Tag: money

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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.

Key Takeaways:

  • 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. 
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Hard Work Got Me An Increase In Salary by $3,507! But Wait…There’s More…

This year, hard work got me an increase in salary by $3,507! A lot of people talk about making more money. From my experience, the best way to increase your salary is by adding value and solving complex problems. That is what I have been able to do with both my W2 job and my real estate investments. 
Another solid end of year eval at work!
How My End of Year Eval Works
At the end of each fiscal year at work I am evaluated on performance. This evaluation used to not be a huge deal as it only impacted base salary changes, but now my company has made it a larger impact on my overall compensation.
 
At work, we are rated on a scale of 1-5. A 3 means you met expectations for your role. A 4 means you exceeded expectations. The higher the number the better. Typically less than 2% of people get a 5 which is considered a Top Performer.
 
The last two years I received a 5 which led to some amazing opportunities. I busted my ass to get where I am at today. So many people out there aren’t willing to put in the work, and for the last 5 years, I have busted my ass to get in the position I am currently in. The first two years of my W2 career I worked 16 hour days 7 days a week. For two straight years.
 
I developed skills and knowledge that led to my company to create a new position to rollout the things I had been doing to all buildings we have in the US. This has helped lead to over $100 million in labor savings through increased efficiency within the operations teams.
 
This past year, I got promoted to a Director role. I was one of the youngest ever in the company to be a Director. Developing the skills and knowledge I have and adding value are the main drivers behind my rapid growth within the largest company in the world, Walmart.
 
I am blessed to be where I am, but also know I have worked extremely hard to get here. This year, I received a 4 on my eval. For being a Director level, and still getting a 4, overall I am very pleased. The only unfortunate thing is I am at the top of the pay band so my raise was less than I would normally expect. I am still happy with $3,507!
How My Salary Increase Works
There are multiple cool things about increasing my base salary. My total compensation at work is comprised of multiple things. Base salary is just one of those. My total compensation is made up of these three things:
  1. Base salary
  2. Bonus % of Salary
  3. RSU’s (Restricted Stock Units)

With the increase in base salary by $3,507, I will also see a few other benefits.

  • My 401k match is still 6% of my salary. So an increase in base by $3,507 will in turn increase my salary will result in an additional match of $210.
  • An increase in base salary by $3,507 will also increase by bonus by $981 based off my current pay structure.

So all in, the overall benefit of my base increasing by $3,507 will be an increase in total compensation by $4,698! Not too shabby.

Key Takeaways:

  • Base salary increases are just one component of compensation! There is much more to it than just base compensation. 
  • The fastest way to earn more money is by adding value in whatever it is that you do. You are paid in proportion to the level of problems you solve. 
  • Go after it and take action towards your goals!

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

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4 Things I Did To Hit Over $100,000 In My Brokerage Account At 27

It feels amazing to see my Vanguard brokerage account hit over $100k at such a young age. I have worked hard in both the earning and expense side in my investing journey. It feels great to see the progress and growth to hit over $100k in such a short amount of time. Here are four things that were critical for me to hit this major milestone!
 
The first and most important thing I have done is ensuring my money is also making money for me. This is my first of three core principles that are fundamental to my values.
 
If you are keeping your money in a savings account earning less than .03%, your money isn’t working as hard for you as you are working for it. If you are keeping your money in cash stashed under your bed, again, your money isn’t working hard enough for you. Keep your money invested in assets so it can work as hard for you as you work for it.
 
The earlier you begin, the better off you will be in the long run. The main driver here is compound interest and how powerful it is.
 
A key to having a lot of money to invest is by saving. The largest expense for 99.9% of American’s is housing. If you house hack, there are a few things you are doing. First, you are eliminating your largest expense. This allows you to automatically save that money, if you are smart. Next, if you buy a home, you are building equity in the home by having your tenants pay your mortgage for you. Finally, there are tax advantages to owning real estate. I won’t bore you with all the details on the advantages here, but you can read this article to understand a little more on the tax advantages of investing in real estate. 
 
Item #4: I Focused On Both Sides Of The Equation
Too often, I hear people talking about cutting the small expenses. What they sometimes forget is the fact that there are two sides of the equation. The first side is expenses and the second is expenses. I have put a heavy focus on both increasing my overall income as well as decreasing my living expenses. This focus on both sides of the equation has been a critical part of being able to get to $100,000 in my Vanguard brokerage account.
 
Sometimes it is good to take a step back and celebrate how far you have come. I am often very hard on myself that I am not doing enough and need to do more. I am often slow to celebrate the amazing progress I have made in trying to do big things with my life.
 
To fully grasp this accomplishment, if I were to not touch this account for 30 years, let’s see what it could look like. If we were to use a 7% interest rate compounded yearly, in 30 years, my $101,000 would look like this.
 
What My Vanguard Account Will Look Like In 30 years
 
That’s right, if I were to not touch this account (no adding money and no removing money), it would be worth $774,000 in 30 years. Now, I don’t plan to stop here. I am going to continue automating my investments every week. At least, until I hit a number where I feel financially independent.
 
So for a very short period of time, it is time to celebrate! $100,000 let’s get it! Time to get to $200,000 and on!
Key Takeaways:
  • Ensure your money is always working as hard for you as you work for it. 
  • Invest early to realize the power of compound interest
  • House hack to eliminate your largest expense
  • Focus on both increasing your income and decreasing your overall expenses. It isn’t enough to focus on only one or the other. 

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