standard on living or living with basic in US

[Enuff2Eat]

All,

We are not high earn income folks but let's assume that we make around $75k/year. Take home around $1800/2 week pay.

Now let's look at the "standard of living" in US and see where i am at.

income $1.8k/2wk = $46k/year take home

mortgage $15k/year
car payment $3.5K/year
property taxes $2.5k/year
cable, cell phone, internet, home phone $2k/year
heating and cooling bill $2k/year
car and home insurance $3k/year
1 short vacation $1k/year
1 nice vacation $3k/year
upkeeping the house and car $2k/year
misc. membership $1k/year
copay and drugs $1k/year
food $4k/year
gasoline $1.5k/year
entertainment ??

===============

total +/- $41.5k/year

$46k income -$41.5k expense = $3.5k left


Reality = seems like we're shorting $5k/year.

Yet I thought we make "big bucks". The standard of living is way way too high. We don't think we're doing anything extravagant at all. I mean no BMW, Mercedes or plasma TV. what's up? since when cable, hi speed internet, cel phone became a "standard" for everyone. Am i doing anything wrong here? Thank God my kids do NOT eat much yet...

Just a thought

Enuff

 

[SteveR]

Enuf,

I did not see any savings (401k, IRA etc.) in your numbers. I am assuming that is in the gross and not the net for your monthly income.

The frugal living crowd here will have some "ideas" for you I am sure but for a working couple (?) it would seem you are not living too large for your gross income.

 

[LOL!]

I hope the difference between your $75K income and $46K take home is $28K in maximum contributions to two (husband and wife) 401(k) plans and $1K in taxes.

Cut out the cable and the car payment.

 

[MasterBlaster]

Everyone is entitled to MY opinion ... so here goes

- At your income level $4k/year for vacations is extravagant. You might want to think about that. Maybe think about $1k for memberships. Cable,cellphone and intenet are luxuries $2k/year for those is quite a bit at your income level.

Do the tax deferred 401k/IRA thing to the max.

Based on your numbers I would ditch the vacations, cable, cellphones, and high speed internet, and the memberships. You can get dial-up internet for $5.50 a month (www.550access.com) - that's what I use.

I calculate that you could save at least $10.5k per year.

Invest that in a tax-free account like a 401k/IRA and it'll get you up to maybe $13k/year with the tax break in savings.

I suspect that there are even more savings to be had. You just have to be determined in what you want and go for it. The alternative to not saving money is to work until you drop. You can either make a few relatively painless adjustments now in order to save or continue to to work forever for "the man". It's your choice.

There are lots of families getting by on half (or less) of what you have. Don't think that it can't be done !

 

[TromboneAl]

If you make $75K and take home $46K, are you saying that you pay $29K in taxes?  Is some of that for your 401K or something?

You are living like most Americans, and I think your analysis is correct.  You are probably losing $5K/year because there are things you didn't think of.  That was true for me.  Best way is to track all expenses for a year.

Ditto what MasterBlaster said -- I had the identical thoughts.

 

[Jay_Gatsby]

Cable and high-speed Internet can eat up $100+ a month very easily. If you're not spending a great deal of time researching online, downloading files or streaming audio/video, high-speed is a very expensive way to save a few minutes. You're also better off replacing your cable TV with Netflix or other DVD-mailing service. Many of the shows that are on cable end up on DVD within 6 months.

 

[Nords]

mortgage $15k/year
car payment $3.5K/year
property taxes $2.5k/year
cable, cell phone, internet, home phone $2k/year
heating and cooling bill $2k/year
car and home insurance $3k/year
1 short vacation $1k/year
1 nice vacation $3k/year
upkeeping the house and car $2k/year
misc. membership $1k/year
copay and drugs $1k/year
food $4k/year
gasoline $1.5k/year
entertainment ??

Necessities:  things you probably can't cut back on.  Mortgage, property taxes, insurance, utilities, medical copay/medicine, groceries, gasoline.

One option would be raising insurance deductibles ($2500 home) or dropping comprehensive/collision on the cars altogether.  That depends on the age of the vehicles and how your family would feel about having to spend $8-12K on short notice to replace a vehicle.

Another option would be having the electric company do a free home energy-use survey.  They'll look for hot/cold air leaks and check on the A/C, water heater, fridge, & lighting.  The water company will do a similar survey to help with water leaks and low-flow faucets/showers.

Groceries are a whole 'nother topic.  I subscribe to the Dollar Stretcher e-mail which might give you some ideas.  

Frugality:  Things you could consider cutting back or doing without.
Cable, cell phone, home phone, vacations, home & car upkeep, memberships, entertainment.

Cable providers have just been directed to start providing family-friendly packages.  I don't know how long it'll take to get down to the consumer level but presumably we'd be able to get the "necessities" (HGTV, Disney channel, Cartoon Network, Nickelodeon) without the stuff we don't watch (MTV, VH1, sports & foreign-language channels).  Maybe that programming option would even be cheaper.  Personally I don't get much value from having a TV, let alone from having a cable subscription, but the rest of the family regards this as crossing the line from frugality to deprivation.

Cell phones... I can understand if it's for peace of mind or emergencies.  However I've survived over four decades without one and every time my spouse has had one she's regretted it.  Is there some way that work could pay the cost of your cell phone?  Or is there a cheaper/better plan for the way you use your phone?

Home phone:  there's usually room to cut the second line, the long-distance access, and convenience features like call waiting.

Home/car upkeep:  Usually the more you can do for yourself, the better... Dollar Stretcher again.

Vacations-- usually when you're working & parenting your vacations are limited by the boss and by school.  So that can get expensive, although there's certainly room to cut back on the fancy stuff and do more locally.  But this can cross the line from frugality to deprivation.

Misc memberships?  What the heck costs $1000/year?!?

Entertainment:  If you don't know how much you're spending on entertainment, then you have no idea if you're getting any value from it-- let alone how much.  This is a great place to start tracking spending for a few months.

Deprivation:  life without high-speed internet access.  I don't care how cheap the dial-up is, it's too much money for too little value.  DSL or cable access is worth every penny!

 

[Mr._johngalt]

Cable and high-speed Internet can eat up $100+ a month very easily.  If you're not spending a great deal of time researching online, downloading files or streaming audio/video, high-speed is a very expensive way to save a few minutes.  You're also better off replacing your cable TV with Netflix or other DVD-mailing service.  Many of the shows that are on cable end up on DVD within 6 months.

We have neither, so that's money saved. However, I still
have my Frappacino habit so most of what we save
on cable/high speed internet is lost there. Maybe I will swear off for 2006.................probably not!

JG

 

[MJ]

I'm not sure if you took into account that a part of your tax deductable mortgage interest and RE tax should return you at least $1k.

 

[MasterBlaster]

OK - maybe I got carried away with the dial-up versus DSL internet thing. Now that you can get broadband for $20 a month the difference is not that great in price and the service is much better. I don't use the home 'puter much so dial-up is mostly just fine. Especially for getting on this forum.

However, I would put in a word of caution. Everything that you spend money on can be justified (rationalized) somehow. The trick is to see through the rationalizations and keep your eye on the goal. Yes you can have DSL and a few Frappacino's or whatever. But you can't have the DSL, the Frappacinos, the big new car(s)/house, the expensive vacations, the cable TV, and so on and still get to retire early. If you rationalize everything then the bottom line is that you'll never save enough and retiring is but a pipe-dream.

I like to tell the young-uns at work what that new car will really cost em when they forego decades of market returns. Just sometimes it gets them to thinking.

 

[maddythebeagle]

However, I would put in a word of caution. Everything that you spend money on can be justified (rationalized) somehow. The trick is to see through the rationalizations and keep your eye on the goal. Yes you can have DSL and a few Frappacino's or whatever. But you can't have the DSL, the Frappacinos, the big new car(s)/house, the expensive vacations, the cable TV, and so on and still get to retire early. If you rationalize everything then the bottom line is that you'll never save enough and retiring is but a pipe-dream.

I think this sums it all up.

 

[uncledrz]

Enuff
I looked over your post, and it seems that your spending is in line with a middle class lifestyle. T-A made the comment that you should actually track expenses, I'll second that idea. Take three months, write down everything you spend (you'll need to get your SO on board for this one). Once you've got that down, you can spreadsheet it and figure out where to go from there.

Point made by those on this board time after time is that life is about choices. Get a solid grip on where you are, then make the choices.

 

[Enuff2Eat]

thanks for everyone advice. i guess it;s not how much i make. it's how much i got left at the end of the end that's really matter.

 

[TromboneAl]

If you rationalize everything then the bottom line is that you'll never save enough and retiring is but a pipe-dream.

Another way to put this is that instead of looking at expenses and asking yourself whether they are extravagant, you might look at them as choices.   For example, "Would I rather spend $1K/year on memberships, or retire 1.5 years earlier?"

 

[bongo2]

I agree with most of the comments so far -- you could save a considerable amount on cable/cell/internet and vacation. I actually spend quite a bit more than you do, but about the same on the things you mention (+6k for house, +2k for health, +2k food, -5k for cable/cell/internet and vacation, -3k car). I also have +2k for garbage, water, life ins, etc, and +1k clothes, +4k whatever it is we end up buying at Wallmart/IKEA/Target/BestBuy, and (the big one) +10k for kids lessons/camps/toys/etc (I have four). The most surprizing thing about your info is the taxes. If you have kids then you should only pay maybe $2-3k federal + another $5k FICA +?? state.

One thing I'd like to challenge is the assumption that you make "big bucks." I think, a lot of people way under estimate the average income of people like them because they think of the number they hear in the media all the time that the average household income is something like $45k. This is true, but this includes "households" of the elderly, college students, and homeless. The median income for married couples is $64k, for people age 45-54 it's $62k, and for people in the county I live in it's $62k. When you put all that together, I figure the typical middle aged married couple in my town with a couple kids is probably pulling down better than your $75k -- maybe something like $100k. I don't want to discourage you because you should be able to have a fine life with the income you have, but you may have to scale back your expectations a little bit relative to what you see people around you doing.