If your HHI went from $350k to $900k +
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Anonymous
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There are some great answers here. The same happened to us, and more (big law).
1. Pay off your mortgage. It's a great feeling to be debt free. 2. DON'T buy $5,000 handbags just because you can. (Doesn't sound like you are interested in those things, good!) We've seen lots of people that frittered away their temporary bump in income on stupid things like that. 3. Max out your 529's. You can contribute more upfront and then take a few years off of giving... thereby maximizing the investment value). Also a great feeling. 4. Give more to charity. Feels fantastic, and there are many, many needy ones out there. Also makes you feel less guilty about the insane money you are making if you share it. 5. Invest in convenience for your family. Time is more valuable than money at a certain age. 6. Bump up the style of vacation you take. We got better hotels, hired guides in unfamiliar destinations, and thought of the trips as the "last time I'll be here." 7. Give more elaborate gifts to those you love. 8. LOVE the idea of the family organizer and having a handiman on call. Wish I had done that as our livestyle got more complicated. 9. Get the second home. I also vote for it being under a 2 hour drive so you actually use it and form lasting memories with your kids there. 10. Congratulations to you for even asking this question on this forum. You sound able to handle it wisely! Good luck. |
Anonymous
We own commercial real estate. What kind of job in it makes this income stable? If he’s an agent, it isn’t stable. If he’s and owner it isn’t stable, either. All you need is one large expense related to the building. Was it a sale that generated this income? If so and he doesn’t dump it into another one quickly, he will have a lot of taxes due. Point is: how much can you rely on this income? |
Anonymous
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we have gone from perhaps $450k to $750k over past two years, but the increase is pretty steady/certain.
we work really a lot. the main change was to hire a personal assistant to do all the things that we would have to do on weekends /evenings (change HVAC filters, get car repaired, etc.), so that we can spend that time with our kids. An expense that we can scale back relatively easy if we need to (or when the kids are older and don't want to spend time with us). we are also remodeling our 1980s kitchen. lots of "little" decisions to spend an extra $1-$2k here and there (weekend trip for all six of us, etc) really add up. So we are going to conduct an austerity drive. significant amount of charitable contribution as well, which can be scaled back |
Anonymous
I would do the following,with that extra $600K - in this order: 1) make pretend that you still earn $350K 2) pay off recurring debt - ex credit cards 3) beef up retirement savings - big time 4) pay off mortgage 5) pre-pay college |
Anonymous
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We went from $250 to $1.5M (move from govt to private practice in law) over the course of three years. Where we best spent our money:
1) Fully funded a major house renovation--no loans. 2) Take an intl vacation per year. Nice hotels/Airbnbs, etc., hired tour guides, nice meals, convenience tickets (skip the line). 3) Take several domestic vacations per year (to visit family, trip to NYC, beach vacation, etc.) 4) Hire housekeepers for weekly visit vs every other week 5) Nicer presents for family, bigger donations to charity, etc. The law firm has forced retirement savings, we've maxed out 529s, and the non-lawyer spouse (me) kept working. (My career doesn't pay much, but has great benefits and flexibility and some "prestige" while doing good in the world.) We didn't move out of our neighborhood (Upper NW), but our house is more comfortable. Kids are in private school. |
Anonymous
This seems like a very good list. |
Anonymous
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I'll echo the comments about assuming it won't last. My uncle was a dentist, and made this kind of money 20 years ago (he owned several practices, so was really more of a business owner). They had multiple houses, 5 cars, private schools, the expensive ex-wife, etc. He got brain cancer, and was dead within 4 months of diagnosis. My aunt (mother's sister) was left with 2 kids in middle / high school, low 8 figures in assets, and pretty severe depression / alcohol issues.
It took her about 10 years to run through all the money, plus another mil of my grandparents'. A lot of that was the recession and housing markets (they had a lot of real estate). She currently lives with my grandmother with no income or assets, and pretty much eats TV dinners for every meal. Her kids, now grown, who went to the best private schools and were given new Escalades on their 16th birthdays, do not have health insurance. So, knowing that, if it was me: 1. Pay off all non-mortgage debt 2. Create tax-advantaged passive income streams 3. Diversify and create a capital preservation plan 4. Set up strong trusts to provide for people I care about if something happens to me 5. Create plans for my children and grandchildren 6. Improve my lifestyle, primarily through experiences (I would definitely buy a Porsche, though) 7. Depending on how I felt about the job (Maybe I love it), get heavily involved with non-profits We are about at your starting point (ie. $350k, depending on how you measure), but have been lucky enough to have had great life experiences. I get much more value out of a $10k safari in South Africa than a $10k watch. My college roommate started making that kind of money in his early 30's (trader in Chicago). He took a year off when each of his children were born, and they temporarily relocated to rental beach houses in Florida. His wife and kids summer in France every year (the kids speak fluent french), and he joins them when he can. He also paid for his younger sister-in-law's college. Must be nice! |
Anonymous
Yes- sounds like this is not a secure ongoing thing. OP- details? |
Anonymous
Interesting question - why save first, and pay off mortgage second? I'd likely reverse them, or at least split up investable income between mortgage and savings, under the theory that if the mortgage is paid off, we need a lot less income to maintain our very nice lifestyle. Because if you need cash in a hurry, it's easier to withdraw from your investment accounts than to sell your house or get a HELOC. I'm not suggesting leaving your bank accounts bare, but there's a word of difference between having a healthy, six figure emergency find and a "seven figure post-tax nest egg." That's the part I have questions about. I’m the PP who want s seven figure post-tax nest egg. We already have seven figures, but between retirement accounts and home equity. We do have a six figure nest egg, which I love. Frankly, if we had about a million invested the money it was making should cover our mortgage vs paying off the mortgage and having nothing left over. I’d just rather have a big income stream vs asset, but it is riskier. Plus I don’t want too much net worth stuck in a single asset/house. |
Anonymous
| Bitter green-eyed monster poster here...but this is the kind of post that makes me kick myself for going on DCUM at all. |
Anonymous
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I can't believe there are even enough people with similar experiences to reply to this thread.
This income puts you in the top .2% of all American earners. There are approximately 300,000 people in the whole country (of 325 million) who make this much. According to the globalrichlist.com, it means you're in the top .01% of all world earners. It's basically your responsibility now to realize you won the lottery and never complain about anything again. |
Anonymous
| How the hell are all these people making so much money? |
Anonymous
Someone went from, what, about 160K in govt to $1.5 million in private practice in three years (or a bit less, subtracting your small salary) and started taking that many vacations? Niche practice area? Instant partnership? I’m calling bs on this one, chief. |
Anonymous
White privilege, greed. |
Anonymous
NP, we know of someone who did this. DOJ to partnership I think? |