W2 Bonus Season! Big Checks Are Always Nice!
Part of my overall compensation is my yearly bonus! I am extremely fortunate to earn a bonus each year for the company I work for. I am grateful of all the opportunities they have provided me and the compensation. I have busted my butt to get here, but grateful nonetheless.
My bonus has changed a bit over the years. There are two main things that have changed in regards to my bonus.
First, my bonus is now based off performance. Previously, everyone got the same bonus multiplier. Now, the higher rating you get for performance, the higher the multiplier. This means if you are a bottom performer (which I don’t plan on being) that you can get half or even 0% bonus.
Second, as I have continued to get promotions, my percentage bonus target of salary has also increased. Early on this percentage was small, around 18%, but now my target percentage is at 28% and continuing to grow if I get another promotion.
Breaking Out My Bonus
I will receive my bonus check this Thursday. My bonus came out to be $46,845. Yes, I know for a lot of people that could be a years worth of salary. Again, I have busted my butt at work to get where I am at and I am grateful for having the opportunity to earn this amount.
Overall, this paycheck comes out to $53,390. The reason for this is my normal two week pay is added on top of the bonus.
Of the $53,390, here is a breakdown of where the money is going:
- Taxes: $10,901
- Social Security: $3,307
- Medicare: $773
- 401k: $3,154 (this will put me at the max of $19,500 for the year!)
- Net Pay: $35,085
I didn’t detail out some of the line item insurance stuff, but there is the breakout of my bonus!
With all the market volatility, I am going to look at putting a decent chunk into stocks and then the rest will help me float a the hiccup of the impact to my Airbnb business. Click this hyperlink to read more details of how everything that has been going on is impacting my Airbnb business.
- When negotiating salary, don’t forget that you can negotiate your bonus!
- I like to frontload my 401k. This will bring much larger paychecks later on in the year. I am excited to say my 401k is now maxed out!
- Maxing out your tax advantaged accounts is a great way to reduce my overall Adjusted Gross Income (AGI) and helps me pay less in taxes. This is critical because of the amount of money I earn.
75% February Savings Rate – Here Is My Breakdown
W2 – $13,543
House Hack Room #1 – $900
House Hack Room #2 – $800
House Hack Room #3 – $650
Housing – $2,207
Entertainment – $1,329
Food – $234
Transportation – $123
Have some months where you spend! Be just as proud of the months where you spend a little extra on doing some fun things!
House hacking continues to be an incredible way for me to have a high savings rate. If I wasn’t house hacking, my savings rate would be around 70%. Still not bad, but there is nothing better than living for free.
Automating your investments is extremely helpful! Don’t worry about what the market is doing. You can’t time the market. Trust me. You might hit the right timing once in a while, but over a 10 year period, you don’t beat the market.
Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:
1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking