't think of a single thing I couldn't use it for, but I may be missing something.

Did you have the means to pay off that credit card in a reasonable amount of time?  That might be an issue with this family.

At the time we had 2 jobs so we could pay it off quickly, but I get what you're saying.  They're already living paycheck to paycheck.

SpendyMcSpend

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How you can spend $200 per month easily as a woman on hair and nails type stuff:

Bikini wax: $50
Laser hair removal for chin and lip: $120 a session
Haircut: $60-80
Highlights or grey cover:  $60-120
Monthly pedicure: $25
Monthly manicure: $10-20

Easy!  You don't have to do this by these types of expenditures are very common.

mustachianteacher

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That article caught my eye, because that is almost EXACTLY what our household income is, and we are saving nearly 3X what they are saving for retirement. 


Same here! I don't usually calculate annual amounts, but I just did, and boy do I feel better about how we're doing, LOL! I was thinking we were about average, but like you, we're saving about three to four times what they are.

The only mathematical issue I noticed regarding their savings is that they probably aren't counting her pension contributions as retirement contributions, whereas I do. My husband and I are both teachers, and we have 10% taken out pretax as a required contribution to the pension. Since 10% of our total income is actually a pretty substantial amount, and having that pension is part of our retirement plan, I absolutely count it as part of our retirement savings.
« Last Edit: April 16, 2015, 08:25:01 PM by msjd123 »

KungfuRabbit

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i also don't see the point of this article.

they are certainly not mustachian ($6,000 on a year, $2,400 a year on hair and nails), but that budget looks like a very average middle-ish class couple. 

They are saving a little and not drowning in debt living way above their means.  so not mustachian but leaps and bounds above a lot of people with $25k in credit card debt or something.