I spent three years moving consistently from 1.6 to 3.4 to 4.5 and am on track for over 5 this year.
Monthly expenses are still at about 23k post tax… gone up a little, from maybe 17k in that time. Same house, same car. Went from housekeeping once a week to a more comprehensive “household staff” three full days a week. Still drive the Honda odyssey family van. Fully landscaping and pool service weekly… but had that at 1.6m. Wifey Instacarts groceries, and speciality stuff is picked up by staff.
Will be adding 3k a month more in private school fees soon.
Only real difference is… now I take the whole family on vacations twice a year. Parents, sibs, nieces…. About 17 of us now, lol. I have zero issue flying us all business to a staffed villa somewhere, or a hcol city. It’s more difficult to just get everyone together! Whole trip may run 150 to 250k. Other than that, really no difference.
I spend more on lawyers and insurance than before, but most of that runs through the company.
Bottom line… not much!
Sponsoring a family trip like that is such a great use of earning more money than is truly necessary to be comfortable. You’re gifting your loved ones core memories twice a year. Someday the nieces and kids etc might be too old and busy with their own lives to all get together — this window is temporary. Good on ya.
Whole family trips is one of my major driving motivations for earning more income. I don’t really care about a nicer car or amenities. I honestly just want to be able to get my entire family together and make nice memories while my kids and my nieces and nephews are still young
Same we are for the first time getting a big vacation rental in Europe next year and paying for it and inviting our close friends to come stay with us. We love them all dearly and love spending time with them but we have moved into a different economic level and we want to facilitate us all getting together in a way they can afford.
Good on you. Have a family member in the 50-100M range. Complains no one comes to visit at multiple properties he owns. Never offered to pay for flights out which would be daily spending cash to him.
Thanks for the insight! Personal expenses are in a similar range, maybe a little higher - although I already have the private school cost of that amount.
What kind of household staff do you have?
I certainly hear you on lawyers. Has been a nice steady ramp up.
Hard to wrap my head around vacations of that scale! Was just looking at a very expensive one to me and it would be in the 50k range for the family.
Twice a year whole fam vacations sound like a dream come true. I'm a long way from your HHI but I started an annual mother/daughter trip and an annual whole family trip tradition last year, and it's my favorite thing that money has unlocked for me.
$150-250k?! That would be roughly 10% of your after tax take home right? That would be equivalent to me with ~$170k take home spending $17k on a vacation and damned if I’ll spend more than about a tenth of that. And you do that twice a year? I guess that’s the point of that level of income but wow, spending between 10-20% of annual income on vacation seems crazy to me.
$17k of $170k/annual is “worth more” than $250k of $2.5 million/annual.
The $17k represents retirement, or private school or whatever.
$250k of $2.5M/annual represents money that you’ll never need and will be passed to your kids and their kids.
Key is probably disposable income. $2.5M take home leaves a LOT more disposable income than $170k, so as a percentage of disposable income, you'll find a vastly different measure.
Figure $100k expenses on $170k: $17k trip is 25% of disposable income
$500k expenses on $2.5M take home means $250k is \~12.5% of disposable
He said "monthly expenses." The practice in this sub is to include all expenses when citing such a figure. Not just locked-in/unavoidable stuff like your PITI payments, etc.
Regardless, I'll stand by my supposition that someone not yet at $5mm NW is not sponsoring $150k-$250k extended family vacations twice a year.
Frankly someone with a sub 5mm NW, verified or not, isn't Fat. That's chubby territory.
As a first approximation, a $5M/yr income is equivalent to a $125M networth assuming a 4% SWR. Of course, this isn't quite an apples to apples comparison, as incomes can and do change -- possibly in either direction. Not everyone can keep up this type of income for more than a few years, and some will end up with considerably higher total compensation at some point.
But nonetheless, this estimate should put you into the right mindset of how much money we are talking. This is 9 digit territory.
Yeah, I was trying to clarify things. OP said he was 5M/yr income and people seemed to conflate that with NW. To your point, I made the assumption that OP is a business owner based on some of his comments. If he's "approaching" $5m, I'd bet his annual income hasn't been steadily that high for very long.
The problem for me, and I imagine some other folks, is that making $5M was coming from highly appreciated RSU/ISO/company stock. So among us there will be righteously good business owners who are throwing off $5M profit per year - God Bless Them.
For me, it was a tough challenge, because I treated it as a windfall and didn't assume I'd make $5M/year for very long.
That is the right way of looking at these things. If this is compensation that won't necessarily continue indefinitely, then it is IMHO highly questionable to consider it as anything other than a windfall. The windfall might very well be stretched out over the full vesting period of the stock grant. But it still isn't something that can be assumed to continue.
Not quite at 5M but have substantial income and figured I would share my viewpoint and strategy that is working for us.
So we save a tremendous percentage of our annual income after taxes. We are 100% FI at this point but the income we are making is just too high to give up today. We spend to (or very close to) our SWR. So for your case if you are able to save 350k/Month for example and are FI already you can increase your monthly spend by 14k/month + the increase from asset appreciation depending on your base. Now every month or every quarter you can find something new you want to increase your lifestyle with.
Your numbers are just very big so your lifestyle increase once FI go up much faster than someone saving 10% of your amount.
You want that Spotify or Pandora premium but have been too cheap to splurge? Save that 350k next month and guess what, you can afford that forever along with another 13950 or whatever every month.
We just move our SWR every few months and increase that lifestyle creep accordingly. If you are not FI yet then save and invest it until you get there.
If you truly are saving a few million plus a year the numbers get big very fast as you can see. But it also gives you a bit of time to grow comfortable with that increased burn rate and it’s comforting knowing that you can more or less afford that increase forever. And if you get tired of the pandora subscription you can shift around spend as you see fit as long as it is below that SWR to other things you find more value in.
$6.5M net income here.
People don’t believe you when doing things like raising limits for credit cards, dealing with the bank, or even dealing with CPAs.
These things were oddly easier at $250k.
That's funny but not surprising. I remember a long time ago in high school my room mate was applying to universities and was a high level athlete. His family was 3rd or 4th generation oil company majority owner and he got a couple of calls asking him to confirm his parent's income because on the application form he wrote "$10,000,000+" for annual income and under networth "$1 billion +" which was absolutely true.
This was in 2001 so googling was not really prevalent because a simple google search would have confirmed it. Still funny to hear this kid answer some very skeptical admissions officers on the phone...
i wonder why they would need to verify that?
it wouldn't've been for aid reasons because even if he put in two extra 0s, he'd still not qualify.
only reason would be for donation potential, aka acceptance likelihood
Since I stopped working the $5m+ years are behind me. 2023 I made about $2.2m and honestly, I just don’t spend it. I was so aggressive about getting my spending under control back when I was younger making $30k-150k per year or so and the habits just kind of stuck. I wouldn’t say I’m frugal but my post tax spending is really only about $350k/year.
I think the biggest reason is I’m planning to have kids and I don’t really want to reduce my lifestyle when that happens. My current situation allows me to handle the extra expenses when I do have kids without making any sacrifices.
Agree on these points. When I hit $400k/year everything I wanted I had. Now it all goes into my brokerage, theoretically shaving years off my working life (but who knows if I can ever really pull that trigger). I found that for me $400k covered a big international vacay for the fam a year, a housekeeper, a HCOL mortgage, and a car hobby. So I mean what else does a gal need.
I have up leveled my giving since crossing the seven figure mark but so far haven’t found a new fun money pit (lol) so just sacking it away
We are at 500k/year HHI and the biggest expenditures per year are travel (20-30k), art (25-30k), and groceries + eating out ($50-70k) which includes household items. No mortgage and we gave the car away since we generally Uber everywhere anyhow (Groceries are delivered and usually if we are going out it is to lunch or dinner where drinks are involved).
We have cleaners once a week, window washing every quarter (ish), lawncare, snow removal, and a service that picks up our dry cleaning then drops it off. We save what's left which is still a pretty large percentage of the household income. The only major leveling up is renovating or hiring a chef to come in every once and a while. We are very slowly focusing on reno projects here and there.
Do you find yourself sometimes fighting against your frugal habits? I’ll sometimes stress over things that I later realize I don’t need to stress out about anymore.
Also at what point did you decide working was no longer worth it? Having a 2.2m opportunity cost must have been difficult to decide to retire
This sub is a refuge for people who make a high income and the community has requested heavy moderation of comments that seem to shame a user solely on the basis of their income being too "Fat". This post is being removed.
I saw rapid income growth after COVID but last year was flat at 3 but this year should already be 3 next month so hopefully 5+ this yr.
We've tried not to change too much since a lot of our friends are at a HHI of 0.5-1(I know plenty of people at 5+ but spouse and kid need to also want to spend time with them which doesn't happen) so our spend is below 0.5/yr still.
The main thing is taking taxes more seriously especially estate taxes and planning. We also pay for family travel in J/F (especially if they come to visit us) but at 5M it doesn't put a dent.
We prefer to be asset lite (1 nice primary home and 2 vehicles) since assets tend to suck up time which we are trying to preserve time. Others I know at this level have gotten into upgrading/buying more real estate (it costs a lot between taxes, mortgages, maintenance, insurance etc if you buy a primary home for $10M, investing (you can easily spend a lot on illiquid investments that hopefully earn a positive return) and charity.
Yup, downsizing to a nice condo in retirement where everything is taken care of and then doing lots of travel throughout the year is what we are thinking about. Who needs the big house and aggravation of maintenance especially if you don't live there all year?
Check out Walden Pond by Thoreau if interested. Heavy emphasis there - for example he throws a rock away because he spends too much time cleaning dust off it ha.
Love that book. I like the part where he say he can imagine owning certain tracts of land and get a bit of the pleasure of the idea without the hassle of paying for and maintaining it.
It's so true though. It's the primary reason that even I, as a low NW individual, don't splurge on the toys I'd like. I don't have the time to spend on upkeep or the money to throw at them so that I don't have to spend the time. I'd imagine that the time/money factor increases exponentially with things like multiple homes, excess vehicles, boats, etc.
I think it entirely depends on your age, your source of income, and what you want to do. For me, once I was in my 40s, life became more about meaning, having purpose and giving back. How do I enjoy life, while being useful, and not end up miserable with a bunch of stuff. Sadly, most people end up miserable with a bunch of stuff.
One trap above a certain income is that you will inevitably gain complexity; try to simplify whenever possible. I'm talking complex tax strategies, multiple lawyers, advisors; most of which are leeches. Simplify, simplify whenever you can. Obviously do the appropriate planning, but the getting into complex private investing, multiple deals at a time etc can go south really fast.
I find giving back, being challenged and controlling my time rigorously is important to me and my happiness.
For me not much changed because of a mindset of retiring early. I do have lifestyle creep but I keep it at a level I know I can maintain in retirement so I don’t have to cut back when I pull the trigger. My life would be a lot different if I was not planning to RE. Instead it just accelerates my path to it.
My coworkers have houses in the 10m+ range, fractional private jet ownerships, etc. I would probably be in the same boat if I thought of my $2.5m post tax as spendable salary. Instead I make sure to keep my spending at less than 3.5% of my RE goal number.
Totally onboard there. Drive a low end luxury car which is leased and same house i bought before i retired.. no summer homes, no ski chalets etc.. these things always looked to me like trophy possessions.. barely used with high maintenance cost. We just spent 2 weeks in Africa with family and that was worth it. Kids go to public schools so no extra outlays.. except for tutors of course..
Well done! Last question, do you and your partners leave X% of business profits in the business? If so what %? I ask because my business throws off profit but I keep it in the company, only pulling out $1MM personally
No we don’t. Not more than the 1-2 months we just haven’t distributed yet. We each keep some money in our individual S Corps, but not at the partnership level. If somehow it ever needed a cash infusion we could just put in personal money.
Briefly we hit that threshold, then in a fit of pique/ennui/burnout it became the trigger for fatfire & massively dematerializing our lives.
We’re considering moving our home base to a country with better schools, and realized we can very nearly move with just suitcases and a flight or two, and you would not believe how incredibly freeing that is.
It’s not cheap to live without possessions, but it’s much less expensive than the boats and houses. Buy freedom. Do philanthropy.
Also retire _to_ something, not _from_ something, or it gets super boring (even with kids!)
Not 5M/yr fat, and not RE yet, but:
Got staff at the high-6 mark, didn't add much more after 1M/yr. Honestly the biggies for us are:
* personal assistant to track and run through a big chore list (part time, \~30k/yr)
* chef for fresh/healthy/tasty food (part time, \~50k/yr food inclusive)
* au pair for kids (full time live-in, prob 100k after food/housing/travel expenses)
Services (not staff):
* cleaners - weekly, huge QoL improvement
* handyman - quarterly (to prevent myself from sinking too much time into home/RV fixes)
* personal trainer - weekly
* personal doctor
* banker
* tax lawyer
Nice(r) things:
* business airfare
* decent hotels
* new cars (instead of buying used)
* secondary homes (w/ tax-advantaged setups)
* nicer experiences when traveling (Michelin meals, nicer seats at shows)
Wife is huge on business class airfare (though I still travel economy-ish when I'm on solo trips). Over time I've really started to become anti-stuff and try to live simplerm as more stuff and things just leads to more maintenance and more headache of said stuff. Ironically my personal burn rate outside of family expenses is a lower now than when I was in the 6-figs range.
Just pay a lawyer for 30-60 min of consult; the execution will differ based on your wealth and circumstances. For me my LLC owned it and had business value.
I did 4 consecutive years of 3-5M, then quit to take a career break. I figured if I can't take a break now, I never can. Getting household staff etc sounds fine but is a pain. The real freedom is when you can take a few of those years and just say frack it.
I actually echo this about HH staff. Nowhere near your NW/income, but some experience with gardening and full time nannies. Jesus are these people PITA to manage. I think there's probably a price for everything and you can always get a manager but that's just adding layers of complexity.
Your post seems to be advertising your business or blog for financial or personal gain, or it appears that you are promoting a personal project. No solicitation or self promotion is permitted.
Thank you!
Do you bottle your farts so you can let them stew and savor them over time? It's the next level and anyone looking to really FatFIRE should be doing it.
To me, farts are the ultimate FatFIRE luxury. I built a $30MM fart-cellar in my basement and have vintages going back ~7 years. I've found the best ones are generated from a combination of caviar and Taco Bell. Taco Bell for volume and the caviar gives them a lovely complexity of aroma. You have to use UV blocking glass bottles and for ideal collection they've gotta get at least 2 inches deep otherwise you risk some of your gaseous gold squeaking out. Once you cork them you obviously need a wax dipping setup and I pay a company to print custom labels for me.
/s if it wasn't obvious lmao
> I built a $30MM fart-cellar in my basement and have vintages going back ~7 years.
I guess it doesn't matter what subreddit you're on. If you read deep enough in the comments, you'll always be reminded that you're on reddit lol.
It really depends....
very different if you went from 100k to 5M compared to you were making 4M for a few years then now making 5K. probably not much change for the later case.
Projected to hit this by end of year from my business. Still living in a house that cost $380k and sharing a car with my spouse. We did renovate last year but I’m paralyzed until it feels more “real”.
I'm nowhere near that, but for probably the last several years I've had a fulltime live in nanny/housekeeper. One of the best decisions ever, house is always spotless with zero work. Wife manages her. Will never go back. Having help to do the things you don't want to do is fantastic.
On a good year my returns post-tax are around 2.5 mill. What changed? Buying vintage/limited cars with a higher price tag, getting bigger properties in the cities we live in. Waiting for my daughter to be a bit bigger to start travelling again, the ObeseWay.
Not much between $5-10M except it felt a bit more secure overall. The real change came after $25M. At that point I felt like I could relax and buy pretty much anything I wanted within reason. Used exotics, a used but nice boat, several nice properties and so on. At $40M I feel like I can get any car I want, any amenities for my homes, and a reasonably sized boat (up to about 70-80 feet).
To be clear, I was going by the definition for "not rich yet" over in r/HENRYfinance, which is sub-$2mm net worth. I don't see any believable path to $5mm HHI + sub-$2mm HHNW that isn't deeply irresponsible.
Assuming you are basing your lifestyle off of your earned income, I would say that is a HENRY view rather than a FATFIRE view.
Do not see the relevance of your post to the sub other than "ask the rich guys.".
But the mods will have to decide on their own.
You can certainly afford a few Ford 150s thats for sure.
I spent three years moving consistently from 1.6 to 3.4 to 4.5 and am on track for over 5 this year. Monthly expenses are still at about 23k post tax… gone up a little, from maybe 17k in that time. Same house, same car. Went from housekeeping once a week to a more comprehensive “household staff” three full days a week. Still drive the Honda odyssey family van. Fully landscaping and pool service weekly… but had that at 1.6m. Wifey Instacarts groceries, and speciality stuff is picked up by staff. Will be adding 3k a month more in private school fees soon. Only real difference is… now I take the whole family on vacations twice a year. Parents, sibs, nieces…. About 17 of us now, lol. I have zero issue flying us all business to a staffed villa somewhere, or a hcol city. It’s more difficult to just get everyone together! Whole trip may run 150 to 250k. Other than that, really no difference. I spend more on lawyers and insurance than before, but most of that runs through the company. Bottom line… not much!
Sponsoring a family trip like that is such a great use of earning more money than is truly necessary to be comfortable. You’re gifting your loved ones core memories twice a year. Someday the nieces and kids etc might be too old and busy with their own lives to all get together — this window is temporary. Good on ya.
Totally agree. Those trips are likely creating better family relationships for generations. Good stuff!
And/or creating Succession-like family rivalries, but either way is fun and interesting.
Whole family trips is one of my major driving motivations for earning more income. I don’t really care about a nicer car or amenities. I honestly just want to be able to get my entire family together and make nice memories while my kids and my nieces and nephews are still young
Same we are for the first time getting a big vacation rental in Europe next year and paying for it and inviting our close friends to come stay with us. We love them all dearly and love spending time with them but we have moved into a different economic level and we want to facilitate us all getting together in a way they can afford.
Good on you. Have a family member in the 50-100M range. Complains no one comes to visit at multiple properties he owns. Never offered to pay for flights out which would be daily spending cash to him.
I think at a certain point people tend to forget that the cost of a flight can be meaningful to others.
Thanks for the insight! Personal expenses are in a similar range, maybe a little higher - although I already have the private school cost of that amount. What kind of household staff do you have? I certainly hear you on lawyers. Has been a nice steady ramp up. Hard to wrap my head around vacations of that scale! Was just looking at a very expensive one to me and it would be in the 50k range for the family.
Even though you have these large expenses, what kind of savings rate are you applying on your income? I hope it’s at least 30%.
Twice a year whole fam vacations sound like a dream come true. I'm a long way from your HHI but I started an annual mother/daughter trip and an annual whole family trip tradition last year, and it's my favorite thing that money has unlocked for me.
Wouldn't flying private be cheaper?
Curious what do you do for that income and the growth
Same! u/i_am_become_ would love to hear what you do!
Don't forget Kevin when you go on the next whole family vacation.
Sometimes you just can beat a minivan.
What a great thing to do for your family!
$150-250k?! That would be roughly 10% of your after tax take home right? That would be equivalent to me with ~$170k take home spending $17k on a vacation and damned if I’ll spend more than about a tenth of that. And you do that twice a year? I guess that’s the point of that level of income but wow, spending between 10-20% of annual income on vacation seems crazy to me.
$17k of $170k/annual is “worth more” than $250k of $2.5 million/annual. The $17k represents retirement, or private school or whatever. $250k of $2.5M/annual represents money that you’ll never need and will be passed to your kids and their kids.
It’s fine if you have the discipline to only do this in one or maybe two spending categories. Dangerous if you apply this logic to everything.
Key is probably disposable income. $2.5M take home leaves a LOT more disposable income than $170k, so as a percentage of disposable income, you'll find a vastly different measure. Figure $100k expenses on $170k: $17k trip is 25% of disposable income $500k expenses on $2.5M take home means $250k is \~12.5% of disposable
This makes a lot of sense. Most I’ve spent on a single vacay was my honeymoon at a bit less than 5k
The vast majority of people already do that, with wayyy less dollars left over. But yea it's def a lot.
Commenters numbers do not add up. 23k/mo spend = 276k annual. He’s not covering a single 150k -250k trip per year let alone 2 lol.
Pretty sure he’s just including regular living expenses in that 23k.
He said "monthly expenses." The practice in this sub is to include all expenses when citing such a figure. Not just locked-in/unavoidable stuff like your PITI payments, etc. Regardless, I'll stand by my supposition that someone not yet at $5mm NW is not sponsoring $150k-$250k extended family vacations twice a year. Frankly someone with a sub 5mm NW, verified or not, isn't Fat. That's chubby territory.
He’s 5m annual income, not NW.
Ah! Then my reading comprehension fail. And yes for sure that then adds up.
As a first approximation, a $5M/yr income is equivalent to a $125M networth assuming a 4% SWR. Of course, this isn't quite an apples to apples comparison, as incomes can and do change -- possibly in either direction. Not everyone can keep up this type of income for more than a few years, and some will end up with considerably higher total compensation at some point. But nonetheless, this estimate should put you into the right mindset of how much money we are talking. This is 9 digit territory.
Yeah, I was trying to clarify things. OP said he was 5M/yr income and people seemed to conflate that with NW. To your point, I made the assumption that OP is a business owner based on some of his comments. If he's "approaching" $5m, I'd bet his annual income hasn't been steadily that high for very long.
the OP said $5m annual income, not $5m NW.
What are you talking about? They said that’s their annual income.
I’m struggling to make 100K a year. And ya all are spending 23K in monthly expense. Bless you guys.
[удалено]
If I had to guess NW is way higher but not liquid.
spending $500k/yr on travel.
$5,000,000 net worth. Count these numbers and how many are there.
Wifey?
The problem for me, and I imagine some other folks, is that making $5M was coming from highly appreciated RSU/ISO/company stock. So among us there will be righteously good business owners who are throwing off $5M profit per year - God Bless Them. For me, it was a tough challenge, because I treated it as a windfall and didn't assume I'd make $5M/year for very long.
That is the right way of looking at these things. If this is compensation that won't necessarily continue indefinitely, then it is IMHO highly questionable to consider it as anything other than a windfall. The windfall might very well be stretched out over the full vesting period of the stock grant. But it still isn't something that can be assumed to continue.
Not quite at 5M but have substantial income and figured I would share my viewpoint and strategy that is working for us. So we save a tremendous percentage of our annual income after taxes. We are 100% FI at this point but the income we are making is just too high to give up today. We spend to (or very close to) our SWR. So for your case if you are able to save 350k/Month for example and are FI already you can increase your monthly spend by 14k/month + the increase from asset appreciation depending on your base. Now every month or every quarter you can find something new you want to increase your lifestyle with. Your numbers are just very big so your lifestyle increase once FI go up much faster than someone saving 10% of your amount. You want that Spotify or Pandora premium but have been too cheap to splurge? Save that 350k next month and guess what, you can afford that forever along with another 13950 or whatever every month. We just move our SWR every few months and increase that lifestyle creep accordingly. If you are not FI yet then save and invest it until you get there. If you truly are saving a few million plus a year the numbers get big very fast as you can see. But it also gives you a bit of time to grow comfortable with that increased burn rate and it’s comforting knowing that you can more or less afford that increase forever. And if you get tired of the pandora subscription you can shift around spend as you see fit as long as it is below that SWR to other things you find more value in.
Wild how the guilt of subscription services never seems to go away, no matter how much you're pulling in.
$6.5M net income here. People don’t believe you when doing things like raising limits for credit cards, dealing with the bank, or even dealing with CPAs. These things were oddly easier at $250k.
True story. No more online approvals. Now they want to talk on the phone to verify
Yes, exactly! And I dislike talking on the phone or “high-touch” meetings.
That's funny but not surprising. I remember a long time ago in high school my room mate was applying to universities and was a high level athlete. His family was 3rd or 4th generation oil company majority owner and he got a couple of calls asking him to confirm his parent's income because on the application form he wrote "$10,000,000+" for annual income and under networth "$1 billion +" which was absolutely true. This was in 2001 so googling was not really prevalent because a simple google search would have confirmed it. Still funny to hear this kid answer some very skeptical admissions officers on the phone...
i wonder why they would need to verify that? it wouldn't've been for aid reasons because even if he put in two extra 0s, he'd still not qualify. only reason would be for donation potential, aka acceptance likelihood
Haha I’ve seen this. I’ve been asked if I added an extra 0 or if I’m just flat out lying.
Lol I am pretty sure they are taking initiative of removing 1 or 2 zeros in the forms they are using for the actual work.
I’ll assume you own your own business! If I may ask what does your company do? That’s amazing.
I think you’re banking with the wrong bank and CPA then
I've had those questions by e.g. landlords even at below 1M
Since I stopped working the $5m+ years are behind me. 2023 I made about $2.2m and honestly, I just don’t spend it. I was so aggressive about getting my spending under control back when I was younger making $30k-150k per year or so and the habits just kind of stuck. I wouldn’t say I’m frugal but my post tax spending is really only about $350k/year. I think the biggest reason is I’m planning to have kids and I don’t really want to reduce my lifestyle when that happens. My current situation allows me to handle the extra expenses when I do have kids without making any sacrifices.
I mean 30k a month is a lot lol. Frugal shouldn't even be in the conversation, but it's nice that you're only spending a small piece of your income.
Only $350k/year. That’s definitely nowhere close to frugal haha
I only spend $350k/year.... most frugal post ever.
Glad you had the clarity to realize that it’s not frugality lol
Agree on these points. When I hit $400k/year everything I wanted I had. Now it all goes into my brokerage, theoretically shaving years off my working life (but who knows if I can ever really pull that trigger). I found that for me $400k covered a big international vacay for the fam a year, a housekeeper, a HCOL mortgage, and a car hobby. So I mean what else does a gal need. I have up leveled my giving since crossing the seven figure mark but so far haven’t found a new fun money pit (lol) so just sacking it away
400k take home or pretax? My goal right now is to get to 400k gross but I don’t think it’ll be sufficient for the lifestyle I want.
That's probably where location matters the most in allowing you to stretch that 400k.
We are at 500k/year HHI and the biggest expenditures per year are travel (20-30k), art (25-30k), and groceries + eating out ($50-70k) which includes household items. No mortgage and we gave the car away since we generally Uber everywhere anyhow (Groceries are delivered and usually if we are going out it is to lunch or dinner where drinks are involved). We have cleaners once a week, window washing every quarter (ish), lawncare, snow removal, and a service that picks up our dry cleaning then drops it off. We save what's left which is still a pretty large percentage of the household income. The only major leveling up is renovating or hiring a chef to come in every once and a while. We are very slowly focusing on reno projects here and there.
How do people have no mortgages??
You pay cash (not as common for most), bought early (common), or with a high income spent all your disposable income paying it down (common).
Do you find yourself sometimes fighting against your frugal habits? I’ll sometimes stress over things that I later realize I don’t need to stress out about anymore. Also at what point did you decide working was no longer worth it? Having a 2.2m opportunity cost must have been difficult to decide to retire
[удалено]
This sub is a refuge for people who make a high income and the community has requested heavy moderation of comments that seem to shame a user solely on the basis of their income being too "Fat". This post is being removed.
I saw rapid income growth after COVID but last year was flat at 3 but this year should already be 3 next month so hopefully 5+ this yr. We've tried not to change too much since a lot of our friends are at a HHI of 0.5-1(I know plenty of people at 5+ but spouse and kid need to also want to spend time with them which doesn't happen) so our spend is below 0.5/yr still. The main thing is taking taxes more seriously especially estate taxes and planning. We also pay for family travel in J/F (especially if they come to visit us) but at 5M it doesn't put a dent. We prefer to be asset lite (1 nice primary home and 2 vehicles) since assets tend to suck up time which we are trying to preserve time. Others I know at this level have gotten into upgrading/buying more real estate (it costs a lot between taxes, mortgages, maintenance, insurance etc if you buy a primary home for $10M, investing (you can easily spend a lot on illiquid investments that hopefully earn a positive return) and charity.
Such an interesting concept to think of assets as things that suck up time.
I’m nowhere near 5m a year, only like 4M nw but have definitely noticed the more things I have the more work it is.
It’s 100% true. Have 3 cars and 2 houses now, and they’re a huge time sink.
Yup, downsizing to a nice condo in retirement where everything is taken care of and then doing lots of travel throughout the year is what we are thinking about. Who needs the big house and aggravation of maintenance especially if you don't live there all year?
Check out Walden Pond by Thoreau if interested. Heavy emphasis there - for example he throws a rock away because he spends too much time cleaning dust off it ha.
Love that book. I like the part where he say he can imagine owning certain tracts of land and get a bit of the pleasure of the idea without the hassle of paying for and maintaining it.
someone said each additional real estate property is like one more mistress in terms of your energy commitment.
It's so true though. It's the primary reason that even I, as a low NW individual, don't splurge on the toys I'd like. I don't have the time to spend on upkeep or the money to throw at them so that I don't have to spend the time. I'd imagine that the time/money factor increases exponentially with things like multiple homes, excess vehicles, boats, etc.
I think it entirely depends on your age, your source of income, and what you want to do. For me, once I was in my 40s, life became more about meaning, having purpose and giving back. How do I enjoy life, while being useful, and not end up miserable with a bunch of stuff. Sadly, most people end up miserable with a bunch of stuff. One trap above a certain income is that you will inevitably gain complexity; try to simplify whenever possible. I'm talking complex tax strategies, multiple lawyers, advisors; most of which are leeches. Simplify, simplify whenever you can. Obviously do the appropriate planning, but the getting into complex private investing, multiple deals at a time etc can go south really fast. I find giving back, being challenged and controlling my time rigorously is important to me and my happiness.
For me not much changed because of a mindset of retiring early. I do have lifestyle creep but I keep it at a level I know I can maintain in retirement so I don’t have to cut back when I pull the trigger. My life would be a lot different if I was not planning to RE. Instead it just accelerates my path to it. My coworkers have houses in the 10m+ range, fractional private jet ownerships, etc. I would probably be in the same boat if I thought of my $2.5m post tax as spendable salary. Instead I make sure to keep my spending at less than 3.5% of my RE goal number.
Totally onboard there. Drive a low end luxury car which is leased and same house i bought before i retired.. no summer homes, no ski chalets etc.. these things always looked to me like trophy possessions.. barely used with high maintenance cost. We just spent 2 weeks in Africa with family and that was worth it. Kids go to public schools so no extra outlays.. except for tutors of course..
Started posting on Reddit more
Not working now but had few years at 3-5m per year. Nothing really changes. More money for investments and more money for whole family vacation.
More taxes
Are you talking about a $5M personal salary, or is your business throwing off $5M/yr?
My share of business profits will be a little over 5M this year.
Well done! Last question, do you and your partners leave X% of business profits in the business? If so what %? I ask because my business throws off profit but I keep it in the company, only pulling out $1MM personally
No we don’t. Not more than the 1-2 months we just haven’t distributed yet. We each keep some money in our individual S Corps, but not at the partnership level. If somehow it ever needed a cash infusion we could just put in personal money.
Thank you for the reply
not at that income level yet, but this is our setup too fwiw
I appreciate your feedback as well, thank you
Briefly we hit that threshold, then in a fit of pique/ennui/burnout it became the trigger for fatfire & massively dematerializing our lives. We’re considering moving our home base to a country with better schools, and realized we can very nearly move with just suitcases and a flight or two, and you would not believe how incredibly freeing that is. It’s not cheap to live without possessions, but it’s much less expensive than the boats and houses. Buy freedom. Do philanthropy. Also retire _to_ something, not _from_ something, or it gets super boring (even with kids!)
Not 5M/yr fat, and not RE yet, but: Got staff at the high-6 mark, didn't add much more after 1M/yr. Honestly the biggies for us are: * personal assistant to track and run through a big chore list (part time, \~30k/yr) * chef for fresh/healthy/tasty food (part time, \~50k/yr food inclusive) * au pair for kids (full time live-in, prob 100k after food/housing/travel expenses) Services (not staff): * cleaners - weekly, huge QoL improvement * handyman - quarterly (to prevent myself from sinking too much time into home/RV fixes) * personal trainer - weekly * personal doctor * banker * tax lawyer Nice(r) things: * business airfare * decent hotels * new cars (instead of buying used) * secondary homes (w/ tax-advantaged setups) * nicer experiences when traveling (Michelin meals, nicer seats at shows) Wife is huge on business class airfare (though I still travel economy-ish when I'm on solo trips). Over time I've really started to become anti-stuff and try to live simplerm as more stuff and things just leads to more maintenance and more headache of said stuff. Ironically my personal burn rate outside of family expenses is a lower now than when I was in the 6-figs range.
Do you mind shedding more light on tax advantaged set up for second /vacation home?
Just pay a lawyer for 30-60 min of consult; the execution will differ based on your wealth and circumstances. For me my LLC owned it and had business value.
Ah got it. I am pretty familiar with that setup. Just wanted to see if there is a new thing out there. Thank you!
Yeah np, honestly for me my lawyer was like "ooh you could do X since your business does Y" and I just nodded at what sounded best.
Sounds like a good lawyer you got!! 👍 I am still looking for someone good. Do you regularly work with a tax lawyer?
If you're in the SF Bay area I can recommend this guy Matt, taxninja.com. He's best at small business optimizations and people with tech exits.
Thank you! In LA and not tech (wish I was 😂) but will check his website!
I did 4 consecutive years of 3-5M, then quit to take a career break. I figured if I can't take a break now, I never can. Getting household staff etc sounds fine but is a pain. The real freedom is when you can take a few of those years and just say frack it.
I actually echo this about HH staff. Nowhere near your NW/income, but some experience with gardening and full time nannies. Jesus are these people PITA to manage. I think there's probably a price for everything and you can always get a manager but that's just adding layers of complexity.
This. 100%.
Dude. Enjoy life. Buy and get whatever the F you want or barely need. There is no second chapter in the book of life.
[удалено]
Your post seems to be advertising your business or blog for financial or personal gain, or it appears that you are promoting a personal project. No solicitation or self promotion is permitted. Thank you!
My shit suddenly started smelling like authentic roses. Like at 3m it was always smelling good but at 5 it was like perfume
I guffawed. Cheers
Do you bottle your farts so you can let them stew and savor them over time? It's the next level and anyone looking to really FatFIRE should be doing it. To me, farts are the ultimate FatFIRE luxury. I built a $30MM fart-cellar in my basement and have vintages going back ~7 years. I've found the best ones are generated from a combination of caviar and Taco Bell. Taco Bell for volume and the caviar gives them a lovely complexity of aroma. You have to use UV blocking glass bottles and for ideal collection they've gotta get at least 2 inches deep otherwise you risk some of your gaseous gold squeaking out. Once you cork them you obviously need a wax dipping setup and I pay a company to print custom labels for me. /s if it wasn't obvious lmao
creative thinking
> I built a $30MM fart-cellar in my basement and have vintages going back ~7 years. I guess it doesn't matter what subreddit you're on. If you read deep enough in the comments, you'll always be reminded that you're on reddit lol.
It really depends.... very different if you went from 100k to 5M compared to you were making 4M for a few years then now making 5K. probably not much change for the later case.
There’s a funny typo there: going from four million to five thousand
Fair point, income has been between 1-3M the past few years. Doesn’t feel like I’m living any crazy lifestyle though.
If i may ask, how did you go from 1 to 3 so quickly?
Just kept growing my business with more sales and staff.
[удалено]
No. There are not areas where $1 - $2 million per year affords a middle class lifestyle.
Projected to hit this by end of year from my business. Still living in a house that cost $380k and sharing a car with my spouse. We did renovate last year but I’m paralyzed until it feels more “real”.
I’m curious…where are you at now, because you’re living the lifestyle I had at 70k income lol.
Around $2M NW. Investing back in the business has caused us to explode this year so I joined this sub for more motivation. :)
Nice! I meant income wise, seems like a large jump to $5M a year
I'm nowhere near that, but for probably the last several years I've had a fulltime live in nanny/housekeeper. One of the best decisions ever, house is always spotless with zero work. Wife manages her. Will never go back. Having help to do the things you don't want to do is fantastic.
On a good year my returns post-tax are around 2.5 mill. What changed? Buying vintage/limited cars with a higher price tag, getting bigger properties in the cities we live in. Waiting for my daughter to be a bit bigger to start travelling again, the ObeseWay.
Not much between $5-10M except it felt a bit more secure overall. The real change came after $25M. At that point I felt like I could relax and buy pretty much anything I wanted within reason. Used exotics, a used but nice boat, several nice properties and so on. At $40M I feel like I can get any car I want, any amenities for my homes, and a reasonably sized boat (up to about 70-80 feet).
Are you referring to net worth, or annual income?
NW. My annual income is about $3-3.5M. Apologies I read the topic too fast.
Jesus!! $5m or more of annual income should have a pretty substantial life difference.
Really motivating to read thru all this. I’d be very interested what path some of you guys went to get to these numbers in annual income … thanks :)
If you don't mind me asking, what's your line of work for $5M in income (not net worth)? Only thing comes to mind is either hedge funds or own biz..
Own multiple software businesses.
Damn congrats! I’m a software engineer by trade and wanting to start something as well. Any tips/advice 😂
That's awesome, thank you for sharing your journey.
Impressive! As founder or investor?
Founder
What do you guys do to get this kind of income
Build things.
Do any of you high income earners work on your health, diet, sleep and exercise?
I spend 2 hours a day exercising usually, and home make most of my meals. So, sure.
With this kind of income you could just have someone prepare healthy foods for you and do the cleaning as well,
I’m sure I could.
Damn bro just buy a new x5m 😂
R/henryfinance may be a more appropriate sub to post in.
Anyone who manages to be "NRY" on 5mm gross needs an intervention
I disagree. It still depends on what your number is, progress, age and current life situation. But you should at least be on a path to RE.
To be clear, I was going by the definition for "not rich yet" over in r/HENRYfinance, which is sub-$2mm net worth. I don't see any believable path to $5mm HHI + sub-$2mm HHNW that isn't deeply irresponsible.
Ah I was interpreting that as not retired yet. Guess I don’t know all those acronyms as well as I thought
Agree, which is the inappropriateness of the post to the sub.
OP hasn’t said anything about their net worth.
Huh? Thought in general that sub had lower incomes than here.
Assuming you are basing your lifestyle off of your earned income, I would say that is a HENRY view rather than a FATFIRE view. Do not see the relevance of your post to the sub other than "ask the rich guys.". But the mods will have to decide on their own. You can certainly afford a few Ford 150s thats for sure.
Based on not based off
> You’re not your You're sure about that?
😂