Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'd say watch for lifestyle creep. Nothing changes when you get that bump until you realize you now have money for something "extra" or to give yourself a little treat.
I'd say watch for lifestyle creep. Nothing changes when you get that bump until you realize you now have money for something "extra" or to give yourself a little treat.
This is a good point. Congrats on the windfall, OP, but stay in tune with your long term goals.
I can't say I've had tremendous increases to the tune of what you're stating, but I may get there eventually.
The progress I had in my career has jumped significantly over the last 10 years and my income doubled. Below is the timeline of my job changes - note that these are all in markets that fall below the national average for COL.
I never allowed lifestyle creep to set in. The downside for me is that the most recent job I was in for 17 months, and then my entire department was laid off - and I'm now in month 7 of unemployment. I got laid off at the end of the year, and for executive roles, there simply aren't many available in Q1 due to people waiting for their bonus checks, and now I'm getting a lot more interest, but since I'm now at a level where there's much more competition, my resume doesn't stack up to other people in executive roles due to my lack of recent leadership experience. So, I may be due for a drop back in salary if I'm not able to obtain what I want in the next month or so.
This is precisely why people warn against lifestyle creep. If I had bought a house or a fancy car when I got the job in 2016, I'd have egg on my face today. Because my wife and I have lived frugally since we met in 2010, and she's been successful in her own right, we've been able to amass a net worth of around $170k despite the debt I brought into our relationship from my previous marriage/a landlord deal that, due to my naivete, went terribly due to horrible tenants who ruined the house over a 3 year period. Thus, we've been able to navigate this unemployment without falling deep into the pits of depression that others succumb to during long layoffs. We're also fortunate to not have children who depend on us.
As someone else said, whoever said money doesn't buy happiness was just trying to make the majority feel better about their terrible financial situations. Having a strong emergency savings allowed us to not panic, which allowed the bond with my wife to stay strong through this challenging time, and we've managed to still travel and do things, albeit more frugally than even before, and not lose our cool. I wouldn't say I'm happy to be in this situation, but I am happy that I don't need to panic and take a job that doesn't really fit with my desired career path, at least for a little while longer. Now that unemployment has run its course, I am going to take side jobs while I'm job hunting to make up some of that difference. I don't care what salary/career level I'm at, I will never think I'm too good to do a dirty job. However, the ends must justify the means.
This is a good point. Congrats on the windfall, OP, but stay in tune with your long term goals.
I can't say I've had tremendous increases to the tune of what you're stating, but I may get there eventually.
The progress I had in my career has jumped significantly over the last 10 years and my income doubled. Below is the timeline of my job changes - note that these are all in markets that fall below the national average for COL.
I never allowed lifestyle creep to set in. The downside for me is that the most recent job I was in for 17 months, and then my entire department was laid off - and I'm now in month 7 of unemployment. I got laid off at the end of the year, and for executive roles, there simply aren't many available in Q1 due to people waiting for their bonus checks, and now I'm getting a lot more interest, but since I'm now at a level where there's much more competition, my resume doesn't stack up to other people in executive roles due to my lack of recent leadership experience. So, I may be due for a drop back in salary if I'm not able to obtain what I want in the next month or so.
This is precisely why people warn against lifestyle creep. If I had bought a house or a fancy car when I got the job in 2016, I'd have egg on my face today. Because my wife and I have lived frugally since we met in 2010, and she's been successful in her own right, we've been able to amass a net worth of around $170k despite the debt I brought into our relationship from my previous marriage/a landlord deal that, due to my naivete, went terribly due to horrible tenants who ruined the house over a 3 year period. Thus, we've been able to navigate this unemployment without falling deep into the pits of depression that others succumb to during long layoffs. We're also fortunate to not have children who depend on us.
As someone else said, whoever said money doesn't buy happiness was just trying to make the majority feel better about their terrible financial situations. Having a strong emergency savings allowed us to not panic, which allowed the bond with my wife to stay strong through this challenging time, and we've managed to still travel and do things, albeit more frugally than even before, and not lose our cool. I wouldn't say I'm happy to be in this situation, but I am happy that I don't need to panic and take a job that doesn't really fit with my desired career path, at least for a little while longer. Now that unemployment has run its course, I am going to take side jobs while I'm job hunting to make up some of that difference. I don't care what salary/career level I'm at, I will never think I'm too good to do a dirty job. However, the ends must justify the means.
My husband's situation didn't quite go this far, but he was hired as a new junior executive and sort of similar thing happened to him within a year. He had to go back to managerial level. He's only been able to entertain executive level again with roles in undesirable places around the world.
i believe i saw a documentary a while back. im not that kind of person but the house i bought was a short sale so there were things that just needed to be done. there are also some wants thrown in. i got a big discount on the house due to the short sale situation, so even after spending a bunch of money i am still not really going to be underwater on the house value vs what i spent.
you guys may get a kick out of this chart. so like i said, income rose substantially basically january 2012. i happened to sign up for mint around that same time. so here is my spending then to current. december 2016 is when i closed on my new house.
In 2014 we barely made $100k combined. Which was actually pretty good for us because our average annual income had been much lower. Our net worth was <$400k. Age 32.
Four years later HH income is roughly $275k with net worth of ~$1.4m. It peaked at $1.55m () back in March.
Our expenses have roughly remained the same or declined. We invest the vast majority of the excess in equities. Don't go out and do anything crazy with the money. Keep living frugally. Eventually you get to the point where a nice car doesn't mean anything to you, because anything easily bought is in reality worthless. You will appreciate things more that cannot easily be purchased even if there is no monetary value.
Find what makes you happy and focus on obtaining that. Anything else is just noise and serves to distract from the overall goal.
Oh, one of my joys is getting free money from banks. We made $2k in June alone with bank bonuses. That's pretty serious money for just filling out online forms and transferring money around.
This is the type of situation I'm about to enter into and I think it's a weird adjustment period. I've mostly reinvested all of my money back into new investments and whatnot, but I have enough investments at this point that it's soon time to adjust my lifestyle to where I want it to be. Ten years of living pretty frugally is great, but there comes a point where if you have the money, you also need to enjoy life. I'm about at that point.
It's still a weird idea, though, because I've lived on between $3-5.5K per month including my girlfriend for the last 10 years (the high was in Los Angeles, and I was single, still was tough keeping my cost of living to just $5,500/month because the tiny condo I had ate up $3,200 in property taxes, mortgage, and HOA dues). Never an exorbitant amount of money and there were times in there where I really did watch every dollar. I still use every appropriate credit card to get maximum cash back savings, we take advantage of deals, we try to be smart with money even though now it's not as consequential. Next year I'm considering getting up to an $800,000 mortgage and it's a really strange idea to me. I know every time I go over the math, I'd still be very comfortable and safe, no worries financially, but it's still mentally something I can't quite imagine as much. Maybe once I have the money coming in formally, it'll start to seem more imaginable, but I think it's always a weird thing because I've spent my entire adult life thinking $5K per month in expenses is high, I want to avoid that, I've always felt more comfortable at $4K or even less. A good, comfortable life but avoiding most vacations, extraordinary expenses, eating out too often, that kinda thing.
I think the best advice I would give is probably the conclusion I've reached myself -- don't make any sudden changes. I think you have to adjust to that new level of income / wealth for a little bit before you go spending any of it or changing your lifestyle. It's probably a gradual change that happens when you start feeling more comfortable with increasing your lifestyle.
When my three kids were young I came into a $170,000 windfall when the company I worked for was bought out and my stock options kicked in. Wife and I gave each $10,000 in December and the same in January. $40,000 in their 529 accounts that 12 to 15 years later paid for their college tuition.
Other co workers bought cars and other toys. Their kids are still paying off their college loans.
Most people think (serious) money will solve all your problems.
If you're smart, it creates a ton of work/problems.
Why? Because you now have a huge responsibility to put that money to work. The financial industry is not there to help you. It's there to part you from your money, and make them rich.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
) back in March.
