We Make Six Figures But Student Loans and Daycare Are Keeping Us Broke
Currently, one in eight Americans has student loan debt, and 63.1 million have children under 18 living at home. We're in both camps, and we're broke.
Last month, I decided to create a spreadsheet of all the debts my family has. Between student loans, a credit card, a car payment, and some home repairs that we had to finance, I found out that my husband and I currently owe $131,985.17. This is, I admit, both better and worse than I thought it would be by this point in our lives.
Today, my husband and I are making more money than either one of us has ever made—and yet we're barely surviving. Our income should be more than enough to let anyone live a good life (after all, I somehow survived living in New York City in my early 20s barely making $30,000 a year) but we are currently broke due to our student loan debt and rising childcare costs. And sadly, we're not the only ones. Currently, one in 8 Americans have student loan debt and 63.1 million Americans have children under 18 living with them—and we're in both camps.
Living the DINK Lifestyle
When we first met over five years ago, my husband brought $100,000 in student loans into our relationship. I also brought in a bunch of credit card debt from when I got sober the year prior. Shortly after, I had to buy a car—my first as an adult—and I incurred another $25,000 in debt for our household. Still, we were DINKs (people who had a dual income and no kids) and enjoyed the lifestyle that provided.
We paid our bills on time and were still able to travel plenty—both in and outside of our home state of Florida. In our first few years together, we went to Chicago five times, New York City three times, Mexico for a week, and New Orleans for my brother's birthday. We spent two weeks in Europe (Amsterdam and Germany), flew to Los Angeles to visit friends, took a honeymoon cruise to Havana, and went to Denver for Thanksgiving. We also took numerous short trips in our home state, going to Orlando three times, the Florida Keys twice, plus Miami Beach, Saint Augustine, and Sarasota.
We had a lot of debt, sure, but we were able to manage it on our six-figure combined income and still live a good life. We were even able to buy a house (primarily due to my parents' financial help) and save some money before we became parents in March of 2020.
Having a Baby in a Pandemic
When we decided to have a baby at the beginning of 2019, my husband and I made a serious commitment to pay off our credit card debt. We focused all of our extra income and traveled less, and were able to get our credit card balance from $15,000 to $0 within six months.
We were proud of our achievement—and I was finally pregnant after a previous miscarriage. We spent the rest of 2019 saving money before our son's arrival. By the time that 2020 began, I finally felt secure in our finances, so we opted to upgrade my car to better fit a car seat for our new baby.
By February 2020, we were ready for our child—the baby shower had come and gone, providing us with everything we needed for our little one. We had spent the past few months putting together the baby's room. And we'd even been able to continue saving money, even with our new car expense.
I thought we were in a great place as a family—and then the pandemic hit. Our child was born at the end of March 2020, just as the world was dealing with the first lockdown.
I spent those first few months of the pandemic on maternity leave, happy to have my baby safe with me. And because we weren't able to go anywhere, our savings miraculously began to grow again, despite the added expense of having a baby and needing to buy formula when I couldn't breastfeed fully. I consider us incredibly lucky to have two stable jobs that we love, but my hours at work were cut by half when I returned from maternity leave—and it stayed that way for almost an entire year. And although my job eventually bounced back, we now had many more added expenses due to the baby continuing to grow and need more.
Growing Income, Growing Expenses
A year into the pandemic, just after our baby turned 1 year old, my husband got an amazing job opportunity in Denver, Colorado—so we decided to move from Florida (where our families are) to this new state. Around the same time, my job went back to normal, so I assumed that we would go back to being on good financial footing. Boy, was I wrong.
Moving cross-country is expensive, even when a new employer helps. We decided to buy a house in our new hometown because all of the rentals were, shockingly, more expensive than it would be to have a monthly mortgage. But, we had to drain our savings to make that purchase. And we now had to factor childcare into our expenses, too—something which was not true for the first year of my son's life, thanks to my mom being able to watch him while I worked part-time.
Within a couple of months, we had a new mortgage, childcare expenses, and credit card debt that quickly rose from $0 to $15,000 due to unexpected moving expenses like having to buy a new washer and dryer for our home. Additionally, we had refinanced the student loan in early 2021—which halved our interest rate but doubled our payment. So despite making good money in our jobs, we were now deeper in the financial hole than ever.
As a family that makes almost $150,000 combined, I thought we would be doing okay. But instead, we are broke and drowning in debt.
Between the student loan payment and our new childcare expenses, we're paying $3,000 a month—which is just a bit more than our new mortgage payment. We also still have car payments, credit card debt, and a couple of crucial house repairs we had to finance. Every month, it feels like all we're doing is paying bill after bill after bill—while wondering when and if things will get better.
Although the student loan has gone from $100,000 to $85,000 in the past five years, it feels like we're never going to be done with it. Meanwhile, I know that our $20,000 in daycare tuition is temporary (I mean, eventually, my child will go to public school, right?) but it feels like we're going to be paying that amount for a long, long time.
The Financial Toll on American Families
I know how lucky my family is. We had financial help from my parents to buy our first house. We make good salaries, and my husband's industry is pretty damn stable (even if writing, for me, isn't). Plus, our baby is healthy and safe—and we've all been able to maintain our mental health during this pandemic, if only just barely. But the financial toll that all of this is taking on us is a lot. The financial anxiety is ever-present. I'll be honest: I had a breakdown this summer just before I decided to create a debt spreadsheet.
Very often, I worry about how we're going to be able to provide my child with a decent life when we can barely afford any kind of life at all. Once our own student loan debt is paid off, we'll have to begin saving for his college costs. And sure, someday he will be in public school and we will no longer be paying for his daycare, but I'm sure we will have plenty of other new expenses by then. For instance, both of our parents are close to retirement age, and I have no idea if they have prepared for it. Will it fall on me and my husband to help?
Unfortunately, this is the current state of the American Dream for so many millennial parents—stuck between a rock and a hard place as we deal with our own debt and rising childcare costs while living paycheck to paycheck. A 2019 Child Care Aware of America report stated that millennials spent 18 percent to 42 percent of their income on daycare; the Department of Health and Human Services recommends spending 7 percent. Although I have hope that, someday, this will change—and the U.S. will adopt free college tuition and/or universal daycare, I'm afraid that it will be too late to help families like mine.
So in the meantime, the best I can do is try to keep my family afloat and hope that our work situations don't change. Yet it often feels really hopeless to be a family who is doing well on paper but is broke in reality. And if our family is drowning, what about those less privileged?
I'm astonished at the comments here. It's extremely clear to me that anyone commenting negatively doesn't understand the standard of living found across the 38 richest industrialized nations on earth. America is dead last on that list.
Every facet of life -- and I mean every single one -- is better done overseas. No student loan debt, no medical debt, first-time homebuyers and car buyers grants, mandatory paid vacations and parental leave, and working holiday visas schemes make American life look unnecessarily difficult. And it's all self-inflicted because of views like these.
Australia, a country that boasts a massive middle class, even features contiki businesses that help citizens plan 6-week around-the-world trips because Australians can afford it annually in time and money. But you all criticize this woman for going to Cuba which is 90 miles from her home state of Florida. Might as well be her backyard.
Such a pathetic indoctrination of the American "Dream" where we all work ourselves to the bone with no vacation time in order to make others richer. You all jump to the defense of our scam of a "trickle up" economic system. We're the richest country in the history of the world yet have record homelessness because of the short-sighted, selfish and dogmatic views of those commenting on this article.
Wake up. Realize, through articles like these, that America is a third-world country wearing a Gucci belt. And vote like your health, happiness and life depend on it. Because if you don't, the wealthiest in this country will continue to suck money, time, energy and life out of you for their benefit.Read More
As a financial planner of 20+ years, I have a plenty of experience working with families of all shapes and sizes and this author's story is, unfortunately, a good example of what not to do. There are families earning far less than this doing well in our country and the primary difference is that they understood that every decision comes with a trade-off and they live below their means. They tend to plan and save ahead --- whether it's for large upcoming expenses such as travel, property taxes or holiday gifts as well as 3-6 months of cash reserves for life's unexpected curveballs. The people I talk to who are under the most stress are those who splurged while also piling up or neglecting expensive debt (or cannibalizing retirement plans) believing they could just worry about it all later. I don't wish to sound judgmental. The best suggestion here is to sit down as a household and identify what your priorities are, what expenses are required and what can go; even consider downsizing to a less expensive house and cars. As for some of the "better" countries just remember their income tax rates run at least 8-12% higher than U.S. rates so if we want all those things, great; we have to pay for it though. Just please stop with the headlines and so forth where everyone's a victim because of someone else. If you have an education, you have the means to reverse course and it's really nobody else's responsibility than your own. Welcome to adulthood.
I'm confused, why are you even paying student loan payments during the pandemic? Even if you wanted to take advantage of making payments while no interest was accruing, you don't need to be making the full payment...
But yeah, childcare is expensive, and scarce. In my area, the shortest wait-list is 2 years. As a new mom, I literally cannot afford to go back to work. I think a lot of people will find it hard to sympathize with your 6 figure sadness, but I will say that for my family and others like ours, we are richer on one single stream of income where we can receive some benefits like reduced cost health insurance and income driven loan payments than we are both working and paying full price for everything, especially childcare.
Yikes! You knew you were going to get crucified for writing this, right? You grossly mismanaged your personal finances for years and now it has finally caught up to you. You're not going to get a lot of sympathy from the people who have been making the hard choices all along that it takes to not get into this situation. This has nothing to do with "America these days" and everything to do with your personal choices.
The good news is that you don't have to keep living like this. You mentioned getting sober. Attack this situation the same way you attacked your prior substance addiction. Seek professional help. Brace for painful lifestyle changes. Prepare to confront parts of yourself that you prefer to pretend aren't there. Forgive yourself for your past mistakes but decide that enough is enough and things will be different now. Money problems ruin marriages and they usually rub off on your kids too, cursing them to a life of chronic broke-ness just like you had. So even if you can't do it for yourself, do it for your family.
You will discover a lot of parallels between your prior substance addiction and your current debt addiction. If you beat one you can the other though. Good luck.Read More
As other comments have suggested, there are tons of self-inflicted financial wounds in this article. Yes higher education had a cost issue among its plethora of problems. This article is just a roadmap of how to spend yourself into massive debt. If you are putting a vacation on credit cards, perhaps you shouldn't go until you can pay cash and have all your student loans and car loans paid off. Watch some Dave Ramsey videos - doesn't really matter if you are religious for his advice since you get a bonus 10% to work with if you aren't religious. Or watch the youtube snl skits about the book "Don't Buy Stuff."Read More
Let this story be a warning to anyone who reads it that budgeting works better before you're already tapped out.
Some life events are going to require you to sit down and get perspective on your current financial plan: whenever possible, the decision to start having children should involve a budget review. Moving cross-country to a higher cost of living area where you won't have family support should also involve putting some actual thought into it.
What this woman is describing isn't that student loans are an untenable system, it's that taking 22 vacations over a 3 year period instead of paying them off, buying two new cars over the same timeframe because "it's hard to get a car seat in the first one", and failing to plan for childcare is a problem. You can stumble your way into debt, but you're highly unlikely to stumble your way out.Read More
I was going to comment, but it is an absolute nightmare to type comments on this website with all the ads popping up and blocking my access to the text field and keyboard. Please fix.Read More
Are you kidding me? Student loan debt is not the problem it's the sense of entitlement and gross mismanagement of your finances. I know plenty of people that make this kind of money, have their debts paid off, travel on a frugal budget, etc. This is nothing but trying to live the jet set lifestyle on $150k - guess what, it doesn't work.Read More
I don't mean to offend, but there is a gross mismanagement of funds here. I sincerely encourage the author to speak with a financial planner to help build a budget that makes better financial sense.Read More
What? Student loans and daycare aren’t the real issue. It’s the lifestyle and extravagant trips you chose rather than knocking out the student loans when you had the income to do it. Stories like this is why the average American doesn’t believe in student loan forgiveness. Stop feeling sorry for yourself.Read More
You'd be surprised. I'm in a similar boat, less student loans but more children. Childcare + Ed Loans account for ~20% of our pre tax income. Putting off savings for education and children means we're behind target on prudent retirement goals and playing catch up... So the recommended 15% every year for life is more like 25% (I know most can't afford to save anything but in a world without pensions and an insolvent social security system it feels necessary as opposed to indulgent), 10% for grocery/diapers (we rarely eat out and post-covid sales are less attractive than they used to be).
The rest breaks down as you would expect... I KNOW our income puts us at the 80th percentile (borderline "rich"), I also KNOW that from a living standards perspective we're a family of five having a historically standard middle-class experience. Truth is there is not much room in America today for anything in-between rich and poor, and the traditionally nuclear family with 2.5kids and the white picket fence is fast becoming a "luxury" in ways it never was before.