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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75% February Savings Rate – Here Is My Breakdown

Last month, my savings rate ended up at 75%! This marks one of the lowest savings rate months I have had in awhile, but I am extremely proud of it! There are months where you should always expect your savings rate to go down. Whether this is from a vacation or some extra fun you decided to have, you should celebrate every month!
2020 Savings Rate Feb
 
Time to go through a breakdown of February!
 
February Total Money Earned
February brought a little dip in my income. The main reason for this is how I breakout my W2 income when looking at earned income. For me, I take my pay and determine how much money I earn per day and then multiply that number by the number of days in the month. For that reason here is the breakdown of my income I generated. Note I exclude any investment income as I track that separately.
 
Income Breakdown:
  • W2 – $13,543
  • House Hack Room #1 – $900
  • House Hack Room #2 – $800
  • House Hack Room #3 – $650
This brings my total income for the month $15,893.
 
Not a bad income month. Now time to look at expenses.
 
February Expenses Breakdown
February brought some expenses that were definitely not planned for. I ended up taking a last minute trip to Vegas to celebrate a friends birthday and we went all out. Between VIP at Omnia ($5,500 for the night) and a suite at Planet Hollywood, we definitely didn’t hold back on expenses.
 
Breakdown of expenses:
  • Housing – $2,207
  • Entertainment – $1,329
  • Food – $234
  • Transportation – $123
Total expenses for the month ended at $3,895. The rest of my money went straight to investment accounts.
 
Investing For February
What a wild market we have been seeing the last couple months. This wild market doesn’t stop my investing strategy. In a singular statement, I would outline my investment strategy as follows:
 
Setup automatic investments in the market and retirement accounts while continuing to add income streams through real estate and other investment vehicles.
 
With that in mind, I had two paychecks for February. I have been automatically sending 50% of each paycheck to my 401k. This puts me at $13,076 sent to my 401k so far this year. I am close to maxing out my 401k. Only two more paychecks and I will be there.
 
I also maxed out my HSA with my first paycheck this month! Now that this account is maxed out, I can work to invest that money elsewhere and save for my next property!
 
From a taxable account perspective, I continue to invest $1,200 each week in my Vanguard account into VTSAX. At some point I think I am going to transition this investment strategy to buy a few other index fund. For now, I am going to continue investing in VTSAX!
 
All in all, it was another great month! House hacking and earning a great income at my W2 have been incredible ways for me to continue with my high savings rate.
 
Key Takeaways:
  • 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