How do you account for variable comp when determining your purchase budget? Our HHI is $237k, but with RSUs and bonus last year our total was $332k. It’s a pretty big spread and I’m trying to figure out what I should use to determine an appropriate budget for our “forever home”. LCOL in Ohio

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If it’s not 100% guaranteed, don’t include.

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This isn't a mathematical formula per se. You need to find out the cost of the purchase, contemplate your risk tolerance, and then consider if you can carry it on a monthly basis within your risk tolerance. For example, would you tolerate having to dip into savings to carry through until some hoped for cash event or raise? Are you OK having to sell it if you can't carry it? Would you be OK being able to carry it but having no spending cash? Do you have kids to keep off the street? Does your partner share your views?

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Totally agree - it’s really about risk tolerance. You aren’t guaranteed a job, ever

How long have you been in your current role? If your last 2 tax returns show strong bonus / RSU’s, that can help you from a qualification perspective.

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Base your budget on net cash flow not unrealized profit. Use annual items such as bonus or whatever other incentives as buffer. Incorporate only recurring cash flow to manage risk.

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1yr in role, RSUs expire 3 yrs from now

I wouldn’t count the RSU’s until they’re actually vested.

Bonus maybe you consider 25% of it as being expected until you have a longer history of how much you can expect.

The more conservative you can plan for, the better.

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Can’t count on future bonuses. You can only count on the prior bonus if you saved it and can use it as a down payment

Thanks all. Very insightful. The majority of my variable comp is tied to RSUs which are somewhat more reliable than the variable individual performance bonus.

I was curious if/how others in a similar situation have handled

You lose the RSU’s if you leave before they vest, right? And would also lose them if you got laid off.

Therefore, don’t count them until they’re actually vested and yours to liquidate.

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Can you use the RSUs to pay your mortgage tomorrow if needed? If not, don’t count them.

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