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    $100K income (to create a budget)

    I was reading this article:

    http://moneytalkscoaching.com/the-100000-budget/

    I think some of the numbers are off (like food)

    But it made me think that the author is correct, a $100K budget doesn't go that far.

    What would your $100K budget be like (or how would it differ) if you met the same criteria (family of 4.)???

    Dawn

    #2
    I don't really see what in that budget is of such great concern. From an objective look, it seems they are meeting their needs & many of their wants quite comfortably. Certainly, I could nitpick about some of the expenses laid out (auto fuel, car payments, electricity, clothes, and other categories all are quite high in my view), but considering the assumptions (Arizona family of 4 with teens), it was all acceptable. Bottom line, I'd say that the theoretical family is doing just fine. After all, what do you expect? To have a huge overage from your annual income that you don't know how to use? No, of course not. It will be spent, or it will be saved. I think it would be easy for the family to reduce expenses & save more--it would just require a change in priorities. But then, saving about 20% of their income, they aren't doing badly at all.

    All of that said, to answer your second question... My wife & I make a combined $120k-ish, but our budget looks nothing like that at all. We are DINK's for now, live in Oklahoma (one of the lowest COLAs in the country), and we prioritize savings & debt payoff. Between retirement, investments, other savings & accelerated debt payments (which I group in with net savings), we save nearly 50% of our income. Certainly, as we have kids the exact amounts/percentages will change, but the philosophy & priorities will stay the same. That's really what effective budgeting is all about... Laying out your priorities, and figuring out the best way to accomplish them.
    "Praestantia per minutus" ... "Acta non verba"

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      #3
      That budget certainly is not extravagant. the taxes are very enticing to go down to that level! My budget is not that different. The taxes are the biggest difference. We spend twice that on food, no mortgage or car payments but we pay 4 times that for taxes. we save about $100k each year with general savings and retirement.

      Comment


        #4
        Interesting article and I dont find any part of it unreasonable. It did make me thankful I dont spend near as much for health insurance or auto insurance when compared to this example. Also thankful i have no HOA.

        Comment


          #5
          Originally posted by dawnwes View Post

          What would your $100K budget be like (or how would it differ) if you met the same criteria (family of 4.)???
          I think kork said it very well.

          We have a $80k budget for a family of 4, in California nonetheless. We don't lack for anything and save about as much (dollar-wise) as in the example. (In fact, we also pay $15k per year for our health insurance and deductible).

          When I look at this $100k budget, I see a lot of waste. I think it's fine given the income. They can certainly afford the waste. BUT, the question is asked in the article, what do those with lesser income do? Well, we pay less taxes and we don't have to save as much. (20% of $80k is less than 20% of $100k. & so on...). & we don't spend $3,000 per year on cable and internet when we can get equivalent services for a few hundred dollars per year. $3k per year for birthdays and holidays? You completely lost me on that one. A $3k vacation is of extreme extravagance, by my own perspective. Vacation is a luxury that lower income people survive without. We personally have a $1500 vacation budget that we can stretch very far. (Could stretch even farther if we wanted to get into the airline miles thing. Is in fact how we plan to pay for our Hawaii vacation next year).

          Bottom line? If this family's #1 spending priority was a $10k (paid in cash) vacation every year they could certainly do it. They'd have to trim some fat and get a little more fiscally efficient, but they could easily afford whatever the heck floats their boat. IT comes down to priorities and efficiency. Creativity helps too.

          Comment


            #6
            I think that spending plan is fairly reasonable, and probably pretty typical for a family making 100K. I agree with MonkeyMama that it could certainly be adjusted in various areas if needed or desired. I also agree that it doesn't correlate that folks earning less must be suffering because some expenses scale with income (taxes, savings, etc.). And there is fat in there that could be trimmed - spend less on vacation, buy cheaper cars and keep them longer so you aren't carrying 2 car payments.

            Overall, though, it's pretty realistic.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

            Comment


              #7
              Very interesting, and not that different from my family's situation. Our mortgage is exactly the same ($1200 a month) but we spend more on medical expenses, less on car insurance, we don't have a car payment, and a few other minor differences.

              Comment


                #8
                In CA I make just under $100k and only get about $53,300 take home from my paychecks and thats before 401k contribution, I do have a 9% deduction for pension. Everything seems to be at least 20% more expensive than in that example, I am doing fine but 100k really is much less than it sounds. Realistically I need about 48-50k take home so there is some room for savings and investments.

                I just take the higher prices as the price for living in CA.

                Comment


                  #9
                  I am assuming their mortgage includes all taxes and insurance as that isn't a line item anywhere else. They pay $1,200/mo. That doesn't get you very far in many areas of the country.

                  And yes, there is excess. $600 for car payments is quite high.

                  I don't think we could eat very well on $500/mo including cleaning supplies and toiletries.

                  We pay $600/mo for health insurance. No getting around that if we want health insurance.

                  Comment


                    #10
                    Haven't read the article, but living in the midwest (pretty average COL), our family of 3 spends about $40-45K per year.

                    We don't have a mortgage, however.
                    seek knowledge, not answers
                    personal finance

                    Comment


                      #11
                      Originally posted by dawnwes View Post

                      And yes, there is excess. $600 for car payments is quite high.

                      I don't think we could eat very well on $500/mo including cleaning supplies and toiletries.
                      YIKES! I didn't catch that on the car payment. That's probably some of the biggest waste in that budget, now that I See it.

                      We eat very well for $500/month. I think some of it is regional. Sure, cost of housing is high where we are and many things are more expensive, BUT we also have other perks and pay less for many many things. Food is one of them, we have an abundance of fresh produce regionally. (Cars is another - our cars last forever in the mild climate and so we have never spent very much on cars).

                      Comment


                        #12
                        In the grand scheme of things I don't think $600 a month in car payments is that crazy. The article states it is for a $300 payment on 2 cars.

                        Both my car and DH's cars out of college had car payments of $250 and they were both used. His latest BMW payment (also used) was just over $600.

                        Now in our case both of those were temporary. When we paid off our college cars (in about 1-2 years) we kept saving one of our car payments in a 'car fund'. We then used part of this money as a down payment on the BMW. The BMW payment was for a 3 year loan at 0.9% interest. The loan itself was just to prevent us from draining our assets.

                        I think spending $600 a month on car payments for all eternity is crazy, but I can see how for a short period of time it would be completely plausable.

                        Comment


                          #13
                          Originally posted by ktmarvels View Post

                          I think spending $600 a month on car payments for all eternity is crazy, but I can see how for a short period of time it would be completely plausable.
                          I took it as an all eternity thing, as most Americans do. I think an eternal $300/month per person car payment is fairly average in our culture.

                          Comment


                            #14
                            Originally posted by ktmarvels View Post
                            In the grand scheme of things I don't think $600 a month in car payments is that crazy. The article states it is for a $300 payment on 2 cars.

                            Both my car and DH's cars out of college had car payments of $250 and they were both used. His latest BMW payment (also used) was just over $600.

                            Now in our case both of those were temporary. When we paid off our college cars (in about 1-2 years) we kept saving one of our car payments in a 'car fund'. We then used part of this money as a down payment on the BMW. The BMW payment was for a 3 year loan at 0.9% interest. The loan itself was just to prevent us from draining our assets.

                            I think spending $600 a month on car payments for all eternity is crazy, but I can see how for a short period of time it would be completely plausable.
                            There is a much simpler option to prevent draining one's assets on a car: buy a less expensive car that you can comfortably afford to pay for with cash, where that cash is saved up so that the expense does not affect your assets.

                            Comment


                              #15
                              I do admit we are a family of 5, with 2 large dogs, and two of my boys are teenagers! So, $500 was fine when they were toddlers!

                              Also, we do choose to buy some more expensive food items.

                              The article said they ate, and bought toiletries and cleaning supplies for $500 without being frugal. To me, I can't imagine making it work without some element of frugality.

                              When we stopped being so uber careful with our spending, the grocery bill was the first thing that went up! It is so much easier now.

                              Dawn

                              Originally posted by MonkeyMama View Post
                              YIKES! I didn't catch that on the car payment. That's probably some of the biggest waste in that budget, now that I See it.

                              We eat very well for $500/month. I think some of it is regional. Sure, cost of housing is high where we are and many things are more expensive, BUT we also have other perks and pay less for many many things. Food is one of them, we have an abundance of fresh produce regionally. (Cars is another - our cars last forever in the mild climate and so we have never spent very much on cars).

                              Comment

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