Bad Math

[LivingAlmostLarge]

So you want to hear something weird? A friend of mine is a teacher married to a guy who works for a small company (aka cheapo). They have two kids the same ages as my two and she is staying at home until September.

So obviously they are going to have to pay daycare for two kids. Jointly they make a little over $100k/year. She says her husband makes all the financial decisions, this by the way drives me nuts that she has no idea about her finances period. I mentioned to her that perhaps staying at home would be more cost efficient, but she says her husband says that after paying for daycare for two kids they save $500/month.

Here's where the story just doesn't jive. Currently her DD1 is in preschool 2 days a week for $200/week. We talk openly about costs of preschool. When she is full time she will be $400/week. In September her second baby will also be $400/week as well because of the second child discount, otherwise she'd be closer to $450. So at $800/week it would be $41600/year. In order for $500/month to be saved she'd have to be making around the $48k she mentioned making. Okay but that's before taxes and everything.

So I can see where the $500/month. But here's the problem. I don't get where how after taxes, job expenses, gas, union dues she really is saving $500/month. She is barely grossing $500/month over childcare. How is it worth it to work? She says that if she doesn't work they could save anything? Aren't they just paying to work and the saving is from living on less?

So it gets worse. But here's the BAD part. So they recently in September they remodeled their home for $30k. But they didn't pay for it. Nope Cheapo's parents gave them the money, because cheapo felt he deserved it. He felt his parents owned him because they watch his brother's child for free but don't watch his kids because they don't want to drive and drop off the kids. She doesn't like her in-laws but they did just fork over some dough.

Cheapo's dream is sail around the world for a year. Hence the $1k sailing lessons. Mind you she mentions wanting a third kid but not being able to afford it. I point out no one is saying you need to own a boat!!! Or that you need to move so each kid can have their own room.

I don't get it. Today she says we aren't paying for our two girls college. But both her and her husband had their college educations paid for. But instead they are saving to buy a boat that costs $150k, a 32 ft sailboat because it's their dream, and instead take out a loan to buy it in 5 or 10 years.

I couldn't help myself I said are you nuts for taking out a loan for a boat? I mean I guess they don't have to pay for college but instead using it to pay for a boat? Or sailing lessons? I will guess their kids would rather have $4k in a college fund instead of sailing on a boat.

Also their kids would love to go to a good preschool instead of one where they allow her kids to eat other kids foods and break out into hives from food allergies that they told the school about. Or watch tv as part of the daily routine. Or "be bullied" by other children. I don't get why a boat and savings would be more important than paying for the best care possible.

She said it's Cheapo's dream and my dream is a nice home and they are choosing to live in a smaller home to afford the boat. My eyes nearly bugged out when she said her musical instrument costs $30k and her second instrument cost $10k, bought courtesy of her parents.

I just don't get it. Seriously. Am I crazy for thinking musical instruments shouldn't cost more than my two cars combined?

She said they don't vacation except one week in which they rent a house for $2k. You visit hawaii multiple times a year, to see family. And our one week vacation to prior cost us less than $1000 for the week including airfare, car rental, food in southern cali. I was aghast at paying that price for just lodging.

I am floored that people at what people think they can afford. Is it just me? Am I that out of the norm? I know that it's "normal" to have a car loan, CC debt, etc. But this just like very expensive taste more than the norm.

[Redraidernurse]

It all boils down to priorities. And blindness. They are blind to the fact that just because on paper it looks like they'll be saving $500/month, much of that will be eaten away by some of the things you listed. There are many working moms who don't realize this.

It sounds like their hobby they enjoy is sailing. As much as some of us on these boards value helping pay for college, to some people that's not important. Let's face it, maybe some people would rather be more selfish and spend the money they are working to earn on themselves instead of their children. I can't believe sailboats cost that much, geez.

[Wino]

I knew a girl who lived very much like your friends are now. She made about $50K a year, and spent about $50K per year. She had declared bankruptcy once, which was the only reason she spent only what she made. She just couldn't get credit extended to her for anything, so it was impossible for her to spend more.

Her motto, "I work to live. I don't live to work." Every weekend, she went out and "did something."

One year, in October, she was diagnosed with stage 4 cancer. She passed away in December of the same year.

She was the happiest person I ever knew. I'm glad she lived the way she did, and I know of no one who knew her who has ever had a bad thing to say about her.

Let your friends spend how they choose. Who is to say their house won't have a sink hole open under it and swallow them all up the day they get back from their round-the-world cruise? Sure, if they live long enough to retire, they'll have problems. If they die young, then they'll die happy.

I guess it depends on how you think about things, and not just the math.

[elessar78]

It's the love of stuff that I find problematic. I feel lucky because I seem to have simple wants. I don't really care much for cars as toys or status symbols, the latest clothes, latest electronics, etc.

I do wish we could go on an annual vacation but in the five years we've been married we've had events that prevented that-illness, home purchase, birth if children- so we went without. We spend a little annually on furniture, but not if we can help it by scouting Craigslist for a bargain.

I roll my eyes at my SIL and BIL's situation as , IMO, they overpay for everything. But it's their life.

Maybe Im just really lucky that what I like is relatively inexpensive.

[MonkeyMama]

Is she working full-time? I am just continually amazed at people willing to work *full-time* for so little money. $500/month?? It's crazy. If she isn't working quite that much, I know many people who are. Is just extremely financially inefficient. (I am always amused when the average person tries to wrap their brain around my spouse *not* working. Trust me, once we cut out income taxes, daycare, working expenses, yadda yadda, there is nothing to miss. IT is an adjustment and kids are expensive, but neither of us will be working full-time for pennies. We might have considered it if spouse liked his job, for long-term growth. So, I will preface that with no one in my house will be working a crappy job FULL-TIME for pennies. We could find a crappy part-time job if we need/want the pennies).

[phantom]

Is it possible that your friend figures that she would pay for her kids to be in preschool whether or not she is working, and that she therefore considers the childcare costs associated with her working to be $200/kid? That might make the math work a bit better. Alternately, are preschool and your friend's teaching job year-round? Perhaps you're thinking of 52 weeks of child care expenses when you should only be thinking of 40?

I do have to agree that spending $150,000 on a boat when you only make $100,000 sounds crazy. It would have to be an amazingly awesome boat. By the time you consider income taxes and the cost of financing the boat, that's at least 2 years worth of work each from 2 people. I have a really hard time imagining enjoying a purchase enough to justify that, but I hope your friend and her husband do.

[elessar78]

Another thing to consider, and some people may not come forward with this reason, but some parents are not cut out to spend all day watching their kid. It's not that they don't love their kid, but some people don't have the all-day caregiver gene. Nothing wrong with that, IMO.

[Joan.of.the.Arch]

Maybe they know that the parents who bought the $30K remodel and the $30k and $10 instruments are going to pay for many more things for them. Perhaps they are counting on an inheritance.

[disneysteve]

I knew a girl who lived very much like your friends are now. She made about $50K a year, and spent about $50K per year. She had declared bankruptcy once, which was the only reason she spent only what she made. She just couldn't get credit extended to her for anything, so it was impossible for her to spend more.

Her motto, "I work to live. I don't live to work." Every weekend, she went out and "did something."

One year, in October, she was diagnosed with stage 4 cancer. She passed away in December of the same year.

She was the happiest person I ever knew. I'm glad she lived the way she did

Let your friends spend how they choose. Who is to say their house won't have a sink hole open under it and swallow them all up the day they get back from their round-the-world cruise? Sure, if they live long enough to retire, they'll have problems. If they die young, then they'll die happy.

I have trouble with this line of thinking: "I might as well live it up because I could get hit by a bus tomorrow." While that's true and none of us knows what the future holds, I find it to be a pretty depressing way to live. I'd much rather be optimistic and prepare for the future. If I die prematurely, then my family will benefit from my savings and planning.

One thing that we never seem to hear about is what happens to those left behind when these "live for today" folks die. Their families are often devastated, both by the emotional loss and by the financial loss. It often destroys the spouse and/or kids who survive. No money for funeral expenses. No money to live. Often no life insurance.

[MonkeyMama]

Another thing to consider, and some people may not come forward with this reason, but some parents are not cut out to spend all day watching their kid. It's not that they don't love their kid, but some people don't have the all-day caregiver gene. Nothing wrong with that, IMO.

I personally in no way shape or form have the "stay home" gene. But I also do not have the "work for pennies" gene either. So basically, yeah, I wouldn't choose either option.

[disneysteve]

I personally in no way shape or form have the "stay home" gene. But I also do not have the "work for pennies" gene either. So basically, yeah, I wouldn't choose either option.

My wife, unfortunately, doesn't have the "work all day" gene.

She was perfectly happy to be a SAHM for 10 years and would still be at home now if I didn't nudge her back into the workforce even part-time.

[~bs]

I knew a girl who lived very much like your friends are now. She made about $50K a year, and spent about $50K per year. Yes go on the cruise if you can afford it. But not if its going to hamstring your future. She had declared bankruptcy once, which was the only reason she spent only what she made. She just couldn't get credit extended to her for anything, so it was impossible for her to spend more.

Her motto, "I work to live. I don't live to work." Every weekend, she went out and "did something."

One year, in October, she was diagnosed with stage 4 cancer. She passed away in December of the same year.

She was the happiest person I ever knew. I'm glad she lived the way she did, and I know of no one who knew her who has ever had a bad thing to say about her.

Let your friends spend how they choose. Who is to say their house won't have a sink hole open under it and swallow them all up the day they get back from their round-the-world cruise? Sure, if they live long enough to retire, they'll have problems. If they die young, then they'll die happy.

I guess it depends on how you think about things, and not just the math.

She's just 'lucky' she died early and didn't make it into retirement years or have to face kob loss, disability, need to support someone else, etc. In any of those cases, she would not be the happiest person you've ever met.

To me life should involve balance. You SHOULD be willing to spend on what makes you happy, but also be willing to invest in your future.

[papa_squat]

You say this person is a friend of yours, but to be honest you don't really talk about her like she's a friend. I can understand showing concern that maybe her husband (Cheapo?) is driving their finances into the ground, but it also sounds like you are passing a lot of judgment on things that mostly boil down to different lifestyle choices.

I'm not criticizing; I've been there. I see a few friends that make me wonder some of the same things you do, but I don't ask how they can afford those things or ask about numbers. They may have trust funds or may have made smart investment choices early on that you don't know about, so it doesn't really help wondering how they afford it. More importantly, you don't want your focus on their financial picture to come between your friendship. If I were that friend, some of the things you mentioned saying to her would leave me side-eyeing you, wondering why it's any of your business in the first place. But like you, I hope the conversation might serve as some sort of wake-up call that she should start getting more involved with the finances to ensure their goals and dreams are in touch with their financial reality.

[shaggy]

I'm confused that any of this is your business. I don't mean that to sound harsh.

There are many musical instruments that cost as much as a car. Everyone has their hobby or interest that they like to indulge in. I have a ton of expensive jewelry, but I don't own a car. Priorities differ.

Live the way YOU want to, and let others go their own way. The fact that I earn a lot of money doesn't make me morally superior to anyone else.

[LivingAlmostLarge]

Trust me not a snarky comment to her about the spending other than HOLY CRAP $150k for a boat is nuts and why would you take a loan for it? That was just too much to pass up.

It comes out in complaints. Hey she shared that they do expect inheritances to help them along. She also shared that they resent their parents for not forking over more money now for them to enjoy their life rather than waiting till they die. She's said that point blank they asked their parents for money to enjoy now, but their parents did say no.

I told her it's probable that her parents need the money and her in-laws too. Her response was they don't, they are very well off. I don't know, but she was venting how it was unfair that their parents won't help them out now while they struggle.

MM, I think she wants to stay at home but her husband insists they save money by her working. I don't know what money, but that some how they do. She definitely wants a third kid, asking if we thought in another 5 years she'd be too old at 37. I said no, but who knows where your fertility goes. It may not happen easily or naturally.

More than one friend has said if you want the third kid have it. No one says I regret my third kid, but probably more people say I regret a boat. But it basically is the boat or the third kid. Her husband wants the boat.

She would love to try for a son. I can't say I blame her. And she's been a nanny, worked in daycare, I think she loves her kids. Plus working long hours she is missing a lot. But she never sits down and calculates more than I make $x gross and daycare is $Y so I make $Z profit. Trust me I guarantee they would have a better lifestyle with less money, less stress, less rush. But people hate to hear they are working for $25/day. Crazy and insane.

If you bank $500/month and work 20 days you are making $25/day working. Nuts.