What % of your takehome pay are you spending on living expenses?

[burn587]

Right around 40% of net income is spent on mortgage and utilities. Total bills probably jumps that to 50%.

My wife and I are DINKs, max out our 401s and try to invest beyond that. Neither of us are big spenders so most of our “entertainment” expenses go towards streaming/tv, concerts and a couple of trips a year. The retirement age in my industry is 60 and looking on track to do that without having to pick up a part time job until 65, although I could see myself doing that anyway due to boredom.

 

[cowgirl836]

Our 5 year old is almost done with daycare and I feel like it's going to be a freaking windfall of cash come August. Then in November our other kiddos rate will drop $80 a week I think. Cannot. Wait.

Daycare is EXPENSIVE.

To be affordable, childcare should be 7% or less of income and I think we'll FINALLY hit that when the youngest starts school this fall. Still $1k a month on afterschool care.

 

[CycloneDaddy]

livin like roommates but legally married ... just seems super risky to me.

how do you do shared goals? how do you know how much to spend on vacation or a house or when to retire?

how to you know she's not blowing it all on hookers and pulltabs? (or vice versa)

The goals are to max out 401 and 529 accts. As long as she does both I dont care what she does with her money. As far as vacations go I give her a $ amount and then she spends twice as much. We do have joint savings and brokerage accounts.

 

[cowgirl836]

It IS a windfall

We're done in August too. It's a substantial amount that will stay in the pocket.

I don't want to run the numbers on 10 years of daycare for the boys. I could cry

Since fall of 2018 I'm at about $225k spent. Two kids who are 3 years apart. The year we had $40k+ in childcare costs was fun.

 

[clones_jer]

Since fall of 2018 I'm at about $225k spent. Two kids who are 3 years apart. The year we had $40k+ in childcare costs was fun.

one of the shittiest things this country does is rob every dollar and moment of time they can from young parents. it does get better, but from the moment they charge you thousands leaving the hospital to the time the kids are teenagers it's nothing but daycare / groceries / diapers / first homes and oblivious people wondering why you "don't spend more time with your kids". I'm at work to try to afford them!

as someone who is starting to come out the other side, it does get better eventually, but there's a TON of undeserved stress on young parents and I feel for you. it's honestly amazing that most marriages survive and the kids generally turn into quality humans.

 

[BWRhasnoAC]

For me it's around 35-40% just for living expenses. That's the low end of rent too. I'm not living in some expensive West Des Moines apartment.

 

[AllInForISU]

Agree but for the average person it's not a budgeting problem. It's an affordability/inequality issue.

I’d be interested to know what you mean by that.

 

[Cyrealist]

In my opinion, the OP has it about right. I'd be reluctant to go over 25%, but there are a lot of variables. A mortgage on an investment-grade house can justify a higher percentage than just renting. And, if you go to the least expensive option and have a lower income, then the percentage is what it is

 

[BWRhasnoAC]

I’d be interested to know what you mean by that.

Assets are through the roof. The median income is 52k and that's the highest end of the measurement. Average home is 440k. The math ain't mathing no matter how frugal you are.

 

[AllInForISU]

Assets are through the roof. The median income is 52k and that's the highest end of the measurement. Average home is 440k. The math ain't mathing no matter how frugal you are.

I would agree with affordability issues are crazy at the moment. Inequality however, I’m not sure what you necessarily mean by that, but trades are hiring and almost all of them will get you pretty quickly around 100k and they will take anyone.

 

[AgronAlum]

I'm going to add some context because a figure of 25% is hardly justifiable in today's market. The median household income is 75k in Iowa so lets call that 56k net (75% of gross) or 4700ish monthly.

A 300k home at 20% down, a 6% rate, 3000 in taxes and 2000 in homeowners has a payment of 1852 or 40% of net. That doesn't include any utilities either. With rents being so high, a 20 percent down payment isn't even attainable for most people so it only goes up from there. It looks even worse when you get out of Iowa. The nationwide median household income is 83k and the average home price is north of 400k.

The system is creating life long renters and housing has become completely unaffordable for the working class.

 

[AgronAlum]

I would agree with affordability issues are crazy at the moment. Inequality however, I’m not sure what you necessarily mean by that, but trades are hiring and almost all of them will get you pretty quickly around 100k and they will take anyone.

I see people bring up "the trades" almost every time there is a discussion on affordability. I don't know how many folks that force that into the conversation have actually worked around people that just don't have the ability. It truly isn't for everyone and if you try it and suck, you're not making 100k a year. Neither are general laborers in the trades. Google is saying median wage for skilled trades is 64k a year.

 

[FriendlySpartan]

As long as you aren't going into debt to do it, fine. Never borrow for wants.

Mostly agree but it also depends on the borrowing costs to do it. Obv if you have zero money invested don’t borrow for wants at all but otherwise there are plenty of ways to do it if the interest rate is right.

Not all debt is bad debt, it depends on what your situation is

 

[BWRhasnoAC]

I would agree with affordability issues are crazy at the moment. Inequality however, I’m not sure what you necessarily mean by that, but trades are hiring and almost all of them will get you pretty quickly around 100k and they will take anyone.

I'm in the trades. Approaching master carpenter. Most don't make anywhere near that. If you want 6 figures you're generally traveling and doing commercial work.

Inequality has to do with the assets. The richer the rich get the higher assets go up. They don't make income like everyone else. It's stock options and assets for them usually. So as the rich get further and further away from everyone else assets follow.

That causes it to be impossible for the median income to afford a home, the #1 way people create wealth.

Edit:
It also creates a tax shortfall because the wealthy don't really pay anything on capital gains. So the government has to borrow from the rich to cover the difference which just compounds the issue.

A perfect picture of the inequality. 90% of stocks are owned by 10% of the people. If you aren't making enough a year or getting an inheritance I'd difficult to buy assets.

Also private equity is buying up a large portion of the real estate market and driving up the monthly rent, especially in the South.

 

[MeowingCows]

I see people bring up "the trades" almost every time there is a discussion on affordability. I don't know how many folks that force that into the conversation have actually worked around people that just don't have the ability. It truly isn't for everyone and if you try it and suck, you're not making 100k a year. Neither are general laborers in the trades. Google is saying median wage for skilled trades is 64k a year.

And the other thing that never gets brought up is actually having time and energy to spend with your kids after the gruel that is trade work. There's a reason those jobs are frequently open, it's cuz they suck livelihood away in ways other jobs don't.

Source: the very household I grew up in. Not much time for your kids when you work nights, the kids go to school during the day, and you still have to sleep somewhere in there.

 

[NorthCyd]

It has worked for 25 years but will probably have to change that approach once we hit retirement.

I do the same. I'm divorced and remarried and we both decided it was best to just keep our own accounts and split the monthly bills. It works great and there is no ******** about what the other is spending money on as long as we are meeting the budget. Neither one of us have a lot of expensive hobbies or habits so that helps.

 

[BWRhasnoAC]

And the other thing that never gets brought up is actually having time and energy to spend with your kids after the gruel that is trade work. There's a reason those jobs are frequently open, it's cuz they suck livelihood away in ways other jobs don't.

Source: the very household I grew up in. Not much time for your kids when you work nights, the kids go to school during the day, and you still have to sleep somewhere in there.

That's everyone that isn't in a high paying field right now. Most people have side hustles just to survive.

 

[MeowingCows]

That's everyone that isn't in a high paying field right now. Most people have side hustles just to survive.

Fair enough, got me there. Also, you're spot on about assets. The house I bought was a condo built ~25 years ago. Sold new around $80-90k and I just bought it over $200k. It's almost the same damn house it was back then, but cost almost 3x as much now... is the median wage 3x higher now since 2000? I'd bet most normal people would consider my house to be a "starter home" around here.

 

[deadeyededric]

Why? I say enjoy your life while you are alive.

Why work all your life just to die with a bunch of money saved up?

Because its nice to have money when things unexpected come up. I still take trips and do pretty much everything I want but I dont blast every dime I have.

 

[deadeyededric]

Ok, you didn’t include other loan payments. Groceries is a living expense. Unless you somehow don’t eat, they are a living expense.

I consider non living expenses to be of the optional kind. You can drive an old car (I do) but know that you will have repairs. If you live in a city you can get by with public transportation to get to work and around, so that would be living expenses. If you need it to survive and perform your work, I co sided that living expenses.

Why I thought you had 5k left over at the end of the month.

I guess I should have said housing related expenses. I dont go cheap on food. I like good meat and fresh fruit.