$100k!

February 13, 2005 5:35 PM

I did my taxes this weekend and was surprised to find out my husband and I made about 120k last year. After a few rocky dot-com years and a new job for both of us, I knew we were doing ok, but had no idea we would break the six figure barrier for the first time in our lives. The problem is, not much seems different. I always thought making $100k/year meant we could have anything. We don't live paycheck to paycheck and we don't sweat going to the grocery store, but we don't have a huge plasma tv and we both drive economical cars. Our house is worth less than $200k. Are we bad with money? Should we see a financial planner and budget everything to see where it is all going? I feel like we should have tens of thousands of savings given what we make (we have a few grand in the bank for emergencies is all). I feel like we're living just as we did when we made half as much and I'm also concerned if we'll have enough for kids someday. Or am I doing everything right and the $100k/year american dream isn't all it's cracked up to be? This honestly took me by surprise.
posted by anonymous to work & money (45 comments total)

Perhaps personal financial software, such as Quicken may help you see how you spend your money and, thus, prioritize how to spend it in the future? Generally your bank should offer a file to download account history in a format for Quicken to import. Quicken and similar software usually provide a pie chart showing where the money went, though categorizing each expense is tedious.
posted by quam at 5:43 PM on February 13, 2005

You don't need a financial planner for this, that would just be another expense. You do need to track where your money is going, and Quicken is a good way to do that.

I put all my expenses into Quicken. I don't think the categorization is tedious. The typing can be. But you already use it to balance your checkbook and double-check your credit card bill so you should have most of the stuff in there already. Right?
posted by grouse at 5:50 PM on February 13, 2005

I agree with quam. the first step is to always just write down how you're spending every single cent, either with software like Quicken or just in a notebook. Do you eat out a lot or buy a lot of books/CDs/DVDs? Little things like that can quickly add up.

Depending on where you live, even six figures might mean no more than living comfortably and having a little extra pocket money instead of living like royalty.
posted by gyc at 5:52 PM on February 13, 2005

Hi. Welcome to progressive taxation. It stings, but it's there for a good purpose that benefits even those it hits hardest.

A bit more seriously (that was true, but said with a twinkle in my eye), you might want to know that books like The Millionaire Next Door tell us that the typical American millionaire is someone that does NOT drive a flashy car, does NOT live in a mansion, and does NOT buy expensive, high-depreciation toys like plasma TVs. They live in neighborhoods of normal middle class houses and households and buy used cars.

In short, they look like you and your hubby.

Now your next job is to keep living sensibly so that you can join those millionaires, and gain the greatest luxury: independence. Keep in the groove with the good spending habits you seem to have, and start building serious wealth.

And, frankly, making $100,000/year does mean that you have just about any (one) thing you may want. But that doesn't mean it's a good idea to take out that loan and get it. Enjoy your husband, enjoy your home, and enjoy the feeling of building towards your own independence.
posted by NortonDC at 5:52 PM on February 13, 2005

A few observations which may help or may not:

1) You didnt mention where you live. The same amount of money will go a lot farther in different places. I know that as a single person living in downtown Manhattan in the mid-90s I made over six-figures but never felt particularly rich. Then again, it wasnt unusual to waste a couple hundred bucks on a night out.

2) Yes, start tracking where all your money is going. Some people do this and are surprised to see where it goes. Do this for at least a couple months: write down all expenditures. Carry around a notepad or PIM and write down what you are spending your cash on. Again, I dont know you but you might have left something out and this method will certainly tell you.

3) Going from making say 60k to 120k doesnt mean you are bringing in twice as much money thanks to that thing called a graduated income tax. :)
posted by vacapinta at 5:54 PM on February 13, 2005

Tracking your expenses is great advice. You may be shocked to see just how much seemingly little things can add up to hundreds, even thousands of bucks every year that aren't going into savings or retirement.

But even if you never go to Starbucks again, putting together big savings (or retirement, or college funds for kids, etc.) won't happen by itself, no matter how much you make. My off-the-cuff advice is first to clarify -- and I mean really get clear and specific -- what your actual goals are regarding what you want (and will need) in order to retire, send kids to school, etc. Then break those down annually (and ultimately monthly) to see how much you need to be putting aside before you write the check for your mortgage or go to the grocery store.

It will never happen magically -- you've got to decide to do it. (And I'm speaking as someone who didn't have a savings account until the past couple of years -- I'm now 35 -- because I'd simply never decided to save until then.) A great place to check out is The Motley Fool -- chock-full of very useful and engaging advice that you can start using immediately to help with maximizing your finances. (There's even a section on there that can help you decide whether you really do need to see a financial planner or not, though I too suspect you and your husband can take care of a lot of this on your own with Quicken and a clear-eyed savings plan.)
posted by scody at 6:03 PM on February 13, 2005

The following is just random numbers, based on where *my* money would have went in your situation.

Salary = 120K per year = 10,000 per month
Taxes - ~36K = 3000 per month
Take Home Pay = 7000 per month
401K = 15% of salary (ea person) = 3000 per month
IRA = 166 per mo each person = 300 per month
Other Savings = 1000 per month
House - 1000 per month
Car Payment - 500 per month
Food - 500 per month (yeah, lots of eating out)
Going Out - 150 per month
Stuff - 150 per month
Utilities - 250 per month

So in my case when I was in a similar situation, we were left with about ... 7000-6850=$150 of extra money per month, which isn't that much.

I'd say if you're saving a good portion every month, you're probably ok, if not, then yeah, your money is going somewhere, and you'll have to figure out where so you can budget accordingly (and the suggestions on using Quicken to figure that out are good ones).
posted by forforf at 6:09 PM on February 13, 2005

Are we bad with money?

You're only bad with money if your goal was to have more in savings than you do now. If your question is "could we have saved more than this if we were paying close attention?" then the answer is probably "Yes." I saved about 3K last year on an income that was roughly 20% of what you guys made. On the other hand, I've been doing this for a long time and plan pretty specifically to save a lot of what I earn.

If either you or your husband is self-employed you'll be taking a hit by paying your own Social Security taxes in addition to your normal taxes. If you own your own home you'll also owe property taxes as part of your mortgage which will be steeper the nicer neighborhood/area you live in. I don't think you need a financial planner, but if you'd like to do something differently and want to save for starting a family, then budgeting is definitely in order.

The good news is that starting to pay attention to your money before you get in a money jam is a good way of going into this without getting really stressed about money. You seem like the two of you are comfortable, now it's time to see where your money is going and see if you can be just about as comfortable and be putting a little bit of money away. Write down where your money is going and look for trends. Of particular interest are things you are spending regular money on that you may not be noticing: eating out, cell phone plans, cable TV/internet, web/net stuff, travel/hotel/food, car loans, gym/club membership, any other loans, phone/electric/heat bills. With a few exceptions, a lot of this is tweakable stuff [got two cell phones? cancel your land line, for example, savings = $350/year or so] Find a way to track all this stuff that doesn't feel like a punishment, or work, and then just keep an eye on it and see what develops.
posted by jessamyn at 6:12 PM on February 13, 2005

How does making $100k put you on a road to being a millionaire someday NortonDC? I'm thinking that no matter what I make, it would take me 5-10 years to save up an annual salary. I think I would go to my grave before I had 10x my annual salary, if I made that much.

Somehow I think the answer is "compound interest, my boy!" but how does someone go from a few grand to a millionaire in a safe, but relatively speedy way? I feel like I'm just starting to learn this stuff.
posted by mathowie at 6:13 PM on February 13, 2005

$120,000 isn't the best place to be tax-wise since you jump from the 25 to the 28% bracket after $117,250.
posted by shoos at 6:13 PM on February 13, 2005

To answer your "how are we doing?" question- if you're living in a major coastal US city, then $100k isn't all it's cracked up to be. Yes, you should do money management, but I wouldn't freak out that you're not awash in disposable income.
posted by mkultra at 6:17 PM on February 13, 2005

I make 66K a year and I'm broke all the time.
posted by Mean Mr. Bucket at 6:39 PM on February 13, 2005

Definetly Quicken. And, just sit down and really look at your bank statement sometime. One thing that I stick to is not allowing auto-debits of my account. I will pay the $2 extra for an actual bill just to control my bank account. I sat down with a friend of mine to look at his banking statement, and 9/10ths of the wasted money was going to little auto-debit things, some for services he didn't even use anymore. That's the bad thing about autodebit -- if you are awash in cash, it's easy to forget about them.
posted by Medieval Maven at 6:41 PM on February 13, 2005

Welcome to the real world. Big paychecks don't buy plasma TVs, big debt does. Thank your lucky stars that you have not learned to get too comfortable with the extra cash. Perhaps you can find a way to save a bit of it.
posted by caddis at 6:44 PM on February 13, 2005

What they all said. Living modestly within one's means is the key to financial security.
posted by five fresh fish at 6:53 PM on February 13, 2005

2004 was our best year as well, although a goodly chunk of it was my severance pay, so 2005 is starting off sucky. The main difference I can see between 2003 and 2004 is that in 2004 when we wanted something, we just bought it. I don't mean anything extravagant, but whereas in 2003 a $200 purchase meant saving and budgeting, in 2004 we didn't have to.

We'll be fucked in 2005, but what the hell. You only live once.
posted by mr_crash_davis at 6:56 PM on February 13, 2005

shoos, that change in tax bracket only costs you 3% of $3000. Or $90. So no big deal.
posted by smackfu at 7:18 PM on February 13, 2005

Interesting this came up now (and I don't think it's a question anyone should feel so embarrassed about that it requires anonymous posting). My wife and I are winding up a month of tracking every little expense. It's been informative. We've learned that A) we're not living very extravagantly. If we cut out every penny of eating out, booze, and entertainment, and bought no expensive groceries, we'd save about $400 between us. B) Credit card debt is bad. We already knew that, and we're paying it off, but it takes a big chunk out. The whole thing has helped put our financial situation into clearer focus and shown us things we need to do.

She and I did see a financial planner a few months ago. He did not tell us to track our expenses, but he did have some good advice for long-term planning, which actions were worth taking and which were a waste of money.

In 2001, my income was less than half what it had been in 2000, my best year. I realized that I didn't feel half as rich--it was a real slap in the face to discover that no matter how much I was making, I still seemed to be facing the same money problems--though I did travel a lot in 2000. In short, I don't think it gets easier until you've got old-money wealth.
posted by adamrice at 7:22 PM on February 13, 2005

The new jobs you got last year might have carried 'hidden' expenses that you weren't using before, such as increased transportation fees (gas, maintenance, tolls, trains), dry cleaning, haircuts, eating lunches out, etc. A bunch of minor things can eat away at your extra money. A great book for evaluating your financial plans, figuring out how much you want to be spending and saving (and deciding if your current job helps you to do that) is Your Money or Your Life.
posted by xo at 7:37 PM on February 13, 2005

Find a way to save no less than 10% of your salary every year (forforf has the right idea). Take it right out of your check before it's disposable income, either through 401K contributions (pretax) or the payroll savings plan (aftertax). After a few years, in an emergency, it's good to have even if you must take a tax and 10% penalty hit on it.
posted by nj_subgenius at 7:41 PM on February 13, 2005

I'm not talking about anything speedy, mathowie. I'm talking about establishing or nurturing the practices that allow one to achieve those goals over a lifetime. I'm sorry if anything I wrote seemed like an exhortation to seek a quick payoff, because that's pretty much the opposite of what I meant.

Homebuying is one long-term way that many families build wealth. It's not a lock, but it is relatively broadly available tool for building wealth over the long term. We don't know the asker's situation, but if they have a lot of equity in their home, they should think of that when measuring their savings.

Hmm, this (and my first answer, actually) does seem to be wondering afield from the question, which is "why don't we have more saved up given what we make." Progressive taxation is actually part of the answer, but, like everybody else said, concretely knowing where your money really gets spent is also key to understanding things if you really are mystified.

So, I was originally reacting positively to the "We make a lot but don't have expensive stuff" aspect, but not paying enough attention to the follow on of "so why don't we have more in the bank?"

Yeah, do track it all to get learn where it goes. If you're already in the habit of reigning in your major expenses like cars and major electronics, then understanding where else you money goes and applying that same level-headed approach to other expense categories may turn out to be painless for your family.
posted by NortonDC at 7:56 PM on February 13, 2005

What isn't mentioned by the poster here is the issue of any unsecured debt. In my experience, people in her situation were often there (good income, hardly any savings) because of plastic. I was in that boat myself and had to file bankruptcy in 1997. Since then, I've paid cash (checks/debit card, etc.) for everything. Doing so makes the purchases more real and gives me a better handle on where the money goes. It also prepared me for the lean times ahead when I got laid off nearly four years ago and the tight budget of a returning college student now.
posted by AstroGuy at 8:24 PM on February 13, 2005

How does making $100k put you on a road to being a millionaire someday NortonDC? I'm thinking that no matter what I make, it would take me 5-10 years to save up an annual salary. I think I would go to my grave before I had 10x my annual salary, if I made that much.

Somehow I think the answer is "compound interest, my boy!" but how does someone go from a few grand to a millionaire in a safe, but relatively speedy way? I feel like I'm just starting to learn this stuff.

$100,000 / year =
$8333 / month.
-$2000 to Uncle Sam
-$500 to your state government
-$1500 for your sweet pad
-$500 for utilities (phone, heat, water, gas, electricity)
-$500 to feed yourself and drink on the weekends
-$500 for the carpayment
-$300 for the gas and car insurance
----------------------
~2500 left over each month.

Skip the equations on how to calculate compound interest (google is your friend) and get to the results:

Starting with $0 and dropping ~$2500 a month in a boring but secure savings account (2% annual) will make you a millionaire in ~24 years.

Taking risks and investing in the stock market will cut 10 years off of that if you average a return of 10% annual on the same monthly investment. (And assuming you don't lose your shirt in the lean years.)

So, can you become a millionaire in 5-10 years at 100k salary? Certainly not via a simple savings account. But is 14 years so bad to wait? Also, this simple sketch of a savings plan assumes no 401k plans by your employer or any other instruments you may use like an IRA.

As others have stated, there's a lot of frills that are cut out. Notice that no DVDs, books, frappacinos, CDs, ipods, cell phones, broadband subscriptions, or cable TV were included. It doesn't mean you can't have any of those things, you just have to take a hard look at how they are keeping you from your million dollar mark. Note there's no credit card payment, either. Personally, I use a credit card for almost everything, but it is paid in full every month.

I also think that one of the best things a person can do with their money is to get out from under the car loan burden. In the above scenario, it would only take 6 months to save enough to outright buy a brand new car with cash. (The millionaire next door drives a Honda, btw.)
posted by achmorrison at 8:25 PM on February 13, 2005

IANAFA, and what they all said, basically. Track your expenses. Treat savings (ideally 10% of your net income) as a bill, like your mortgage, that MUST be paid. It's educational to make up a budget _now_, guessing at where your expenses currently lie, just to see how accurate or otherwise you are once you've tracked your expenses for a while.

The other secret to growing your money tree, I'm told, is to start as soon as possible. Invest what you can, as soon as you can, be it in real estate, the stock market, or whatever. Remember that savings accounts are not effective long-term, as they do not keep pace with inflation. Fertilise this investment often (with more money).

Lordy. Have to pop in this tidbit too - I earn roughly $US31k, here in Oz, and I'm paying 30c in the dollar. That goes to 42c @ ~$US 40k, and 47c @$US 49k. Heh.
posted by coriolisdave at 8:33 PM on February 13, 2005

Yeah, definitely find out where it's all going. You are probably paying too much in taxes - a good tax accountant saves me something like 30 times what I pay him - and you're certainly not putting enough away.
posted by ikkyu2 at 8:34 PM on February 13, 2005

For clarification, with the current tax system, the higher tax rate is only paid on the income above the threshold.

What everbody else said. And, pay yourself 1st. Make saving/investing a high priority. Pay off all credit card/high interest debt.

A lot of people have gotten rich by investing steadily in the stock market. There are index funds that take away a lot of the guesswork, and socially responsible funds if you're bent that way. Owning a house has helped many people build some wealth, too.
posted by theora55 at 8:59 PM on February 13, 2005

I don't count my income in the tens of thousands so what do I know, but I did find that when I tracked my expenses for a few weeks, there were a number of things I thought I could cut back on - eating out, buying clothes. . .

Figure out how much money you spend on random stuff you don't absolutely need, and start by putting half that amount away automatically each month. I find that having less means I spend less, and I am usually none the worse for it.

Also, here is my mother's advice: buy your car. Never lease, because then you are always making payments. If you buy it, you can pay it off in a few years and if you buy a reliable one (she likes toyota), you can drive it for ten or twelve years. Not glamorous, but big savings, a few hundred a month after you pay it off. Or save up and buy without a loan to save on interest.

She is really agressive about savings, even when it means cutting back on luxury. It meant that I got to go to college wherever I wanted. She put away a hundred or so per month into a mutual fund when I was a baby (stopped after my brother was born), and it grew like mad. Mutual funds+lots of patience=more money.
posted by mai at 9:30 PM on February 13, 2005

I asked myself this question a couple of years ago. After reviewing my check register for the previous year, I found the answer: credit card debt. Buy a little here, spend a little there, the debt mounts up and so does the finance charge. Review your credit card statement next time and ponder what you purchased.
posted by SPrintF at 9:30 PM on February 13, 2005

120K + no kids = a few thousand in the bank for emergencies? I would have to say you do not sound like you're very good with money.

Of course, buying a Plasma TV would be "being bad with money," too :) You need to do a lockdown. Go through your life systematically and trim the fat (especially the recurring fat). Set a moratorium on 1-time purchases over $100. Do this until you feel in control again. I've been through the process and plan to do it at intervals throughout my life, because it really gave me control over my situation and the ability to plan and change my future.

Not sure what to say about the rest of it. If you had some kind of associations with the number 100,000, I can't really speak to them, but I am kinda shocked to hear you're not saving anything. If nothing else, start putting pre-tax money into a retirement fund.
posted by scarabic at 9:31 PM on February 13, 2005

If you're investing in the stock market, please don't put in more than 10% of the money you have available. If you get burnt, you don't want to be on the streets.
posted by madman at 9:36 PM on February 13, 2005

She is really agressive about savings, even when it means cutting back on luxury.

OH GOD NOT THAT!!!1!

Also, here is my mother's advice: buy your car.

Here's my advice: buy a used car.
posted by NortonDC at 9:39 PM on February 13, 2005

Suggestions:

1) Pay off high-interest credit card debt (if you have any) as quickly as possible. The goal should be to pay off every credit card every month. Sometimes you may need to put a big-ticket item on the card, although usually stores will offer you more attractive financing for things like appliances, but try not to put anything on that'll take more than 2-3 months to pay off. Never carry a balance on a card that charges more than say, 10% interest, never accept a card that charges an annual fee (except in extraordinary circumstances -- Citi recently offered me 12,500 frequent flyer miles for signing up for a card that costs $50 a year; basically I'm calling that "getting me most of the way to a free flight for $50"), ensure that all your cards have a grace period and use only single-cycle averaging for interest calculations. (Yes, I'm looking at you, Discover, you two-cycle-averaging bastards.) Naturally, use your rewards card (if you have one) for regular expenses like bills and whatnot so you get cashback or airline miles or whatever, but always pay those off.

2) If you are paying any kind of interest on your car(s), say more than 3-4%, pay it off as quickly as you can. You can save hundreds or even thousands by paying off your car early. I got my car on a 5-year loan at 8.6% (mildly bad credit at the time). I got the 5-year loan because I had been laid off twice since I moved to Seattle and wanted to make sure if I lost my job, my car payment would be low enough that I could continue making it while I was collecting unemployment. But I considered it a minimum payment, and put all my extra money toward it. I paid it off in about 14 months. Saved about $1500 and will not have any car payments for the next few years. Very nice. In many states it prepayment penalties are illegal; make sure your loan doesn't have one before paying the car off, though.

2a) For the same reason, pay off the house as quick as you can too. Sure, you'll lose the tax deduction, but you'll get back more money than you paid. And over 30 years, you'll save an absolute buttload of money. If you make just one extra payment a year, you'll pay your mortgage off years early, which could easily save you $50,000. This is important because for most people, their house is their main investment. The less you pay for your house (including interest to the bank!) the more you make as it appreciates.

3) Contribute to your company's 401(k) and/or IRAs. Since this is taken out of your paycheck, you'll quickly adjust to live without it. Before you know it you'll have tens of thousands of dollars socked away. If you start now, are about 35, and put away about $1,000 a month, you'll be able to draw out $5000-$6000 a month when you retire.

You are very smart not to buy a plasma TV. There is precious little HD broadcasting now, and prices will plummet over the next 2-3 years, and the sets will get better too. Your television should not be something you need to upgrade every few years.
posted by kindall at 9:58 PM on February 13, 2005

This is important because for most people, their house is their main investment.

You alluded to this, but actually a house is not most people's biggest investment. The financing on their house is. Most of the time, the interest paid on the loan will exceed the principle cost of the house. That's subsidized a bit by the deduction, but still...
posted by gd779 at 10:18 PM on February 13, 2005

Unrecoverable costs such as loan interest do not constitute an investment, so, yeah, the house is their biggest investment, even if the interest is their biggest cost.

And for someone doing a 30 year loan with a 20% down payment at the extremely low interest rates of this era, interest may not always exceed principle these days.
posted by NortonDC at 10:49 PM on February 13, 2005

Our bank has a financial planning service for free (!!). The planner helped us get money out of regular savings into a longer-term higher interest investment account with a guaranteed interest rate of 5%, but with performance of closer to 8%. The 5% rate is guaranteed for 15 years, in which time, compounding will double the money.

Now, after a dry spell of employment, we're both employed and our goal is to set aside 2K per month for savings. Now, I don't if this goal is realistic or not (but I suspect it is), but if it is in 15 years we will have more than $500,000 working at a 5% interst rate. 30 years? 1.6million.

Make it a habit to put money aside. Check your habits and change some. Our grocery bill, which is somewhat high (I think), is $120 a week for two adults and a toddler, which averages to about $5.75 a meal per person (but the grocery bill also includes non-food items). That's a bargain compared to eating out. If we both ate out for lunch and dinner, That'd be an additional $140 per week, or $550 per month, or 1/4 of our savings goal.

Personally, I hate debt. Hate, hate, hate. I do my best to carry no loans (mortgage is the exception) and carry no credit card debt. I like to get interest and I hate to pay it.
posted by plinth at 6:27 AM on February 14, 2005

You must, absolutely must, max out your 401k and your IRA eligibility, which is about $36,000 a year with two workers, of which $28,000 (the 401k) is pre-tax, and $8,000 is post tax Roth IRA contribution. The pre-tax aspect of the 401k softens the blow considerably.

The 401k is taken out of your paycheck before you see it -- perfect discipline -- and you can set up your IRAs as monthly installments of $667 debited automatically from your bank account.

Let me dissent ever so slightly as to a nice home entertainment system. There's lots of HD content now -- most network prime time shows and most all of the new movies when they come onto premium cable. If a $3,000 investment could keep you home (suffiently entertained) one Friday night a week you'd otherwise go out and spend $75 on dinner and the movies or a show, that's $3,900 a year -- more than paying off the system, and making each of the two or three years left while the system is high enough tech for you pure profit...
posted by MattD at 7:27 AM on February 14, 2005

$120,000 isn't the best place to be tax-wise since you jump from the 25 to the 28% bracket after $117,250.

The higher tax rate only applies to the earnings above the lower bracket. To use the numbers cited above: You pay 25% on the first $117,250 and 28% on any money above and beyond that. What the actual numbers are in your jurisdiction may vary, but the concept carries across jurisdictions. You don't pay the higher rate on your entire income. (someone mentioned this quickly, but I wanted to stress the point cuz it's one of my pet peeves that people misunderstand this)
posted by raedyn at 7:45 AM on February 14, 2005

If you live in an urban area: get rid of your cars! The average american family spends 25% of their income on their vehicles. For many, it would be more economical to take cabs everywhere - no joke. If you're willing to take public transit, in a two-car family you'll be saving a thousand-odd dollars a month, and a much larger amount if you amortize the not-buying-new-cars savings.
posted by louigi at 7:48 AM on February 14, 2005

An interesting aside, way back in the early 90s I remember thinking that once I earned more than $30K all my (money) problems would be solved.
posted by evilelf at 8:35 AM on February 14, 2005

You can't always get what you want
but if you try real hard
you just might find
you get what you need.
posted by five fresh fish at 9:16 AM on February 14, 2005

Read Your Money or Your Life. Or don't -- the essential concept is easy to relate: track all of your income and expenses, to the penny (with Quicken or its imitators or without.) At the end of the month, categorize it (however that makes sense to you) and see where it went. Also look at the categorized expenditures in terms of percentages of your net income.

Most people find they automatically spend less just by watching closely. And either way, you'll have actual data with which to answer the question as to whether you're good with money.

For your elective expenses, does where they're going by percentage make any sort of sense compared to what you consider your priorities?

And as a homeowner in an expensive area, I can tell you that $120K of joint income just plain isn't enough to be wallowing in conspicuous consumption. Without going further into debt, that is. If you see people around you who you figure make about the same money but always have the latest toys, don't be surprised if they have five figures on their credit cards.
posted by Zed_Lopez at 9:51 AM on February 14, 2005

Not much more to add to the above, but I did do one thing which has helped keep my credit card debt down to reasonable levels (and being in grad school and pretty broke-- not to mention with a teenager to feed-- it's easy to fall back on it "just this once", which can add up frighteningly). I lowered the limit on my credit card to just about a thousand bucks, roughly the amount of money I would need for an emergency flight to England. Interestingly, Visa fought with me, and has more than once tried to raise it again without me requesting that they do so (though I suppose I shouldn't be surprised). And another vote for following every cent you spend, even if just for one month to get an idea of where it's all going. The day I found out that I was spending 10% of my disposable income at Starbucks was one I will not soon forget.
posted by jokeefe at 11:05 AM on February 14, 2005

I'm late to the party, as always, but I developed a piece of budgeting software (well, it's in Excel, but it's cool beyond measure). It's free and publicly available, but I'll hold off on the self-link until Announce MeFi is up and running. If you (or anyone else) e-mails me, I'd be happy to send you the link.

It's expressly for tracking expenses and making budgets. It might be just what you need, and it's free. And easy to use.
posted by Alt F4 at 12:31 PM on February 14, 2005

Self-links within comments have always been kosher, Alt F4.
posted by NortonDC at 2:51 PM on February 14, 2005

Well, alrighty then! This question is now off the front page, so who knows how many people will actually see this link, but here you go: PearBudget.

It's in Excel, but any normal spreadsheet software should be able to use it. It divides your expenditures into Regular, Irregular, and Variable expenses. All of that's explained in the program, and it's written to be really easy to use.

Again, it's free, although any donations sent in go into a trust for the 6-month-old son of a (deceased) friend of mine.

I'll be posting this again once Announce is set up.

Good luck, Anonymous!
posted by Alt F4 at 4:41 PM on February 14, 2005