Our income has fluctuated substantially over the course of our 30+ year marriage. In the early days, we rented a small apartment and were happy we could contact management when we had problems.
When our kids were little, we moved into the house we still live in. Being a homeowner has its own issues, good and bad. We have more than doubled our gross income from 2011 to now. We FEEL pretty similar to how we felt then, “upper middle class.” We still live pretty simply, same old house, same old cars, but do eat at more restaurants and spend a bit less time comparison shopping for hotels and rental cars. We are even willing to stay at slightly nicer places.
We are able to support our young adult financially (without destroying our finances) until hopefully someday her medical condition is successfully treated and she can get and hold a job!
We are now living this experiment almost exactly. Unfortunately, we also have lived all 3 of @rosered55 life altering bumps, cancer, unemployment, and we have paid lawyers about $40k the past 6 months. Five years ago are income was below $30,000, slowly climbing to just above $100,000. This year, after a job change for W, we should earn slightly over $200k.
Step 1: Take a nice vacation. W has not had one (except for camping) in two years.
Step 2: Take care of some of the things put off because we could not afford it. The minivan needs brakes. The car needs new tie rods. Both need tires. The chimney leaks. We need to paint.
Step 3: Do our best to catch up on retirement accounts. Cancer and the almost inevitable subsequent unemployment took almost all our net worth. We borrowed to stay in our house.
Step 4: We have lots of loans left from W closing her business. Lots.
So far, how we deal with day-to-day spending and our attitude toward it has not changed.
We have never not traveled regardless of income. We manage to travel as grad students with combined household income of $25,000 in the 1980s and 1990s. Later once we had kids, even when they were still quite young, we took them to Europe and to Mexico. I am glad we didn’t wait until we were more comfortable financially. Time is always a bigger constraint than money when it comes to travel for me.
And responding way way up to my question about expenses going down when kids leave the house - makes sense, thanks. Car situation still the same (4!), trying to figure out what to do with city kid’s car,
No, not other than the essentials to maintain or grow the increase. Every time I get a raise, I put that amount back into savings…529, 401K, house account. But, when I got a new travel position a few years ago, I had to upgrade my vehicle and got locked into a $350/mo lease and needed to purchase a few outfits. I also had to have extra spending $$ for the meetings that were an hour from home and required dinnertime meals, that sort of thing. Unfortunately, I was laid off from this job one year ago and rehired for half the hours and then laid off completely just last week. I still have 18 months on my lease for a car that I don’t really need anymore and some business clothing I’m unlikely to wear very often. On the upside, I put nearly every penny I made in the job into the 529 and have managed to finance D’s first two years of college. Another downside though is the prior prior that is showing more than double my salary at this point.
The scenario described by OP happened for us over a decade ago. Income was $100K and then DH jumped on an opportunity to double it. Then , with bonus, the next year’s income was $300K+. We had 2 in college when income first jumped so great timing there. No significant lifestyle changes except we took several great vacations and DH bought a more expensive car than he needed. Oh yes, DH also insisted he needed a house where his new job was since he now lived there 4 days a week (he didn’t need a house, an apartment would have been fine, but my opinion was over-ridden and I let the issue drop since our family home was paid off). Maxed out his 401k contributions. Saved a bundle of money. Which came in handy when 3 years after great opportunity occurred, DH lost job and was unemployed for 18 months. We had 3 in college then. Investment values had dropped significantly but we had enough saved to pay all bills. Took 2 years to sell his extra house at 75% of what we paid for it. We were very fortunate we had saved as much as we could when things were good. Income is now back to levels seen prior to big opportunity; with all our children out of the nest and self-supporting we are still saving quite a lot.
@rosered - I know what you mean. Ten years ago I lost my job when my research site closed, and although I found another (much lower-paying) job, my H and I now make about half of what we did back then. No complaints, really, since we no longer have tuition payments and we had saved a lot of that high income in retirement funds and rainy-day savings. I just would not have predicted that my financial fortunes would take this arc.
There’s no way we will ever earn what we did then, and sometimes I wonder – what would we be doing differently now if I were still making the big bucks? I’m guessing we would travel more (and more luxuriously) and maybe my H would drive a cooler car. I would definitely be retiring earlier than I plan to retire now. In fact, this question is more interesting to me: what would you be doing differently if your income suddenly decreased by half?
@scout59, great question! I was going to say “send child to a top private college, since we’ll now be eligible for need-based aid”, but then realized that the savings will not disappear, so no aid. Well darn. Anyway, the child would still shoot for the state flagship, we would stay in the current house that we bought when we made 1/3 of what we earn now, and cut down on eating out and shopping - we have too much stuff anyway. Travel less often and stay in modest accommodations. NBD.
I have just realized that the possibility of living on half our income (still 6 figures) does not trouble me as much as a financial meltdown scenario that wipes or greatly reduces our savings.
^ That’s pretty good. Mr. Money Mustache would be proud.
It’s a hard number to calculate for us. My “take-home” from my salaried job is less than 40% of the gross, because I have a lot of extra taxes withheld to cover some of DW’s taxes from being self-employed. We have to do estimated payments for her in addition… what does “take-home” really mean when you are self-employed?
We are kicking in about $50K into retirement accounts every year, and pay down an extra $30-35K or so in mortgage debt. So I feel we are saving a decent amount, which would give us a huge buffer if the “living on half your income” scenario came to pass. That plus half the taxes we pay is nearly half our income, so we could survive on half our income just by not saving any more. With my age and occupation, there’s a good chance it will happen at some point.
My dad near doubled his income, and that placed him into what people call the 1% in Texas. We were living comfortably in the 250-300k range income, but almost double that. We honestly don’t spend any more. Almost every penny goes into savings, and those savings buy investments such as stocks, rental properties, etc. I believe he does donate a lot more. He tries to give about 10% of his post tax income to various charities, mostly out church, a year, so that went up. I guess we travel more and make riskier financial decisions, but that is pretty much it. He is 90% commission based income, so there’s no way of knowing when his next check is coming in. Perhaps we didn’t change much of our financial situation because of that.
As mentioned in other threads, money can have a lot of emotions around it.
I am naturally conservative and never thought money makes you happy. I am willing to pay for experiences - nice hotels, great restaurants with amazing service, flights to see my kids when I want.
Our income increased from quite a bit less than $100k to about $250,000 about 6 years ago. We haven’t changed anything in our basic life, however, we have joyfully paid tuition payments for the last ten years, with three more to go. The only real dramatic changes have been that we now worry less, and have four stunning, framed college and graduate school diplomas on the wall of our dining room. My husband and I feel that’s the most luxurious, decadent, exotic thing that we could have ever bought.
When our kids finished college, we decided we could afford to halve our income. Husband changed jobs to one with a lot less pay in a locale better for us.
We have always been rather deliberately downwardly mobile, but could afford this due to family safety nets, in the event of an emergency. We haven’t had any emergencies and have been very lucky with regard to health, job security, etc. Knock on wood. Can’t plan for luck.
We have definitely experienced ‘income creep’ . . . when we were moving out of our long-time house last year, I came across record storage boxes of old bills, Publix receipts, etc. It’s amazing how much more food seems to cost, utility bills go up, insurance premiums, et al., than it did back in the late 90’s/early 2000s.
We have chosen to ‘consume’ more in ways that our family values. Our thing is traveling. We intentionally spend more in that department than others might. But we do not drive late model cars or buy luxury purses, clothes, what-not. We also spent more in the education area with private schools, and then tutors after we started homeschooling.
I think no matter what you make you have to be intentional to get ahead from a financial perspective. There are people with very large incomes who basically live paycheck to paycheck. And I can see how it happens, especially if you live in an expensive area. It is very easy to ‘creep’ up what you spend imho.
Something that we hadn’t expected or really understood, is that we are pretty young (51) and will still be pretty young in 2 1/2 years when we make the last tuition payment. We are thinking about what we will do after we have finished paying tuition, and have started to seriously consider a vacation home that we might retire to someday. I never, in my wildest dreams thought that would be possible for us to consider. I also have a great dream of spoiling grandchildren someday, and doing some things around the house. Nothing lavish, but some needed maintenance. It will be the first time in 35 years of marriage (at that time) that we will have significant disposable income.
If our income suddenly doubled, we would probably put 1/2 of the increase in savings and then we might splurge a little more with the rest. But generally speaking our lifestyle probably wouldn’t change much (we might retire sooner though!)
Ironically, we actually had the opposite happen early in our marriage. My H changed careers (engineer to teacher) and I cut my hours to half time (as a new mom to stay home more) so our income was cut in half. Our lifestyle didn’t change much then either (except that we had children—but that’s a different type of lifestyle change!).
Sounds more like “things don’t make me happy, experiences do.” We have a very nice home (completely paid off) and drive newer model cars. But I don’t buy clothes, shoes, purses, jewelry, fancy audio visual equipment or technology, or other things of that nature. On the other hand, I do like to travel, and travel well. The burger place is perfectly fine for lunch on vacation, but at night, we like to go to nice restaurants. I don’t have to have the most expensive wine on the wine list, but I do recognize very cheap wine and don’t like it. I like to upgrade to first class whenever possible (almost always with miles), and I like to stay in very nice hotels because I don’t “just sleep there.” When I go somewhere beautiful, I want a room with a view, and I have no hesitation about ordering whatever I want off the menu. We have worked hard for our money, we live within our means, have retirement well in hand, give to charity, etc., but are now more than ever aware that you can’t take it with you. These are the years when we SHOULD take advantage of the fruits of our labors. We never know when our health will keep us from traveling and enjoying all that comes with that.
Let’s face it, it’s easier to have wonderful experiences when you have money. There are many ways to economize, but at the end of the day, it’s hard to do and go and see if one has no money at all or if you are putting every single penny away for retirement. I feel like anyone who doubles their income should take care of debt and retirement, but geez, do something fun as well. Life is SHORT.
When second kid was nearing graduation (or so we thought… but that’s a different story), we did two things:
Similar to @alh, H changed careers, which reduced his income by about two thirds. But gave him the thing worth more than any money–time.
Along the lines of what @zoosermom said, we put most of the savings we had left into a second home which will be a retirement home.
These two things leave us less discretion funds, but first, the second home is a place we love, so whenever we are there, we are on vacation, and again–the greatest gift is time (and along with that, a huge reduction of stress.)
We may not be able to afford exotic vacations, but we still have enough to feel secure and to be there to help kids’ and their families if needed.
