Author Topic: Can couple afford to live on only 110,000 a year?  (Read 1990 times)

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Offline Matthew

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Can couple afford to live on only 110,000 a year?
« on: August 31, 2010, 12:11:16 PM »
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  • Shawn and Mary Kate DeRose live comfortably on a combined $133,000 income.

    The short version:
    Right now the couple make $133,000. They are highly in debt (read: living beyond their means)
    The wife got a deal to work half-time for half the pay, which would bring them DOWN to $110,000.

    But here's what they're trying to decide: Can they afford to live on only $110,000 -- they have two children, after all!


    (MONEY Magazine) -- Shawn and Mary Kate DeRose live comfortably on a combined $133,000 income. They pay their debts, save for retirement, even have room to splurge on dinners out and high-end gym memberships.

    But the birth of their second child, Regan, in May has Mary Kate, 33, a literacy coach for a school district, thinking of dialing back to part-time work. "In a perfect world, I'd be able to spend more time with my girls," she says.

    Her employer will let her go half-time for half pay: $32,600. But is that enough -- along with the $78,000 that Shawn, 33, earns as an assistant principal -- to support their lifestyle?

    With a $3,600 monthly debt load that includes payments on a mortgage, home-equity loan, auto loan, and credit cards, their budget will be tight, warns Alexandria, Va., financial planner Tim Wesling.

    They'd need to cut debt by $500 a month and other expenses by $1,300, he says. That's more than the DeRoses had bargained for.

    "We really have to think about it," says Mary Kate.
    Their Goals

    1. Meet current expenses on a smaller monthly income: $8,600 rather than $11,000.

    2. Keep saving enough for retirement. Right now they have $7,500 in cash, $38,500 in retirement funds and $2,100 in college savings accounts.
    What They Must Do

    1. Cut the debt. The DeRoses are paying 7.8% on a $63,000 home-equity loan. They could refinance and shave more than 2 percentage points off that rate, reducing their minimum payment by $200 a month. Wesling also wants them to nix the $300 a month they put on credit cards (for meals out, clothes, and the like).

    2. Take the ax to expenses. The couple will save $500 a month on day care, but that still leaves them with $800 to cut. They might get rid of their older car and reduce costs across their budget to do it.

    3. Keep saving. Shawn should continue stashing 10% of his income for retirement even as the couple trims elsewhere. As he gets raises, he should direct the cash to retirement and the home-equity loan.
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    Offline Matthew

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    Can couple afford to live on only 110,000 a year?
    « Reply #1 on: August 31, 2010, 12:13:01 PM »
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  • They splurge on dining out (probably not fast food) and "high-end" gym memberships -- even though they have debt service of $3,600 a month!?

    Here we have some sheep that think the music's going to keep playing forever. If the Great Depression hits them, they will be financially ruined, and they will learn just how little it takes to survive on.

    Matthew
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    Offline Matthew

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    Can couple afford to live on only 110,000 a year?
    « Reply #2 on: August 31, 2010, 12:13:58 PM »
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  • Here's a chart that went with the story:

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    Offline Matthew

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    Can couple afford to live on only 110,000 a year?
    « Reply #3 on: August 31, 2010, 12:17:30 PM »
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  • Here is a picture of the family.

    If the past is any indicator of the future, the mom or dad here will probably sign up on CathInfo in about 4 months. It's happened about 5 times before!

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    Offline parentsfortruth

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    Can couple afford to live on only 110,000 a year?
    « Reply #4 on: August 31, 2010, 04:25:53 PM »
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  • The things I would be able to do with $11,000 a month...
    Matthew 5:37

    But let your speech be yea, yea: no, no: and that which is over and above these, is of evil.

    My Avatar is Fr. Hector Bolduc. He was a faithful parish priest in De Pere, WI,


    Offline wallflower

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    Can couple afford to live on only 110,000 a year?
    « Reply #5 on: August 31, 2010, 04:36:09 PM »
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  • Only 110,000? The horror!

    Being serious now, I'm not understanding the problem. They will still bring in 8600 a month while their debt load is 3600 a month. There is still a 5000 dollar difference in their favor. What is tight about that?

    Offline Matthew

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    Can couple afford to live on only 110,000 a year?
    « Reply #6 on: August 31, 2010, 04:45:41 PM »
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  • That's what I was thinking.

    You can buy a lot of comfort for $5000 a month!

    Their "debt load" of 3600 seems to include house, car, loans, and credit card debt.

    She hasn't gone to part-time yet -- so she's still pulling in 11,000 a month.

    So that $7,500 a month is being spent on food, utilities, entertainment, and high-end gym memberships -- and let's not forget "stuff".

    I realize that SOME of that is going to savings -- but looking at how much they have saved, they don't seem to be very impressive savers. Most of that money is being spent every month.

    Matthew
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    Offline Elizabeth

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    Can couple afford to live on only 110,000 a year?
    « Reply #7 on: August 31, 2010, 08:40:31 PM »
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  • It's REALLY expensive to live in Alexandria.  The daycare will be a killer expense.


    Offline CathMomof7

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    Can couple afford to live on only 110,000 a year?
    « Reply #8 on: August 31, 2010, 11:00:28 PM »
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  • My Lord, have mercy on me.  I can only dream of what our family could and would do with 10K a MONTH.  We could pay off our house in less than 2 years AND still have more each month than we make right now.  Amazing what some people think is a "tight budget", a "struggle", and a "sacrifice."

    Offline gladius_veritatis

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    Can couple afford to live on only 110,000 a year?
    « Reply #9 on: August 31, 2010, 11:02:54 PM »
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  • The supreme reality check is on the way for all of us, CathMom.  God bless you and yours.
    + Vincit veritas +

    Offline TKGS

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    Can couple afford to live on only 110,000 a year?
    « Reply #10 on: September 01, 2010, 06:55:46 AM »
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  • If she quit her job and stayed home and raised the children, they would probably end up with more disposable income than they have now--or at least more than the part time job would pay.  They would pay less in income tax, they would pay no child care, she wouldn't have to eat out for lunch every day, transportation to work would be greatly reduced, and we could go on and on and on.


    Offline Elizabeth

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    Can couple afford to live on only 110,000 a year?
    « Reply #11 on: September 01, 2010, 04:37:29 PM »
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  • LOL as soon as I saw the photo I KNEW they were from N. Virginia!

    Their teeny house probably cost $800,000.

    Offline Belloc

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    Can couple afford to live on only 110,000 a year?
    « Reply #12 on: September 02, 2010, 08:12:54 AM »
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  • My cousin used to work for Enron or one of those companies that went haywire yrs ago, she got a huge paycheck and bonus, paid off a bunch of things and stayed home to have, in her early-mid 30's, her daughter and raise her. Spouse went to work and made a little more than this couple and my uncle and aunt were lamenting they only survive, somehow, on $125,000 a yr!!

    My response, that must be nice!@ at that time, I wa making a little less then $30,000/yr
    Proud "European American" and prouder, still, Catholic

    Offline parentsfortruth

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    Can couple afford to live on only 110,000 a year?
    « Reply #13 on: September 02, 2010, 12:33:49 PM »
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  • Quote from: Belloc
    My cousin used to work for Enron or one of those companies that went haywire yrs ago, she got a huge paycheck and bonus, paid off a bunch of things and stayed home to have, in her early-mid 30's, her daughter and raise her. Spouse went to work and made a little more than this couple and my uncle and aunt were lamenting they only survive, somehow, on $125,000 a yr!!

    My response, that must be nice!@ at that time, I wa making a little less then $30,000/yr


    Try to imagine a family of 7 people that manages off of less than $30,000 a year and you'll see my life. :)

    Thank you God.
    Matthew 5:37

    But let your speech be yea, yea: no, no: and that which is over and above these, is of evil.

    My Avatar is Fr. Hector Bolduc. He was a faithful parish priest in De Pere, WI,

     

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