Author Topic: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth  (Read 19061 times)

Impatiently

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My husband is a Mustachian by nature. I'm not. I've lived a frugal life by necessity for twenty-five years, a lot of it below the poverty line before I met my now husband. Suddenly I'm earning more money than I ever dreamed of and I don't know how to handle it. I'm terrified of losing it. I'm looking for clarity. I'm trying to figure out both how to have a comfortable retirement, and if I can relax a little bit now.

The backstory: Without knowing about the Mr. Money blog, my husband and I have lived the type of frugal lifestyle it delineates. In fact, I'm kind of wondering if my husband IS Mr. Money and has created a whole secret life and blog I know nothing about. He was born loving to save money, loving to find a deal and loving to live within his means. I'm the spouse that got dragged into it kicking and screaming and even though I can see the value of it and know being frugal is a great thing, my reality is that I often felt blocked, stopped, frustrated, thwarted and pissed off. While living frugally meant we didn't accumulate debt other than our mortgage and our kids learned to live really cheaply too, I finally realized that my "happy point" with money is different than my husband's. I decided to live and let live as far as he was concerned and make my own money and my own money decisions--that way we can each live at our "happy points".

Once I got over feeling guilty about not sharing a money vision with my husband and "allowed" myself to strive for what I wanted, I really got into it. I started to work harder. In fact, I started to work all the time. All the time. All. the. time. It paid off. I started a company that made some $ and I stacked it up in a savings account. When I realized that company wasn't going to do well long-term, I gave myself a year (which my savings could cover) to see if my dream job (writing) could earn me the living I wanted. The first year writing I earned enough to cover my portion of our bills. This year (my second) my writing took off.

I write romance novels and I self-publish them. The stars aligned (and I worked all the time) and since April I've earned $500,000. Suddenly I'm living the life I wanted to live. I paid off our house. I got my very first cell phone (at 45!) and got cell phones for the two remaining kids at home so they wouldn't always have to borrow their friends'. Once in a while we go on day trips. I'm taking a vacation in October. I have more money to help my kids with college.

And I'm FREAKING OUT.

$500,000 is terrific, but I'll get hit by taxes (I'm incorporating and that will help). Paying off the house took a whack of cash, too. What's leftover will not set me up for life. :)

I'm freaking out because I don't know how much $ I need. I don't know how long this string of good luck will go on. I don't know when it's okay to relax. I don't even know how to relax. Every time I spend money I feel guilty. I feel like I should be over the moon about what I've earned. Instead I feel daunted by how far I have to go. In order to keep my income high, I have to publish frequently, so I write a novel every other month. The pace is really getting to me. I'm terrified of making mistakes, terrified my next book will flop and so on. When I'm hanging out with friends, I have a hard time being present. People keep telling me I need to slow down.

But whenever I think of slowing down I panic. After all, this is the first year we've had any savings to speak of. We're in our late forties. Shouldn't I be working like crazy to stack up the cash? I don't want to go back to living the way we used to. I could bore you for hours with grim tales of hardship and stress from my early adult years - the reason that living frugally pushes some of my buttons.

So - I'm hoping a clear plan will take off some of the pressure. I need to balance my knowledge that there's no guarantee this crazy kind of income will go on, with my need for a slightly less stressful work schedule.

Income:

Writing: 2014 - $500,000

Loan repayment money (we sold a rental complex to a couple and are acting as the bank. They will pay us about $750,000 over 25 years.) 2014: $39600

Total: $539,600


Current expenses:

YEARLY EXPENSES
Food and household: $6000
Electricy: $540
Medical: $4800
Natural Gas: $2700
Phone and internet: $1320
Netflix: $108
Gas: $1500
Kids' allowances $2880 (they pay for all clothes, fun expenses, birthday gifts for friends and so on)
Kids' activities (music lessons, etc.) $2000
Christmas $1000
Vehicle Ins $1700
Vehicle upkeep $2000
Home insurance $940
House taxes $2400
House expenses $1500
Personal expenses $14,400 (we each take a $600 monthly allowance for....everything)
Vacation: $10,000 (nice round number)
Business Expenses: $10,000

Total: $65,788

Taxes: ??? (somewhere between $100,000 and 200,000?)

Real Total: $165,788 to 265,788?


Expected ER expenses: Not sure.

Assets:

House: $320,000
Car: $5000
Truck $5000
Savings: $204,000
Receivables: $100,000
Loan receivable: $750,000   (not sure what to call that)
Mutual funds: $12,000

Total: $1,396,000


Liabilities: Amount - rate - description

Total: None


Specific Question(s):

1. What should be my goal amount for retirement? How much money do I need to save?

2. How do I decide what I need per year for retirement? We seem to be getting by on under $70,000 now, but I'd like to spend more on travel and have some cash to help our children and grandchildren. Plus there will be inflation. I feel like 20 years from now when we officially retire, we probably need $100,000 a year.

3. My income could disappear overnight if Amazon and iTunes decide to change the game. How do I handle that? This is a major reason I'm afraid to relax. Amazon did this to one of my husband's businesses about 8 years ago. One day he was making a decent income as an independent working with a distributor. The next day Amazon bought that distributor, changed all the rules and my husband's income disappeared. I live in constant fear of this happening to me.

4. How do I overcome my fear of investing this extra money and what do I invest it in? I don't want to own rentals again. We battled drug dealers for years and came close to having our property seized. I'm done with that. We are becoming open to stocks again after backing way off for a long time. Our mutual funds are performing pretty poorly. I'm beginning to spend more money on help so that I can keep writing fast - so I farm out tasks I used to do, like formatting, cover art and so on. Other than investing in myself, I don't know what to do.

Thanks for any and all help!
« Last Edit: September 07, 2014, 08:18:23 PM by Impatiently »

former player

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #1 on: September 06, 2014, 04:13:25 PM »
Congratulations on your success.  If you have earned $500K in the less than 6 months since April, it suggests that your income this year could be a lot higher.

1. and 2.  Standard reply around and about these parts is that you need to invest 25 times the income you want to have, which gives you a withdrawal rate of 4%.  So for an annual income of $100K you would need to invest $2.5M.  Not counting your house and cars, you currently have assets of $1.066M.  So you would need to invest another $1.434M.  Subject to taxes, if you keep going at your current rate you would be there pretty quickly.

3.  I agree putting all your eggs in Amazon and iTunes is potentially risky.  Could you diversify into traditional publishing?  Find yourself an agent and bring out a new line of books that way?  You are already selling so well you would be a valuable commodity to one of the mainstream romance publishers, who could help you find a new and expanded readership.  Foreign sales?  Movie rights?  Sky's the limit!

4.  You need advice on investing: your day job is writing, and you can't take on more jobs.  You have enough money, and potential future income, to ring up Vanguard direct and get their attention.  They have some of the lowest fees for investing around and good returns - check the MMM blog for why he invests there.

Please don't go so fast that you burn out.  Slow down just enough to make sure that the quality of your writing doesn't suffer - your readers will always be prepared to wait an extra few weeks for the next book, provided you keep the quality going.

lhamo

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #2 on: September 06, 2014, 05:52:54 PM »
First of all, congratulations on your incredible success -- really inspiring!

Second of all, take a deep breath and stop panicking.  You are not going to become a bag lady at this point.  And I wouldn't worry so much about what might happen if Amazon and ITunes pulled the plug.  This is a different situation from what your husband faced.  He was dealing in actual things, and working for someone else.  You are dealing in your very own ideas.  Amazon and ITunes are just a platform -- granted a very big platform, but still just a platform.  Should they change their terms and become unattractive it sounds like you have a big enough reader base at this point that it wouldn't matter. 

I would make a very deliberate decision to stop writing at the pace you are writing.  Set limits and be firm about them.  Write no more than X hours per day -- whatever seems reasonable.  Spend no more than Y hours per day on the business side of things.  Hire someone to help if you need to.  Decide yourself that it is ok that you only put out a new book every 3/4/5/6 months -- whatever feels more reasonable and allows you to slow down and have a more regular life.  Your audience will still be there -- you may actually generate MORE excitement/sales by stretching things out.  The quality of your writing is probably going to improve as you are less stressed about it and able to put more thought/time into it.  And you'll be able to sustain it over longer periods of time.

At the same time that you are slowing down with the production of the books, think about ways you can take advantage of your success in other ways.  Can you teach classes or develop materials (that you sell) about how to break into the industry, how to self publish, how to market through social media, etc.?  You have achieved amazing success that a lot of people would love to learn from/follow.  Branching out into teaching and developing materials for people interested in similar markets could be a great way to diversify your income stream and make you feel less urgent about getting new books out all the time. 

As long as you plan to remain a small business, I believe there are some great ways to shelter large amounts of income in retirement plans -- I would talk with someone about that and get it set up as soon as possible.  If your DH is also employed by the business you might be able to get a significant amount out of the taxable column by getting that done this year.

Regarding the rental sale -- how confident are you that they buyers are going to pay consistently?  Personally, I would be nervous about carrying that large of a contract myself.  I guess you have the property as collateral if it doesn't work, but still.  If it were me, I might look into restructuring the deal so that I was out of it in a much shorter timeframe.  Might take more of a tax hit, but for me being done with it would be worth it. 

Deep breaths and slow down.  It sounds to me like you are on a solid path to long-term success.  I'm a huge reader and I think most readers will tell you that once they love an author they will always love that author -- even if they write a dud or two -- and will always eagerly await the next book.  Doesn't matter to me if it is 2 months, 2 years or 2 decades, I'm going to read it.  Maybe the romance field is different, but I doubt it.   

I would definitely look into getting great insurance for you, though -- if you are injured or disabled, your family's financial situation would take a huge hit. 

Ybserp

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #3 on: September 06, 2014, 06:11:30 PM »
Taxes question for you: Are you aware that taxes are due quarterly, not just once a year? If you haven't been paying quarterly estimated taxes, you really need to do so. The penalties the IRS charges are not pleasant.

Congratulations on your business success!

Ybserp

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #4 on: September 06, 2014, 06:13:00 PM »
Also did you know that you can contribute to either a SEP IRA or an individual 401k and reduce your taxes while setting aside money for your retirement?

Gone Fishing

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #5 on: September 06, 2014, 06:43:34 PM »
What's up with that natural gas bill, are you running a foundry out back? 

Just kidding, it's just another day, take it one step at a time.

Watch out for scammers, they can smell money, especially if it is fresh.  If there is even a hint of suspicion, walk away, no opportunity is that good.  Run things by the forum, we have nothing to gain.

You need a good CPA that can help you defer all the taxes you can.

You need to plan much like a professional athlete (which are notoriously bad at planning) should, 'stache as much as you can as fast as you can, because you never know when it might all end.

Don't take on any debt or otherwise leverage up your lifestyle.

Don't count your incoming loan payments as income, they should flow directly into your 'stache.  You are simply drawing down one asset to fund another.

As Former Player mentioned, a $2.5 million 'stache is a good number, and Vanguard is the place to do it.

If things continue on, you are happy, and you are blasting past the $2.5 million mark, you will have to decide what to do with the extra cash. 

The more the cash flows the harder it will be to quit, sounds cheesy, but be true to your yourself and what you want for your life.

DON'T spoil the kids just because you can, some help is okay, but keep them responsible.

Start thinking about what you want to do when the writing winds down.  if you have been working full tilt for some time, you will need to wind down and reinvent how you spend your time.

Think about a few charities you might be interested in supporting. 

You've accomplished something amazing, on a level most of us will never see, be proud, enjoy it while it lasts and be ready move on when it ends!
 


Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #6 on: September 06, 2014, 08:43:45 PM »
Former Player - Because of the way I get paid (delayed) the sales I make through the end of September pretty much will be what I "see" this year, so I think 500k is a pretty good estimate. If things continue in this fashion for the next twelve months I could earn $1 million in 2015.

It is really great to just get a solid number - $1.5 mil is nice and finite. I had somehow convinced myself I needed more than $5 million. Basically because I've stopped counting on any interest income at all.

I am looking for an agent to handle foreign and movie rights. I don't want to deal with a traditional publisher right now. My strength is that I can move so fast to jump on a good trend. But, I will be on the lookout for other ways to diversify. Meanwhile, I will check out Vanguard - I've heard of them for years, but have never dealt with them.

So Close - I have both a Canadian and US CPA working on my case right now. I am a US Citizen who lives in Canada, so I file US taxes each year, but have never had to pay any money to the US since I've been here. The CPA is setting up a corporation for me and I will be taking dividends from it, trying to structure things so my husband and I take out just enough that we pay very little personal taxes on top of the corporate ones. Canadian tax law for corporations is different than US tax law so it's been a confusing process but I think we're on top of it. We will definitely keep our eye on things there because aside from earning the money, it's the biggest way for us to save money.

The "upgrades" to my lifestyle I'm making are:

1. The extra vacation. It's not actually even an extra one; it's a little more expensive than we usually do.
2. We will buy a car this year. We have always bought used cars and I love my little Honda Fit for running around town. We live in the boonies though and in winter I'm afraid to drive out of town in it. It floats around over the snow and when I'm contending with huge logging and transport trucks, I'm afraid someone isn't going to see me. We're still debating what to get. Husband wants a Civic. I want something a little bigger. I hate to say this here but I want a brand new one because I know I'll be driving it for a decade and I don't want to inherit problems. (ducking)
3. It's interesting you brought up cash flow and difficulty quitting. When I get into something, I really get into it-- until I burn out on it. I get a lift out of fan mail and interaction with people who like what I write. I get a HUGE lift from seeing sales numbers. When Amazon set up KDP and allowed authors to see their sales numbers in real time they created the perfect instrument to get me to write more and more and more. I love checking my numbers and adding them up. It's like checking your high score on a video game. Then you can check your book ranks and author ranks and track if they go up and down....LOL, I'm an addict.
4. As for the kids...I'm searching for a balance on this one. We have always told them we'd pay half of college up to $10k a year if they matched it. My oldest two decided that was too hard and didn't go to school. They are both scraping by with low-paid restaurant work. They're both self-sufficient, which is great, but I wish they had gone to school. My next child will go to college a year from now. I'm very tempted to shoulder more of the bill. He's worked hard to save up money and will be able to pay his half of the first year, but I think it might be a stretch after that. Not sure how to shift that percentage yet.
5. When I wind down from writing I'm going to pick something active to do. Yoga instructor, maybe?

Ybserp -

My taxes are a bit different since I'm Canadian, and yes, I'm paying my quarterlies although the amount I'm "required" to pay based on last year's taxes is laughable. Next year will be different.

Ihamo -

The rental sale is unusual, but it was a property that was really hard to sell. It's zoned wrong (grandfathered in), the buildings are old and banks didn't want to lend against it. On the flip side it's consistently generated income and my town is booming due to it's proximity to mines and pipelines. The couple who bought it rented from us for several years, began to act as on-site managers for a while and then bought it. They have turned one of the houses on the site into their "forever home" and running the rentals is their retirement plan. They probably will pay it sooner than the 25 years. It's a risk, but a risk that at the end of the day we were willing to take because we'd seen them in action for a while.

Thanks to everyone who answered so far. Just typing all of this out has cleared my mind somewhat. Thinking about money and even thinking about earning money in a serious way is fairly new to me. For some reason I thought I would be lousy at it and I still shy away sometimes from really looking at my budget and balance sheets. Finding a place where it's okay to talk about what you've earned without everyone wondering why your kids aren't in private school is pretty refreshing.

zolotiyeruki

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #7 on: September 06, 2014, 09:14:23 PM »
Wow, congrats on the windfall!

I think there are some things you are doing right--you're not immediately rushing out to spend every penny, and you're worried about such a tendency.  You paid off your debt entirely.  That's all good.

But I think you need a few facepunches (no offense intended, and take them for what they're worth.  If you don't like it, feel free to ignore me :) ):
1) Kids' allowances - $120/month!?  Seriously?  Once I was in high school, my parents gave me $20 twice per month for clothing, and basically nothing for allowance.  If I wanted money, I had to go out and earn it.  Babysitting, mowing lawns, shoveling driveways, etc.
2) $1000/kid/year for activities seems a bit high.  Although piano lessons are expensive.
3) I hope you didn't buy your kids smartphones. 
4) $600/month for you and your spouse for allowances--what does that get spent on?
5) $10k for vacation is stupidly expensive.  At least, it seems so for me.  For comparison, last year we took our family of SEVEN to DISNEYWORLD (about the least mustachian vacation) FOR A WEEK and spent just over $4k.

As for advice, here's a few suggestions:
1) I wouldn't offer more to the child who's considering college.  If he/she has the desire, he/she will make it work.  Your money will grease the skids, but it has to start with the kid's desire.  Besides, it may be interpreted by the older siblings as favoritism ("Well you didn't offer to pay that much for MY college! *whine* *whine*")
2) Yes, you've kinda won the lottery.  Don't let your guard down, though.  Don't inflate your lifestyle.  Your frugality and work ethic have brought you to this point.  Don't ruin it.
3) Sock away as much of this windfall as you can. 
4) Scammers and "needy" friends and relatives will appear out of the woodwork if word gets out that you got half a million from sales.  Watch out and learn to say no.  Same goes for kids who learn you're suddenly "rich".
5) Yes, you live in Canada, so winters are harsher.  You might look into upgrading the insulation in your home--that may help with that huge gas bill.

What will you do with the money that was formerly going into your mortgage?

theonethatgotaway

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #8 on: September 06, 2014, 09:47:21 PM »
My husband makes income self publishing.

What he notices is that the revenue drops after the initial launch, or peak. Keep this in mind for next year.


Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #9 on: September 06, 2014, 09:57:07 PM »
1) Kids' allowances - $120/month. The boy got a huge raise when we started putting the girl in charge of her clothes because we wanted them both to get the same thing. Girls' clothes are way pricier. The boy is having fun with his extra cash. They pay for everything and I'll admit the girl is having fun with clothes. I'll admit too that I'm spending way more on clothes in the last few years than I used to. I used to love thrift store clothing...back when I lived in the states. Up here there aren't enough people to generate the kind of thrift stores you can dress well from. The clothes at the consignment store cost more than the brand new ones do. But yeah - we're being generous there. Both kids do have jobs. They are required to save 50% for college costs. The boy is saving far more than that. The girl is only 13 and just started working very part time.

2) $1000/kid/year for activities  - that's actually a significant drop. :)
3) Phones. I admit it - I blew it here. Like I said we've never had cell phones before and I really wanted one for my daughter and me because she's lovely and 13 and for the first time recently I just saw a grown man do a double-take when he looked at her...like he checked her out. I nearly decked him.  She walks and bikes all over town and I want her to have a phone to give me a little peace of mind. She asked for an iPhone because all her friends use the message system it has. I went along with it. This is probably my biggest "Luxury". At least it is finite.
4) $600/month for allowances--we just raised this. Well, I just raised this, LOL, because I was spending it even though it used to be $400 a month. It's for everything from lunches out with friends to clothes to books to extra travel to haircuts to...everything I do in life.
5) $10k for vacation. Yep, I'm living the high life here. There used to be six of us and we'd drive cross country to where my folks lived and stay with them a month or so for free for our vacations. We were able to do the whole thing for $5000. Now that there are four of us and kids are working, we fly and cram in a trip to California, too, to see the friends I left behind when we moved here. Our airfare is a big part of that. Living up north adds an extra flight in that's super-expensive. So for our last trip nearly $7000 was airfare. We are trying to become more savvy about seat sales and airmiles. We have a lot to learn there. Once the kids fly the coop we'll go back to driving, too.

The money that used to go into the mortgage is getting banked. Everything is getting banked.  I have a ridiculous amount sitting in my savings account. We're stuck until we get the corporation formed. At that point I actually have to take all the money back out of the mortgage, put it into the corporate account and then pay it back into the mortgage again (it's all good, my mortgage is a line of credit). Big pain in the butt, but all of my earnings for the year are supposed to travel through the corporation when we get it set up. Then I can do things with it.

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #10 on: September 06, 2014, 09:57:54 PM »
My husband makes income self publishing.

What he notices is that the revenue drops after the initial launch, or peak. Keep this in mind for next year.

Absolutely, which is why I'm on such a treadmill. Release month is terrific, then it starts sliding.

theonethatgotaway

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #11 on: September 07, 2014, 12:06:19 AM »
I guess I'm not understand why you feel you are on a treadmill??

If you were comfortable before and 500k was an unforseen extra bonus income, investing it in your mortgage or retirement plans seems like the way to go.

Are you trying to raise your standard of living?

theonethatgotaway

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #12 on: September 07, 2014, 12:23:12 AM »
Oh wow I just re-read your post.

Why do you think you need 100k in retirement?? That's a LOT.
 
You're panicking because you haven't attained your F-U money yet, you're playing catch up. If you made 5 million, you probably wouldn't be here. Basically, you won a lottery sum. Be careful.

As for the books-
You're 100% right. You will see income and you won't see income. Freelancing in any sense is an entrepreneurial effort- you win some you lose some. I would not start spending as if 500k is now your new yearly income. Trends come and go.

what you have proven to yourself is that when push comes to shove you can pivot and create income. That's great. If writing starts faltering, pivot. You will be fine.

I think you need to ignore the urge to 'keep up with the numbers.' It's good to capitalize, it's bad to run your health into the ground.

Try to start approaching this from a point of abundance (500k is waaay more than the 50k I expected!!) Not from a point of scarcity (500k is less than I should be making, write faster/need more now!). You will make better decisions if you change this outlook.

As for your current spending-
You spend a lot. This is probably worrying you that you will keep raising your spending due to level of income going up at times. I would suggest not raising your level of spending and taming the feelings to suddenly splurge on fancy vacations. That's a trap and won't be sustainable if your income takes a nosedive. Plus it doesn't lead to happiness. Writing leads to your happiness. Money is the biproduct.
« Last Edit: September 07, 2014, 12:28:08 AM by theonethatgotaway »

Bateaux

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #13 on: September 07, 2014, 01:39:30 AM »
Nice paycheck.   I hope it continues for you.  Dumping the rental sounds like a great idea.  It'd be nice if you could lock in the money now.  You've stated that you'd like 100k income after FIRE.  The 25 times amount already mentioned is 2.5M.  I'd keep spending modest until hitting that number.  If the publisher continues to pay you can start to ease off the spending controls.  The Honda Fit is a great little car but an AWD crossover or maybe a Subaru would be better in the snow.  Buy a reasonable automobile that you are happy with, you have need for it since you are in the boonies. As others have mentioned, contact Vanguard and speak with a professional.   Learn all your options.  Good luck with it all.

Villanelle

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #14 on: September 07, 2014, 05:06:24 AM »
If you are worried about Amazon pulling the rug out from under you, have you considered going the traditional publishing route?  Since you aren an established author with an established readership, a traditional publishing house might be interested in you.  You might not make as much, but it might be more reliable.  I am only slightly familiar with the ins and outs of publishing and agents, but it could be worth at least researching. 

ltt

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #15 on: September 07, 2014, 05:33:15 AM »
You may want to consider sitting down with a CPA who can give you some good, solid advice, especially on the tax end.  And then they can lead you to a good financial planner.  You've done well!! 


chasesfish

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #16 on: September 07, 2014, 06:46:15 AM »
Congrats on your success, I'm not sure I agree with the 100k number in retirement, but its your choice and congratulations on your success. 

Since you haven't done a ton of investing, I'm going to throw one more idea out here that you don't see every day on the forum.

IF you have another big success, consider purchasing an immediate annuity.   This is where you exchange a lump sum of money up front for a guaranteed income stream for the rest of your life.  You're basically changing the way your paid to align with your goals of long-term income.  Its a good way to let someone else discipline the principal for you.

Here is the link to Fidelity's calculator to give you an idea:

https://www.fidelity.com/annuities/immediate-fixed-income-annuities/overview

If you think you can be disciplined, the 4% rule and a lot of other strategies on here work the same way, but it might be a good choice to exchange a chunk of money for a guaranteed income for the rest of your life.  This is something you should buy through one of the discount brokerages houses, not a commissioned rep in person.   

Congrats again on the success


iwasjustwondering

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #17 on: September 07, 2014, 07:20:02 AM »
Congratulations!  You are awesome.  Good job.

I don't have any advice on the money, but the one thing I would say is think about your customers.  If you're selling so many books, it means you are developing a loyal following.  How do you reach those people directly?  How do you keep them interested in your work?  If Amazon went away, how would you stay in touch with your customers and help them remember your name?  The customers, IMO, are the key here.  If you can find some way to interact with them apart from Amazon (a blog, a contest, something), it will be a connection you can keep if the Amazon one is lost. 


justajane

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #18 on: September 07, 2014, 10:35:38 AM »
Based on your first paragraph, I thought your expenses were going to be much lower, but as theonethatgotaway wrote, you guys spend a lot. I personally would be nervous doing that on what is essentially a windfall that might or might not continue. I am a writer and know how hard it is to write well and be successful, so a hearty congrats! Having said that, I don't think that writing a novel every few months is sustainable for you. It's okay to make your loyal readers wait a while, and if you cut your spending down and invest wisely, you can afford to slow down and not burn yourself out.

How about hosting conferences or meeting for budding writers (for a fee, of course), or writing an e-book about how you became a successful self-publisher? This would give you a break from the frantic writing and hopefully make some money in the process.

Albert

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #19 on: September 07, 2014, 11:55:14 AM »
Let's not be silly here. One definitely needs to be careful with this money because of the nature how it was gained, but pretty much everything OP is spending on is entirely reasonable. Also I would definitely pay for college of your remaining school age kid assuming his grades are good and he is actually interested in studying. There will be plenty of time for them to be entirely on their own afterwards.

If I was her husband I'd argue for few weeks of relaxation on some Pacific island far away :)

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #20 on: September 07, 2014, 04:51:47 PM »
Congratulations!  You are awesome.  Good job.

I don't have any advice on the money, but the one thing I would say is think about your customers.  If you're selling so many books, it means you are developing a loyal following.  How do you reach those people directly?  How do you keep them interested in your work?  If Amazon went away, how would you stay in touch with your customers and help them remember your name?  The customers, IMO, are the key here.  If you can find some way to interact with them apart from Amazon (a blog, a contest, something), it will be a connection you can keep if the Amazon one is lost.

I've been thinking about this thread a lot. 

1.  iwasjustwondering brings up something you need to have a handle on.  Cultivating your fans (outside of services from Amazon or itunes) is important because that fan base is YOUR asset.  I recommend reading Tim Grahl's 'Your First 1000 copies' to learn the nuts and bolts of cultivating this userbase in non-smarmy kind of way.  Once you have your fan email list, you can walk to ANY platform and succeed. 

2.  How many words to you knock out in a day?  I just retired and my new 'job' is writing a book.  I find that setting achievable goals is the most effective way for me to get things done - so I 'have to' write 500 words every day.  If I was writing all day long - holy shit I'd be done with my book in a few weeks.  Now I'm thinking, what if I wrote all day long? 

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #21 on: September 07, 2014, 05:32:15 PM »
Today is one of my writing days and I'm trying to hit my word count before I get too distracted....but here goes.

I hear you guys. We are spending more than we ever have and I am aware of it. I'll be honest. I'm doing some of the things I've waited 25 years to do. I probably don't need $100,000 per year when I retire. I may be past the point when I really want to travel; I'm not sure. I'm just so fried from pinching every penny for years that I'm reveling (in a fairly mild way, let's face it) in my good fortune. I won't buy a sportscar. I won't buy a million dollar beach house. I will take a couple of luxury vacations, though. And I want to be sure I can pay my way in retirement. I'm not sure how to plan for inflation and so on, so I'm hedging my bets.

There's been some interest in how I'm writing. I would point anyone who is interested in self-publishing to Kboards - the Writer's Cafe. That's Amazon's forum for writers using it's KDP self-publishing option. Like I warned one person, stay away from the in-fighting and politics. Look back through posts and you'll find a lot of good stuff. Many, many writers are sharing their secret of success. At the heart of it, of course, is that you have to be able to write. On top of that, the people like me who are getting over the top have a very strong brand, write series in popular genres, start at least by launching a series when they've already written three or so of the books so they can put them out one after another quickly, and cultivate a fan base. I put out six novels in my first series in my first year and then I made the first book free. My sales jumped to ten times their previous number and they were already higher than I'd ever dreamed possible. The power of a series cannot be over-stated. (I write under a pen name, btw, and I'm a little hesitant about posting it here. I write western romances.)

Someone mentioned making sure to know my fans. This is one place I do feel good about. I have a mailing list of 3300 people. I know that when I reach about 5,000 on that list I will really hit a strong position. I am running a list-building contest for the very first time right now. Previously, the only people to sign up for my newsletter are those who genuinely want my newsletter - they were offered no freebie, etc., to do so. I made that decision with a lot of thought. I interact with my fans on Facebook, which is where romance readers hang out. I consistently do promotions with other authors, talk about other authors and so on, and they do so for me. Later this month I'll have a day-long Facebook event in honor of the release of my last book in my first series. I have over 30 other authors coming to "party" with me and chat with my fans. Every one of them will do a little giveaway during the day and I will cap it off with giving away an IPad Mini to one lucky fan.

When you decide to self-publish, you have to be willing to take on the business side. It probably takes up at least 1/4 of my time. It should take up more, but I find that the thing that generates the most sales for me is writing a new book, so I concentrate on that.

Someone asked about my word count? I fast-draft the first draft of each novel, which means I try to write the whole thing in 10 - 15 days. When I fast-draft, I write 5,000 words per day. Other days I do nothing but edit, though, so I don't do that every day.

A lot of you seem to be men, so people you might be interested in following (reading their blogs/facebook pages) are guys like Hugh Howey and Russell Blake. Hope this helps!

olivia

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #22 on: September 07, 2014, 06:30:55 PM »
Have you considered paying for your 2 older children to go back to school?  If I were in your shoes and either of them have expressed interest I would certainly offer to foot the bill, provided they keep up good grades and pay for their non-tuition related expenses.  (Or whatever would make you feel good about it.)

And congratulations on your success!

lhamo

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #23 on: September 07, 2014, 06:53:35 PM »
Maybe it would work to set some financial targets and reward yourself when you reach them.  I'm thinking something like:

Every time a new title hits the $100k profit mark, you book yourself a $10k vacation
First $1 million in sales = purchase of new car under $50k
$500k in annual sales = one month off from writing
Commit to publishing no more than 4 titles/year (if you write more than that, you can take more time off the next year)

For some people it doesn't work to mix business with pleasure, but maybe you can structure some promotional tours/on site fan interaction with trips you want to take.  Chris G and Ramit Sethi both do this a lot. 

If you structure those kinds of things into your work/financial plan, you might find it easier to pace yourself and enjoy life while you are still being productive with your writing and the business management side of things.


CommonCents

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #24 on: September 07, 2014, 07:28:00 PM »
Read Prosiac's blog and maybe PM her.  She has a similar story to you (sudden financial success through writing, which was initially not the day job0.

If you do offer your kids more money for college, I would definitely offer it to all of them.

I like the above rewards for financial targets, and don't forget to enforce time off for yourself.  I think you could burnout from trying to push too hard.  Maybe yourself take time off (and not just for vacation).

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #25 on: September 07, 2014, 08:29:46 PM »
Some more good suggestions - thanks.

I know there is a ton we can learn about traveling for less--without giving up the good stuff. I told my husband today that one of us (or both) needs to take that on as a serious hobby. I am trying to build up to a point where some of my travel will be paid for. I'm going to a couple of writers' conferences over the next year and giving presentations (so the trips at least are write-offs). I hope if I do a good job, someone will offer to pay me to do it in the future. I've also started to do live author video interviews and put them up on YouTube and other places, but a lot of people are doing that, so I don't know if I'll get anywhere. There's actually a lot of competition among authors like me to tell other people how to do what we've done. We're more common than you might think, LOL, and we're all basically giving the same talk, but I'm fairly good at presenting, so again - I hope for the best.

One reason I started reading the Mr Money Mustache blog is that I realized I need to change my attitude again toward frugality. As I said above, I was immersed in it for a long time--but more out of necessity than choice. I need to come back around to it from a positive angle--making it a game, almost. I'm thinking about starting a journal with some goals and see if that helps. My husband will be thrilled if I get back into it in a positive way. :) He, too, would think my $100,000 a year retirement number is ridiculous.

I like that I've seen mentions on the blog and in people's posts that you can't force frugality on people. I like that you guys acknowledge that. Being in control of your money and spending is great. Being cornered into it isn't much fun.

BTW - I read Prosaic's journal and she is on the same journey! Now I'm wondering which author she is. I bet I know of her if I don't know her, LOL.

lhamo

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #26 on: September 07, 2014, 09:55:06 PM »
BTW - I read Prosaic's journal and she is on the same journey! Now I'm wondering which author she is. I bet I know of her if I don't know her, LOL.

That's weird -- I had kind of assumed you WERE Prosaic, but posting under a new name.  Holy moly -- I think I need to take up romance fiction writing.  Maybe if I can bring in 500k in my first year then DH will agree to let me quit my day job!

Peony

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #27 on: September 07, 2014, 09:55:47 PM »
I know there is a ton we can learn about traveling for less--without giving up the good stuff.

One reason I started reading the Mr Money Mustache blog is that I realized I need to change my attitude again toward frugality. As I said above, I was immersed in it for a long time--but more out of necessity than choice. I need to come back around to it from a positive angle--making it a game, almost.

My husband will be thrilled if I get back into it in a positive way. :) He, too, would think my $100,000 a year retirement number is ridiculous.

I've traveled high on the hog and low on the hog, and IMO low is genuinely better. More educational, more social, more of an experience of a place as the locals live. Not to say you have to stay in fleabag joints, but most fancy hotels could be anywhere, whereas an Airbnb apartment in a real neighborhood (for example) gives you a special window into the particular place where you are. Fancy restaurants are nice (and I wouldn't deny myself that experience from time to time while traveling), but so is a meal made of fresh food purchased at the local farmers' market. Once, my ex-husband and I found ourselves in Italy drinking homemade grappa in the garage of a cab driver who took a shine to us. That is not something that ever would have happened if we'd been doing a fancy trip. It may not be everyone's idea of a great time, but I loved it and have never forgotten it.

I guess what I'm trying to say is that frugality has its upside, and it's not all about the money. I feel my life has been enriched by taking the frugal path in many endeavors, and again, I'm not speaking of my bank account.

On the other hand, sometimes you just need a beach and a fruity alcoholic beverage. I do get that.

Villanelle

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #28 on: September 08, 2014, 01:42:56 PM »
You might also set up a Goodreads author page, if you haven't already.  I know that I have found several authors via various milling around Goodreads.  I don't know how it works, if they charge authors, etc., but it seems well worth investigating. 

arebelspy

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #29 on: September 08, 2014, 06:03:50 PM »
You and prosaic need to get together and compare notes.

Read this journal: http://forum.mrmoneymustache.com/journals/buying-autonomy/

And PM the author.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

expatartist

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #30 on: September 08, 2014, 07:50:50 PM »
These are wise words for anyone in the creative industries:
"Writing leads to your happiness. Money is the biproduct" by theonethatgotaway

Congrats to you!
And remember to breathe.

CommonCents

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #31 on: September 08, 2014, 08:50:12 PM »
Ah hah!  I will give myself a pat on the back for beating Arebelspy to advice.  :)

arebelspy

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #32 on: September 08, 2014, 09:01:49 PM »
Ah hah!  I will give myself a pat on the back for beating Arebelspy to advice.  :)

Silly me, I just skimmed the thread for links and then posted, having not seen it, after you already said it and OP has even responded that she read it.  Whoops.  Well done.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Wolf_Stache

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #33 on: September 09, 2014, 01:06:06 PM »
Wow, congrats! I just released my first book on amazon KDP (well, I take that back, I'm using their pre-order feature - it comes out this Friday).

I agree with others, your personal expenses seem high, and $100K a year retirement income is a little crazy, IMO.

It does sound like you have your stuff together, with CPAs, etc. You might also consider hiring someone (paid by your business corporation) to take over the business side of things for you, as well, even someone just part time. I know an author couple who have done that and it really seems to be helping them take off to even greater heights, because they can focus more on the writing and leave all the business stuff to an expert.

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #34 on: September 09, 2014, 02:26:53 PM »
GamerGirl, I'm searching for that special someone, LOL. I haven't found one person who can take over the whole business side, but I am slowly finding people who can do part of the job. The really big one - the promo person - I'm still looking for, but I'm sure I'll find them.

The business part takes more and more time as I go and that is frustrating. However, it is also crucial, so I can't just give the job to any old hack.

You all will be happy to know I dialed back our retirement income number to $80,000. Grudgingly. But it does make reaching my goal easier. :)

former player

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #35 on: September 09, 2014, 05:16:09 PM »
You all will be happy to know I dialed back our retirement income number to $80,000. Grudgingly. But it does make reaching my goal easier. :)
Your current assets of £1.066M (excluding house and car) appropriately invested and using a 4% withdrawal rate, would as of now provide you with an annual income for life of $42,640.  (OK, a large part of these assets is what you are owed on your former rental, so it may not quite work out like that in real life.)   That annual investment income of $42K puts you over half way to your new target of $80K per annum, and nearly two-thirds of the way to your current annual expenses of $66K.  Congratulations on making it so far already.

If earning $1M does pan out for you next year, then depending on taxes you could meet your target passive annual income of $80K by the end of the year.  However, I like the suggestion made by other posters that you might offer to pass on some of this to your children in the form of help with college.  I also agree with them that it would be fair to make the same offer to all four, so you might want to wait to see how your income pans out next year.  But if earning $1M next year really does pan out for you, offering $15,000 per kid per year for 4 years each, provided grades are kept up, would still be less than 25% of that one year's earnings.  I suspect that the satisfaction of offering your children that chance would sit better with you at the end of next year than difference between $70K and $80K in passive income (on top of whatever you can earn from writing after next year) when at the same time you have children who are scraping by on low-paid work because they don't see any other option.

OK, I've read that back and it sounds as though I am trying to guilt you into making that offer to your children.  I'm not, and I understand that after years of hard work and penny pinching, your focus is on being financially comfortable.  I also think you've pretty much made "financially comfortable" already, that you could live well on what you've already got without ever writing another word, and that you now, or will very soon, have the luxury of saying to yourself "I've reached the point where my kids having real choices matters more to me than having the money in the bank".  I'd hate for you to miss that moment.

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #36 on: September 09, 2014, 07:19:44 PM »
Former Player - I've been trying not to get into the kids dynamic too much because it's complicated. I'd actually offer them that right now if they'd take it. Neither of them is interested at the moment. I hope that changes. I'm equally willing to help either of them get into their first home or start a business that I think has a real chance of succeeding. We have several members of our family who've done quite well without degrees, so I know it's possible. After trying to convince them to do all kinds of things for the past few years I've finally figured out that they'd prefer me to back off for the time being. It's hard to keep my mouth shut and stop pushing them, but they've both been pretty darn clear they don't want to be told what to do.

(Where did they get that from?)

The $ for school, etc, is there if and when they want it.

totoro

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #37 on: September 09, 2014, 08:44:41 PM »
I think you should focus a bit more on tax planning.  I've had a similar windfall year and have been looking around at options.

As it turns out, keeping money in your corporation means it is taxed at a lower rate which is good. Investing your profits (rather than spending them or removing them to invest personally) into other businesses will likely bring you the best return in Canada.  Something that would generate capital gains that are tax exempt.

Gone Fishing

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #38 on: September 10, 2014, 01:21:13 PM »
So, Impatiently, you've made $5k or so since you started this thread, what did you decide to do with it;)

Cinder

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #39 on: September 10, 2014, 07:20:27 PM »
Lots of really great advice already in this thread, posting to wish you luck and see your story unfold!

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #40 on: September 16, 2014, 05:55:38 PM »
So, Impatiently, you've made $5k or so since you started this thread, what did you decide to do with it;)

LOl - I think I've made more like $20k since it started now. It's still sitting there. The incorporation is taking forever. I have to nudge the guy later this week. Meanwhile I'm scrambling on a deadline and have a new release next Monday.

And one of the old boys decided suddenly to go to college - completely out of the blue. So I've spent the last few days running around getting him signed up for a semester at the local community college. He can take a lot of courses here that are transferable to other in-province universities later. Plus I can keep an eye on how things are going with him until he finds his feet.

foobar

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #41 on: September 16, 2014, 07:53:25 PM »
One thing to note is that you have very little in terms of appreciating assets. It is great to be getting 750k over the next 25 years but it isn't remotely the same as having 750k today. 750k today for example would be worth on the order of 3 million dollars in 25 years. Your 750k is probably worth more like 1.5 million (assuming you are investing it as it comes in).

Personally I can tell you how I handled it when I started a business and had my income go up 10x. I paid my self a salary that I was getting at my previous job (after tax) and invested the rest. In 3 or 4 years if you have 750k in  liquid assets, start upping the lifestyle if you want. 


HattyT

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #42 on: September 17, 2014, 04:22:39 PM »
First congratulations and YAHOO!!  A windfall with your own earned money. 

To generally answer your specific questions:
You have enough (a)  when your passive income, 4% of your net worth, properly invested (Vanguard Indexed funds) can cover your expenses. (b)

You quantify your expenses by tracking them with Mint.com (or other tracking system).  (c)

I think it is ok to work as hard as you want, to ‘stache your cash until you have enough. But it may be smarter to determine and aim for a sustainable pace.  Sounds like you could afford to breathe a little.  Remember to enjoy life.
You will be able to stop panicking about having enough as you flex your frugality muscles. (d)

You want to be able to enjoy life now and once you have enough.

a)    How much do I need
http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/
b)    First paragraph of this touts Vanguard and even car choices
http://www.mrmoneymustache.com/2014/05/13/moto-x-vs-moto-g/
c)    Watching your stash with mint
http://www.mrmoneymustache.com/2011/12/12/watching-your-stash-with-mint/
d)    Frugality as a muscle
http://www.mrmoneymustache.com/2011/06/21/frugality-as-a-muscle/

dragoncar

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #43 on: September 22, 2014, 03:42:13 PM »
I'll add that the loan value probably shouldn't be considered an asset at it's future value.  At least not for 25x expenses calculations.  I'm not an accountant, but I'd personally use net present value using some reasonable estimate of inflation.

prosaic

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #44 on: September 23, 2014, 03:22:18 PM »
OMG, I HAVE TO KNOW who you are! (And I actually think I DO know who you are, based on one of your comments...) PM me!

And your meteoric rise parallels mine, and I always tell people it's not the change that is hard -- it's the RATE OF CHANGE. This happened so freaking FAST that my brain, heart, and bank account didn't have time to process it all properly.

And for those of you thinking "HOLY SHIT I NEED TO WRITE ROMANCE NOVELS", well...what's stopping you? ;)

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #45 on: September 23, 2014, 03:34:00 PM »
PM'ed you, Prosaic, and it's going to be really funny to find out we hang out on the same "boards" somewhere else....:) I won't tell if you don't!

Everyone else - I'm not ignoring you, I've just got back to back to back deadlines and don't know when I can come up for air. Good news is that I'm finally incorporated and will have all my banking sorted out in the next couple of weeks.

I'm going to check out mint - I need something like that.

Wolf_Stache

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #46 on: September 23, 2014, 04:30:15 PM »
PM'ed you, Prosaic, and it's going to be really funny to find out we hang out on the same "boards" somewhere else....:) I won't tell if you don't!

Everyone else - I'm not ignoring you, I've just got back to back to back deadlines and don't know when I can come up for air. Good news is that I'm finally incorporated and will have all my banking sorted out in the next couple of weeks.

I'm going to check out mint - I need something like that.

Nice! This question is for Prosiac AND Impatiently - I just published my first book, partway done with the second - anticipate it will be out in Jan/Feb.

Should I incorporate now or wait until I have a couple of books published? It sounds like both of you waited - do you regret waiting? What would you do differently?

Impatiently

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #47 on: September 23, 2014, 05:46:37 PM »
Gamer Girl, it's tricky, because depending on where you are - US or Canada - it probably doesn't make sense to incorporate until your income is reaching $70k or more annually. I didn't have my big "break" until I had 6 books out. I can't speak for Prosaic, but I imagine she had a few books under her belt, too. So the trick is to jump on incorporation as soon as your income spikes. It took me a while to get it done because of tricky dual citizenship issues. I'm okay, but it would have been better if I'd taken care of it the month my income jumped. Hope this helps.

Wolf_Stache

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #48 on: September 23, 2014, 06:45:08 PM »
Gamer Girl, it's tricky, because depending on where you are - US or Canada - it probably doesn't make sense to incorporate until your income is reaching $70k or more annually. I didn't have my big "break" until I had 6 books out. I can't speak for Prosaic, but I imagine she had a few books under her belt, too. So the trick is to jump on incorporation as soon as your income spikes. It took me a while to get it done because of tricky dual citizenship issues. I'm okay, but it would have been better if I'd taken care of it the month my income jumped. Hope this helps.

I'm in the US, but, yeah, that makes sense. I work for a small company that is made up of a bunch of little LLCs and C Corporations, and incorporating def increases the amount of paperwork you have to do and the complexity of your tax returns. Currently I did register as a Sole Proprietorship, so I could set up a DBA Company -  I'll just leave it at that until my income increases. (yes... I am an accountant in my day job, if you can't tell, LOL)

Thanks!

MandalayVA

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Re: Case Study: How Do I Handle This Roller Coaster Ride--sudden wealth
« Reply #49 on: October 14, 2014, 11:25:20 AM »
As someone who's feeling like I want to pull the trigger on self-publishing (and um, I might write romance, heh heh) this is turning out to be a very informative thread.  Thanks!