Is it getting harder financially or is it just me?

[SDHousehunter]

Who am I?

I am a young married self-employed professional with one child. I make a comfortable salary of 90K, donate 10% of my net income to charity and have no debt other than student loans for my wife and I. Total outstanding debt is roughly 15K. The cars are paid off and we rent a comfortable apartment with 3 months of gross income in savings for emergency.

I cannot believe how costs are increasing and how difficult it is to make ends meet.

If I am netting $5,000 a month it is soon expensed out

Rent $2,000
Grocery $ 800
Gasoline $ 400
Student
Loans $ 600
Clothing $ 100 (The Little Ones keeps growing)
Internet $ 0 (Use our neighbor’s unencrypted
(network)
TV $ 0 (Use my father’s slingbox)
Tithe $ 500
Misc/Ent $ 150
Auto Ins $ 250
Life Ins $ 100
Utilities$ 100
Medical $ 100
_________________
$5,000

So I ask these questions:

Am I doing something wrong?
I make twice the median income and I cannot afford to buy a home?
How can mothers stay home to raise children?

If I am feeling a pinch what about the debt slaves?
How about those who took out home equity lines?
How about those who have car payments, credit payments, furniture payments, child support payments, etc.? Does everyone have life insurance?

The money has to be coming from somewhere?

All I know is I cannot use emergency savings for a home down payment, I cannot save additional funds due to rising costs and I cannot live beyond my means.

My business sense says that the current situation of our family economics is best way to proceed

So I ask those who are older, wiser and more experienced. . . . was it always this difficult to do things the “right way” or is it just me?

-SD Househunter

[contraman]

For starters, I would recommend you stop tithing as it is not applicable to this dispensation of believers as you are under Grace not the Law. I would give that money directly to people in need rather than a preacher somewhere who needs to build another 3 million dollar building to be used once or twice a week…..not smart…give by grace to people not bricks…..

Sincerely, Contraman

[contraman]

For starters, I would recommend you stop tithing as it is not applicable to this dispensation of believers as you are under Grace not the Law. I would give that money directly to people in need rather than a preacher somewhere who needs to build another 3 million dollar building to be used once or twice a week…..not smart…give by grace to people not bricks…..

Sincerely, Contraman

[kewp]

So I ask those who are older, wiser and more experienced. . . . was it always this difficult to do things the “right way” or is it just me?

It’s just you. I light cuban cigars with $100 bills while chugging Christal with the other piggingtons.

All kidding aside, not its not at all just you. There was a study recently that males in their 30’s are first generation since the Great Depression to be worse off than their parents. Wages are flat and the cost-of-living is skyrocketing due to inflation. You and I are doing better than the median and its indeed difficult to make ends meet whilst still being financially responsible.

Anyways, here’s my advice. First, let go of the American ‘dream’ of home debtorship. It’s a ponzi scheme to scam you into buying shitty stucco boxes at a 200% markup. Or, really, selling yourself into indentured servitude to a bank in exchange for the privilege of living on their property. The general public will figure this out over the next few years and prices will retract accordingly.

Next, looking at your budget I’ll suggest moving somewhere closer to work that is cheaper (if possible) and taking public transportation or walking/biking. Don’t forget there is maintenance with the mileage. Look into cheaper insurance as well, especially if you don’t drive much.

Also, drop the charity. If you want to make a difference, donate your time. The vast majority of money that goes to charity ends up funding administrative infrastructure. Might want to cut down on groceries too, try going vegan a few days a week. It’s healthier and will save you money, both at the market and the doctors office.

My financial goal is 1/3 housing and related expenses (rent, utilities, internet), 1/3 debt reduction or savings/investment and 1/3 for everything else. I’m almost there, once I cancel digital cable (basic + dual-tuner Tivo is a rad combo!) and get my promotion and equity increase in August I’ll be hitting these numbers almost exactly.

My mid-term goals are stable, recession-resistant employment in a job I enjoy, great benefits, no commute (no driving at least) and to be debt-free by 2009. A house isn’t even on the radar at this point. If I can buy something when I have a down payment and it fits my budget, I may do that. Otherwise, I have no problem with renting.

Long term, same deal but plan on making over 100k within 5 years. Maybe return to private sector if I’m confident in a stable economy.

[kewp]

So I ask those who are older, wiser and more experienced. . . . was it always this difficult to do things the “right way” or is it just me?

It’s just you. I light cuban cigars with $100 bills while chugging Christal with the other piggingtons.

All kidding aside, not its not at all just you. There was a study recently that males in their 30’s are first generation since the Great Depression to be worse off than their parents. Wages are flat and the cost-of-living is skyrocketing due to inflation. You and I are doing better than the median and its indeed difficult to make ends meet whilst still being financially responsible.

Anyways, here’s my advice. First, let go of the American ‘dream’ of home debtorship. It’s a ponzi scheme to scam you into buying shitty stucco boxes at a 200% markup. Or, really, selling yourself into indentured servitude to a bank in exchange for the privilege of living on their property. The general public will figure this out over the next few years and prices will retract accordingly.

Next, looking at your budget I’ll suggest moving somewhere closer to work that is cheaper (if possible) and taking public transportation or walking/biking. Don’t forget there is maintenance with the mileage. Look into cheaper insurance as well, especially if you don’t drive much.

Also, drop the charity. If you want to make a difference, donate your time. The vast majority of money that goes to charity ends up funding administrative infrastructure. Might want to cut down on groceries too, try going vegan a few days a week. It’s healthier and will save you money, both at the market and the doctors office.

My financial goal is 1/3 housing and related expenses (rent, utilities, internet), 1/3 debt reduction or savings/investment and 1/3 for everything else. I’m almost there, once I cancel digital cable (basic + dual-tuner Tivo is a rad combo!) and get my promotion and equity increase in August I’ll be hitting these numbers almost exactly.

My mid-term goals are stable, recession-resistant employment in a job I enjoy, great benefits, no commute (no driving at least) and to be debt-free by 2009. A house isn’t even on the radar at this point. If I can buy something when I have a down payment and it fits my budget, I may do that. Otherwise, I have no problem with renting.

Long term, same deal but plan on making over 100k within 5 years. Maybe return to private sector if I’m confident in a stable economy.

[cr]

I think you’re in a situation that a lot, though certainly not a majority, of people in your demographic.

You’re not foolish with your money, and therefor you have not spent more than you should like everyone else, yet you’re wondering why those seemingly making less than you can afford a lifestyle you can’t.

Truth is they probably can’t afford it either. Material possesions are no indication of wealth. On the contrarythey most likely mean nothing more than debt.

I’m in a similar situation, and all I can do is wait it out. In doing so I’m starting to realize renting isn’t such a bad deal.

Prices will come down, and the longer it takes the more you will be making by the time they do.

[cr]

I think you’re in a situation that a lot, though certainly not a majority, of people in your demographic.

You’re not foolish with your money, and therefor you have not spent more than you should like everyone else, yet you’re wondering why those seemingly making less than you can afford a lifestyle you can’t.

Truth is they probably can’t afford it either. Material possesions are no indication of wealth. On the contrarythey most likely mean nothing more than debt.

I’m in a similar situation, and all I can do is wait it out. In doing so I’m starting to realize renting isn’t such a bad deal.

Prices will come down, and the longer it takes the more you will be making by the time they do.

[meadandale]

Well, a couple of things.

You are paying too much in rent. You probably need to find something about 400-500 month cheaper.

You are paying an awful lot in gas. I have a gas guzzler and drive 17 miles one way to work. Even so, I only usually fill up about once every 10 days. Perhaps you should live closer to where you work (since you are renting you have that option)?

You are tithing 10% and saving nothing for yourself. Charity is great if you are taking care of yourself first. Otherwise, you are gonna be on the receiving end in 30 or 40 years. Cut your tithing in half and save that money for retirement.

You are likely paying too much for car insurance. I pay just over $900/year for a near new car. You are paying $3k. You should be able to find insurance for 2 cars under $2k/year.

$800/month seems like an awful lot for groceries, even for a family of 3.

$600/month on outstanding debt of $15k is awfully high (unless you are making extra principal payments).

FWIW, I was making about as much as you a few years ago and paying the mortgage on a $370k house and payments on a new car. However, I have 0 in credit card debt (although I was paying $50/month on a student loan at the time).

Home equity lines? Nope
Credit card payments? Nope
Furniture payments? Nope
Child Support? Nope

I pay cash for everything. The credit card only leaves my wallet once a year to make the bank happy (or they charge me a $30 fee) and is there for catastrophic emergencies. If I don’t have the cash, I don’t buy it–it’s that simple.

[meadandale]

Well, a couple of things.

You are paying too much in rent. You probably need to find something about 400-500 month cheaper.

You are paying an awful lot in gas. I have a gas guzzler and drive 17 miles one way to work. Even so, I only usually fill up about once every 10 days. Perhaps you should live closer to where you work (since you are renting you have that option)?

You are tithing 10% and saving nothing for yourself. Charity is great if you are taking care of yourself first. Otherwise, you are gonna be on the receiving end in 30 or 40 years. Cut your tithing in half and save that money for retirement.

You are likely paying too much for car insurance. I pay just over $900/year for a near new car. You are paying $3k. You should be able to find insurance for 2 cars under $2k/year.

$800/month seems like an awful lot for groceries, even for a family of 3.

$600/month on outstanding debt of $15k is awfully high (unless you are making extra principal payments).

FWIW, I was making about as much as you a few years ago and paying the mortgage on a $370k house and payments on a new car. However, I have 0 in credit card debt (although I was paying $50/month on a student loan at the time).

Home equity lines? Nope
Credit card payments? Nope
Furniture payments? Nope
Child Support? Nope

I pay cash for everything. The credit card only leaves my wallet once a year to make the bank happy (or they charge me a $30 fee) and is there for catastrophic emergencies. If I don’t have the cash, I don’t buy it–it’s that simple.

[surveyor]

taxes

Look for more tax breaks. As a self-employed person, you should have access to a lot of tax breaks. Maybe you are not accessing them all.

I do question having that $600 student loan if you have enough money to pay it off (using your emergency account). Maybe you should pay it off more aggressively? The only reason to not pay it off would be if you had another loan which had a higher interest rate. If it’s your only loan, maybe you could just pay it off and keep the extra.

Certainly looking at your situation, you are playing it safe, but if you want to get ahead, you will have to take some risks. There are trade-offs and you will have to ask yourself if you are willing to do that to get ahead.

You’re right in that it is a different playing field for you than it was for your parents. It is not easy to just get by nowadays. You will have to work smarter (and I do not mean just your job, I mean in every aspect of your life). Superior financial skills, appropriate risk-taking, and keen analyses are required of every person who wants to get ahead.

(I recommend viewing the Robert Kiyosaki PBS Special that they run every time they hold fundraising and the book The Inside Guide to Real Estate Investing Loopholes by Diane Kennedy and Dolf De Roos).

[surveyor]

taxes

Look for more tax breaks. As a self-employed person, you should have access to a lot of tax breaks. Maybe you are not accessing them all.

I do question having that $600 student loan if you have enough money to pay it off (using your emergency account). Maybe you should pay it off more aggressively? The only reason to not pay it off would be if you had another loan which had a higher interest rate. If it’s your only loan, maybe you could just pay it off and keep the extra.

Certainly looking at your situation, you are playing it safe, but if you want to get ahead, you will have to take some risks. There are trade-offs and you will have to ask yourself if you are willing to do that to get ahead.

You’re right in that it is a different playing field for you than it was for your parents. It is not easy to just get by nowadays. You will have to work smarter (and I do not mean just your job, I mean in every aspect of your life). Superior financial skills, appropriate risk-taking, and keen analyses are required of every person who wants to get ahead.

(I recommend viewing the Robert Kiyosaki PBS Special that they run every time they hold fundraising and the book The Inside Guide to Real Estate Investing Loopholes by Diane Kennedy and Dolf De Roos).

[no_such_reality]

I always start with gross and work down. If you look at your big five expenses:

Taxes – $2500
Rent – $2000
Groceries – $800
Loans – $600
Tithe – $500

Taxes seem high at 33% for base line withholding on a one earner family of three. Self-employed doubles the FICA withholding, but you should be writing off lots more.

Rent doesn’t seem bad, however, as a couple with one child, can you rent a 2/2 cheaper in an area with the schools you need? Do you need to spend $2000 on rent? If you rent differently is it possible to save on rent and gas?

Groceries, that’s roughly $200/week for three people. Does this include eating lunches out? That’s seems a little high for three people, one a little growing child.

Loans. $600/month on $15,000. Can that be refinanced? Or are you tracking to pay it off in just over two years?

Tithe. $500/month. That’s a personal choice that only you know is right or not.

Here’s the thing, I didn’t see your retirement plan. Nor extra savings for the future house down payment and closing costs. I also noted that the wife has student loans but is taking care of the child. Is this a permenant plan or a temporary plan? Or semi-perm until the children are into elementary school? If it’s temporary, is it possible to scale back the tithe until you return to normal income?

If you are paying $2000/month in rent, you can buy a place around $300,000. Rent until something in the $300,000 range is comparable to what you are renting.

Also, with a family of three income of $90,000, you may qualify for First Time Home Buyer Mortgage Tax Credits. See San Diego Housing Commission . In SoCal, many programs go to the 80/90/100K point of income based on City/County.

[no_such_reality]

I always start with gross and work down. If you look at your big five expenses:

Taxes – $2500
Rent – $2000
Groceries – $800
Loans – $600
Tithe – $500

Taxes seem high at 33% for base line withholding on a one earner family of three. Self-employed doubles the FICA withholding, but you should be writing off lots more.

Rent doesn’t seem bad, however, as a couple with one child, can you rent a 2/2 cheaper in an area with the schools you need? Do you need to spend $2000 on rent? If you rent differently is it possible to save on rent and gas?

Groceries, that’s roughly $200/week for three people. Does this include eating lunches out? That’s seems a little high for three people, one a little growing child.

Loans. $600/month on $15,000. Can that be refinanced? Or are you tracking to pay it off in just over two years?

Tithe. $500/month. That’s a personal choice that only you know is right or not.

Here’s the thing, I didn’t see your retirement plan. Nor extra savings for the future house down payment and closing costs. I also noted that the wife has student loans but is taking care of the child. Is this a permenant plan or a temporary plan? Or semi-perm until the children are into elementary school? If it’s temporary, is it possible to scale back the tithe until you return to normal income?

If you are paying $2000/month in rent, you can buy a place around $300,000. Rent until something in the $300,000 range is comparable to what you are renting.

Also, with a family of three income of $90,000, you may qualify for First Time Home Buyer Mortgage Tax Credits. See San Diego Housing Commission . In SoCal, many programs go to the 80/90/100K point of income based on City/County.

[CBad]

I wouldn’t say you’re doing anything “wrong” but you certainly could free up some money. First, while I can appreciate a family contributing a 10% tithe, I would bet on the fact that even God himself wouldn’t want you to do so if it was at the expense of saving for yourself. Why not stop tithing until your student loans are paid off and you and your wife can volunteer your time at your church instead? I kind of doubt you’re going to take that advice so, how about your gas expense. If you are renting, move closer to work. Your grocery bill also seems high for a family of 3. We have 5 in our family and average $400-500. And by the way, I have stayed home full time with my 3 kids ever since my first was born. We have always had life insurance and always contributed to retirement and college funds. Our housing expense is a lot less than yours though due to the fact that we bought pre-bubble and had a large down payment (both of us are big savers). Having me stay home with the kids was always a huge priority for us. So if we couldn’t swing SD on one income, we’d move.

[CBad]

I wouldn’t say you’re doing anything “wrong” but you certainly could free up some money. First, while I can appreciate a family contributing a 10% tithe, I would bet on the fact that even God himself wouldn’t want you to do so if it was at the expense of saving for yourself. Why not stop tithing until your student loans are paid off and you and your wife can volunteer your time at your church instead? I kind of doubt you’re going to take that advice so, how about your gas expense. If you are renting, move closer to work. Your grocery bill also seems high for a family of 3. We have 5 in our family and average $400-500. And by the way, I have stayed home full time with my 3 kids ever since my first was born. We have always had life insurance and always contributed to retirement and college funds. Our housing expense is a lot less than yours though due to the fact that we bought pre-bubble and had a large down payment (both of us are big savers). Having me stay home with the kids was always a huge priority for us. So if we couldn’t swing SD on one income, we’d move.

[Author]

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