The problems of having your income be bonus driven

[Anonymous]

why does it matter to you? BOTH my DH and I are heavily bonus individuals. About 80% of our combined comp is bonus. We own a lot of real estate and leverage one properly to get another and so forth and then we have the 1031x and so forth. we are not afraid of debt, we embrace debt. who cares what some yahoo on a mommy site had to say. I’m most interested in our CPA and what he advises in context of current tax rules to help lower our otherwise astronomical tax liability-not someone yammering on here.

[Anonymous]

Anonymous wrote:

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?

Agreed. I do think the FOMO is keeping the market at all time highs, along with the younger investor not having lived through significant crashes and corrections. But at some point, something will happen and it will crash again.

[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

lady, what do you think high income people with half a brain do with their money? Spend it all? No, of course if we lost our jobs we’d be ok. When you build wealth the right way you have all kids of income streams and ways to access capital. when your job disappears it’s not like your money vanishes. My DH and ai have been making just below 7 figures for 15 years. Our jobs could vanish tomorrow and we’d be more than fine. compounding is a beautiful thing. Eventually your net worth grows faster than your w2.

[Anonymous]

Anonymous wrote:why does it matter to you? BOTH my DH and I are heavily bonus individuals. About 80% of our combined comp is bonus. We own a lot of real estate and leverage one properly to get another and so forth and then we have the 1031x and so forth. we are not afraid of debt, we embrace debt. who cares what some yahoo on a mommy site had to say. I’m most interested in our CPA and what he advises in context of current tax rules to help lower our otherwise astronomical tax liability-not someone yammering on here.

I am guessing you and your DH have a risk tolerance. OP clearly doesn't have a high risk tolerance if she needs a definitive answer re: buying a house.

[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

lady, what do you think high income people with half a brain do with their money? Spend it all? No, of course if we lost our jobs we’d be ok. When you build wealth the right way you have all kids of income streams and ways to access capital. when your job disappears it’s not like your money vanishes. My DH and ai have been making just below 7 figures for 15 years. Our jobs could vanish tomorrow and we’d be more than fine. compounding is a beautiful thing. Eventually your net worth grows faster than your w2.

Do you hear yourself? Are you drinking? Or are you really this smug. Of course you have a high risk tolerance after making "just below 7 figures for 15 years." Very few people are that fortunate.

[Anonymous]

Anonymous wrote:

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

lady, what do you think high income people with half a brain do with their money? Spend it all? No, of course if we lost our jobs we’d be ok. When you build wealth the right way you have all kids of income streams and ways to access capital. when your job disappears it’s not like your money vanishes. My DH and ai have been making just below 7 figures for 15 years. Our jobs could vanish tomorrow and we’d be more than fine. compounding is a beautiful thing. Eventually your net worth grows faster than your w2.

Do you hear yourself? Are you drinking? Or are you really this smug. Of course you have a high risk tolerance after making "just below 7 figures for 15 years." Very few people are that fortunate.

and very few people are as fortunate as the OP. the question is for high income folks who are heavily compensated with bonuses. Nobody’s asking a middle class question here so don’t give lame irrelevant middle class answers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:why does it matter to you? BOTH my DH and I are heavily bonus individuals. About 80% of our combined comp is bonus. We own a lot of real estate and leverage one properly to get another and so forth and then we have the 1031x and so forth. we are not afraid of debt, we embrace debt. who cares what some yahoo on a mommy site had to say. I’m most interested in our CPA and what he advises in context of current tax rules to help lower our otherwise astronomical tax liability-not someone yammering on here.

I am guessing you and your DH have a risk tolerance. OP clearly doesn't have a high risk tolerance if she needs a definitive answer re: buying a house. [/quote
we have no idea what OPs risk tolerance is. The OP is ranting about the idiot advice on here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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

lady, what do you think high income people with half a brain do with their money? Spend it all? No, of course if we lost our jobs we’d be ok. When you build wealth the right way you have all kids of income streams and ways to access capital. when your job disappears it’s not like your money vanishes. My DH and ai have been making just below 7 figures for 15 years. Our jobs could vanish tomorrow and we’d be more than fine. compounding is a beautiful thing. Eventually your net worth grows faster than your w2.

Do you hear yourself? Are you drinking? Or are you really this smug. Of course you have a high risk tolerance after making "just below 7 figures for 15 years." Very few people are that fortunate.

and very few people are as fortunate as the OP. the question is for high income folks who are heavily compensated with bonuses. Nobody’s asking a middle class question here so don’t give lame irrelevant middle class answers.

I probably have a higher NW than the "smug" PP. I'm just saying that making just below 7 figures for 15 years in no way compares to OP's situation. So the answer she gave doesn't help OP.

The best answer so far has been from the PP who said that the advice OP is getting isn't conflicting, it's risk tolerance dependent.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:why does it matter to you? BOTH my DH and I are heavily bonus individuals. About 80% of our combined comp is bonus. We own a lot of real estate and leverage one properly to get another and so forth and then we have the 1031x and so forth. we are not afraid of debt, we embrace debt. who cares what some yahoo on a mommy site had to say. I’m most interested in our CPA and what he advises in context of current tax rules to help lower our otherwise astronomical tax liability-not someone yammering on here.

I am guessing you and your DH have a risk tolerance. OP clearly doesn't have a high risk tolerance if she needs a definitive answer re: buying a house. [/quote
we have no idea what OPs risk tolerance is. The OP is ranting about the idiot advice on here.

I would venture to say that we do know OP's risk tolerance, given that someone who has a higher risk tolerance would not be here saying just give them permission to buy a 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.

My advice is don’t listen to those people and most certainly don’t buy a house in cash. Invest your cash and tap into it if there’s a rainy day. Don’t listen to people who are not in your same tax bracket.

[Anonymous]

20% down, 1-2 year emergency fund, invest the rest and don’t buy at the top of your budget. Leave yourself a cushion. The calculators are all BS anyway. You have to crunch your own numbers to see what you can actually afford.

[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.

Why do you need someone to tell you it’s ok? Are you an adult? You decide if it’s ok. You’re the one who has to deal with the consequences— not some rando on DCUM.

[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.

How many years are you really only making just over $200k? I would think that almost never happens. If there is a high probability of that actually happening, get a job that has a $400k base.

[Anonymous]

So, if you've made that much money in the last 10 years, you surely invested at least $50k in regular investment account buying VOO.
You have that million, go buy the house.

[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.

Good AI answer.