Wasn't sure how granular to get so apologies if this is a bit messy lol. This is all monthly (except the bonus income which paid quarterly but shown here as monthly). A lot of these are averages based on the last 12 months particularly under discretionary.
Some notes:
I work in tech, spouse works at a university and we live in a HCOL area (SF Bay Area)
We have over over 7.5 months worth of necessary expenses saved (~$71k) in liquid/semi-liquid cash accounts (HYSA, CD, regular savings account)
Almost 15 months worth of necessary expenses if you include non-retirement brokerage accounts (~$63k; so ~$134k total)
Planning on opening a 529 and other investment account (IRA?) for our 1YO
No other debt except the mortgage
We run basically everything we can through our credit cards and pay off our statement balances in full every month
Only one car (paid off) and playing with the idea of a second
Some obvious takeaways are:
Probably put more towards our retirement accounts instead of brokerage and/or change the $1k/month to go toward kid's 529 and IRA
Cut back on the eating out (we got pretty lazy once the kid was born and our credit cards provide some credit for Doordash/Uber Eats/Grubhub)
Probably cut back on subscriptions/streaming
Curious to get feedback or any other input. Thanks!
@billyherman45 With that level of income, you really need to max your 401k and 403b contributions before after-tax savings, in order to reduce your taxes.
I know that you’re quite granular already but what are you buying every month from Amazon, Target, Costco, and “other” for $730? I’m sure it’s partly hobbies and essentials, but perhaps try to be more intentional and hold yourself to a tighter budget.
You’re right about the dining out; that strikes me as very high indeed.
Edit: $122 in credit card fees every month? Brother, that’s egregious.
@nart The Amazon/Target/Costco numbers are an average based on the last 12 months. As an example, we only go to Costco maybe 3-4 times a year but when we do we load up. The “other” category was me being lazy because I could have just added everything lol. But your point still stands.
Card fees are, again, monthly average (over $1400 total annual though). We can generally justify them because they come with credits that “offset” the annual fee for things we would have already been paying for without them (e.g. airline baggage fees, streaming services, etc.)
@billyherman45 Surely some of the communities for churning or other CC rewards strategies could help you get that down. My wife and I haven’t paid a dime for airline baggage fees in years and we spend less than half that for CC fees. Again, great that you get streaming services, but you spend $200 a month on other streaming services. Cut down, man.
@billyherman45 You can't open an IRA for your 1yo. They'd need to have earned income. I keep a 529 and a gift account for minors (UGMA). You can roll over some of the money from a 529 into an IRA, but keep in mind there are limitations. The UGMA also must be transferred to the minor when they are of age and before that you can't withdraw except in their benefit.
I set money aside to reach my education savings goal in a 529, and I set a portion of any gift money as well as money for birthday and Christmas in the UGMA. I don't mind if she blows that money because it's legitimately a gift. It's just that she has everything she needs now - so I set it aside for her. I had a UGMA that my great grandparents contributed to for my education. My mother left a bit in it, so I had a small emergency fund when I graduated (my parents allow 6 months at home after graduating).
Putting more towards retirement depends on your goals and planned expenditure.
@chonstance Yeah I guess IRA was the wrong term. I meant more of a custodial brokerage account (or something) for the kid until that eventually transfers to them. But I do like the idea of a “gift” account too.
@resjudicata Yeah this is an expensive area, the principle + interest is ~$4300/mo. (2.875% rate, bought in 2021). The property taxes are kind of a killer. Even our real estate agent made an off-hand comment that she couldn't believe taxes would be as high as they are (~$17.5k per year)
@resjudicata That’s no way to live for you. Frankly I’d never want to be responsible for 10 acres of land and much prefer being outdoors in the mild weather of Bay Area and the amenities/access in the area. I’ll easily pay the taxes to be there so long as I can afford it. And I’ve been in much cheaper cities with a bunch more square footage…
@billyherman45 If you cutdown on the eating out, then it will be fine. Also, if you have enough in your HYSA, switch more of that $445 into something else. Maybe reduce down by 50%
@billyherman45 Are you above the MAGI limit for Roth IRA contributions? Depending on your current balances not your 401k/403b I would increase employer contributions and maybe do back door Roth if your MAGI level is above the limit. I’m in a similar boat where my fixed expense to take home ratio is uncomfortably high due to my mortgage and housing expenses but you’re still saving around 18% so that’s not bad. I would try to get your overall savings rate around 25%. Another raise or two without lifestyle change should cover the 7%.
@billyherman45 No ESPP and/or RSUs from employer? Those are pretty useful wealth building tools and are standard for most tech roles.
You may be getting underpaid tbh, 160k imo is low for SFBayArea (assuming you have ~10 years or so of work experience based on age)
