The problems of having your income be bonus driven

[Anonymous]

My total compensation is much higher than base salary because it's largely driven by stocks, bonuses, etc. It's been like this for the last 10 years of working. Base salary under 200k (recently over 200k), total comp 400k+. Whenever I try to get people's input on whether I can buy a nicer house, answer is always something like this

"you shouldn't count on stocks or bonus to pay for your lifestyle, just live off of your base".

Okay, so I'll save the excess bonus money for several years and buy the house I want in cash eventually so I don't need to carry a large mortgage.

But then they say "nooo you shouldn't have all that capital tied up in an illiquid asset, keep your money invested!!!"

So why is it okay for someone with a 400k base salary to buy a 1 million dollar house, but if god forbid your income is slightly variable you have to live ridiculously under your means? It's so annoying. Just tell me it's okay to buy the damn house.

[Anonymous]

Anonymous wrote:My total compensation is much higher than base salary because it's largely driven by stocks, bonuses, etc. It's been like this for the last 10 years of working. Base salary under 200k (recently over 200k), total comp 400k+. Whenever I try to get people's input on whether I can buy a nicer house, answer is always something like this

"you shouldn't count on stocks or bonus to pay for your lifestyle, just live off of your base".

Okay, so I'll save the excess bonus money for several years and buy the house I want in cash eventually so I don't need to carry a large mortgage.

But then they say "nooo you shouldn't have all that capital tied up in an illiquid asset, keep your money invested!!!"

So why is it okay for someone with a 400k base salary to buy a 1 million dollar house, but if god forbid your income is slightly variable you have to live ridiculously under your means? It's so annoying. Just tell me it's okay to buy the damn house.

It depends. How would you function if you need $350K+ to afford your house and you have a year or two with only $225-250K?

Because when it's a bonus, there is literally no guarantee (no matter how hard your work) that you won't end up with $0 or only 10-20% of your bonus. It happens and you have to be prepared to function and not go into debt

[Anonymous]

I'm very conservative, but if you have the money available in cash, you could just take a mortgage then, with the security that you can make the payments on your base salary.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My total compensation is much higher than base salary because it's largely driven by stocks, bonuses, etc. It's been like this for the last 10 years of working. Base salary under 200k (recently over 200k), total comp 400k+. Whenever I try to get people's input on whether I can buy a nicer house, answer is always something like this

"you shouldn't count on stocks or bonus to pay for your lifestyle, just live off of your base".

Okay, so I'll save the excess bonus money for several years and buy the house I want in cash eventually so I don't need to carry a large mortgage.

But then they say "nooo you shouldn't have all that capital tied up in an illiquid asset, keep your money invested!!!"

So why is it okay for someone with a 400k base salary to buy a 1 million dollar house, but if god forbid your income is slightly variable you have to live ridiculously under your means? It's so annoying. Just tell me it's okay to buy the damn house.

It depends. How would you function if you need $350K+ to afford your house and you have a year or two with only $225-250K?

Because when it's a bonus, there is literally no guarantee (no matter how hard your work) that you won't end up with $0 or only 10-20% of your bonus. It happens and you have to be prepared to function and not go into debt

So that's why I would simply put more money down to have a lower mortgage payment, or even pay cash which might make sense with these moderately high interest rates.

[Anonymous]

Something DH and I have always done is to make sure that our mortgage is affordable on one income. On our current home we put down more than 20% in order to get it to that point. I'm sure financially there are better moves, but this has been something that has helped us over the years. So in your case, get the mortgage to where you can afford it on your base salary.

[Anonymous]

We sold stocks to pay for our house. There are many ways to achieve your goals, OP. You should pick the one you prefer instead of getting all confused when others give you their opinions. And honestly, you're in a pretty comfortable situation. Be careful you don't come off as whiny.

[Anonymous]

You need to consider your audience. Do they work in the same industry as you? I'm in big tech and my comp is structured similarly. If I take a 50% decrease in my bonus comp it's going to be because the stock price fell. The drop has a wider impact than my personal bonus. There are too many investors involved to allow a drop like that to happen.

[Anonymous]

You aren’t getting good advice or the person giving it doesn’t understand your situation. Build up a 2 year emergency fund and a full 20% downpayment and then buy the house you feel you can afford the mortgage on.

[Anonymous]

Anonymous wrote:You need to consider your audience. Do they work in the same industry as you? I'm in big tech and my comp is structured similarly. If I take a 50% decrease in my bonus comp it's going to be because the stock price fell. The drop has a wider impact than my personal bonus. There are too many investors involved to allow a drop like that to happen.

How long exactly have you been in this business?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My total compensation is much higher than base salary because it's largely driven by stocks, bonuses, etc. It's been like this for the last 10 years of working. Base salary under 200k (recently over 200k), total comp 400k+. Whenever I try to get people's input on whether I can buy a nicer house, answer is always something like this

"you shouldn't count on stocks or bonus to pay for your lifestyle, just live off of your base".

Okay, so I'll save the excess bonus money for several years and buy the house I want in cash eventually so I don't need to carry a large mortgage.

But then they say "nooo you shouldn't have all that capital tied up in an illiquid asset, keep your money invested!!!"

So why is it okay for someone with a 400k base salary to buy a 1 million dollar house, but if god forbid your income is slightly variable you have to live ridiculously under your means? It's so annoying. Just tell me it's okay to buy the damn house.

It depends. How would you function if you need $350K+ to afford your house and you have a year or two with only $225-250K?

Because when it's a bonus, there is literally no guarantee (no matter how hard your work) that you won't end up with $0 or only 10-20% of your bonus. It happens and you have to be prepared to function and not go into debt

So that's why I would simply put more money down to have a lower mortgage payment, or even pay cash which might make sense with these moderately high interest rates.

Makes more sense to have the extra money set aside, but only put 20-25% down. That way, you can use the money if needed for house payment. But you have to be diligent to not spend it on anything else, otherwise it makes more sense to put it as a downpayment

[Anonymous]

Anonymous wrote:Something DH and I have always done is to make sure that our mortgage is affordable on one income. On our current home we put down more than 20% in order to get it to that point. I'm sure financially there are better moves, but this has been something that has helped us over the years. So in your case, get the mortgage to where you can afford it on your base salary.

+1

And also you still need a 6-12 month EF for your monthly expenses. If you don't have that, you are not ready to purchase a home, IMO. Too much can go wrong

[Anonymous]

You’re not getting inconsistent advice. You’re getting risk-adjusted advice you don’t like.

A $400k base is stable. Your $400k total comp isn’t. That’s the whole point.

Nobody’s saying “live like a monk.” They’re saying:

Don’t lock yourself into fixed obligations (mortgage) based on variable income
Don’t swing to the opposite extreme and dump everything into an illiquid house

Those aren’t contradictions, they’re guardrails.

If you want the punchline: yes, you can buy the house. Just size it so the mortgage is comfortably covered by your boring, predictable income. Use bonuses/equity to accelerate payoff or build cushion, not to justify stretching.

What’s actually annoying here isn’t the advice, it’s that you want permission to spend like your best years are guaranteed forever. They’re not. Plan like a grownup, then spend like one too.

[Anonymous]

Anonymous wrote:You’re not getting inconsistent advice. You’re getting risk-adjusted advice you don’t like.

A $400k base is stable. Your $400k total comp isn’t. That’s the whole point.

Nobody’s saying “live like a monk.” They’re saying:

Don’t lock yourself into fixed obligations (mortgage) based on variable income
Don’t swing to the opposite extreme and dump everything into an illiquid house

Those aren’t contradictions, they’re guardrails.

If you want the punchline: yes, you can buy the house. Just size it so the mortgage is comfortably covered by your boring, predictable income. Use bonuses/equity to accelerate payoff or build cushion, not to justify stretching.

What’s actually annoying here isn’t the advice, it’s that you want permission to spend like your best years are guaranteed forever. They’re not. Plan like a grownup, then spend like one too.

+1000

Well Said!

[Anonymous]

Anonymous wrote:My total compensation is much higher than base salary because it's largely driven by stocks, bonuses, etc. It's been like this for the last 10 years of working. Base salary under 200k (recently over 200k), total comp 400k+. Whenever I try to get people's input on whether I can buy a nicer house, answer is always something like this

"you shouldn't count on stocks or bonus to pay for your lifestyle, just live off of your base".

Okay, so I'll save the excess bonus money for several years and buy the house I want in cash eventually so I don't need to carry a large mortgage.

But then they say "nooo you shouldn't have all that capital tied up in an illiquid asset, keep your money invested!!!"

So why is it okay for someone with a 400k base salary to buy a 1 million dollar house, but if god forbid your income is slightly variable you have to live ridiculously under your means? It's so annoying. Just tell me it's okay to buy the damn house.

[Anonymous]

Anonymous wrote:Something DH and I have always done is to make sure that our mortgage is affordable on one income. On our current home we put down more than 20% in order to get it to that point. I'm sure financially there are better moves, but this has been something that has helped us over the years. So in your case, get the mortgage to where you can afford it on your base salary.

+1 this is what we have done as well.