Time for a Reboot
I started this blog some time ago as a young professional with some inside-baseball knowledge of the fintech space, figuring I could write useful words while clawing my way toward financial independence. Candidly, maybe obviously, I figured I could make a buck or two hawking the tools that would help me along the way.
As I write this now, I’m an older professional and a father of two. I’m not any closer to financial independence; in fact, I’m further away than I was when I started this, much further than I expected. If I’m not quite broken, I’m definitely broke.
I couldn’t authentically maintain the stated mission of Righteous Money as it was before because, well, that’s not me. I’m so disorganized with money that it costs me money. I make reasonably good money, but I’m still thoroughly on the American hamster wheel.
I’m done lying to myself, and I won’t lie to you either. I’m not a money genius.
For a while I maintained a record of a small but diversified portfolio, aided by modern tools and prioritizing those channels that offered ESG investing. I still have a portfolio, but it’s not growing to the extent that I can credibly say my investing story is instructive. Since I first began publishing my portfolio on Righteous Money, I’ve been smacked in the face a few times:
ESG investing is a pretty inscrutable thing. There never has been any uniform standard for “what is an ESG investment.” (In my research, I found that many platforms and even individual ETFs had a weak definition — pretty much anything outside of egregious reliance on fossil fuels could qualify.)
More importantly, my finances got torpedoed. Part of this was due to less wage growth than expected in my career (the economic tides have turned) but I attribute this much more to the money-burning miracles that have reinvented my world.
What Having Kids Does to Your Finances
To be clear, my kids are wonderful. Having kids is wonderful. I wouldn’t trade it for the world. But let’s get real: this seriously fucks your finances. I knew it would, but I didn’t anticipate how much this would hurt.
I’ll preface this by saying that I’m incredibly privileged: this period of financial challenge is a bump in the road for us, not an existential threat. We don’t have insane salaries, but we have a decent household income, a strong partnership, and a support network. I have no idea how single working mothers, and really most people in this country, manage to have children, much less keep themselves sane and their kids healthy and on-track.
We didn’t intend to have two kids in quick succession, but we did, roughly starting at the beginning of the pandemic. Meanwhile, a couple other factors conspired against us:
The pandemic threw labor markets out of whack and created a dearth of services in lots of areas. Childcare is a big one. These jobs are heinously underpaid (anyone who is a parent knows this). There aren’t as many people willing to do this work (understandably). COVID shutdowns and a tight labor market have made it harder to find quality child care, and consequently more expensive.
Inflation is a bitch! The inflation of the past year+ has hit groceries as hard as anything. Some have even called it ‘eggflation.’ You know who eats a lot of eggs? Kids.
The Greusome Math
So let’s take a look at my typical paycheck and how the kids ravage it up and poop it out.
For the sake of clean numbers, let’s say I make $200k per year and my total tax burden is 35% (not exactly the case, but not far off). I also max out my 401k, so let’s say my takehome is 62% of each paycheck. That means my monthly net income is $10,333… my wife is a nurse (also comically underpaid for the important work she does) and our medical/dental is taken out of her paycheck. She’s also responsible for odds and ends like kids toys and clothes (where we’re fairly frugal). All to say that my wife’s contribution to our monthly income is only $1500. Which leaves us here in terms of the typical monthly balance sheet:
Again, this isn’t exact but it’s pretty close. The actual “breathing room” per month is somewhere between $700 and $1000, depending on the month. If we actually had that surplus to save for our kids’ education, or invest for retirement, I could live with that. But in practice we’re in the red each month. Here are just a few examples of real-life things that have cost me at least $700 recently:
My dog gets nailed by a porcupine (vet bill)
My cavity filling gets upgraded to a “partial crown”
I owe $870 in excise taxes for registered vehicles in the state we live in (what the hell is that?)
So a family with HHI over $250K is still living paycheck to paycheck. What a country! We have enjoyed relative privilege in our lives, so this of course makes me think often of how brutal it must be to try to survive as a parent (or even a single parent) with real structural disadvantages in this country. I will write more on that soon.
This is all a long-winded way of saying that I don’t have that much money to invest, much less give you any investing advice. While I’m not giving up on investing, or writing about investing, I’m going to focus more on how to slim down those line items and crawl back to something like a growing nest egg.
Thank you for reading. If this family budgeting math is at all familiar, you are not alone, and you are not broken.