Penny Can Raise A Kid For Less Than $40,000 Over 18 Years. That’s Waaayyyy Below The National Average.

This page has affiliate links to good products we endorse. Full disclaimer.

Dear Rich,

Oh, my gosh. Over $1 million to raise the twins!!! That’s incredible. Seriously, I can hardly even comprehend that number. You laid everything out really nicely, and I have no problem seeing how you came up with that amount… yet I’m still having a hard time wrapping my head around it. That amount is staggering! And you’re not even living an outlandishly luxurious lifestyle (well, maybe, kind of, sort of).

As you may have guessed, my numbers come nowhere close to that. They aren’t even close to the $233,610 that a CNN article mentioned or even the $174,690 that the USDA is estimating for low-income families in 2017. 

I ran the Cost of Raising a Kid calculator, like you did, and it estimated $7,000 per kid, yearly. For 18 years, that’s a total of $126,000, per kid. I still think that’s high.

Here’s what I came up with.

Looking at the categories that the USDA (and you) used to determine expenses, I’ll go through them one by one. Like you did, I’m going to figure this out accounting for all four kids, and then, at the end, divide it by 4. It’s just easier that way.


My family of six lives in a 1,190 square foot home. Our mortgage payment is only $843 a month. I don’t think we’re spending more money than if it was just Mr. Penny and me. Maybe we garner up some extra with the utility and water bills because of the kids (washing cloth diapers, for instance), so I’ll estimate $400 in additional yearly expenses for that. We haven’t spent very much money on furniture for the kids. We co-sleep, so have never needed a crib. We got their regular beds for free from people we know. We just have very little stuff, in general. But, I’ll estimate $100 here, just to be on the safe side. Plus, that will include stuff like toilet paper.



We all know how my family is on food support right now, so technically, we’re not really spending any money on food. However, for the sake of this article, if we were to be spending money on groceries, it would add up to around $700 a month. Except for the toddler, everyone in the family eats a similar amount of food, so the kids portion of that comes to $5,040 a year.

TOTAL FOOD = What we actually pay: $500

TOTAL FOOD = What we would pay: $5,040

Child Care / Education

No child care here, so don’t have that to worry about. I am super picky about education though, so we do a combination of homeschooling and sending our kids to a private school. We get pretty substantial scholarships. But, and again, for the sake of this article, let’s say we were paying full price. It would be $4,000 per kid for elementary through junior high. That would be for 5 years, since I don’t put my kids in school until 4th grade (more or less). Then, looking ahead to the high school we plan on sending our kids to, that will cost $7,000 per kid, for 4 years. So, $48,000 per kid, or $192,000 total for all 4 kids. I’m going to prorate that amount over 18 years, like you did. (Our actual amount paid, with scholarships, would be around $12,305 per kid total, or $49,220 for all 4 kids.)

TOTAL EDUCATION = What we actually pay: $2,734

TOTAL EDUCATION = What we would pay: $10,666

Continue reading “Penny Can Raise A Kid For Less Than $40,000 Over 18 Years. That’s Waaayyyy Below The National Average.”

Rich Will Spend $1 Million On His Kids. Easily.

What are these kids doing? Reaching up to a mythical sun god for money?

This page has affiliate links to good products we endorse. Full disclaimer.


Kids are pricey. As I mentioned a while back, I’ve easily spent $30,000 per year since my twins were born, just on child care and/or preschool. I estimate that by age 6, the twins will have cost us a cool quarter of a million, easy.

You and some readers might be thinking that this is ridiculous. But no. It’s quite reasonable. Consider. Mrs. R was pregnant with twins and it was recommended that she take some time off during pregnancy. Reasonable. She took 6 months off before the birth and 6 months off after. That’s one year’s salary: $80,000 at the time.

A few months after the twins were born, when it was time for Mrs. R to get ready to go back to work, our options were nanny or daycare. We went with nanny because our work schedules were unpredictable, it provided more focused attention for the boys, and as a bonus they developed Spanish language brain connections. Was this a move for the ultra-rich? Not really. The cost in our expensive east coast area was roughly the same between any respectable daycare and a full-time nanny. Reasonable. The market rate: $30,000 per year. 3 years = $90,000.

Then, 2 years of preschool and camp for 2 kids = $60,000.

$80,000 + $60,000 + $90,000 = $230,000. Boom.

I haven’t even started adding up diapers and beds and food. So as you can see, it’s very reasonable that we spent $250k before Kindergarten.

So let’s take a look at this USDA calculator that claims to show how much it costs to raise a child. On the calculator, I selected 2 kids, 2 parent household, high income (defined as over $107,400) living in the northeast. Here’s what it spit out.

USDA Cost of Raising a Child Calculator. Click on image to enlarge.

It tells me that it’ll cost $21,610 per year, per kid, or $43,220 total per year. For 18 yrs (Ages 0-17), that’s $388,980 per kid, or $777,960 total.  

I did my own worksheet using the same categories. When in doubt, I estimated higher than the national average. I also just started with the total amount for 2 kids, because with twins it’s easier that way. At the end I divided by 2 to get the per kid amount. I also included the year of no salary for Mrs. R. Here’s what I came up with.

Click on image to enlarge.

$1 Million dollars!

My numbers are higher than the calculator and here’s why.

Continue reading “Rich Will Spend $1 Million On His Kids. Easily.”

Monthly Money Check: Rich Explains How He Meets Financial Goals Without A Budget — April 2017

This page has affiliate links to good products we endorse. Full disclaimer.

Hey Pen Pal,

First of all, your money check, despite the Blergs, was awesome — you’ve paid off a huge amount on your student loans this year. Does it feel like it’s picking up steam or still feel like really slow progress?

In my last monthly money check, I talked about how tracking my expenses in great detail isn’t worth the effort for me. The expense reports were interesting in terms of being money porn, but the truth is we don’t talk about basic expenses much at home. Mostly, we talk about priorities and we talk about large, lumpy bills. We don’t quibble about a $3 latte when we have a $24,000 preschool bill.

A couple fellow bloggers (Max, Mustard) commented that tracking expenses was useful for maintaining a baseline. I agree with this to a certain point, and maybe my disagreement with them is semantics. I’m more in line with Go Finance Yourself, who doesn’t do a detailed expense budget. Let me explain further by showing what I don’t do and what I do do.

Do do? Ha!

First what I don’t do. I don’t set a budget whereby I try to limit spending to a certain amount in each expense category. For example, I don’t have a budget of $500 for groceries and then get anxious when I spend $700. To me, that’s what people normally speak of when they talk about budgets. It’s a way of controlling spending behavior.

I can imagine someone doing this if they don’t have much leeway, or if they need to live on a tight early retirement income. I get that, and it’s a smart approach. I’m curious if this actually helps people control behavior or if it just describes behaviors they already have. At any rate, it doesn’t help me much. I don’t care about a few hundred dollars here or there as long as I’m paying the bills and regularly achieving my goals.

So here’s what I do. I maintain a cash flow timeline where I project my income and expenses a few months out. It looks like this (although this is a simplified example):

Click on image to enlarge.

As you can see, I know how much is coming in and approximately how much is going out. I update the numbers when my credit card statements arrive. I also include money I’m setting aside for goals, like the IRA and the 529 plan. And I can see my final balance.

So let’s say I need to buy a car in late summer (which I do). When I look at my timeline, I can see that I’ll have $22k available. I want a car in the $15-18k range, so I’m prepared for that lump expense. If my balance starts to get tight, I can easily adjust by postponing an IRA transfer or something. Not a big deal.  

Does that make sense? This does not seem like a budget to me. When I put $5,000 on my credit card, I don’t really care how much of it is groceries and how much is electricity and so on. The only thing I care about is if I have enough available cash to pay the bills, absorb the lumps, and set aside money for our priorities. If I can do that, I’ll meet all my goals, which I’ve set up ahead of time.

What do you think, is this a budget in disguise or something else?

Ok, enough of that. Let’s take a look at my Net Worth numbers for April and I’ll share some observations. Click on the chart for a better view.

Click on image to enlarge.

So far this year, my net worth has grown by $12,550 per month. Outstanding! I won’t keep that pace, but I’m on track to meet my goal of $1MM at the age of 45.

I have 4 main categories that make up my Net Worth, and goals for each category. Here’s my progress report.

Continue reading “Monthly Money Check: Rich Explains How He Meets Financial Goals Without A Budget — April 2017”

Monthly Money Check: Penny Tries To Keep Expenses Under $2,000 in April 2017. She Ends Up Saying “Blerg!”

This page has affiliate links to good products we endorse. Full disclaimer.

Dear Rich,

It’s the beginning of the month, so time to review my expenses. I like doing this. I used to do it only at the end of the year, but I am enjoying the frequency of this month to month stuff.

I’m going to keep my categories as they are for this year, but next year I might consolidate all of the “House” categories. As an explanation for you now, in case you wondered, here are the differences as I perceive them: House Supplies are things that get used up (things like toilet paper, contact solution, etc.). House Repairs are things that get repaired (duh). And House Stuff are things used for The House that don’t necessarily get used up (things like furniture, fabric, tiller rental, etc.). Does that all make sense? For some reason, I like differentiating them since those differences matter to me, but I will probably consolidate next year for simplicity’s sake.

Anyway, back to the report. Once again, we are all probably waiting with bated breath to see if I can get our expenses under $2,000 (before student loans), so let’s see how I did:

Click on image to enlarge.

As you can see, if we subtract the student loan amount ($6,000), our regular expenses came to  $2,048.46. So, we didn’t make it under the $2,000 yet again! Blerg!

Continue reading “Monthly Money Check: Penny Tries To Keep Expenses Under $2,000 in April 2017. She Ends Up Saying “Blerg!””

Rich’s Financial Origin Story: From Farm Boy To Theology Student To High Income Professional

This page has affiliate links to good products we endorse. Full disclaimer.

Penn Station,

When I take a step back and consider your financial origin story, I don’t disagree at all with your assessment that you’re doing alright. Sure, you racked up some debt, but your income has stabilized and you have a plan going forward. More than anything, what I see is a family that took a while to figure out what it wanted to do career-wise.

I don’t know if you remember this from when we were kids, but I think I always had big aspirations. I don’t remember thinking about getting rich, so it wasn’t about money, but I do remember wanting to do something exciting, like becoming an astronaut or an archeologist (in the mold of Indiana Jones). I haven’t quite made it to space (yet!) or to hidden treasure, but the desire to explore stuck with me.

The other factor is that I always wanted to be really good at something — to be competent, and in that way “successful.” Earning a high income wasn’t the goal, it came about by accident! It took me a while to figure out my career path. I kind of meandered through college and grad school, pursuing my interests, and then found myself in the right place and the right time to land a career starting in 2002, at age 27. Since then, I’ve steadily advanced, and my base salary has ballooned from $39,000 per year to $140,000 now, from around $19 an hour in 2002 to $70 an hour in 2017 (2017 isn’t pictured — the increase is due to a recent promotion).

Click to enlarge image.

A note about the charts in this post. The numbers aren’t simply my salary and aren’t exact in terms of total income. I drew the info from tax returns and social security statements, so what you’re looking at is more like Adjusted Gross Income from salary and investments. For example, in 2012 I had a good sized investment gain so that was my highest year. The past 2 years, I’ve been working less than 40 hours a week, which explains the drop.

I’ll add in Mrs. Rich’s income later, but first I want to explain more about my journey, because it was a bit odd, and I think I’ve learned something about education, work, and role models.

So let’s go back to the beginning. The very beginning.

Early Years: Learning, Working, and Following

The Big Bang.

Just kidding.

Birth. Obviously! You know this part but for our readers: I was born into a small farming community in Minnesota, the last of 6 kids. The baby of the family, le benjamin as they say in French. The term is a biblical reference — Benjamin was the final son of Jacob by several years. Theology and French will become more important later in my story.

Why mention birth?? Because I’ll never discount the aspect of luck in life. My family was healthy, supportive, fairly well educated (compared to previous generations), and hard working. I wasn’t born on the Kennedy compound (probably a good thing), but to be born in the USA in 1975 with a decent genetic makeup and a nurturing environment is, in the history of human civilization, a winning lottery ticket.

In addition to sports and video games, which you and I played for countless hours, my early years were dominated by 2 activities: School and Farming.

Continue reading “Rich’s Financial Origin Story: From Farm Boy To Theology Student To High Income Professional”

Penny’s Financial Origin Story: Debt Does Not Equal Regret

This page has affiliate links to good products we endorse. Full disclaimer.

Dear Rich,

I know we used to be close as kids: playing video games together, kick the can, Blind’s Man Chef, making those silly little movies that we thought were amazing, all of that. But we haven’t really kept in touch with each other much past high school, and you’re probably wondering how I got into all this financial debt in the first place.

So, I’d like to tell you a little bit about how I ended up where I am, with the amount of debt that we have, and how we got here. It’s my Financial Origin Story, if you will.

It all started when I graduated from high school in 1995. I attended the University of North Dakota for one semester, came to the conclusion that:

I didn’t really know what I wanted to do with my life and I didn’t want to spend a bunch of money finding out.

So I dropped out and attended a technical college instead. (A much more affordable option for someone who doesn’t know what they want to do with their life.) I got a “degree” (I think it was more like a certificate) in desktop publishing. A desktop publisher is like a poor man’s graphic designer. (Please don’t judge me by the graphics I make for this blog. I’ve been out of practice for awhile, and I honestly just try to get them done as quickly as possible.)

I got a job working at a newspaper / printing company, where I designed things like newspaper ads, brochures, letterhead, business cards, flyers, etc. My yearly earnings were around $18,000.

In 1999, at the age of 22, I got married.

At that time, Mr. Penny was attending the University of North Dakota. He was 21. He did not drop out, and wound up graduating with a degree in elementary education. We paid for his college though my full-time job and his part-time job, so he graduated without having any student loans.

In 2001, Mr. Penny got his first teaching job at a Catholic school outside of Chicago. I studied photography a bit at a community college and worked at an Outback Steakhouse.

The next several years saw him through a couple other teaching jobs (one teaching computers at a public school, another at small town Catholic school), and us having our first child and starting our family together.

Then, in 2006, Mr. Penny decided to go back to school to become a chiropractor. This is the part of our story where the student loans come into play. Over the 4-½ years that he was in studying to become a chiropractor (he spent a year getting some prerequisites in), he racked up around $180,000 in student loans. Neither of us really worked during this time (I wanted to stay at home with our growing family and Mr. Penny had enough on his plate with schoolwork and family life), so we took out loans to cover our living expenses as well.

I don’t regret this. It was more important to us (and it still is) to have a balanced family life than it was to have zero debt.

I did a little bit of work here and there during this time: I started my small (on-location, natural light) photography business, I taught childbirth classes, I did some art shows, I did some freelance work for a magazine. Whatever I felt like doing, I guess. I got to set my own schedule with all of these things, which was nice. (I can’t imagine going back to work an 8-5 job for someone else ever again, by the way.)

During his last trimester of chiropractic college, Mr. Penny did an internship in Colorado. We had three kids by this time. We were planning to move to Vermont after this internship (don’t ask me why, but I’ve always had something for Vermont), so we sold almost everything we owned and moved to Colorado for three months. We lived in a crappy little apartment. When we moved there, we noticed someone had put a used couch and a TV cabinet out by the dumpster, so we took them and put them in our living room.

This is what our living room looked like:

I can’t believe we lived like that for three months, but it wasn’t too bad, and it was actually kind of a fun adventure. We slept on air mattresses and on a mattress that came with the couch.

Continue reading “Penny’s Financial Origin Story: Debt Does Not Equal Regret”

Monthly Happiness Report: Rich Pursues The Good Life Through Books And Podcasts — April 2017

This page has affiliate links to good products we endorse. Full disclaimer.


Very happy to see that your past month was a happy one.

As I mentioned, I’m leaning toward “The Good Life” as a better way of describing satisfaction with life, because it encapsulates factors like love, virtue, work, and health. But I’ll still use happiness as a shorthand.

In the past month, I can say life is darn good. No big changes, but darn good nonetheless.

Let’s look at the numbers:

4 is my baseline, and I’d say I’ve been happier than usual, clocking in at 4.63 this month.

Here are some highlights from each category:


  • Family: Still steady at 4.5. As usual, twin boys = chaos, noise, and physical destruction. But we’re in a fairly good groove handling the hubbub. Additionally, Mrs. Rich and I just celebrated our 9 year anniversary! The only reason I’m not a full 5 is I’m far from my extended family.
  • Friends: I had a fun guys night out. It doesn’t take much for me to be content with friendships.


  • Work: The job is fine, not much to report here.

  • Hobbies: In addition to writing on this blog, I’ve been reading good books and listening to interesting podcasts. Specifically, I just finished Purity by Jonathan Franzen. Not as good as The Corrections, but I enjoyed it. I’ll touch on the podcasts in the mental health section. I like that my hobbies give me a double bonus by helping my mental health stay strong.


  • Experiences: We continue to take advantage of living overseas. And notice, my Freedom category has been at level 5 for a few months now, and I’m not a retired millionaire. I think Freedom is largely a function of living the life you want to live. Freedom is not the absence of obligations.
  • Recreation: Fun meals out and beach time with the kids and Mrs. Rich.


  • Physical: I finally got this up to baseline. No dental work, no sick days, and eating healthy food has become a habit. I’ve never been a soda guy, and lately I eat very little red meat or processed foods. If I can increase my workouts I’ll be in business.
  • Non-physical: My mental health has been bolstered by listening to the Waking Up podcasts by Sam Harris. The link is to his podcast page. The image is of his book of the same name, but the podcasts are broader in scope and cover a range of topics from morality to religion to consciousness to artificial intelligence. I love when good thinkers are unafraid to challenge conventional wisdom in ways that are honest and logical.

Are there any thinkers you regularly read or follow to stay sharp? I’ve been through many. Currently it’s Harris, but I also like NT Wright, Christopher Hitchens, and Dave Barry.

In happiness,



Monthly Happiness Report: Penny Has Her Happiest Month Yet! — April 2017

This page has affiliate links to good products we endorse. Full disclaimer.

Dear Rich,

I think I’ll take a page from your handbook, and work your little happiness algorithm to see if it matches up to my happiness level this month. But, as we talked about when we were reviewing that book Stumbling on Happiness… is happiness really the point of this all? I like how you said that “love is probably a better indication of what gives life meaning, more so than happiness.” So true. For instance, my toddler is going through this phase where he yells at me for the stupidest things, like sitting on the toilet to go to the bathroom. He just yells at me, “Nooo! Don’t do dat!” I’m not particularly happy when this happens, as it is super frustrating and there is no time I would like to be yelled at less than when I am trying to go to the bathroom. I like having children, but it isn’t always filled with happy times, as you well know.

You’re right when you say that love is probably a better indication of what gives life meaning.

But, back to my happiness for this month…

If I were to rate it on my own, without the help of your happiness algorithm, I would give it:

A pretty happy month, overall.

Now, if I run your algorithm, let’s see what I get:

Hey, look… your happiness algorithm was pretty accurate!

I don’t think I’ll do it every month, since I can probably make a pretty accurate rating without it, but it was fun to quantify it this way this time around.

I’ll do the rundown, just like you do:


  • Family. All is well on the family front, except for the annoying toddler.


  • Work. I don’t have a paying job, so I’m qualifying homemaking and mothering as my work. It’s going well (except for the annoying toddler).
  • Hobbies. I read a lot. Go for walks. Those are my hobbies right now, and they are balanced well within my life.

Continue reading “Monthly Happiness Report: Penny Has Her Happiest Month Yet! — April 2017”

Rich Explains Why High Income Earners Feel Woozy At Tax Time. He Pays 9 Times More in Taxes Than Penny.

Why does the rich guy always look like a creep?

This page has affiliate links to good products we endorse. Full disclaimer.

Penny —

Tax time. Blows. Chunks.

Well, I can be a little more descriptive than that.

It blows big chunks of regurgitated money vomit. 

Puke is a good description, because it’s eating something, tasting its goodness, and then spitting it up into a complex system of pipes. Maybe it’ll end up being recycled for a good purpose somehow. That’d be nice. But from my perspective, it goes down the drain and leaves me wanting to brush my teeth.

Feels better to get that out, doesn’t it? Here’s the truth: I actually don’t mind taxes. I’d rather have a decent income and pay taxes than to be homeless and pay no taxes. And, I appreciate (rationally, if not emotionally) the good that comes from taxes. Roads. Fire Stations. Aircraft Carriers. Food support. You know, the good that flows to my fellow squirrels from the Central Oak and all that.

I actually wouldn’t mind if my taxes were used a bit more for the common good of society — for more affordable health care and social services and universities, a la Europe. But that’s just me.

Penny, you’re in an interesting spot right now, right between poverty level and self-sufficiency level, according to the tax code. You wouldn’t want to earn less money, for obvious reasons, but earning more money means you’ll lose some of the benefits of our tax system. You’ll need to earn even more to experience a real financial benefit from earning more. Ironic.

Welcome to the middle class and the joys of a progressive tax system, I’d say. But you’ve got a ways to go to really pay some tax. Here are your current numbers compared to mine, just for fun.

That’s a difference of $67,887 in tax money paid / received.

So I earn 5 1/2 times more than you in AGI, but pay 9 times more than you in taxes.*

[*Yes, I realize you pay zero taxes and any number times zero is zero, but the calculation is you’d need to pay back your $7,604 refund just to get to zero, and then pay $7,604 another 8 times to reach my tax liability.] 

I think Uncle Sam loves my family. We’re in the upper middle class tax paying sweet spot. We earn enough income that we can pay a ton of taxes, but we don’t earn so much that we can utilize the tax strategies and shelters of the truly wealthy.  

Continue reading “Rich Explains Why High Income Earners Feel Woozy At Tax Time. He Pays 9 Times More in Taxes Than Penny.”

Penny Is A Broke Gal Who Pays No Taxes. By Earning More, She Ends Up With Less!

This page has affiliate links to good products we endorse. Full disclaimer.

Dear Rich,

It’s tax time again! We’ve actually had our taxes done for months, and I noticed that we are getting a smaller refund than we did last year. See, in the year 2015, our adjusted gross income was $27,911. So, last year, we received a federal refund of $7,321 and a state refund of $2,655.

Well, the 2016 tax year, our adjusted gross income was $38,944. So, our federal refund was only $6,497 and our state refund was $1,107. This means, we got back $2,372 less this year than last, which, as you know, is a big deal to us (see a bit how it affects us here).

And the reason for the reduction in tax refund is because of the Earned Income Credit. With the Earned Income Credit, the less you make, the more you get back (assuming that you’re making something to begin with). Take a look at this chart, brought to us by Equitable Growth:

See how the amount kind of tapers off after we start earning $40,000 or more? (I’m married with more than 3 children, so you can look at the very top lines of the chart.)

This is something for us to be aware of, as our tax refunds mean a great deal to us at this time. I can kind of understand how people can get trapped in the welfare system, and not wanting to earn more because they’ll lose their benefits and stuff like that. I get it.

So, this got me to thinking more about how our financial picture will look when we start making more money. Which, I assume we will, because my husband’s business has been on a consistent upward trajectory since he started it, as you can see here:

As you know, we are also on food support. I looked up the income limits to food support and they are $53,760 annually (for a family of six). So, we could possibly be done with food support within a year or two.

Continue reading “Penny Is A Broke Gal Who Pays No Taxes. By Earning More, She Ends Up With Less!”