Family Finances Archives - Financial Samurai

Would You Accept $1,000,000 To Endure Going To Public School Over Private School?

Posted by Financial Samurai 137 Comments

This article is for:

* Students who want to understand the true cost of their education and the sacrifices their parents make in order to make better choices with their careers.

* Parents who make too much to get financial aid, but not enough to feel like they can comfortably afford private school.

* Students and parents who feel bad for attending or sending their kids to public school or have a tinge of envy for those kids who do go to private school.

Congratulations for getting accepted to your grade school or college of choice! You’ve now got to make a decision on how to spend what will likely be your parent’s money if you aren’t getting a scholarship.

I’ve been a big proponent of attending public schools over private schools because I’m biased. I attended international private schools when I lived in Asia, attended a public high school, and went to a public college. I found very little difference in education between my private middle school and public high school. Upon graduating from William & Mary, I got a good enough job that helped me reach financial independence a little sooner than normal.

We all know there’s no guarantee of doing anything special or being anything special just because you went to a private school. With the internet making education free, it’s hard to justify paying record high tuition for a private education unless you’re rich (make 10X the private school tuition per kid). Yet, many parents pay for religious reasons, fear of missing out, the desire for smaller class sizes and more attention for their kids, and the need for a more customized program if their child has special needs.

These reasons all make sense, and I respect them.

However, if you send your child to private school and pay full tuition, there is one guarantee. It is that you will spend a fortune. A lot of parents who advocate for private school got grants for their children to attend. That’s wonderful. But I’m talking about the parents whose children don’t get need based grants because they make a little too much, but not enough to feel wealthy. You know, those families making around $150,000 – $350,000 a year, depending on where they live and how many children they have.

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The Ideal House Size And Layout To Raise A Family

Posted by Financial Samurai 87 Comments

The only time I want a mega mansion is when my in-laws or parents come to visit. I fantasize how it’d be nice to put my guests in a separate wing with their own kitchen, bathroom, and living area. This way, we can all keep our independence while also sharing family time every day.

Alas, my family only lives in a 1,920 square foot, three bedroom, two bathroom house. We downsized from a 2,300 square foot, four bedroom, three and a half bathroom house in 2014 because it was simply too much space. We also wanted to generate more passive income to avoid having to go back to work. There was no way we would be willing to rent our own house at the then $8,800 market rate.

We enjoy living in our current house. Every single room is fully utilized now that we have a little one. There’s a nice view of the ocean and enough space for a hot tub and kids to run around outside. The neighborhood is also extremely quiet, which is a big change from our previous residence that recurrently experienced drunken frat bros screaming nonsense at 2am when walking by.

During the gut remodel of our fixer, we thought of everything we could to make our current residence the perfect house for the next 5-10 years. But after having our baby, I began missing our old house a little bit because a baby will shrink your house by ~30%!

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A Day In The Life Of Two Stay At Home Parents Who Also Work

Posted by Financial Samurai 95 Comments

The purpose of this article is to:

Help folks realize that working from home and taking care of a child is not as easy as you might think. It’s actually much easier to drop your kid off at daycare.
Discuss ways to be a better parent and more efficient producer while at home.
Encourage the 3% of the male parent population who are stay at home dads to speak up about their experiences. And of course hear from stay at home moms as well.
To recognize there is no one way to raise a baby since every baby and family situation is different.

According to Pew Research, two-parent households where both parents work full-time today make up 46 percent of the population, compared to 31 percent in 1970. We didn’t want to be one of the 46 percent so we carefully planned for a life where we could both spend much as time raising our son while also keeping intellectually stimulated. We’ve only got one chance.

Working from home is more efficient than working in an office. You don’t have to waste time commuting. You’ll never get interrupted by colleagues and there aren’t as many meetings. I can get done in four hours what it takes 10 hours to do in the office.

Before my son was born, I thought it’d be relatively easy to be a stay at home and work from home dad as well. But I was wrong. Here are some reasons why it’s difficult to do both:

1) A life is in your hands. One look away and your baby or toddler could suffocate from a pillow, fall off the sofa, bonk his head while trying to stand, impale his eyes with a stick, or die in his sleep. You are always on duty as a stay at home parent. The only time you can rest is if your little one rests. Even then, rest may be a rarity as he may wake up constantly for the first several years. If you slack off at work, like most people do, generally nothing bad happens. If you slack off with your baby, it could be a disaster.

2) It’s impossible to create good work and provide quality care at the same time. Because you can’t lose sight of your baby for more than several seconds, the idea of concurrently working and caring is impossible. I can hold my baby on the floor and read my phone at the same time, but that’s about it. Goodness forbid you have to do something like write, draw, or design for work. When taking care of a little one, it’s best to be 100% present.

3) You lose your independence. There is never a regular schedule to follow when you are a stay at home parent. Your day is dictated by your little one’s sleep schedule, bathroom schedule, eating schedule, and doctor visits. You are working whenever there is a glimpse of free time like I’m doing now at 11pm. The more independent you were before having kids, the harder the adjustment.

4) You relive all the unpleasantries of life. Most of us who are healthy don’t see the doctor more than once a year. But if you have a little one, you are visiting a pediatrician about every three months and visiting other specialists if your baby has other developmental issues. While at the pediatrician, your baby is examined thoroughly and gets injected with vaccines, which hopefully cause no harm. And if you have to visit the hospital or a specialist, you may see other patients with issues much worse than your little one’s.

5) You are always tired. Getting enough sleep is one of the keys to a happy and productive life. Your cognitive ability literally declines by 80%+ if you are sleep deprived. Having to take care of your little one while also having the responsibility of financially providing for your family drastically cuts into the amount and quality of sleep you can get. For the first three months of my baby’s life, I felt like I pulled an all-nighter at work every other night. You get through the exhaustion by telling yourself, “this too shall pass.”

6) You feel their pain. If you are a normal, sympathetic human being, you will feel the pain your child goes through as if it were your own. When your baby or toddler is crying, your body will naturally tense up trying to figure out what’s wrong. Is he hungry? Is he tired? Does he have a tummy ache? A cold? Is he too hot? Does he have a blocked nasal passage? The longer your little one cries, the more pain you feel until it sometimes becomes unbearable where you also start crying.

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The Marriage Penalty Tax Has Been Abolished, Hooray!

Posted by Financial Samurai 73 Comments

In the past, I used to wonder why two individuals with high incomes or two individuals with a large income differences would ever want to get married. Paying thousands of dollars in marriage penalty taxes didn’t make sense. It seemed obvious that the government wanted one spouse to give up his or her career to stay at home, even if there were no children to raise.

Otherwise, why would the top tax rate of 39.6% for a married couple not kick in starting at a combined income of $836,802+? For 2017, married folks begin paying at the 39.6% tax rate once their combined income surpasses only $470,701.

In the eyes of the government, 1 + 1 literally only equaled 1.12. This is blatant anti-marriage discrimination. Discrimination is not OK even if you aren’t being discriminated against. Below are examples that demonstrate the marriage penalty tax that used to occur under the old tax structure. I used the Tax Policy Center Calculator.

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How To Get Financial Aid Making Multiple Six Figures A Year

Posted by Financial Samurai 100 Comments

Despite earning a six figure household income, many parents struggle to pay for their children’s education without going into debt. This post highlights how you can qualify for tuition assistance despite making $300,000, $400,000, or even $500,000 a year.

I was talking to a parent of four who used to send his kids to a private grade school K-8 about the makeup of families who pay $30,000+/year in tuition per child. I cherished my time growing up in Africa and Asia up until middle school and enjoyed my experience attending a public high school in Virginia. To have my son attend a homogenous school where everybody looks the same and comes from similar economic backgrounds would be a shame.

The dad mentioned the school tried to diversify its student body through financial aid. When I asked how the school determined which families got financial aid, he said something surprising.

“Households qualify for financial aid if they don’t make at least $100,000 a year per child.”

In other words, if you have four children, you qualify for financial aid if you make $390,000 a year. Financial aid consists of low interest rate loans, but mostly free grant money. I thought this was a high threshold because $390,000 is right around the top 1% income level in the country.

Nobody needs to send their kids to private school given every child can go to public school for free. Further, I’m not sure if too many folks decide to have four children if they can’t afford to raise them. Sure, one or two children may be unplanned. But having four is definitely intentional.

Because the dad and mom could not afford to continue paying $120,000+ a year in after-tax tuition for their kids, they moved their family to the suburbs to attend free public school. Ah hah, at least they decided to take action instead of complain why life was so hard making $500,000 a year!

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