Friday Reader Case: Help! My Kids Are Holding Me Back

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FIRECracker is Canada's youngest retiree. She used to live in one of the most expensive cities in Canada, but instead of drowning in debt, she rejected home ownership. What resulted was a 7-figure portfolio, which has allowed her and her husband to retire at 31 and travel the world. Their story has been featured on CBC, the Huffington Post, CNBC, BNN, Business Insider, and Yahoo Finance. To date, it is the most shared story in CBC history and their viral video on CBC's On the Money has garnered 4.5 Million views.
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It’s Friday again and you know what that means? It’s Reader Case time!

Now, before I jump in, I just want to warn you, this one is extremely long and meaty. Of the reader cases we’ve done so far, I would say this is definitely one of the more challenging ones. So put on your thinking caps cause we’re about to MathThisShitUp EXTRA HARD:

 

“Hey there,

I’m not sure my case will be the most exciting to feature in a post, but I feel it does raise a question many readers may have and I hope you can write about.

The basic question, before talking details, is how to reach from 0 to FI *after* you’ve already had kids. You touched a few times recently about being FI with kids, travelling with kids and world-schooling, but the vast majority of examples involve couples who reached FI or were well on their way prior to having kids. My reader case and general question is what to do if you wake up later in life?

Some details and background to frame my situation and question:

We are both 40 years old health care workers in southern Ontario – me in healthcare delivery, wife in the admin side. Two young kids (Grades 1 and 3). We think we have decent salaries and we hardly buy “stuff” but we still feel like we can’t manage the daily financial needs, not to mention savings.

– Total combined income: ~120k *NET*
– Total assets: ~350k in RRSP/TFSA/RESP/Cash. Practically all saved prior to having kids. Crappy mutual funds, working on convincing the wife to change.
– Never had any debts, not planning to unless we buy a house one day.
– We both contribute to our pension plans (big, stable, public DB plans), but we both entered those public sector jobs later in life so not much there yet.
– Two cars fully owned. I’m not even sure what their market value is, but it ain’t luxury cars.

Our spending seems out of control, but we don’t know where to cut:
– Housing: 30k / year. (Our rent is 2,100$ + 315$ utilities, which is the norm for this area. It is more than we need but there isn’t a lot of choice around our school)

– Childcare/education: 25k per year. (childcare, before/after care, summer camps and activities)

– Transportation: 11k / year. (That’s for two cars, gas, insurance, maintenance. We unfortunately both need to commute to work as I work in various locations, none accessible by transit and my wife is in an adjacent town. ).

– Groceries: 20k / year. (Our groceries spending is the one thing we know we overspend on but have been unable to bring down despite conscious effort).

– Eating out: 8k (all the restaurants, Tim stops, ice cream stops etc).

– shopping: 12k (cloths, school items, birthday presents, electronics – everything which is not food/transportation/education.)

This is already over 100K spending for the year, and there are little things I kept out because my spreadsheet is far too detailed to bore you with. Needless to say, there is no “savings/investing” column as we are usually in a negative cashflow and are eating down our savings just to get by.

So – we are spendy. But we don’t feel like we can cut much out. I keep a very detailed account of our spending and we cut all the fat out (minus some food expenses that we have a hard time disciplining ourselves to do).

We could have had an excellent saving rate if we didn’t have kids, or if we learned about the FIRE concepts earlier in life. But it is hard to keep saying ‘no’ to everything so we sometimes do eat out or go on an outing (and I do mean “sometimes”. maybe once a week some timbits; a movie or an attraction once a month or two). It is hard to find comfy, clean apartments in my city that are kids friends, and our rent, while high for us, is in line with our neighborhood. We are contemplating moving but that will require both of us to find new jobs (not a certainty or an easy thing to do), or for one or both of of us to commute significant distance.

So – how do people who wake up to the FI concepts after having started their family life manage to save enough?

At this point I am so down about the whole situation that I have given up on any retirement (early or late) and I am planning ahead to educate my kids so they can have an early start and hopefully be in a situation like you two. This makes for a pretty shitty life though (emotionally), and my wife and I are bursting at the seams from stress, despair and paralysis. We read about the examples of families in an FI situation and how much better it is to be able to be with your kids, and we are a bit jealous. I wish I could spend more time with my kids and not work all the time just to tread water – and with no exit plan at sight.

So – for the sake of all the children out there with confused parents who brought them into this world before being enlightened to FI – how do people start saving while raising kids?

Thanks,

Despaired parent.”

Wow, that sounds stressful. DP seems to be trying to paddle and is barely keeping afloat, despite a healthy family after tax salary of $120,000 (the average for Toronto is $70,000 and this is southern Ontario). This seems like a situation that a lot of people can relate to. Especially since they are PAYING to work (transportation costs, childcare costs, etc). But before I dive into gory details, let’s look at a summary of their situation:

Summary
Net Income: $120,000
Expenses: $30,000 (rent) + $25,000 (childcare/education) + $11,000 (transportation)+ $28,000 (food) + $12,000 (shopping) = $106,000/year
Debt: 0
Investible Assets: 350,000

Now, their investible assets look pretty good, but their spending is out of control! With yearly expenses of $106,000/year, 88% of everything they make is going straight out. YIKES!

At this current crappy savings rate of 12% and $350K in assets, it would take them:

Year Balance Savings Portfolio Growth Total
2017 $350,000 $14,000 $21,000 $385,000
2018 $385,000 $14,000 $23,100 $422,100
2019 $422,100 $14,000 $25,326 $461,426
2020 $461,426 $14,000 $27,685 $503,111
2021 $503,111 $14,000 $30,186 $547,298
2022 $547,298 $14,000 $32,837 $594,136
2023 $594,136 $14,000 $35,648 $643,784
2024 $643,784 $14,000 $38,627 $696,411
2025 $696,411 $14,000 $41,784 $752,196
2026 $752,196 $14,000 $45,131 $811,327
2027 $811,327 $14,000 $48,679 $874,007
2028 $874,007 $14,000 $52,440 $940,447
2029 $940,447 $14,000 $56,426 $1,010,874
2030 $1,010,874 $14,000 $60,652 $1,085,527
2031 $1,085,527 $14,000 $65,131 $1,164,658
2032 $1,164,658 $14,000 $69,879 $1,248,538
2033 $1,248,538 $14,000 $74,912 $1,337,450
2034 $1,337,450 $14,000 $80,247 $1,431,697
2035 $1,431,697 $14,000 $85,901 $1,531,599
2036 $1,531,599 $14,000 $91,895 $1,637,495
2037 $1,637,495 $14,000 $98,249 $1,749,745
2038 $1,749,745 $14,000 $104,984 $1,868,730
2039 $1,868,730 $14,000 $112,123 $1,994,853
2040 $1,994,853 $14,000 $119,691 $2,128,545
2041 $2,128,545 $14,000 $127,712 $2,270,257
2042 $2,270,257 $14,000 $136,215 $2,420,473
2043 $2,420,473 $14,000 $145,228 $2,579,701
2044 $2,579,701 $14,000 $154,782 $2,748,483

28 Years!!! Since they’re already in their 40s that would put them at a retirement age of at least 68—beyond the normal 65 retirement age.

So DP is right. If they keep going at this rate, they are not going to be able to retire early.

But a lot of the high costs are due to raising kids, which, according to DP is causing them to lose hope of ever retiring early, does that mean they’re doomed? Obviously, they can’t cut those costs because kids are just too damn expense, right?

RIGHT?

Well, I can’t speak for everyone, but having been raised by parents who started off in Canada barely making above minimum wage and still having to stretch their meagre earnings to support my grandparents, cousins, aunts and uncles back in China. I have to tell you, kids will rise to the occasion if you let them. I never felt deprived growing up because I knew that money was tight but spending time with my Dad was more important than shiny things. The idea that kids absolutely need to have all sorts of activities, nice clothes, presents, etc to be happy is not true. Kids need YOU. They need you to spend time with them, that’s the most important thing you could give your kids. Not clothing, shoes, or fancy electronics.

As I said before, kids aren’t expensive. Parents make them expensive. And the proof that kids aren’t expensive is something we’ve seen again and again from early retirees like Justin (who lives under $40K a year with his family of 5), MMM, who despite his rockstar blog earnings, still lives on only $24K a year with his family of 3, or the Jeremy, aka GoCurryCracker, who lived on $50K/year with his family of 3.

But since I don’t have kids myself, I’ve decided to reach out to the experts, Jeremy and Justin, to get what their take is on this whole situation.

Jeremy (GoCurryCracker):

“Kids aren’t expensive. It is the stupid shit you justify because of kids that is expensive”

What if he quits his job, becomes stay at home dad, they move next door to his wife’s job in next town, and he learns to cook?

This way, they can sell one car and he can try to do online work from home while kids are in school.”

 

 

Justin (RootofGood):

“The kids are in grades 1 and 3 but childcare costs are as if he’s paying for full time daycare for at least 1 plus a ton of other stuff. But before/after school care sounds like they’re in free public school (assuming free since the house is extra expensive to be in good school district??).

Limit paid extracurricular activities would be a huge one. Sounds like one spouse could quit working, cut groceries in half, keep restaurants to about 1/4 (use as a special treat a few times/month). Mostly eliminate childcare costs. That would save $10k groceries, $20k childcare, $6k restaurants = 36k right there without even downsizing housing. After taxes we’re talking a $50k salary to generate that kind of cash which is probably what the least paid spouse makes.

Oh, and that stay at home parent would have to cook a lot more obviously

And the side income work from home is a good idea.

Or one spouse finds a job that doesn’t require summer work, then stay at home w/ kids over summer. After taxes would probably save a lot of money

Bottom line is this family is spending nearly $30k on food, and 75% of that is pure convenience food vs. need to eat food (check out Canadian national stats on average household food expenditures or use the US #).”

 

Wow, great insights guys! Okay, so some takeaways here:

1) One spouse stops working to cut back on transportation, eating out, childcare and extracurricular activity costs.
2) Cut back on food costs
3) Cut back on shopping

So let’s go through each of these ideas:

Idea 1: One spouse stops working

If one spouse earns more than half of their net 120K combined income, it may make sense for the lower earning spouse to quit. This has the effect of freeing up one of the cars since the stay-at-home spouse no longer needs to drive to work, so that cuts transportation by half to $5500.

This also has the effect of freeing up the spouse to reduce childcare costs. If the spouse could watch the kids to avoid having to pay for childcare costs, so that would get them $25K back right here.

So right there, we know the cost of PAYING to work for one spouse is $25K + $5500 = $30,500!

To generate that passive income, you would need a portfolio size of $30,500 x 25 = $762,500. WOWZA!

And we haven’t even dug into how much they could save in food costs, if the spouse had the time to shop in bulk and cook more.

Which leads us to the next option:

Idea 2: Cut back on food costs

As much as I feel for DP’s situation, I have a bone to pick for this category. With a cost of $20K/year (groceries) and $8K/year( restaurants), that’s a combined $28K/year on FOOD! Are you kidding me? I’ll admit I have a bit of a food fetish but $2333/month?! That’s basically their RENT! I know they have 2 kids but unless they’re tiny little sumo wrestlers, kids do not consume THAT much food!

In fact, as Justin suggested, I looked up the average household food expenditure in Canada, and according to a study by the Dieticians of Canada, it costs an average of $868/month to feed a family of 4. That’s $10,416/year, or almost 1/3 of your $28,000/year food spending!

So you are overspending on food to the tune of $17,600/year or $1465/month above the average. WOW. I don’t have visibility into your food budget but statistically, you’re doing something horrendously wasteful. On average, You could feed a family that’s double the size of yours on that budget and STILL have money left over. YEESH.

So if they were to cut their food costs down to a comfortable $1000/month (slightly higher than the national average), that would reduce their yearly spending by $16,000/year or a portfolio size of $400,000.

So just by having one spouse stay home, save on transportation, childcare costs, and food that’s a total savings of $5500 + $25,000 + $16,000 = $46,500. Geez, that’s pretty much a person’s after tax salary right there. Now, if they’re about even in their earnings, then losing half the salary to recover this cost doesn’t quite make sense. But if one spouse is earning less than $50K after tax, that spouse is essentially working for FREE. That’s why I call it “PAYING to work”. Because you’re coughing up these expenses for the privilege of working but not making enough to make that worth it.

Idea 3: Cut back on Shopping

Looking at this, $12k/year on miscellaneous outside of food, transportation, housing and childcare seems pretty excessive to me. I mean what exactly are you getting by spending $1000 every single month? Internet bills and phone isn’t going to take up more than $150, toiletries shouldn’t cost more than $100 (less if you plan ahead and buy in bulk), so where is the other $750 going? I just don’t get it.

This is definitely an area that can be trimmed. I get that the kids might have to give gifts to their friends when they attend birthday parties but EVERY SINGLE MONTH? And do they really need new clothes every single month as well? Considering how these are costs outside your main staples (housing, food, transportation, childcare) I think this can be trimmed down by at least half.

So let’s wrap it all up. By adding together the savings in these 3 categories, they would get back $5500 (down to 1 car) + $25,000 (eliminate child care/after school costs) + $16,000 (cook more, buy in bulk) + $6000 (decrease mindless shopping) = $52,500/year.

However, in order to get the transportation and childcare savings, one spouse would need to quit their job. It would only make sense to lose that salary if the spouse is making less than $50K/year after tax.

If they make around the same salary, they stand to lose more than $50K/year in earnings, then having one spouse quit their job makes less sense. In this case, it would make sense for the spouse to continue working, keep the 2nd car, BUT cut back on other costs.

Food costs can still be cut by $16K/year to match the national average, shopping can be cut back by $6000/year, and childcare costs can even be trimmed by avoiding paid after-school activities.

As Justin mentioned, the kids are both school-aged (grade 1 and 3) and yet they’re paying $25,000/year or $2083/month for childcare costs? You’re spending $30,000 on rent to be in a good school district and yet are still paying the equivalent of full day care costs? What’s the point? If this is after-school care, it should only cost on average $600/month/kid or $14,400/year for 2 kids. And as Justin and Jeremy suggested, cut back on extracurricular activities, to save money in that category, and you’ll end up with a savings of $10,600/year. Not only that, after-school care is only required until the kids are around 10 years old. So in 4 years, the youngest will be old enough not to require after-school care anymore, and you’ll be able to get back the full $25,000 you’re currently spending on that.

Conclusion

So if you go with Idea 1, assuming the spouse’s salaries are uneven and one is earning less than $50K after tax, they would be losing $50K/year in salary, but still retain $70K/year from the other spouse’s earnings.

This would give them a combined income for $70K/year

By shaving off $52,500/year from having the spouse stay home, and cutting childcare, food, transportation, and shopping costs, that would bring their yearly savings to $16,500 or 23% and be able to retire in:

Year Balance Savings Portfolio Growth Total
2017 $350,000 $16,500 $21,000 $387,500
2018 $387,500 $16,500 $23,250 $427,250
2019 $427,250 $16,500 $25,635 $469,385
2020 $469,385 $16,500 $28,163 $514,048
2021 $514,048 $16,500 $30,842 $561,390
2022 $561,390 $16,500 $33,683 $611,574
2023 $611,574 $16,500 $36,694 $664,768
2024 $664,768 $16,500 $39,886 $721,155
2025 $721,155 $16,500 $43,269 $780,924
2026 $780,924 $16,500 $46,855 $844,279
2027 $844,279 $16,500 $50,656 $911,436
2028 $911,436 $16,500 $54,686 $982,622
2029 $982,622 $16,500 $58,957 $1,058,080
2030 $1,058,080 $16,500 $63,484 $1,138,064
2031 $1,138,064 $16,500 $68,283 $1,222,848
2032 $1,222,848 $16,500 $73,370 $1,312,719
2033 $1,312,719 $16,500 $78,763 $1,407,982

17 years.

Hmm, better (they retire in their 50’s at least) but not great. It looks like here the suggestion of the lower paying spouse staying home didn’t have as big of an impact as we would have liked.

However, if both parents continue working, they would need to keep the 2nd car and the after-school care (but only for another 4 years until the youngest is old enough not to need it). In this case, you could still cut food costs (because so much of it is waste and expensive groceries) down to a comfortable $1000/month, childcare costs down to $1200/month for after-school care for 2, and shopping down to $500/month. This gives you a new total yearly spending of $73,400/year (30,000/year + 11,000/year + $14,400/year + $12,000/year + $6000/year)

So that means from year 1-4, their savings would be $120,000 – $73,400 = $46,600

But after that, the after-school care expenses would go away, bringing down their costs to $59,000. This would require a portfolio of $1.475 Million, thus cutting their retirement to:

Year Starting Balance Annual Contribution Return Total
1 350,000.00 46,600.00 21,000.00 417,600.00
2 417,600.00 46,600.00 25,056.00 489,256.00
3 489,256.00 46,600.00 29,355.36 565,211.36
4 565,211.36 46,600.00 33,912.68 645,724.04
5 645,724.04 61,000.00 38,743.44 745,467.48
6 745,467.48 61,000.00 44,728.05 851,195.53
7 851,195.53 61,000.00 51,071.73 963,267.27
8 963,267.27 61,000.00 57,796.04 1,082,063.30
9 1,082,063.30 61,000.00 64,923.80 1,207,987.10
10 1,207,987.10 61,000.00 72,479.23 1,341,466.33
11 1,341,466.33 61,000.00 80,487.98 1,482,954.30

11 years!

That’s better. Turns out the answer is, unless one spouse is making significantly more than the other, it’s better to bring down their spending to the national average.

One more thing to note is that starting from Sept 1, 2017, Ontario is expanding access to before-and-after school care programs, so if their school starts offering these programs, you could reduce your childcare costs even more or have it be free. Check here for more details.

This maxed out family seems to be spending over $100K for a $30-40K year quality of life. Both parents are stressed out of their minds and they don’t even feel like they’re living extravagantly despite having to throw away 88% of their combined salary, yet believe there’s not a single ounce of fat to be cut. This is just not true, since the average Canadian family is spending less than half what you spend to feed a family of 4. They’re also spending 40% less for after-school care. If DP can get his spending on these 3 line items to the average of what everyone else is spending, they’re out in 11 years. And if they can’t, they’ll retire LATER than the average retirement age of 65.

What do you guys think? Do you think they can do it?

PS. Shout-out to Justin(RootofGood) and Jeremy (GoCurryCracker), thanks for your 2 cents and insights on kid expenses!



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114 thoughts on “Friday Reader Case: Help! My Kids Are Holding Me Back”

  1. Another benefit of a spouse staying at home would be that their Canada Child Benefit (tax free child benefit from the government for non Canadian readers) would likely increase if their overall income drops. Definitely not something to count on forever, but every thing helps!

    1. Yes, that is a good point. I suspect it’ll give them a couple thousand extra, but still may not be enough to offset the high costs. But they’ll have to MathThisShitUp to find out! 🙂

      1. Child benefits are surprising. For a household income of 50k you’re in for like 10k/year for two kids, for example.

  2. Woah, my random facebook messages breaking down DP’s finances made their way into official publication? 🙂

    I figured the average for Canada for food is about the same as the US (after factoring in forex rates). Sounds like it is. They’re definitely spending WAY above the average. And there’s really no reason you *have* to be merely average – I think with a little diligence you can get to the slightly below average spending level by focusing on costs and value even more (= eliminating more restaurant spending and convenience foods or overly fancy versions of regular foods).

    Childcare is a shocker still. $600/mo for before/after school care. I guess we are lucky but our school offers after school care of 3 hours (3 pm to 6 pm) for around $140/month at the school. Before school isn’t necessary for a lot of folks because you can drop off at 8 am (when I changed employers I negotiated an 8:30 am start time specifically to allow me to drop the kids off then go to work and avoid coming close to that $600/mo figure if I had to find before school care for my little runts).

    1. You’re so articulate in FB messages, how could I not publish it? 😉 (Don’t worry our drunken FB rants will never see the light of day)

      I think there are cheaper options for before/after school childcare, depending on the school, and YMCA offers some less expensive options as well. As for the job, some companies may allow you to go home early to pick up the kids and then work from home in the evening, so maybe they could try to negotiate that.

  3. Interesting write up. This is a nice follow up to the NPR story that was making its way around this week.

    I think that a significant factor that should be considered when deciding to keep one spouse at home is the competitiveness of that spouse in the workforce. I know that we are all trying to stop working as soon as possible here, but at least during the run up to FIRE, you want both spouses to be competitive. So with this in mind, I would say its better to even tread water for a couple years than to let your skill set slide by staying home.

    Why? Well because lets say that you spend 100% of your salary in years 1-5 – when you need daycare. If you’re both working, you’re actually still getting better at your job. So your earning potential is rising. Kids go back to school, you are getting raises – bang, your savings start to roll again.

    Of course, the big point you guys are making here, is cut the spending. Just cut! Your kid needs your attention more than your money.

    We can probably argue until we are blue in the face about whats the right way to finagle this situation. But the truth is IT’S HARD!!! And why is that? Do we as a society not want to have children? Do we as a society not understand the implications of aging demographics? (Shout out to Japan here) The fact is that we can and should be doing something because if we don’t we are all in a lot of trouble here.

    1. The more I think about this study the more I’m convinced it’s not even kid related costs, but overall lifestyle inflation compared to pre kid years.

    2. Oh there’s an NPR story? Can you send me the link?

      And yes, it’ll be easier to cut than for one person to quit their job. But it’s still not easy. And hey, if it were easy, everyone would be doing it and we’d all be riding off into the sunset on our unicorns, surrounded by butterflies. 🙂

  4. Something that may help this couple is doing Meal Prep Sundays. You prepare all your meals for the week and avoid what seems to be the frequent occurrence of coming home from work too tired to want to cook anything and ordering-in instead, which inevitably leads to a more costly, less healthy meal and other groceries going to waste.

    Check out the Meal Prep Sunday subreddit to get you started: https://www.reddit.com/r/MealPrepSunday/

    Another alternative, an app my wife and I use, is Mealime. It gives you easy-to-cook, healthy recipes, a grocery list and options to exculde recipes with foods you dislike or are allergic to.

    A routine coupled with some shopping discipline should hopefully help on your spending reduction journey.

    1. This! So much this!!! I do this every Sunday, pretty much religiously. I continually get asked how I am able to have food prepared every day and how I avoid eating out. The key word is preparation. We save so much money by planning and prepping crock pot meals, salads, etc. on Sunday. Does it take time, yes. Is it worth it, hell yes.

    2. Thanks for the awesome tip, Rman!

      We did something similar when we were working. I’d cook a big enough batch (4-8 portions) so we’d have enough leftovers for lunch or dinner the next day. That way I wouldn’t have to cook as often. It worked great!

  5. I am really confused about the child care expense. I have three kids and always had them in before /after school care and summer camps because we both worked full time and never spent that kind of money. I would be really curious to see a breakdown. As far as groceries, how can they spent that much for a family of four ( two being young kids)? We were spending about $1,200 for a family of five just a few months ago and I have been on a mission to reduce it to about $800. I am not there yet but making major progress and it only takes a little bit of time and planning. I would strongly suggest this family does the same thing. And $12K in shopping??? I started my FI journey later in life, it is never too late , don’t use it as an excuse.

    1. Interesting reply Caroline! I’m curious, where about do you live? I know that day care in my area is 2,000+ and I could easily imagine other activities to be $1,000 each at school age.

    2. “I started my FI journey later in life, it is never too late , don’t use it as an excuse.”

      LOVE this! Better to start now rater than throw up your hands and give up. The time will pass anyway, whether you do it or not.

      Thanks for sharing your numbers, Caroline! I think the before-after care costs depends on where you live, but good to know that you can live on $1200/month to feed a family of 5 and less than 12K a year in shopping! I’m learning all sorts of amazing things from the parents on this blog. Thank you!

      1. I am learning a lot from reading other blogs such as Root of Good and it is very motivating. They are not just frugal , they know when to spend and enjoy their money.

        1. Ya, the wife convinced me to run away to Orlando during spring break… ugh… I wanna save like no tomorrow, she wants to spend. But with today’s cheap flights, you just wanna go.

          Vancouver to Orlando $413.00 Canadian

          Suite for 3, with a kitchen and continental BF, $165.00 / night

          so all mathed up, its $1300 for airfare, and $750.00 for the hotel… and we can cook in the room if we feel like it.

          Could we do better with an AirBNB ? dunno…

          We lost 2 special people this year, 73, and 38… I am 56…. so I want to live well, while I can…

  6. Hi Handy Millennial, Wow $2,000+ for after-school care? That’s $100/day for a few hours! I agree with the activities , it seems reasonable. I would still be curious to see the breakdown. I know some summer camps can get really expensive.

  7. I agree with Caroline.
    We’re a family of 5, kids are 7, 4 & 3. We live in Toronto’s East End and while I looked into before and after care for our 2 school age kids ($450 each through our local YMCA) I found it to be too much considering full time daycare cost for your youngest.
    I was fortunate that my work agreed to let me work the equivalent of one day from home, I divide it over 5 days and make my work time shorter, so I’m available for after school pick up (also makes my youngest’s day at daycare shorter/cheaper) and my spouse and I share drop off days based on whoever has a less hectic schedule.
    I make a conscious effort to sign them up for low/no cost activities, sports through CC and save my vacation time for summer holidays as they hate camp and I hate the idea of their summer hours being scheduled, regimented and $$$.
    If you commit to at least a pick up/drop off, you can save half of the cost or just go the sitter route, it’s usually more economical with more than one kid.

    Food/entertainment – we eat out, go to events, but nowhere near the tune of $8000/year, holy cow! That’s a family vacation, right there! Our monthly grocery budget varies but it’s about $1000-$1200 per month and that’s including all toiletries, cat food (x2) and diapers for one practically untrainable kid.
    Shopping – whatever we wear, gift, buy is again, NOWHERE NEAR $12,000 per year. I’ve been known to overspend on gifts and birthday presents for classmates as I usually buy them last minute, but I’m trying to plan better.
    Clothes – kids don’t care what you put them into and until they start caring, we dress them in whatever is the most economical, comfortable and presentable getup – in that order. I shop a size ahead when things are on clearance and shop buy and sell groups for kids stuff on fb.
    So yeah – childcare, transportation, groceries, eating out and shopping are definitely trimmable categories.
    Our annual take home income is less than 2/3 of yours, but by keeping our costs down, I feel we’re managing to put a good chunk of cash aside each month.
    You just have to be open minded about what you consider “a must”. Maybe it’s just that you do it/buy it just because you’ve always done it, but it’s not a necessary expense.

    Best of luck!

    1. And yes, you’re spending A LOT on housing. You’re probably renting a bungalow, or a floor of a house. It’s a lifestyle choice, I get it, but apt would be a huge amount of savings in just one category.

    2. Wow, thanks for sharing your numbers, Maria! Good to know it’s possible to live on 2/3 of DP’s salary while in expensive TORONTO, and still put aside savings with 3 kids!

      The biggest take away here is “I make a conscious effort to sign them up for low/no cost activities”. Conscious effort and planning is the key.

      With the advice given to DP from all sorts of parents with different incomes, I think this will help a lot in dropping their costs and getting them to retirement sooner. Thanks!

    3. Hi Maria, we were really careful with clothing too when they were smaller. Once they start caring too much about what they wear (ie: brands), they are probably ready to pay for it themselves:)

    4. Thank you so much for sharing the numbers.

      Our before/after care costs are comparable to yours (and yes, YMCA is not actually cheap). By the way, at the time of writing my kids were at grade 1 and 3 years old, not grades 1 and grade 3, so we paid the 2000+ for the all-day daycare plus before/after.

      Nevertheless, we obviously spend way too much. Your note (and similar ones showing a family spending pattern) are the most valuable to me as it shows me what is possible for people in comparable living situations and is very motivating. As is obvious from our case, the step we are stuck on is expenses, which for us an emotional barrier. This is exactly where a community to show you a way and cheer you along is helpful.

      1. DP, I have a few other suggestions on how to get started, I remember when I was in a semi-similar situation to you and your family.

        The whole thing can be overwhelming. A few things to start out with that might help:

        Remember that you and your spouse only have so much money/time/energy/focus. Making this whole thing work is about balancing them in ways that make sense for each of you.

        Things like the meal plans will help with time AND money (and probably energy, too … it will be SUCH a relief to just have to heat up something you cooked on Sunday for dinner on a Tuesday). Keep looking for ways to save on more than one dimension and you’ll find the fixes compound. For example, I found that getting more sleep helped me have more energy and focus (I spent time to gain the energy and focus which I was able to apply to budgeting which helped with money … and then when the budget was on autopilot I had that energy and focus to apply on other things, like my daughter and my partner).

        You can also make a ‘fun’ budget so you don’t feel like you are living like complete misers (it would may be good to have 3 small pools for this, one for each of you and one for the kiddos).

        Anyhow, GOOD LUCK! I bet things are going to get better as you find ways to tweak how you do things. 🙂

        1. “Keep looking for ways to save on more than one dimension and you’ll find the fixes compound”

          Well said, Jason! Thanks for your 2 cents 😉

      2. Ah, that makes everything that much more expensive!
        I assume your little one has either started school this past Sept or will be going to JK next Sept., which will be a huge help in getting your numbers down. I know I’ll be doing a happy dance once we stop paying for the last full time daycare! Best of luck, it’s hard in the big city and with extra childcare costs, but if you commit to it as a family, you’ll be so much happier.

  8. There is no excuse to be spending that amount on food, none. We spend $400 per month on groceries for a family of two, plus a bit on meals out/ordering in, maybe another $100. $1,000 a month is more than enough to feed a family of four (if not too much still) so right there they’re saving $16,000 a year. Agreed their shopping expenses are absurd too, again this can easily be halved if not more.

    The “little things” they say they kept out of their spending amounts to almost $15,000, 0r $1,250 a month. How is that little? My “little things” spending is around $100 a month. If it’s $1,250 a month, it isn’t “little”.

    Honestly, this seems like a classic case of making excuses. “We don’t know where to cut” really translates to “we don’t want to cut on ANY of these things we like to have.” When someone says they don’t know where to cut yet they’re spending $8,000 on meals out/Timmies, they’re clearly not even trying.

    1. I completely agree! I saw this number and balked. Eating out and getting take out coffee is a luxury. It should never eat up almost $1,000 a month. I literally don’t even know what to say to this. They are lying to themselves if they think they have no where to cut spending. Seriously… it’s called a travel mug!

      1. I know right? I respect their honesty and openness in this plea for help, but I can’t feel like they need a good punch in the face. Soft approaches won’t work here.

        “Despaired Parent”. Give me a break. And these people work in healthcare? Surely they know what real despair is.

        1. Hey,

          You are actually right, soft approaches didn’t work which is why I subjected myself to opening up my numbers and getting both good ideas and some modest scorn. Feeling ashamed of our spending is too a motivating force.

          We both see real despair in our work. Trust me, we feel grateful every day that we can live as comfortable as we do (too comfortably maybe), but my despair is not material one, it is more emotional/cerebral despair regarding the rat race, much like FC describes during her working years.

      2. I agree. Ever since my partner and I started tracking every dollar we spent (yah for excel sheets) it became very apparent where all our money went (eating out, coffee and alcohol). We made the hard choice to cut it down in every category just in time for the summer. I thought we spent a lot on food at $1200/month, but over $2k? thats excessive…

        1. Tracking is definitely the key. You start to realize where all the fat is and when you cut that, you don’t even lose out on happiness.

          1. Yeah exactly! you guys were the inspiration for tracking spending legitimately instead of just hand waving at the end of every month.

        2. Been tracking diligently for 2+ years, which is why I can share details.

          I KNOW we spend too much. I *think* I am trying to reduce but I am clearly not, so here I am asking for help.

          1. This may seem silly or simple, but try doing a daily celebration. Divide your expenses for a month, and get a daily spending amount. Each day you spend less than that amount, write that number on a white board.

            Today we saved $7.00 then multiply by 365 and write $7.00 X 365 = $2555.00

            Of course if you fill your tank with gas, you need to spread that over an entire week. Same with groceries. keep a little notebook handy. this will make you very conscious of spending habits, instead of being amazed at the end of the month. Don’t do it with everything, leave off the rent etc.

            Please come back in a month and let us know how your doing …

            cheers

            1. That’s a cool idea. I’ll start it with the obvious culprit – eating out/ordering in, followed by groceries.

              By the way, I kind of consider gas a fixed cost too. We don’t go on pleasure drives that we can cut out, we drive to work, to the store and to the parents.

    2. You’re right, VB, this is more of a psychological block rather than a financial one. When people balk at cutting their costs, they don’t realize what the end goal is. If you’re just cutting for the sake of cutting, most people will throw up their hands and say “what’s the point?” But put it in the context of “you can retire in X number of years”, and they’ll run towards the goal. It’s like when we say “you should eat healthier” versus “if you change your eating habits, you’ll lose 30 lbs, gain muscle, and be able to go on this hiking trip you’ve always wanted”, it changes the motivation.

      I think DP just needed a concrete goal to turn towards. With the possibility of retiring in 11 years motivating them, the cuts should be a lot easier.

    3. The “little things” are insurance, phone, internet, license renewal, passport renewal, etc etc… Some only hit you once a year, but I spread the cost divided by 12 (or 24, or whatever it is) so I know how much to put aside each month for when it hits.

      Again, not arguing that we are *not* spendy, but this is what went to this category.

  9. As a FI parent of two, I absolutely agree — They really need to learn to cut spending! This family is making their life a living hell by spending that much.

    For example — We spend only about $6k a year on food and we eat really damn good. There’s absolutely no reason why food should be anywhere close to $28k.

    While I agree that childcare can be costly, this family should have passed the most expensive infant and toddler care ages. It should be getting cheaper.

    It’s pretty clear to me that the parents in this family are making the decision to have costly kids. It doesn’t have to be that way!

    Sadly, I wonder if this family is too addicted to convenience to make the necessary changes.

    1. As someone who consistently drools over your food pictures, I completely agree 🙂 You guys end up eating so much better on 6k/year than most people I know that spend double what you spend on food.

      It’s definitely easy to get addicted to convenience. I think you’ve pin-pointed the problem here. With a bit of planning (like the Sunday meal-prep plan that Rman suggested), they could end up with way less stress and way better food.

    2. I think we are costly parents, we don’t have costly kids. The ‘addicted to convenience’ part is too true.
      🙁

      At the time I wrote the post (over 6 months ago) we were at an emotional low with many things going on and not able to see an end to the rat race. Unfortunately, this is when we turn to convenience spending. “I’m fried after the last 3 days at work, I’m just ordering pizza for the kids and sushi for us, we need a pick-me-up”. And here we are with 8K in convenience food a year…

      What an addict needs is an intervention, which is what the comments on this post are providing.

      Thank you.

      1. Ya this is becoming a big problem with MRS Spaceman, she is working a lot more, now that the kids are independent, and is bagged at the end of the day, doesn’t feel like cooking. But don’t give in, its still cheaper to pick up some sushi at the grocery store, or a frozen dinner from Costco.

        Don’t try to go cold turkey, just try a little bit each day, each week, each month. And you are not alone, remember that.

  10. 1. These numbers are Canadian, right? So, the 28,000 in grocery/restaurants is about 21,000 US dollars. Still, it’s an outrageous amount.
    2. It’s super nosy, but I would need to see a break down of exactly what they are buying(like itemized receipts) to understand how they are spending that much. Well, whatever it is, I’m pretty sure I would find at least 50% are wants, not needs.
    3. The 3rd grader is old enough to math it up if they informed her/him of how much is being spent on wants and incentivizing her/him to spend less. Like, they could show how a carton of ice cream, which allows a scoop every day, is the same price as one scoop at the shop. The kid will probably choose the carton. Same goes for drinks from Timmies versus make at home. The parents could make a deal where every dollar saved they would give ten cents to each kid. For example, tell them how much was spent on food in November. tell them that if hundred dollars is saved in December , they each would get ten bucks. I know this is a little two steps forward one step back, but if they get the kids involved in what/where/how the money is spent, I’m pretty they would save a lot more than one hundred bucks.
    4. When the kids ask for a “want”, have them pay for it themselves with the money they “earned” from the previous months. Once kids have to pay for things themselves with their money, all of a sudden they become very mindful of purchases. Great for them; they learn money management. double great for the parents because the kids will start asking for less and the parents get to spend less. Which means the kids get to “earn” more. everybody wins. Same approach could be used on non food related wants, like toys.
    5. would it cost less to have a teenage babysitter after school? Maybe one that knows how to cook and could use a couple of 1st and 3rd grade helpers make the food. Baby sitter costs less, kids learn some cooking skills, food is ready when parents get home.
    6. I know all of my suggestions are food related, but it’s the easiest way to trim the fat without someone giving up a job, or a car, or moving.

    1. “Once kids have to pay for things themselves with their money, all of a sudden they become very mindful of purchases.”

      So true. It’s never too early to teach kids about finances.

      Thanks for all your suggestions, Andrea! I agree that the fat can be trimmed without having to give up a job, a car, or moving.

  11. Def they need to reign in their spending. I would not rush to have one of the parents stay home. That’s a decision that goes way beyond just finances; that is a person’s identity, ability to advance, keep up their independence/skills in case the marriage dissolves, plus an out to get away from the kids (even on a work trip from time to time :). Seriously, I love mine dearly, but I could NOT be a stay at home/work at home parent. It takes a lot of work, energy and patience to entertain kids. Most monday mornings I’m actually very happy to arrive at my quiet calm office! But I enjoy my job, so that may be the difference.

    1. Some very good points, Y m of 3! I definitely think losing identity and the ability to advance is something that needs to be considered. In this case, they both seem stressed and unhappy with their jobs, so having one switch to online work from home, freelancing or part time might not be a bad thing. However, the numbers tell us that they can get to FIRE by simply cutting the waste without quitting one of their jobs, so that’s probably their best bet.

    2. Very true, and where we stand. Also, we are split just about 50/50 so financially it makes no sense, and we both enjoy our work.

      Our wish for FI is actually less about quitting our jobs, and more about thinking ahead to old age and the ability to go part time to take longer time off.

  12. This post is great! We are pretty much in the same boat. We went down to one car, changed our housing situation so our rent is half of the city average, my SO stopped paying to go to work, we are working on starting a side gig, and are making serious dents in our student loans so we can start building a portfolio after they’re paid. Food however, is our soft spot. We eat out about 3x/year and there is 3 of us so far (1 more on the way). We made a commitment to eat organic food and lots of fresh food – and our current food spending is about $1300- 1700/ month (more than double our rent). It’s down from 2000-2400 but we both feel that a $600-800 window is reasonable and would speed up our savings a lot and be FI 10 years sooner or so. Organic and fresh are not something we are going to compromise on but I feel like getting it cheaper is totally possible. I’m really curious to know if anyone else who eats fresh organic food has been able to do to get their costs down or if $1200 is just something we should budget for and look to maybe start a second side gig.

    1. Where do you live? For us, the closest grocery store is the expensive ‘organic’ grocery store (not Whole Foods, thank god), and even at that point we’re able to spend <= $1000 for 4 people. Even with my ridiculous spending on cheese.

      Also, one major place that a lot of people should look at for food costs is how much they spend on meat. Meat will tend to be your biggest food cost and most people eat way too much of it, in particular way too much beef. Beef is often 2x the price per unit – switch it out for pork or chicken and you’ll drop prices a lot. Be more aware of appropriate portion sizes and that’ll also bring costs down.

      1. Good tips on food savings, BikeMike! I’ve also found that chicken and pork are way better value than pork (especially steak). We still get the steak, every now and then, but I don’t miss it when we don’t. We also tend to make tomato and egg (a vegetarian dish) pretty often which is super easy and fast.

    2. I think the fact that your rent is so low, you got down to 1 car, and are working side gigs justifies the food expense. That’s a perfect example of prioritizing. You prioritize in one area that’s important to you and cut ruthlessly in other areas. In DP’s case, if they were able to cut their rent down to half and getting rid of one of the cars, they could spend more on food like you too.

      1. Thanks for replying BikeMike and Firecracker! We live in Edmonton. So far we eat pretty much chicken and eggs for protein . I think I can still do a bit more with the bulk buying/managing to get it down to $1000/mo as my next goal. I probably eat too much packaged food and if I learn to make some dairy substitutes for dairy free cream cheese etc I think it would make a good dent.
        Thanks for the tip about portion sizes! I actually hadn’t thought about that before. I will use the smaller medium plates this month and see if that makes a difference to our budget.

        1. Packaged food and dairy are both two expensive areas. We’re trying to cut back on the former as well. 😛

          Also, with two monkeys around bulk preparation really pays off. We eat a lot more stews and roasts now that there is 4 of us. Huge jugs of milk, large cuts of meat, etc. Slow cookers or pressure cookers (eg: instant pot) are also super handy.

          Portion control is also handy for the waistline. I’m a climber, so a few extra pounds makes my life much harder. It makes me very aware of eating too much. 🙂

  13. We probably spend ~$1000/month for a family of 4 and we already feel we’re eating a pretty luxurious diet 😛

  14. “Total combined income: ~120k *NET* ”

    Sounds like you haven’t really tried to cut spending, Mrs Spaceman and my, combined income is $75,00K per year, NET , and we live in Victoria. Own a 3 bedroom house, have raised 2 adult male children (17 and 19),

    Total spending on food, from all paid on our 4% cash back Scotia card $1500/month

    Eating out, we reward ourselves, once a month $100/month ( but that has crept up a little so lets say $200 with the Timbits)

    Clothing, have you heard of Old Navy? “Welcome to Old Navy” remember that movie ?
    catch the sales, Mrs Spaceman rides the flyers, and is an awsome shopper, buys pants and sweats for the kids, 10 and 20 bucks at the most. I would say 50-100 a month tops.

    Really, have you ever gone in to a thrift store? Do it, the stuff you find is awesome.

    Car’s, we have 2, but I ride a bicycle to work 50% of the time. This is about the same as you, and actually I own 4 cars, 2 collectors, but that is another story.

    Rent, you are paying too much, but that is a hard one to fix, we have been lucky, with interest rates dropping, our payments dropped, and we have been able to buy down principal. My mortgage payment is 1800/month, ok almost the same as your rent, but 700 of that goes into principal.

    Sometimes purchasing a home works out well, not always.

    No one has yet mentioned the tax savings by only having one bread winner. My wife did not work, raising our kids, best thing we ever did. I claimed her exemption on my taxes, and we figured with that, and not paying day care, we saved $20k a year. She had time to shop, watch flyers, bake bread, milk the cow, churn butter… sew my old blue jeans… hey… I feel a song coming on here..

    Have hope, my messsage is we were able to do it, have kids, buy a house, save for retirement and spend time with our kids. But its not easy, take the advice in this blog and
    use it…

    cheers

    1. Thanks for sharing your numbers, spaceman! It’s great to know that you can live comfortably on a 75K net salary while raising 2 kids in Victoria.

      The tax savings on income splitting would’ve helped a few years ago, but the laws have changed and it’s no longer an option. So unfortunately, one spouse staying home won’t yield much tax savings. They maybe able to get CCB (canadian child benefit), like Cass mentioned, but that may not be enough to offset the loss in earnings.

      1. Yes it worked in our case, as Mrs Spaceman, was an import from Taiwan, and did not have a professional career to give up. The savings in daycare, taxes, eating out, vehicle, paid for her to stay at home. Now with both kids in or approaching University, she is developing her consulting business, and it has been lucrative as a second income.

        It is a lot to expect one spouse to give up their job, that they worked so hard to achieve, but it does create more stress. I know of only a few couples, where one stays home, but we made it work.

        I think you have to ask the question, how much of the second income is going towards daycare, 2nd Vehicle, taxes, extra expenses (eating out, crappy frozen food) etc. For us it was almost 80%, so that extra 20% was not worth the stress.

        That said, I know lots of dual working couples that make it work, seem to have time for swim lessons, and holidays. Like us, they find that the expense of children actually decrease over time, and although the teen years are challenging, they are my best friends in the whole world.

        cheers

  15. “So – we are spendy. But we don’t feel like we can cut much out. I keep a very detailed account of our spending and we cut all the fat out (minus some food expenses that we have a hard time disciplining ourselves to do).”

    WHAT? Wow, how can anyone look at the expenses and say they don’t feel they can cut much out? What was the fat they cut out?

    The thing is Thoughts precede actions. For this family to change anything, they have to change their thinking. I really hope your post helps them to see that. I’d like to think they can do it, but I doubt it. They have a ton of bad habits to change. I’d suggest something more extreme, absolutely no eating out for 3 months, no spending on anything besides basics for life. And a 400$ a month grocery budget. Why? Because this family needs to rewire their thinking, they need to get creative in the kitchen, get creative with their kids activities. They need to make sacrifices and feel good about what they accomplished.

    1. I think you’re right, Suzq400. The problem here is psychological, not financial. Getting used to convenience makes it that much harder to cut things. And as we’ve seen from the other parents in this comment thread, lots of them are able to live on much less. It really is about a change in mindset. Maybe once they see examples from other parents as well as how they can get to FIRE in 11 years, it’ll motivate them to change their mindset.

    2. You are right that we need a change of mindset. We found it hard to impossible to make this change on our own, or with the community that is around us, which is why I came to the community here for help, support and ideas.

      The 3 months hard reset is something I do want to do but it is hard since my SO is not really on the same page as me. You are also *very* right that though precede action, which is why I am trying to change her thoughts about it, but it is (and will be) a long, long journey…

      There have been a few posts here and on other blogs how to deal with a couple who is on different pages regarding their financial views. There really isn’t any good answer unfortunately.

      1. My husband and I have gradually adjusted our habits over time and achieved FIRE about 12 years ago. We r 39 and 44. To stay FIRED though has taken much open communication. Communication is the lifeblood of any relationship. The important thing is to start. Don’t be defeated before you try. Your food budget seems to be the obvious one to change. Perhaps YOU can start making dinners at home. Is there a woman out there who would have a problem with that? It will be a ton of wrk for you initially but the payoff in my opinion is huge. Once you start trimming your food budget down you will see more n more areas to trim. Try to come up with 21 different easy cheap meals your family likes. Try to see ways to make each meal even cheaper…generic brands, less meat etc. Use the flipp app so you always pay the cheapest advertised price of any item you purchase. Shop where u can price match those purchases. I’d be happy to share my own grocery lists and meal plans with u if you like. Wish you the best!

  16. I know that FIRECracker has little experience with cars so I’ll throw my two cents in here: If they’re spending $11k/year on cars, they’re either doing crazy mileage or they’re delusional about being thrifty about their cars, especially if they’re “fully owned” (I assume that this means “paid-off”). Of course, the fact that they don’t know the market value of their cars and are somehow coming up with a number of what their transportation costs are gives me pause.

    As an apples-to-oranges comparison (because they’re two cars for one person, because I don’t have to drive much, and because one of the cars is a fair-weather toy, which includes some racetrack use and the attendant costs that come with that, like my $2,000 suspension upgrade): my two paid-off cars combined cost me less than $500/month, and that includes nearly $200/month in parking/storage because my transportation choices are idiotic due to cars being a passion of mine.

    Regarding one parent staying home: my dad’s coworkers used to tell him that he was lucky to have his wife stay home full-time to take care of the household. His reply was that he was too poor to afford his wife going to work.

    Of course it doesn’t have to be the woman, but I think he had a point. Unless the second earner is making a significant salary, there’s a case to be made for one parent staying home. There are savings to be had in transport, childcare, income taxes, food, and home care (if you’re crazy enough to hire out cleaning, etc.) when one parent takes care of these things. And that’s before considering what some women spend on work clothes. And no one says that the stay-at-home parent can’t do some work from home or part-time.

    I’ll echo others in saying that if you’re spending $8k/year on eating out (especially with that kind of grocery spending – holy bejesus!), you don’t get to use the word “despair.” That’s just crazy talk. My girlfriend and I don’t spend that on eating out AND travel combined, and places we’ve been to this year include separate trips to Miami, San Francisco, a drive up the St Lawrence to B&Bs in my convertible, and a 10 day trip through three cities in Spain.

    $12k in “shopping” strikes me as bat-crap crazy, too! I get that kids outgrow clothes, but how the hell do you spend a grand a month on stuff like that? “Electronics?” You buy a phone, a TV, for $500 apiece and they’re good for a minimum of 5 years, and that’s if you have the budget to splurge on luxury stuff. How much does a birthday gift cost? $30 is more than I’d expect from a kid’s friend.

    If you can’t support a family of 4 on $120k NET without putting some money aside and while renting your home, I really am not even sure what to tell you. Probably, like most Canadians, you need a refresher on the difference between needs and wants.

    1. Thanks for sharing your thoughts on the car costs, TalkingPie! There’s likely some savings that can be derived from the transportation category as well. It’ll just take more research and planning on their part.

      Hopefully after reading the comments, they’ll have a better sense in how they can cut the fat without eating into their happiness. Sometimes people just need a concrete goal (retirement in 11 years) and examples from other people’s situations to figure out how to move forward. There are lots of ideas in these comments for cost cutting. Thanks for sharing yours!

    2. Thanks for sharing your numbers and thoughts.

      I don’t know our cars value because it is not important for me, same as I don’t know the value of my used phone or pants. It is an item I own and use, not an investment I need to track.

      We own a 4 years old van and a 15 years old sedan. Just looked it up and they are worth about 20k together. It doesn’t change my spending habits whether they worth more or less.

      In the last 12 months we spent:
      3,700$ on fuel
      2,100$ on insurance
      500$ on parking
      330$ on registration
      400$ on toll roads (what the hell am thinking? This one is going out…)

      Also, I put aside 3,900$ for service this year (I put aside a bit every month so I don’t get a shock if/when I need a large service. We used 2,000$ of actual service cost in 2016, 800$ in 2017). I guess I am putting aside too much, looking at it now… 🙂

  17. Man, this is easy said than done. I bet none of them wants to stop working. First because stay at home w/ kids is really stressful and boring. Sometimes work is just a wait of get away of home problems and stress.
    What if DP was a single dad?

    1. What if guitars strummed out unicorns?

      He’s not a single dad; he’s in a couple trying to find a way to retire early while pissing away most of their family’s substantial income. If he wants to reach that goal, he has to change something. There’s no “feelings” your way around that. If having one person stay home with the family is less appealing to them than retiring earlier, that’s entirely their choice, but facts are facts.

    2. I’m not a single dad, but neither of us would want to stay home, nor would it make sense as we both make about equally and both have good DB pension plans if we stay the course.

  18. Does Canada have Aldi discount grocery stores? Great way to reduce weekly food costs. I had to read the post twice bc I did not see healthcare expenses and realized “Canada”. We (USA) pay about $500 per month just on insurance with high deductibles and many other bullshit and confusing add-ons for our healthcare.

    1. And we pay a considerable shit-ton more in taxes, some of which go towards healthcare, others go towards bullshit and confusing spending (especially since we got a prime minister who believes that happy feelings are more important than being responsible with other people’s money).

    2. We don’t have Aldi in Canada…yet. But it could be coming. We do have Food Basics, Costco, No Frills, etc, so we do have options.

  19. Like what others have said, definitely need to review spending especially inefficient or convenience kind. Re evaluate your priorities.

    Many people just spend because they see this large disposable income and lifestyle is just inflated. Look into paying yourself first! And hiding that money away from you and if you end up going into consumer debt, maybe that will be a wake-up call for your spending.

    Without knowing how the income is split between the two, if you max into your RRSP, you will be able to recover around 10k in taxes! (Also, you can get back more if you save more to catchup.)

    Another concern is whether they are saving in an RESP and missing out on the 20% grants and tax free growth. Maybe you need to reevaluate whether the activities or summer camps or shopping is worth putting off saving for their education.

    Another idea is to get jobs in lower cost of living cities.

    1. It sounds like you guys need to hit the reset button. I know that it is easy to feel trapped into spending way more than you feel comfortable doing in order to meet all of the “needs” of a family. You first have to realize that you are making a choice whenever you spend and you are choosing your current lifestyle over financial security. Kids are only a very small part of the equation. This is fine if that is your preference and your dreams for your life, but it sounds like you would prefer to live differently when you describe your stress and frustration.

      If it were me, I would start by considering moving into a much cheaper, smaller place (assuming you don’t live in a super expensive closet already like people in London).

      My family made it just fine and felt reasonably well off when I was in medical residency and we lived in New Hampshire. My wife stayed home with the kids and I netted around 50k on average. We donated 10k/year to charity and lived on the remaining 40k. Because our area was expensive, we rented a two bedroom 625 sq ft (58 sq m) apartment for $800/month with three kids. The kids all shared the larger bedroom and we took the smaller one that was slightly larger than our queen sized bed. Our grocery budget was around $400/ month at the time.

      Our spending has now ballooned to around 65-70k/year, but my salary has increased significantly. We actively choose to live the way we do now because we can more than afford it, but it would be easy to cut out tons of luxuries if we need to in the future because we’ve done it before and can differentiate needs from wants. You guys can easily cut your spending in half if you want to, but you have to actively make the choices that will allow you to do so. You can choose to live the way you are currently if you really enjoy your lifestyle, but you have to own that choice and not pretend that it’s your kids that are forcing you to spend that much.

      1. I love how you guys lived on a 50K net salary, still made room to donate 10K to charity and had the kids share a bedroom. Incredible. If that is not a great lesson to teach kids about generosity and sacrificing for others, I don’t know what is (really hope you talk about this lesson in your blog when it’s ready)

        And you completely nail it with this statement:

        “This is fine if that is your preference and your dreams for your life, but it sounds like you would prefer to live differently when you describe your stress and frustration.”

        There is absolutely no need to make a change if the high spending made them happy and they could afford it, but in this case, it’s causing stress and frustration. So it’s time to make a change.

    2. Good points, Mia. They did mention RRSPs and RESP in their assets so hopefully they’re maxing both out already.

      It is also worth evaluating whether the activities are truly worth it.

  20. This makes me angry! $120,000 after tax and they say they can hardly manage. That’s obscene. We are a single income family ($50,000 gross) with 2 kids same age as theirs and we are doing fine in GTA.

    1. I feel your frustration, WS. As we’ve seen from the other comments on this post, it is very possible to live on much less in more expensive cities (like Victoria or Toronto) with kids and still be happy. It’s amazing that you are able to live on 50K gross in GTA with 2 kids! Can you share some tips on how to save on groceries, transportation, childcare so we can all learn from you?

    2. Maybe you should direct some of that anger towards yourself/your spouse. $50,000 gross with 2 children in the GTA is poverty. These people have done nothing bad to you. They do have many options.

    3. Sorry that my problem is spending and yours is income… Both of us need to improve in order to support our kids future and allow for decent life in our older age.

  21. Cutting back on the food budget, eating out, and miscellaneous purchases will definitely help.

    To reduce childcare expenses, see if the parents can change their schedules so one of them is available before and after school while the other is at work. Or perhaps one parent reduces their hours to make it fit within their schedule. In a few years, the oldest child will be old enough to take care of both kids so perhaps the oldest can be paid instead and be taught the value of money and earning it.

    After trimming down expenses and keeping them trimmed, the parents can focus on increasing their income by getting promotions, taking on more responsibilities, doing side hustles, selling unneeded items and other ways. Many focus on trimming expenses, which is arguably easier than raising your income, but the income side seems to be omitted often in these discussions.

    1. That’s a very good point on re-arranging the world schedule to see if they can save on before and after school costs.

      The other option is that they can also try raising their income by getting a certification, moving up the ladder, etc. Another option would be to earn some side income However, given that they are already stressed out and stretched for time, I’m not sure how feasible that is. But definitely something to think about if they’re unwilling to cut costs.

    2. Since writing to FC six months ago, I’ve already re-arranged my schedule so I am doing all the before- and after-care.

      Our daycare costs have now been reduced too (we were paying 2000+ for our 3 years old who is now in JK).

      We still have to work on our other spending as money just seems to disappear…

      1. Good work, DP! Every positive change is a step in the right direction. The readers have shared some really great advice on how to save on groceries, cars, kids activities, etc. So as long as there is a will, there is a way. Keep going!

  22. This post makes me a bit nervous about having kids one day!!! However I feel like I’ve forgone so many ‘necessities’, my kids will just have to learn to one day as well.

    I like option two where one spouse quits and their job becomes learning to cut expenditures and then a side hustle. It would feel like early retirement, get the time with the kids they will never get back, and by working on a business from home he or she can still be productive during the day while aligning with the family’s overall goals.

    1. The good news is that, from reading the comments, we can see that there are parents out there in more expensive areas, making it on much lower salaries. So it’s your choices, not the kids themselves that determine your expenses.

      To reduce stress, having one parents stay home and work on a side hustle, that would help, but it’s a personal decision. The good news is that they do have options.

    2. Don’t feel stressed about having kids. Here is why it will be a breeze for you if you dont already have them. I think our issues are mostly a result of:

      1) realizing *later* in life that FI is necessary at some point (we all stop working sometime, earlier or later)

      Which led to:

      2) never having read or educated ourselves about finances until this later point in life

      And, as a side

      3) not being on the same page.

      If you are reading this blog before you have kids you are probably well on your way to address points 1 and 2. I don’t know if you are already in a relationship and if so, whether your SO has the same financial goals and ideas or not, but that shouldn’t matter much if your finances are still separate.

      I would STRONGLY recommend reading/listening to the Mad Fientist interview with his wife. It is one of my favorite episodes and it speaks about how to go through the journey when the two partners are not on the same page.
      (https://www.madfientist.com/sane-fientist-interview/)

      If I could go back and re-arrange our banking, investing etc, I would have a similar set up to them, but we are a little too entangled financially at this point to go back.

      Like mentioned here over and over again, it’s the parents, not the kids which is the issue. Set yourself up for success and you’ll reach it.

      1. Later in life is just fine, I had my kids at 35, and only started learning about saving/investing when I hit about 45. Best thing I ever did was get married, and start a family, cost was not even a thought to us. I am still learning as i go, oops I am 56… (ya I know what your thinking, whats an old fart doing trolling a Millennial site ?)

        Its never too late, and the fact that you are involved in discussions with peers that have done it, or are trying to, means your on your way.

        I am definitely going to read that interview, good advice.

    1. Good point! They’d be able to get the defined pension out as a lump sum when they quit their jobs, so that would also help reduce their time to early retirement. That’s something they can talk to HR about to find out the amount and add it to the calculation.

    2. This is so true. They both have defined benefit pensions which does change all the calculations. For one thing, they are both probably earning a lot given $120K is “net” which I assume means not only after taxes but after 8-15% pension contributions (not sure what the norm is in Canada…). So one spouse quitting may not make much sense at all unless they are both pretty far apart in income. Also though, they’ll have some built in retirement income streams. Plus, kids do grow up eventually, and there was no assumed decrease in expenses in the figures; the extra food and childcare expenses will go away eventually even if they don’t cut the budget at all!

      Things are not so bad for this couple. They already have lots of money saved, they make a very healthy gross income, and they just happen to be in the thick of things with two young kids who are gobbling up resources faster than they outgrow their clothes (which is something that happens FAST for the record). Even if they never learn to cut food costs much, their savings rate should increase over time as childcare costs wane. And their existing assets will continue to grow. Chin up – nothing ever stays the same, for better or worse.

      1. Thanks for the encouraging words.
        🙂

        We DO need to cut our spending now. As we’ve seen, others in similar situation (young kids, GTA area) live on way less than we do. Surely we can get closer to those spending patterns.

        Our 120k *net* is indeed all the money that comes into our chequing account. It is after the pension contributions, that’s true, but it also includes CCB, tax return money, etc. This is the total cash we have for the year. Our actual salaries are slightly less than that, not more than that.

  23. Wow…the numbers are a bit extreme. I grew up in Toronto (city proper), lived in a (expensive) good school district, and participated in multiple extra curricular activities (one activity per weekday, and three on Saturday, including horseback riding in the summer), and I don’t think we spent as much as DP does. Housing is insanely expensive but understandable depending on location ($2100 currently gets you a decent smallish three bedroom townhouse or apartment in Toronto), but the food costs! How is $20k per year even possible?! We spent $200 per week for a family of five shopping at No Frills, Food Basics, and Costco. If DP is serious about wanting to cut expenses but doesn’t know where to start, the MMM forum is filled with folks who think it’s fun to pick apart budgets and expenses and who give good advice on reducing expenses and increasing savings.

    1. Agree, the bloated food costs is definitely a great place to start. And I agree, the MMM forum has lots of information on how to reduce it. Thanks for your recommendation!

  24. I am a recovering over-spender, but we have cut our food spending in half in the past year. The over spending was 100% because I was not paying attention, but shopping on auto-pilot – not making conscious decisions, but acting out of habit. So what does an Optimizer spreadsheet loving nerd do? Make a spreadsheet of course.
    I recorded every line item on the receipt into different categories – meat, dairy, produce, snacks, grains etc. This allowed me to compare costs shop to shop, and also find our biggest expenses. Really! – How much on Snacks? Later I added columns for Why I Bought It, and Did I Use It? These provided even more insight as to how much food I as wasting and how the coupon/sales tactics at the store affected my impulse buying.
    Best Things We Changed
    1) Invest in a good go-cup/thermos for taking homemade coffee to work
    2) Take lunch to work – tuna mayo, deli boxes, hummus & veg. All prepped on Sunday.
    3) Nuts (bought in bulk) in the office drawer to cut down on unhealthy expensive vending machine treats.
    4) Learned to cook better and take notice of the ingredients – goat cheese REALLY expensive, feta, not so much. I really like Budget Bytes for this. https://www.budgetbytes.com/
    5) Cook a double batch of something brown on Sunday (chilli, bolognese, shepherds pie) and freeze half. The busiest day of the week gets to be Easy Freezey day. Pull out the tub of brown in the morning to defrost and reheat in the evening. Add cheese.
    6) Make a gigantic batch of soup with whatever veg is “Produce of the Week”. Freeze it, or eat all week for lunch.
    7) Keep cheap frozen pizza handy for those days when everything spirals out of control. This avoids the emergency take-out fast food runs. This tip comes from Mrs Frugalwoods, who also has loads more on cost cutting including kid raising, with slightly less face-punching than MMM. Both of them make me laugh and make me think.
    http://www.frugalwoods.com/
    8) Try to have at least 1 vegan meal a week : meat & dairy are our biggest expense
    9) Menu Planning and Meal Prep – for super optimizing on time & ingredients
    10) Fake Out night to replace restaurant meals or take-out. Thai, vietnamese, ethiopian, chinese, indian, there will be a recipe online for whatever floats your boat. Fun to learn and experiment. And if it’s a disaster, there is always frozen pizza!

    1. Wow, these are fantastic tips! Thanks, jb!

      “The over spending was 100% because I was not paying attention, but shopping on auto-pilot – not making conscious decisions, but acting out of habit. So what does an Optimizer spreadsheet loving nerd do? Make a spreadsheet of course.”

      I LOVE how you put that. Great job on cutting your food spending in half! Hopefully DP will follow your tips and can do the same!

  25. This is rather ridiculous to me, we spend $450 per month on groceries and $200 on restaurants. That’s less than just their restaurant spending. We have no kids, but i imagine that we’d need to pop out like 10 kids to reach their food spend.

    These guys haven’t even tried to cut costs, just ridiculous amounts of wasteful spending here. All i’m hearing is “I want what you guys have but i don’t want to put any effort into getting it”.

    Why don’t you try not blowing money on every single thing with a pricetag that you come within 20 metres of, and see how that works.

    1. Well, our spending is ridiculous which is why I came asking for help from the community.

      We actually don’t feel like we buy that much (though we obviously do).

      We don’t own a TV, have no laptops, no tablets, we don’t pay for cable (we use netflix with the TV that came with the house). We buy a new phone when the old one physically breaks and we use the cheapest internet and cell plans I’ve seen among my friends.
      We don’t go to sports events or concerts, rarely to the pub (though we somehow manage to waste away 8K on eating out/ordering in). Our cars are an old sedan and a newer minivan, basic trim.

      If you met us you would know that we don’t buy what you would usually associate with extravagant materialistic purchases. I ahte shopping for cloths (Costco is where I got almost my whole wardrobe). My wife is not into fashion, there are no purses or shoes in her closet. We really seem to just slowly waste money away on bad daily habits, not consumerism in the sense of wanting shiny items.

      1. if you can get your daily spending under control which sounds like you are already taking steps to do, you are going to be amazed to see what you can afford. You will be able to use your money on what you truly value. It’s like trading multiple dollar store purchases of junk for a shiny new tablet…..or instead of cheap shoes in every color and none you really love…..one pair of great shoes.
        It’s incredibly satisfying to stretch your dollars and still not be deprived. You may want to read a little about the minimalist mindset, may help u in your goals. Or at least analyze your spending in terms of the value each purchase brings to your life.

  26. One thing to those talking about how expensive after school care child care is – it’s not “just” after school care – most centers provide child care in the morning as well as during PD days, school breaks and some even over the summer. It’s super hard to recruit qualified child care workers for part time positions (when you also then need them for full time hours during those PD days for example). So, while there are some savings as the child-caregiver ratio improves as the children get older (hello 1 caregiver to 3 babies versus 1 caregiver to 15 school aged kids), the general premise is the same – qualified employees want full time jobs (and surprisingly no, teachers don’t want to also do this work). I’m now paying for both kids less than I paid for 1 kid for full time care, which will drop again next year (thank heavens). But – there’s also benefits to quality child care programming and exposures your child may not otherwise get (and yes, lots that work the other way too – no one size fits all).

    I agree with everyone’s comments about it looking like they are not really trying to cut back expenses. I’ve been trying somewhat but like others here – it’s super frustrating because it’s so easy to be lazy at times and order the pizza, or do the movie out, instead of doing the lower cost activities/make your own pizza. I’ve been tracking my big picture expenses/revenue reconciliation enough to know we are spending too much – so for 2018 I’m planning on really tracking our expenses by category to see where we end up rather than just the “big picture”. For 2017 we are looking like we will hit a 33% savings rate (nice to see it moving up 24%->27%->33%) from our income, however I’d like to get that to at least 50% ASAP!

  27. I’m a bit late to the comments but I would also examine transportation costs. This is one of our extravagances. We have 2 kids we are still helping with cars (2 (for a total of 4 kids) are on totally on their own) and my wife and I have 3 cars between us – so we are paying for 5 cars. Our annual costs for these cars is $7000/year. I know that gas prices are more expenses in Canada than the US but $11K for 2 cars is also surprising.

  28. Thank you for everyone who took the time to write down some advice and share their numbers and strategies.

    We spend too much on our daily life. I know it which is why I came to the community for help. Unfortunately, my physical community around me isn’t able to help. For once, not a lot of people are of the mindset of saving and planning and second, most don’t feel comfortable talking money openly. Sadly, I’ve let myself follow blindly and get to the point where I spend far too much. Among my friends, it is often “lets go for sushi or coffee out” where it should be “come over for lunch and a walk to catch up”. Alas, I can’t change the people around me so I came here where people congregate based on ideas and not based on geography.

    So thank you:
    Maria for the detailed spending pattern.
    Andrea for the Specific suggestions of how you manage things.
    BikeMike, Blutterfly for the Discussion about your food costs.
    Elizabeth for the encouraging words.
    JD for describing your success plan with many actionable steps.

    and everyone else who chimed in with ideas

    These are the kind of conversation I unfortunately can’t have in person with my friends.

    And most of all, thank you FC, especially in light of Monday’s post about working on important projects that make a change in peoples life. Somehow you intuitively understood my mindset and what I need: a light at the end of the tunnel (11 years) that might make me start walking towards it. Thank you for being positive and focused in every comment you added. You didn’t just shoot me down for spending too much, but re-focused the comments on how to reach the goal. Please keep the blog and community going.

  29. I just wanted to chime in with some encouragement.

    To me it sounds as though you are feeling overwhelmed at all the changes you think you need to make, and are not feeling supported. We recently made an interstate move for work and I have been feeling so overwhelmed. Our spending at the moment has increased and I know I should do more to get it under control. It will happen but there is only so many things that I can focus on at once.

    It’s ok not to do everything at once. Pick an area you think you can make a difference in and focus your energies there. It will become a habit and then you can move your focus somewhere new. It will all add up.

    I have two young children and I am at home with them every day. I still feel overwhelmed at the thought of cooking dinner, so I concentrate on simple meals. I love recipes that I can just dump in the crockpot. Frozen peas and corn are the staple “vegetable” with meals. I cook big batches of bolognaise sauce etc and put at least two meals worth in Ziploc bags in the freezer, ready for another night. We have a stash of meals in the freezer that just need a little rice or pasta cooked to make the meal. My husband enjoys cooking, so on weekends he makes a couple of meals ready for the freezer, like curries.

    When I was working I either took leftovers to work or a sandwich. My husband preps a few salads on Sunday night to take to work during the week.

    Some articles I read recently suggested concentrating on “food prep” not “meal prep”.
    https://thestonesoup.com/blog/2012/04/the-magic-of-mise-en-place-how-a-chef-secret-can-help-you-prepare-for-the-busy-week-ahead/

    http://alliecasazza.com/blog/2017/9/13/simplify-your-meal-planning

    When I first read your article I thought of this one by MMM. Perhaps you’ve read it?

    http://www.mrmoneymustache.com/2016/07/13/making-space-for-badassity/
    It resonates with how I’m feeling at the moment, that I need to simplify everything in my life. To make space for bigger changes.

    1. Thanks for the links, haven’t read any of those yet and will do so shortly.

      It is very true that I just feel overwhelmed… 🙁
      I do plan to tackle the meals thing first as it has many simultaneous benefits: the financial, health, time and educational components are all bundled together there.

  30. I’m way late to the comments on this one, but this post really resonated with me. Two busy working parents, a 1 year old and a 3 year old… of course DP is feeling overwhelmed!! Parenting two toddlers is no walk in the park. Hopefully he’s been able to see incremental progress in the last few weeks. I have 3 action items to add to the conversation.

    First, cut out fast food / convenience eating. I’m not talking restaurants – I’m talking grab and go because you had to work late, not sure if there’s anything for dinner at home and sometimes, dang it, you want a freaking milkshake because it’s been a long day at work and don’t you deserve a treat every once in awhile? I was shocked at how much I was spending per month when it was just $4 here and $6 there.

    Second, read The 5 Love Languages of Children. When my two kids were 1 and 5, and I was working late on a regular basis, I found that I would go out shopping after work. The kids were already in bed and I didn’t get to see them that day, but I was thinking of them and wanted to do something for them to make up for not being there. So I shopped. DD1 needs a new jacket. DD5 would like a new book. The rush of giving the new book, jacket or whatever to my daughters the next day made me feel like I had “provided” for them even though I hadn’t been there for them the night before.

    However, as we all know, material items are often tossed aside, and it was a very unhealthy cycle (both mentally and financially). Kids need and want our focused, undivided time more than material items. The 5 Love Languages of Children helped me to understand that more concretely and to re-prioritize how I was spending my time and consequently my money. It also made me more intentional and mindful with the time I did have with them, and as a result, I no longer felt the need to provide for them in such a material/consumerist way.

    Third, and finally, for all his faults, Dave Ramsey has at least one good strategy. It’s the cash/envelope strategy. You get $X in cash in an envelope for each of your spending categories per week or per month. That’s it. That’s all you get. No danger of over-spending. Don’t have enough cash to pay, then put something back.

    Anyway, good luck with your FI journey as well as your parenting journey. They don’t call it a labor of love for nothing! 😉

    1. “However, as we all know, material items are often tossed aside, and it was a very unhealthy cycle (both mentally and financially). Kids need and want our focused, undivided time more than material items.”

      Love this, JDonFire! Thanks for your 2 cents and for recommending “5 Love Languages of Children”, I’m sure it will help DP a lot, and I’m going to check it out too.

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