The problems of having your income be bonus driven

[Anonymous]

Anonymous wrote: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.

VOO guy is back!

[Anonymous]

Most banks will lend on 3 years of income history. My income is 75% commissions because I’m in sales. I easily qualified for a loan based on the full income after showing the history. I bought more conservatively though.

[Anonymous]

DH has a higher bonus than salary. We would never have bought our primary home based on his bonus. We live off his base and save the bonus. We do use bonus for vacations, home renovations, etc but not everyday living including mortgage.

[Anonymous]

We always have lived off our base salaries and saved our bonuses. We live comfortably and what we’ve saved for college and retirement means our future looks very good.

[Anonymous]

If you’re in the investment business and on the money management side, it’s fairly likely that much of your compensation is variable (bonus) and depends on how the investments perform. I’ve lived that way for my entire career. As a result, I count on some bonus income when considering things like house purchases. I’m not going to live in a very modest house if most years I can afford something nicer. I’ve come to terms with this aspect of my financial risk.

[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 are stupid people this rich?

[Anonymous]

Buy the damn house with cash and investment returns from previous bonus years. Don't be a damn fool and buy a house based on variable income that could easily go down next year.

[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.

How are stupid people this rich?

The question is really how smart finance professionals who manage other people's money can be so bad with their own personal finances. Like so, bad. I know because I'm married to such a person.