Holy Hell 2020: $850k Total Income (Can We Hit $1M Next Year?)

Ok, let me catch my breath here. Because. What? I just added up all our income for the past year and if my calculations are right (they are) we made $850k in ONE YEAR in actual income (not counting investment gains.) This figure makes me kind of numb. You would think I’d feel rich (because when you make $850k you are rich even if it’s temporary) yet… I’m blinking here and feeling like, wow, even if I never make this much again in one year, I’m shocked that I did this ever. 

  • Shocked because I’m a bipolar woman who can’t hold a job.
  • Shocked because I’m pregnant with my second kid and struggle to be a mom and a full time employee and I constantly feel like I’m going to be walked out the virtual door.
  • Shocked because a year ago my boss put me on a PIP and I was supposed to be fired in July, but I held on for dear life to make this year a reality.
  • Shocked because in Silicon Valley, it’s probably somewhat normal for 2 adults in a household to earn this much in a year ($750k of the $850k was my earnings, $100k was my husband.)
  • Shocked because I don’t deserve to make this much.
  • Shocked because many of my peers and superiors likely made 2-5x+ what I made, and are likely going to continue to do that.
  • Shocked because wealth makes no sense and while many people struggle and go hungry in this country, and I am trying to figure out my place in how to help people while also knowing that due to my mental health issues I need to save a bit more aggressively than the average person, as I could hit a wall and not be able to work at some point.

This income won’t be our income forever. 2021 could easily break this record if the stock market holds up, but in 2022 we’ll be back to about $300k (which is still crazy good compared to the average person, but not holy shit we earned almost $1M in a year good.)

For the record, this has been my income and net worth gains since 2005. Clearly this year is abnormal. (This doesn’t include my husband’s income/savings, which have remained largely flat. If I keep earning like this maybe he can actually quit his job and become a FT SAHD!)

Year Income Networth $ Growth % Growth
2005 $15k n/a n/a n/a
2006 $35k n/a n/a n/a
2007 $50k $24.9k n/a n/a
2008 $60k $15.8k -$9.1k -37%
2009 $60k $32.7k  $16.9k 206%
2010 $120k $88.6k $55.9k 270%
2011 $90k $145k $56.4k 64%
2012 $100k $200k $55k 38%
2013 $110k $253k $53k 26%
2014 $125k $299.5k $46.5k 18%
2015 $160k $342.4k $42.9k 14%
2016 $190k $416k $73.6k 22%
2017 $130k $551.3k $135.3k 32%
 2018  $300k  $625k  $73.7k  13.3%
 2019  $400k  $1.05M  $425k  99.83%
 2020  $750k $1.6M  $550k  52.8%
2021 $750k 2.1M Goal $500k Goal 31.25% Goal

I’m still. Blinking. At my google spreadsheet. It is insane. Absolutely insane how much one can make a year if you hit the RSU lotto. And PLENTY of senior Silicon Valley execs make this every year of their working lives. And are married to people who also make this much. What do they do with all that money? I mean, if I could consistently make this much for even 10, maybe just 5 years I’d be set. Forever.

That would be nice.

My taxes are a nightmare but that was expected. We went safe harbor last year knowing we’d owe a lot. I was running these numbers to figure out how much “a lot” is and it looks like we owe about $50k for 2020. That’s ok, I have that set aside. What I don’t have so neatly set aside is 2021’s first quarterly payment. It’s going to be messy because if we go safe harbor (which we probably should) we have to do 110% of this year’s taxes owed.  Welp, that’s going to be $57k…

Typically, some of that would come out of salary. Now, some of it will come out of my RSU vesting and bonus (if I get one) as that will be paid out while I’m on maternity leave. But my maternity leave pay is much lower than typical pay and no tax is automatically paid on it. I know, boo hoo rich people problems — but we need to be careful because if we don’t pay enough estimated taxes next year we’ll have a huge penalty. The year after will be fine with my income dropping substantially. Next year is… well, basically in April we owe $100k in taxes. Hopefully no additional penalties there… I think we should be ok, as our CPA said we were doing fine on safe harbor as long as we paid 110% of last year (and we did automatically, since my total income went up so much.) But next year… it’s going to be rough if I lose my job at any point as we will be forced to massively overpay early on.

Again, rich people problems. Am I a rich person? Eh, I don’t feel like one. I guess I am? I did just buy a $1000 Roomba and a $35k bathroom remodel. But I still feel like I can’t afford a good kitchen table (we’ve never owned a good kitchen table.) So there’s that.

Next year–my wish is to break $1M income. It will be close. I’m going to have fun building a donor-advised trust as well. It might be wise to do that this year also, but I think I’m going to wait as I don’t have much of a mortgage deduction yet and I’m kind of scared about the tax situation so I need as much cash on hand as possible for the time being (plus who knows what random costs will come up for this house.) By the end of next year I should have a better idea of just how much I can/should put into a donor advised fund.

I mean, if I have some horribly traumatic birth and end up disabled (or dead) things are going to change quite a bit. If I don’t… then it’s full-speed ahead to some serious wealth. People on this blog constantly ask why I stay in Silicon Valley. This is why. I want financial freedom. FAT Fire. This dream is being built here. It’s certainly not a sure thing. But it’s worth it, as I approach 40, to know that I’ll have hopefully a large chunk of my adult life when (earning and saving a lot of) money is no longer a concern. We could always pick up and retire elsewhere and live a life of luxury too, but we love it here, and I think there are still great things for me to accomplish with the right company/team. Businesses to build. Problems to solve. There are a lot of things I love about working in Silicon Valley. I don’t love the craziness behind how people change when they’re chasing their next vest date, or needing to white lie to a board to get that next round of funding. But I do love a lot of the energy here. The desire to always improve things. Never settle. I probably would get bored most anywhere else.

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8 thoughts on “Holy Hell 2020: $850k Total Income (Can We Hit $1M Next Year?)”

    1. Yup. RSU is really just a cash bonus for that year. Any gains thereafter I would not count as these are not income. I actually am not sure what my AGI will be with cap gains overall in 2020 but I think my losses and gains mostly will balance out. I didn’t sell much overall this year of any stock. I am looking at my income from an actual comp perspective. And I sell RSU on vest for the most part. I do hold on to most ESPP but I am not including that in this year’s income outside of what I paid to purchase the stock, since that was income this year that I had to pay tax on.

      1. I hold onto my ESPP too but for income purposes I calculate how much I would have earned if I sold it at the earliest opportunity. It would have added $25k to my income this year.

        Congrats on a great year!

        1. I don’t calculate that because I’m going purely off of what I will owe in taxes this year. That’s my income for the year. It will count as income later when I sell it so I don’t see why I should include it now beyond what I paid to buy the stock because I pay tax up front on that.

          1. There is value to tracking your total compensation even if you don’t pay taxes on certain pieces. Partly for competitive benchmarking purposes.

            There are some companies that pay a significant amount of 401k match, pension credits, or deferred compensation. None of these are taxed immediately. But they should definitely be counted in your total compensation.

          2. Good point. I would just add my 401k employer match and then ESPP growth then? ESPP growth is substantial… about $50k for the year on top of what I paid. So I could add another $50k to the total. But I’m not paying tax not hat this year, just the $25k I put in to buy the stock (which I included in my total comp.)

  1. I would add the value of 401k match at the time it is matched (and not any gains on top)

    I would also add the ESPP value at the time of share purchase minus your cost basis. For example:

    Share price at beginning of offering period: $100
    Share price at end of offering period: $200
    Purchase price: $85

    Total amount purchased: $25k
    Total shares purchased: 294
    Total market value of shares at time of purchase: $58.8k

    “Income” attributable to ESPP: $33.8k

    1. Hmm so I can add another 50k or so then. But I still think it shouldn’t count since I’m not actually taking that as income until a future year. Though I guess I could sell immediately. I’m just not taxed on it until I sell, as you know. But I wouldn’t consider it “income” in a future year it would be cap gains.

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