What are we doing wrong finance wise?

[hopemax]

I wonder about our neighbors all the time. They have 1 income and have everything. Biggest house in the neighborhood, expensive cars/trucks, vacations every other month, movies, out to eat, expensive clothing (and several other big ticket things). I just can't figure it out how they do it.

As a one income household, I just wanted to post that having nice things and being one income are not mutually exclusive. DH and I made the decision to go one income when we graduated college. It was meant to be temporary, but 12 years later it's permanent. We had to make a lot of hard choices early on, that have turned out to be habits as we got older. As DH's income has increased, we have gotten to the point where we are content and comfortable. DH has a better than average job, compared to some (service/factory/teaching) jobs. But it's not a fabulous paying job either; he's a software tester. Without speaking hard numbers, we found out that DBIL&DSIL make more than DH does, but yet they feel very pinched, yet we are comfortable.

For us it has boiled down to priorities. We only have one car, we delayed buying a home until now (we close in 19 days. It isn't the biggest house in the neighborhood, but it does have the biggest lot and a great location). We both have 2 hobbies we are really into. We do eat out a bunch. But we don't do movies, music, concerts, alcohol, clothes, makeup/hair/pedicures, coffee. I watch what we spend at the grocery store, I do a lot of shopping online, antique/thrift shops, garage sales. And probably our biggest "saver" is we don't have kids. Those little guys can sure do a number on a budget.

Unlike your neighbors we don't have "everything." But I have a very expensive Disney habit, that results in multiple vacations in a year, DH has a couple expensive habits too. I scrapbook which is also very pricey. It's enough eye-catching stuff, that I know DH's family wonders how we do it.

Not only do you have to figure out where your money goes, but you have to figure out where you WANT or need your money to go. Once you know that you can figure out ways to get those wants/needs for cheaper (coupons, menu planning, ebay, garage sales, sale rack). And it makes it easier to say "no" to everything else.

Going back to the neighbors that seem to have everything. They may be in debt, or maybe they aren't adequately saving for retirement/college funds. Or maybe they know where to get the best deals, have a favorite consignment shop, and are saying "no" to some things that you are saying "yes" to.

 

[dvcgirl]

I'm kind of feeling a bit down about our finances today. My husband makes good money, I am a stay at home mom. We have three kids and own a house. Currently the only debts we have is our home and about $1800 on our credit card. It seems like we can never catch up. Why is it that some people seem to have so much? Are they just going deeper and deeper in debt? I feel like we can never do what we want or purchase what we want. I know I should feel blessed because we have a very loving family. Today, though, I just feel like venting I guess. Anyone else feel like this? Any great words of wisdom? I think I am going to go to a cash only system again and stick with it. I know that will help. I just get frustrated with wants and I know I shouldn't.

Honestly, you sound like you're better off than most Americans, especially these days. Putting anything at all into your 401K and carrying only $1,800 in cc debt puts you ahead of the pack. Keep in mind, being anywhere near "the pack" these days isn't a place you want to be .

The only thing you may want to build up is a bit of an emergency fund if you don't have one already (about 3-6 months of expenses). Also, we budget for larger "wants" like vacations or big purchases/toys. Sometimes it's simply making choices. We wanted to do a lot around the house this year, buy new dining room furniture and DH wanted some new guitars/equipment. So...no vacation this year. Next year is a vacation to Disney, and we'll begin saving for our next trip to Europe in 2011....so no new guitar stuff for DH next year. It's all about communication and compromise when it comes to "wants".

Of course, saving has to come first. And then like Crisi often says around here....sometimes it's an income thing. Some of those people you know who seem to have it all may simply make a lot more. It's not all that tough to save, live beneath your means and satisfy most of your wants on a large income. The problem for many Americans is that they were living way above their means....on credit. And those are the folks that are really experiencing what I would call The Great Downsizing of the American Lifestyle.....

 

[Tweevil]

I am right there with you...
Single mom, mortgage - no car payment now (one may be coming up due to auto issues) and about $2000 in cc debt. Now, due to my divorce the credit isn't all that great but I am trying to repair it.

I do what I can, and as a salaried person who wonders why her hourly people are driving new cars (they make tons of OT) I think I need to ask for a raise... lol

Keep your chin up.

 

[DisneySJB]

Hello! You are truly blessed to be able to stay home with you kids.

I agree with the other posters that people are in a lot of debt. It is a dirty little secret that a lot of people have.

Also, I have found that a lot of people get help from their parents. I have friends who don't save for their kid's college, because the "rich" parents have already committed to paying for it. I also have noticed that a lot of people go on vacation with their parents. (I bought DVC so my DD will have this luxury some day) I know people whose parent's buy their kids school clothes and so on and so on. So, it looks like they "have it all", but they are heavily relying on someone else.

 

[crisi]

Of course, saving has to come first. And then like Crisi often says around here....sometimes it's an income thing. Some of those people you know who seem to have it all may simply make a lot more. It's not all that tough to save, live beneath your means and satisfy most of your wants on a large income. The problem for many Americans is that they were living way above their means....on credit. And those are the folks that are really experiencing what I would call The Great Downsizing of the American Lifestyle.....

And that income thing is often hidden. I had ANOTHER one of those surprises this summer.

My son has a friend. His mother is a SAHM, his dad is a computer programmer. They have two kids in private schools, nice cars, nice vacations, a beautiful home - and I'm thinking "eyeballs in debt." And we are driving his friend around and my son says "Wow! Look at that house" - and points to a $3M home. And his friend says "oh, my grandpa's is bigger."

"Oh?" says I.

"Yeah, my grandpa owns ____________." The company he named is one that is now publicly traded, that it turns out grandpa founded - and is still the largest shareholder of. You'd probably recognize the name.

I've known these people three or four years - neither one has ever mentioned that grandpa is loaded. And, of course, I haven't ever asked "how do you afford it." Now I know - because their ten year old said what Mom and Dad probably would have never mentioned.

 

[disneybound31]

I would have to agree that many people rely on their parents. I know mine try at times to help us out when it seems like we can't afford something most others have- like a Wii. We chose not to have a Wii on our home for several reasons- because, for us, it was cost prohibitive and we just did not want our kids to have 'another' video game type toy. They bought us one last year. Said 'everyone' had them and they wanted us too as well. And that was nice of them- but I would never ask my family for $ or expect them to give us any unless we were in some kind of life and death or other medical emergency with us of the kids.

I 'might' ask for temporary help or a short loan if we were to lost a job or something, but never for a material want.

We have friends whose parents pay their car payments and pay for their kids school lunch money. I think that is ridiculous when they have new cars and top notch cable and eat out too often.

 

[aka-mad4themouse]

And that income thing is often hidden. I had ANOTHER one of those surprises this summer.

My son has a friend. His mother is a SAHM, his dad is a computer programmer. They have two kids in private schools, nice cars, nice vacations, a beautiful home - and I'm thinking "eyeballs in debt." And we are driving his friend around and my son says "Wow! Look at that house" - and points to a $3M home. And his friend says "oh, my grandpa's is bigger."

"Oh?" says I.

"Yeah, my grandpa owns ____________." The company he named is one that is now publicly traded, that it turns out grandpa founded - and is still the largest shareholder of. You'd probably recognize the name.

I've known these people three or four years - neither one has ever mentioned that grandpa is loaded. And, of course, I haven't ever asked "how do you afford it." Now I know - because their ten year old said what Mom and Dad probably would have never mentioned.

And this is why I try to refrain from commenting on "other people's spending". You just never know what someone else's finances really are. The best we can do is not measure our oen spending by using someone else as a yardstick.

OP, I think there are times when all of us feel that we could be doing better with our money than we are. I hope that you're feeling a little better about where you are with your finances. Keep working on spending just a little less and that revolving $1800 balance on the CC will eventually get smaller and smaller every month.

 

[HeyIt'sMe]

You never really know what's going on behind the scenes with "the Jones". Like other posters have said "the Jones" are probably deep in debt.

We are friends with a couple that spend ALOT of money on big ticket items (season football tickets, several trips a year, etc) and we always wondered how they did it. He works in IT and she is self-employed. My DH, who has a FaceBook page, always comments that our friends (well, mostly the wife) has new pictures posted of her/their most recent trip.

Several months ago the wife told me they were re-financing their house (again) because they had no cash flow. Then her husband was laid off a couple months ago but luckily found another job quickly. BUT now he's making almost $2,000/month LESS. AND we also found out that they have a ton of credit card debt. That's how they buy their things and take their trips - they financed them.

And the kicker is - they have a big trip to California planned for the end of next month. Some people never learn.

 

[DISdreamin']

I have neighbors I seriously wonder about...I know, I know - it's none of my business. But man, how they have what they have on one income, and that coming from a source where I know the salary range (salaries in the field are public knowledge). I just don't get it?! We have two incomes and don't have tons of extra money just floating around.

Thankfully when it comes to finances, DH and I both have extremely stable jobs that we enjoy, we have a manageable mortgage, we live near work and share a car, and we agree (usually) on spending and saving habits. It could be much worse!

And lets not even forget our wonderful kiddos! Life could be so much worse. Maybe we don't have a ton of material things (and we live in a neighborhood where many people do enjoy their toys!) but we are pretty darn happy with our lives.

 

[Justsyd2]

I hear you saying that your DH makes good money, but you feel that you can never catch up...where does the money go? You should probably write down everything the spend (yes, everything) for one week. It's doable. Then, sit down and look to see where the money is going, and figure out how better you can control it.

DH and I take a lot of trips, but, we have two savings accounts, we have no debt, our cars (three) are all paid for, and we live within our means. We budget money and stick to our budget so that we can do the things we want to do.

 

[lisaross]

What works for me and i definitly suggest it is to open different accounts perhaps in ING on-line...You will stop depending on that credit card each month. For example i pay my water bill each quarter, BUT ihave an ING acct. called "water bill" each month i put in a certain amount then when the quarterly water bill comes i transfer the money over from the ING account! It makes me feel powerful - in charge i do this also for my vacation fund...now planning a cruise in 2011 so i have opened an acct. in ING called Cruise vacation - every month i transfer in a certain amount of $ and so on the same for my car - i have an account for that w/money i transfer in each month so when the ins. bill comes or a repair etc. i don't have to charge it i already have the money

Good luck - it does become a game after a while!

lisa

Honestly we really are not in debt. We do have our $1800 credit card but that pretty much gets paid off monthly. We just depend on it does that make sense? We are saving for our future 401k wise. We are pretty frugal too. I am in no way high maintenance. Sometimes it is just hard to live in our neighborhood where people seem to "have it all". I don't mean to sound like I am complaining. I know we are lucky. I was just feeling really down. Catch up wise, I was just referring to saving for wants and not depending on our credit card.

 

[DawnM]

I know many people don't like it, but I recommend Dave Ramsey.

We stopped using credit cards for most purchases.....we used to pay $1,500 or so per month for misc. things and now that we carry CASH only we spend only $800 or so for the same purchases.....we buy less!

If you take $75 in cash to the grocery store you are far more conscience of what is going in your grocery cart for example.

DH makes a decent income and I am currently staying home. We only owe on our house now, but we used to owe on student loans and a car as well. We followed Dave Ramsey and paid off all of our debts other than the house by putting our credit cards away and using cash envelopes only.

It is NOT easy but it was SO worth it.

We live in a cul-de-sac. We are the ONLY ones without a 2nd home in the mountains or at the beach. But, after a pool party (in our neighbor's new 200K renovation that included a beautiful pool) we now know we are also the only ones financially solvant. In fact, that neighbor with the 200K renovations now has listed the house "they planned to die in" because they can't pay the loans anymore. It was listed at 850K and has come down to almost 750K now. It is the most expensive house in our neighborhood and I think they way overdid it.

Dawn

May I suggest 2 books:

The Millionaire Next Door
Total Money Makeover

 

[crisi]

Another way to catch up is to spend a few months postponing and downsizing. Get an extra six months out of the car, and extra month out of your son's tennis shoes, another year out of your old coat. Do I need it? Do I need it NOW? To inspire you on this project, clean your bathroom today and figure out how many bottle of "stuff" you own that are duplicates or similar to other stuff (if you are like many people, three moisterizers, six hair products, four bottles of shampoo, etc. - and this is a good one because that stuff is usually pretty expensive, so you can easily find $500 "wasted" dollars in your bathroom.)

Avoid eating out and eat budget meals for a bit if you don't already. Try a food stamp challenge, find out what the food stamp allowance is in your area and have a family project to eat for that much for a week....increases social awareness as well as saving money.

And I've said this before....avoid the "good money" trap. We have two "good" incomes and I know from experience that whenever I convince myself that we have two "good" incomes, I spend more - and a LOT faster than I should. When I think about us as needing to watch our money in order to get two kids through college, I do. (With two good incomes, our kids are not qualifying for financial aid other than loans at market rate - and maybe a token gesture. Might as well just accept that reality and save).

Another thing is avoid the "good money/gross income" trap. We tend to think "well, we make $80k a year" (or whatever), that's good money. And we forget that by the time we pay taxes, make a 401k contribution, have the insurance taken out, give $10 a week to the United Way, etc. that $80 is often $40k in take home - or less. $80k makes it sound reasonable to spend $2,500 going on vacation - after all, its just 3% of your income. But its 6% of your take home pay.

 

[MrsPete]

I agree with the majority here: When we look around at others, we tend to get a skewed perspective on what they really have. Perhaps these people who tend to "have it all" really are carrying more debt than you, are leasing cars, aren't putting money away for retirement, etc.

However, I have another question for you: You said that you have only two debts, but what percentage of your paycheck is already spent before you get it? That is, what percentage of your take-home pay is going to the mortgage and the credit card? If it's more than 50%, you're not likely to "catch up".

If it's more than 50%, you need more income -- even if it's only for a while -- or you need less debt (which isn't so easy to do in these circumstances).

If your gotta-pay stuff does total less than 50% of your take-home pay, then you need to tighten up your budget. If more thana 50% of your money "is yours to keep", then you should be able to revamp the budget to make ends meet.

 

[blanq]

It is totally pointless to speculate about someone else's money situation, and it seems this thread is full of people who do it. I would just suggest you concentrate on you and your situation. If you are down, there is a reason and perhaps there are changes you can make with respect to how you budget or spend. Families who choose to have a stay at home parent often do give up in the income department, but they also gain so much that you can't put a price tag on. Even with a husband who makes "good money" as you state, that money needs to feed, clothe and support a family of five so it is all relative. If you are doing the right thing for your family by staying home, then the only other thing to look at is how you are spending the money you have available.

 

[Chicago526]

I agree with those that say many people get help from family. My friend and her husband are closing on a house in two weeks, his parents gave them the bulk of the down payment to "avoid PMI" (which would be about $50 a month, not exactly a budget buster). And since my friend's son is her in-laws only grandchild, I'm 99% sure they haven't had to buy anything for baby since the baby shower before he was born! They don't live high off the hog, but I know they get a decent amount of help from his parents.

Another friend of mine also has inlaws that buy tons of stuff for her kids. I don't think they've helped out with money at all (my friend is very independant that way) but I do hear her complain about how they have no more room in their small home for more toys for the kids, but they in-laws keep buying them stuff anyway.

This is totally alien to me, my parents wouldn't dream of offering to pay for anything, and as for gifts for the grandkids, they get 1 thing at b-days and 1 thing at christmas and that's it! All the hugs and kisses they want, but Grandpa isn't a piggy bank or the CEO of Toys R US. And my DH"s mother is on fixed income, couldn't help us out if she wanted to.

 

[crisi]

And this is why I try to refrain from commenting on "other people's spending". You just never know what someone else's finances really are. The best we can do is not measure our oen spending by using someone else as a yardstick.

Another one from this year....my husband has a friend whose been out of work. He was out of work before the economy went south. He's never had a lot, but I always assumed he was struggling.

Nope, he says this Spring - when the economy is poor - I should probably get a job. And goes out an has one in three days. Turns out his skill set is in high demand. And the reason he wasn't working - he was the only child of his father, who divorced his mother years ago, saved for his retirement, owned a home, and then died two years into retirement with a 401k balance and only my husband's friend to inherit. So my husband's friend was in a job he didn't like, and took a few years off and lived off the proceeds from Dad's house and the 401k.

If he appeared to not have much, it was because he was stretching out the inheritance as long as he could. And if he didn't have a job, it wasn't because he couldn't get a job, it was because he was choosing to pursue other interests for a few years.

 

[mrsklamc]

Is it in the movie 'Failure to Launch' that the friend who you assume 'lives with his parents' turns out to be independently wealthy and kindly allows his parents to live with him?

You just never know. My wonderful, amazing husband bought our house when he was young and didn't know better- but a bigger down payment would have made a HUGE difference in the amount of our mortgage every month. You just never know about other people's finances.

 

[Chicago526]

Another one from this year....my husband has a friend whose been out of work. He was out of work before the economy went south. He's never had a lot, but I always assumed he was struggling.

Nope, he says this Spring - when the economy is poor - I should probably get a job. And goes out an has one in three days. Turns out his skill set is in high demand. And the reason he wasn't working - he was the only child of his father, who divorced his mother years ago, saved for his retirement, owned a home, and then died two years into retirement with a 401k balance and only my husband's friend to inherit. So my husband's friend was in a job he didn't like, and took a few years off and lived off the proceeds from Dad's house and the 401k.

If he appeared to not have much, it was because he was stretching out the inheritance as long as he could. And if he didn't have a job, it wasn't because he couldn't get a job, it was because he was choosing to pursue other interests for a few years.

You know, I've heard of that...it's called "pre-retirement". People take a take few years (or even a whole decade) to travel, have hobbies, enjoy time with the kids, all the things we usually wait until retirement for, and then go back to work, planning on working until well past traditional retirement age to make up for the years they took off. The idea is to enjoy your money while your young and healthy enough to do it, and work when you're older and don't have as much going on in your life.

I can see the attraction, but I'd worry that I'd get too sick to work well into my 70's and then I wouldn't have enough money! With my luck, I'd be too ill to work much past 65 and then I'd spend the next 10-20 years flat broke.

 

[KAMKIM]

We are far from rich, but not even close to poor.

But sometimes I feel like everyone around me has more and I do get jealous BUT when I tuck my girls into their safe cozy little beds with full bellies, I remind myself how many mothers would give anything to be in our shoes.