4 ms·

As a single income family, he's more right than wrong. My wife and I have one infant, and want another. I make around 117k/year pre-tax. Rent for a 3 bedroom

As a single income family, he's more right than wrong. My wife and I have one infant, and want another. I make around 117k/year pre-tax. Rent for a 3 bedroom townhome is 2500/month, that's roughly half my monthly take-home pay. Everything else comes out of the other half. I contribute enough to my 401k to get my employer match, but no more. I'm putting $250/month into my daughter's 529 based on similar calculations for what a decent 4 year degree will cost (a little north of a 100k). I max out our HSA to make the high deductible health plan worth it. We don't eat out that much. I drive a 23 year old hand-me-down Toyota. Things still add up fast if we don't keep track. There's not much left over at the end of the month. And there's going to be another $250+/month when the other kid comes along. We're not living in poverty by any stretch, have no debt, and can afford some minor luxuries. But it's a lot tighter than it was for my dad working essentially the same job at the same age. I'm curious as to the levels of credit card debt in your moderate income neighborhood, and how prepared they're going to be for retirement at their current savings rates. Or perhaps they just don't expect to pay for their kids' college at all, and are just hoping they don't get sick. We've already sacrificed the vacations and expensive restaurants. Should we sacrifice our HSA and kids' college funds as well so we can have 3 instead of 2?

xyzzyz 4y ago
Yes, sacrifice college fund, obviously. Why do you feel this is a requirement? Your kids can get a loan for college in their due time, and 20 years from now, you will be in a much better position to help them financially anyway. Saving your wealth to give it to your kids when they older is good and noble, but not having kids just because you cannot furnish them with enough wealth for when they are adult, is really silly and counterproductive. Similarly, you might reconsider maxing HSA, depending on how much you spend. HSA has two benefits, a direct one which is tax savings, and the indirect one being actually forcing you to save money, which is useful for many people who are bad at planning and looking ahead. The latter doesn’t apply to you, obviously, if anything you’re overthinking it. On the other hand, with your earnings, and assuming two kids, using HSA gives you around 20% discount on actual healthcare spend. Take account as to how much you actually spend on healthcare, and consider whether saving 20% on that is worth not having extra kid.
- scottLobster 4y ago
  It may have been silly and counterproductive before the cost of tuition went through the roof, and a 4 year degree became a de-facto requirement for almost all well-paying careers. My dad paid his own way through his PhD working part-time at Friendly's (fast food chain) while my mom was a public school teacher. Good luck doing that these days. It is my responsibility as a parent to ensure my children are as equipped to prosper as possible. They should not have to endure decades or potentially a lifetime of un-forgivable debt for what has become an almost fundamental requirement to be middle class. Expecting 18 year olds to get a job and pay their own way is no longer realistic unless you are fine with your kids being shut out of most economic opportunities. I hope it'll be more realistic in 18 years, but I can't count on that. Call me silly if you want, I'm just adapting to the way things are. I'd rather have two kids with full opportunities than four kids with 20% opportunities. As for the HSA, having seen my mom fight cancer for over a decade I'm well aware of how much healthcare can cost. Even with out-of-pocket max limits, it'll be a while before I feel comfortable not maxing it out.
  - xyzzyz 4y ago
    Again, you can also help your kids pay off the college loans, which will be much easier for you 25 years from now, than it is to save money up front. Second thing is that you need to understand how cost of college works: basically, schools offer a lot of financial aid, but only to those who cannot afford it otherwise. This means that the more you save for your kids college, the higher the bill will be. The schools will ask your kids how much money they have saved, and will adjust the price to extract all of it. The system favors the people who don’t save, and people like you pay the cost. You are literally hamstringing yourself, thinking that it’s for benefit of your kids, but you’re actually benefiting people who don’t plan and live day by day.
  - rayiner 4y ago
    > a 4 year degree became a de-facto requirement for almost all well-paying careers. Which is the real problem. The U.S. sent a man to the moon with a work force that was just 8% college graduates. Do most people really need a college degree today, or is it just useless and very expensive gatekeeping? Why does a receptionist need a college degree? Even many white-collar jobs that involve working with computers could probably be done on an apprenticeship model. Does doing online marketing really require a 4-year degree when being a nurse or an HVAC technician doesn't?

xyzzyz 4y ago

Yes, sacrifice college fund, obviously. Why do you feel this is a requirement? Your kids can get a loan for college in their due time, and 20 years from now, you will be in a much better position to help them financially anyway. Saving your wealth to give it to your kids when they older is good and noble, but not having kids just because you cannot furnish them with enough wealth for when they are adult, is really silly and counterproductive. Similarly, you might reconsider maxing HSA, depending on how much you spend. HSA has two benefits, a direct one which is tax savings, and the indirect one being actually forcing you to save money, which is useful for many people who are bad at planning and looking ahead. The latter doesn’t apply to you, obviously, if anything you’re overthinking it. On the other hand, with your earnings, and assuming two kids, using HSA gives you around 20% discount on actual healthcare spend. Take account as to how much you actually spend on healthcare, and consider whether saving 20% on that is worth not having extra kid.

scottLobster 4y ago
It may have been silly and counterproductive before the cost of tuition went through the roof, and a 4 year degree became a de-facto requirement for almost all well-paying careers. My dad paid his own way through his PhD working part-time at Friendly's (fast food chain) while my mom was a public school teacher. Good luck doing that these days. It is my responsibility as a parent to ensure my children are as equipped to prosper as possible. They should not have to endure decades or potentially a lifetime of un-forgivable debt for what has become an almost fundamental requirement to be middle class. Expecting 18 year olds to get a job and pay their own way is no longer realistic unless you are fine with your kids being shut out of most economic opportunities. I hope it'll be more realistic in 18 years, but I can't count on that. Call me silly if you want, I'm just adapting to the way things are. I'd rather have two kids with full opportunities than four kids with 20% opportunities. As for the HSA, having seen my mom fight cancer for over a decade I'm well aware of how much healthcare can cost. Even with out-of-pocket max limits, it'll be a while before I feel comfortable not maxing it out.
- xyzzyz 4y ago
  Again, you can also help your kids pay off the college loans, which will be much easier for you 25 years from now, than it is to save money up front. Second thing is that you need to understand how cost of college works: basically, schools offer a lot of financial aid, but only to those who cannot afford it otherwise. This means that the more you save for your kids college, the higher the bill will be. The schools will ask your kids how much money they have saved, and will adjust the price to extract all of it. The system favors the people who don’t save, and people like you pay the cost. You are literally hamstringing yourself, thinking that it’s for benefit of your kids, but you’re actually benefiting people who don’t plan and live day by day.
- rayiner 4y ago
  > a 4 year degree became a de-facto requirement for almost all well-paying careers. Which is the real problem. The U.S. sent a man to the moon with a work force that was just 8% college graduates. Do most people really need a college degree today, or is it just useless and very expensive gatekeeping? Why does a receptionist need a college degree? Even many white-collar jobs that involve working with computers could probably be done on an apprenticeship model. Does doing online marketing really require a 4-year degree when being a nurse or an HVAC technician doesn't?