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Budgeting Basics In A High Cost of Living Area

According to the Economic Policy Institute (, a family similar to ours living in Maryland suburbs of Washington, DC with 3 children and 2 adults, have an average monthly budget of $7,961, with the breakdown as follows:

Housing: $1,966: This seems to be pretty reasonable to me.

Food: $954: Seems slightly elevated, but again within reason of what I have seen.

Childcare: $1,215: This number seems to be criminally low! Our family at one point had both of our children at a county daycare (nothing fancy) and would have paid almost $3,000 if our military copay didn’t kick in.

Transportation: $608: expenses are based on the costs of owning and operating a car for work and other necessary trips.

Healthcare: $728: Self explanatory, although the EPI goes on to qualify that this amount is based on premiums at the lowest-cost bronze plan in the rating area.

Other necessities: $1,410: this includes apparel, entertainment, personal care expenses, household supplies, and other miscellaneous items.

Taxes: $1,080: the EPI calculates this value from the Bureau of Economic Research’s Internet TAXISM, which calculates information on federal personal income taxes, state income taxes, and federal social security and medicare payroll taxes.

FI/RE Family Budget Roundup

So how does the FI/RE’s family stack up?

Housing: $3,243: slightly elevated compared to the EPI’s estimate. We live in a modest 1,070 square foot, 2 bedroom, 2 bathroom apartment that works well for our family. We also own a home at a location we were previously stationed which increases our housing cost a little. Fortunately, we have renters that cover the cost of the mortgage and a little more.

Food: $263: our number is about 75% less than the EPI’s estimate. Through careful meal planning, eating everything in the refrigerator avoiding waste, and selective dining out, we manage to cut our food budget to the bone. No Wagyu beef or avocado toast, but we eat pretty well.

Childcare: $1,284: Again very close to the EPI’s estimate. We are fortunate in that both of our children were able to obtain spots at a military childcare center, which have notoriously limited space. Our youngest child will begin childcare in September, as our oldest transitions to Kindergarten.

Transportation: $450: our number is about 25% less than the EPI’s. Being able to carpool to work with the wife goes a long way in keeping these costs down, in addition to switching insurance from USAA to GEICO recently.

Healthcare: FREE! : One of the greatest benefits provided by military service. Although at times not the most convenient, the “socialized” medical care our family receives is excellent all things considered.

Other necessities: $448: We tend to live a pretty minimal lifestyle when it comes to assorted necessities. We buy what we need, when we need it, but our 5 year old laptops and 7 year old plasma TV still work wonders.

Taxes: $1,200: Slightly elevated compared to the EPI’s estimate. Considering Mrs. Fire and I are both employed, and about a third of our income is tax free, more on that later, I think our tax burden is quite reasonable.

For the visual learners, I have created a chart with the breakdown of our budget compared to the Economic Policy Institute’s Estimate:

Grand total: $6,888 which is about a 14% haircut from the EPI’s estimate. Considering their estimate is extremely low for daycare costs, it’s good to know we are in the ballpark. Stay tuned to the blog, where we will update our monthly spending, and provide tips on how we maximize our dollars in this high cost of living area.

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