Struggling on $125K a Year – Really? Why I Don’t Agree with This MSN Article

3e369f618b5a4fb591bf614d3dbd271aToday on the MSN homepage read an article titled, “Doing well at $125K but still losing sleep about money”. I am sure if there are any other readers out there making below that amount who would love to earn that income. I am in the same boat as you! It is kind of hard not to be annoyed with this type of article because the family is clearly making a lot of money.

The family says they are barley scraping by and say that they do not spend their money foolishly. The family also claims that they met financial hardship when their son was diagnosed with a rare eye cancer as an infant, but that was over eight years ago. Want to know what this family is spending each month?

Here is the Brada family budget:

Mortgage — $2,700.
Electricity — $300.
Wife’s cellphone — $70.
Internet — $70.
Energy company — $40.
Water/sewer — $100.
Vehicle gas — $100.
Tollways — $40.
Student loans — $700.
Groceries — $150.
Credit cards — $3,000.
Other home costs — $700.
Total — $7,970.

There are some pretty big issues with their budget here. Here are the top three concerns I see:

Mortgage and Electricity: The article mentions that the family live in a reasonably priced home. Reasonably priced for whom, Hugh Hefner? In all serious though, the cost of their mortgage and electricity suggests the home is too big for their budget. Right now in the area that they live in, they could rent a nice 4 bedroom home for $1600-1800 month, or they could buy the same sized home for $280,000. A smaller home would mean a smaller electricity bill, as well. Just by going to a smaller home, they could save $100 a month in electricity. Say the family choose to sell their home and rent during the next two years to get their spending and savings under control. This could look reduce their mortgage/rent and electricity expenses to a combined $1800 a month, saving them $1200 a month or $14,400 a year. Wow! Of course selling your home and going to a smaller home is a sacrifice, but it is one that would put them in a better financial situation. I am not sure what other home costs are, but they do look too high (unless this is for home insurance and end of the year property taxes).

Credit Cards: They are paying $3000 a month towards their credit cards. This is a huge red flag. The article is vague to what it means they are paying for when they are paying for credit cards. Do they have a huge credit card debt that they are chipping away at? Or are they spending an extra $3000 a month with their credit card which they are misbudgeting? Either way, it it an insane number and it needs to be taken care of. If it is a huge debt, then the family needs to consider debt consolidation or the debt snowball plan from Dave Ramsey and make bigger payments towards the cards to get it paid off quickly.

Groceries: My problem with the groceries section isn’t how much they are spending, but how little they are spending. I highly doubt they are spending $150 a month in groceries to feed their family of four. This low number shows more evidence that they are not accurately counting their spending, which could be where their extra credit card expenses are coming from.

My point in writing this article is not to judge how another family spends their money. However, if you make more than most of the population and are complaining that you can barley scrape by, then there is something wrong. They could definitely cut down on their cellphone bill and Internet bill for a savings of at least $50 a month, but the biggest issues are the mortgage, credit cards, and student loan. If they really wanted to transform their living situation, they would downsize their home, use that extra money to pay off the student loan within two years, and drastically change their credit card situation. Those three major changes would save them $4900 a month. Personally, I would love the have $4900 a month to live with, how about you?

What are your thoughts on the article and the family’s budget?