Author Topic: How to plan life with (temporary) high income at young age?  (Read 3110 times)

kay02

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How to plan life with (temporary) high income at young age?
« on: October 09, 2020, 01:36:00 PM »
Hi MMMers,

I think this is kinda a unique situation and I can't really ask anyone IRL abou it.

I have a very high income right now from some online work I started earlier this year.  Nothing illegal or dangerous, but not something I want to tell anyone in my life about.  Think camgirl but like not quite the same thing.

Anyway it didn't start out that I was making this much but now it's about 20-30k per month and might go up more and my bank account just went over 100k which feels good and exciting but really scary at the same time.  I don't feel like I'm ready for that much money, idk what to do with it really.  My family is pretty poor and bad with money mostly.

I was going to start college this fall but deferred for a year because of covid etc.  My family really wants me to go and my grandma wants to pay for it, but I don't really know what I want to do or have passion for any major so I just chose one kind of randomly.  I don't really know what I want to do. I'd feel guilty if she was paying a lot of money for something I feel unsure about but I feel pressured to do it.  Also if I have all this money it feels wrong to take hers but I don't want my family to know how much I have.

I have a low paying but ok "dayjob" and live with roommates, none of them know what I do so even though I make way more than at the dayjob I feel like I should keep it and I don't know if I'll be able to keep making this much money on the side but it feels like I can.  I don't think I'd want to do this when I'm like 30 but it relaly feels like I could make a lot in the meantime.  I don't really know what I want to do for a "real job" or when I'd have to get one.

With MMM and FIRE it really seems like I could just do this for a few years and be set for life with investments etc but that seems really overwhelming.  I don't spend much money so I've been saving almost all of it but I don't really have a budget or investing or anything.  I'm scared of doing something stupid and losing it all.  Or family finding out I have money and trying to take advantage.

Then I know I need to pay taxes this year on all this money and I'm scared to ask someone for help about that.  If I ask an accountant for help will they keep what I do private or do I even have to tell them exactly? I don't know how it works but I know I Have to pay taxes and it seems like it'll be a lot but idk.

There seems like so much to think about and plan and I don't even really know where to start.  I like my roommates but maybe I should buy a house for a good investment? I don't know what to do or really think about and everything feels so uncertain.

I guess my real question is what should I focus on right now? Thanks for reading I know it's a lot at once but I def need some help!

YttriumNitrate

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Re: How to plan life with (temporary) high income at young age?
« Reply #1 on: October 09, 2020, 01:52:25 PM »
I think you're smart not to tell anyone about your income. Just keep doing what you're doing and let the money pile up. No need to buy a house or anything like that. Perhaps you could open up a brokerage account and put the money in a nice boring low cost fund, but having the money sit a bank account for a few years while you figure things out it also fine.

Is there a reason you couldn't replace your low-paying but "ok" day job with college?

You're definitely going to need to pay taxes on your income, and yes it's going to be a lot, probably between a third and half.  FICA is about 15% self employed, federal is about 25%, and state is probably between 0 and 10%.

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Re: How to plan life with (temporary) high income at young age?
« Reply #2 on: October 09, 2020, 01:57:58 PM »
Ok, in your case, let's keep it simple. Note: this isn't the most advantageous money thing to do right now. I'm deliberately keeping this dead simple because I want you to succeed, and to have options later.

Open up a savings account JUST for this money. Ally, Capital One, whatever. This should NOT be your usual bank. All the money you're earning from this should go into this account. Just let it sit there. When it's time to do your taxes, remember this account because you'll have to pay taxes on the money.

The other thing you need to do is start learning and getting better at money management. Develop a budget and get good at following it. For investing, I like to recommend J Collin's Stock Series (google it). Do this for 3-6 months. At the end of that time, you should feel a little more comfortable with things.

Once you're feeling a little more comfortable with money management in general, then you come back to this account and come up with a plan of how to invest this that makes sense for your situation.

My reasoning here is this: yes, you'll lose out on some investment earnings by not investing it now, but you're too new and scared. You need to build up your knowledge base. Right now you don't know what you don't know, so if you can focus on broad financial education you will then be much better equipped to plan and make decisions. Take some time to do this and you'll be way better off in the long term.

As for college - you have some time to figure this out. Try to talk to people who do different jobs and see what it's like. Once you know what you want to do, then figure out what kind of education you need to get there. Don't waste grandma's money, or your money, going to college with no idea what you want to do yet.

You do not have to tell your family or your friends about this money. Not now or ever if you don't want. Its your money.

You got this.

Imma

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Re: How to plan life with (temporary) high income at young age?
« Reply #3 on: October 09, 2020, 02:49:19 PM »
Firstly: find an accountant. I'm in Europe so I can't tell you how to find a reliable accountant over there but people on here can probably tell you what to look for.

Yes, you need to tell this person exactly what you do, but a good financial professional takes confidentiality seriously. It's important for an accountant to know exactly what you do because depending on your particular situation, certain tax rules may or may not apply.

Secondly, keep all your receipts for any costs even remotely related to your work from now on and give these to your tax professional. They'll be able to tell you which costs are deductible etc but if they don't have the full picture they can't properly advise you.

You've been acting smart by not telling anyone about this money and just setting it aside. And you're in an especially great position in life having discovered the concept of FI at this point in your life. If you handle this wisely, you're setting yourself up for life. Don't make big decisions right now but learn more about money management.

You're still young. It's totally normal for people your age to not know exactly what they want in life. A lot of young adults do dumb stuff that gives them 6 figures of student debt while they're figuring stuff out. You're making $$$ and setting yourself up for a life with no money worries. By the time you have figured out what you want to do, you'll have the money to do so - whether that's college or art or travelling or having a family.

If you do want to go to college, can you tell your family you receive some kind of scholarship? If your family is not wealthy I can imagine feeling bad about getting money from them that you don't need. But don't tell them about your money. It's yours and it's your ticket out of poverty.
« Last Edit: October 09, 2020, 05:00:47 PM by Imma »

jamesbond007

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Re: How to plan life with (temporary) high income at young age?
« Reply #4 on: October 09, 2020, 03:17:27 PM »
I can tell you one thing. If you are not doing anything illegal or hurting others, you don't have to be answerable to anyone. It's your money. Keep earning it while you can. When you know your family might take advantage, then buying a home is a sure shot way of telling them. Don't do that. Consider this like winning the lottery. None one but you should know about it. Don't alter your lifestyle too much. The fact that you asked here tells me that you are disciplined. Stay the course. Find an accountant on the other end of the city or in a nearby town. Don't rush to decisions. When in doubt, ask here.

I will close with one other thing. You said you cannot tell anyone what your work is. I am no one to judge and it is not my business. But you said that your income is temporary. So, think about good long-term income possibilities while doing this temporary work. Once you find out what it is, get it. You got this. Check these forums every day to keep your discipline in check and keep you grounded.

Laura33

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Re: How to plan life with (temporary) high income at young age?
« Reply #5 on: October 09, 2020, 03:25:35 PM »
First, do what Sibley said.

I am going to address the college/guilt issue:  why don't you start at a community college next year?  That way, your grandma won't have to pay much, and you can take some basic classes while you are researching and figuring out what you want to do long-term?  Heck, you could take an accounting/tax prep class so you wouldn't have to hire an accountant in the future.  ;-)  Then quit the current job and just tell everyone you're living on what you've saved up while going to school. 

One thing to realize about the IRS:  they expect you to pay taxes when you earn the money.  So since you don't have an employer taking money out of your paycheck, they will expect you to pay quarterly taxes on your own.  That is why you should get to an accountant right now so you are doing all the things you need to be doing to be sure you're managing the tax issues right.  Once you get that set up, you can really run it pretty automatically; you just need the setup help and advice. 

Freedomin5

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Re: How to plan life with (temporary) high income at young age?
« Reply #6 on: October 09, 2020, 03:26:17 PM »
Imma and Sibley have given you good advice. I second the recommendation to read JL Collinsí Stock Series.

Other books to get you started are ďYour Money or Your LifeĒ and ďRich Dad Poor DadĒ. Rich Dad Poor Dadís style is a bit brash, but the concepts he covers are solid for the most part. Dave Ramseyís Total Money Makeover is also good at covering the basics. Heís not as great when it comes to how to invest your money. But right now, it sounds like you need the basics. You should be able to get all these books from your library.

I also echo the advice to keep all this money separate from your day job money. Live off your day job money and keep your expenses within that income. Do not spend a penny of your online work.

Get an accountant to help you sort out taxes. Donít go with someone who knows your family. Don't take them up on their generous offer to help you invest your money. If youíre in the US, you can figure out how to invest through Vanguard by reading the JL Collins series.

Finally, is there someone whom you can trust to mentor you? Someone who has proven that they are good with money? Not someone who looks wealthy, but someone who has a successful business, who retired early, etc.? Or is there an MMM meet up group near where you live? Itís easier if you donít have to do this alone.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #7 on: October 09, 2020, 03:40:05 PM »
Thanks for all the help so far!! This is great info and advice.

Glad the consensus seems to be keeping the whole thing private. :) That honestly is the easiest way.

I think you're smart not to tell anyone about your income. Just keep doing what you're doing and let the money pile up. No need to buy a house or anything like that. Perhaps you could open up a brokerage account and put the money in a nice boring low cost fund, but having the money sit a bank account for a few years while you figure things out it also fine.

Is there a reason you couldn't replace your low-paying but "ok" day job with college?

You're definitely going to need to pay taxes on your income, and yes it's going to be a lot, probably between a third and half.  FICA is about 15% self employed, federal is about 25%, and state is probably between 0 and 10%.
A third to half sounds like what I was finding before.  I'll definitely find someone to talk to about taxes.  Just a little squeamish about even telling one person what I actually do will be something.

Ok, in your case, let's keep it simple. Note: this isn't the most advantageous money thing to do right now. I'm deliberately keeping this dead simple because I want you to succeed, and to have options later.

Open up a savings account JUST for this money. Ally, Capital One, whatever. This should NOT be your usual bank. All the money you're earning from this should go into this account. Just let it sit there. When it's time to do your taxes, remember this account because you'll have to pay taxes on the money.

The other thing you need to do is start learning and getting better at money management. Develop a budget and get good at following it. For investing, I like to recommend J Collin's Stock Series (google it). Do this for 3-6 months. At the end of that time, you should feel a little more comfortable with things.

Once you're feeling a little more comfortable with money management in general, then you come back to this account and come up with a plan of how to invest this that makes sense for your situation.

My reasoning here is this: yes, you'll lose out on some investment earnings by not investing it now, but you're too new and scared. You need to build up your knowledge base. Right now you don't know what you don't know, so if you can focus on broad financial education you will then be much better equipped to plan and make decisions. Take some time to do this and you'll be way better off in the long term.

As for college - you have some time to figure this out. Try to talk to people who do different jobs and see what it's like. Once you know what you want to do, then figure out what kind of education you need to get there. Don't waste grandma's money, or your money, going to college with no idea what you want to do yet.

You do not have to tell your family or your friends about this money. Not now or ever if you don't want. Its your money.

You got this.
Thank you, I really needed this! :)  I will open a new account at a different bank! Should I have the money go directly there or just move it over from my main account? Does it matter? I don't really know how this usually works.
Firstly: find an accountant. I'm in Europe so I can't tell you how to find a reliable accountant over there but people on here can probably tell you what to look for.

Yes, you need to tell this person exactly what you do, but a good financial professional takes confidentiality seriously. It's important for an accountant to know exactly what you do because depending on your particular situation, certain tax rules may or may not apply.

Secondly, keep all your receipts for any costs even remotely related to your work from now on and give these to your tax professional. They'll be able to tell you which costs are deductible etc but if they don't have the full picture they can't properly advise you.

You've been acting smart by not telling anyone about this money and just setting it aside. And you're in an especially great position in life having discovered the concept of FI at this point in your life. If you handle this wisely, you're setting yourself up for life. Don't make big decisions right now but learn more about money management.

You're still young. It's totally normal for people your age to not know exactly what they want in life. A lot of young adults do dumb stuff that gives them 6 figures of student debt while they're figuring stuff out. You're making $$$ and setting yourself up for a life with no money worries. By the time you have figured out what you want to do - whether that's college or art or travelling or having a family.

If you do want to go to college, can you tell your family you receive some kind of scholarship? If your family is not wealthy I can imagine feeling bad about getting money from them that you don't need. But don't tell them about your money. It's yours and it's your ticket out of poverty.

I did keep some reciepts because I was thinking about that! But I need to be more organized.  Everything just kind of happened, I didn't expect things to take off like it did.
I like the scholarship idea!  I might do something like that if I end up going the college route.
I can tell you one thing. If you are not doing anything illegal or hurting others, you don't have to be answerable to anyone. It's your money. Keep earning it while you can. When you know your family might take advantage, then buying a home is a sure shot way of telling them. Don't do that. Consider this like winning the lottery. None one but you should know about it. Don't alter your lifestyle too much. The fact that you asked here tells me that you are disciplined. Stay the course. Find an accountant on the other end of the city or in a nearby town. Don't rush to decisions. When in doubt, ask here.

I will close with one other thing. You said you cannot tell anyone what your work is. I am no one to judge and it is not my business. But you said that your income is temporary. So, think about good long-term income possibilities while doing this temporary work. Once you find out what it is, get it. You got this. Check these forums every day to keep your discipline in check and keep you grounded.
When I say temporary, I mean this isn't like a lifelong career.  I don't know for sure but I definitely think I could keep this going for a few years, maybe even until I'm like 25.  And so could potentially bank a LOT. But I'm also thinking of it as temporary so I don't rely on it (which I don't).
First, do what Sibley said.

I am going to address the college/guilt issue:  why don't you start at a community college next year?  That way, your grandma won't have to pay much, and you can take some basic classes while you are researching and figuring out what you want to do long-term?  Heck, you could take an accounting/tax prep class so you wouldn't have to hire an accountant in the future.  ;-)  Then quit the current job and just tell everyone you're living on what you've saved up while going to school. 

One thing to realize about the IRS:  they expect you to pay taxes when you earn the money.  So since you don't have an employer taking money out of your paycheck, they will expect you to pay quarterly taxes on your own.  That is why you should get to an accountant right now so you are doing all the things you need to be doing to be sure you're managing the tax issues right.  Once you get that set up, you can really run it pretty automatically; you just need the setup help and advice. 
Community College is something I thought about, might do that if I'm not sure still next year.  I will get an accountant soon!  It will make me feel like I have an actual business which makes me feel good.
Imma and Sibley have given you good advice. I second the recommendation to read JL Collinsí Stock Series.

Other books to get you started are ďYour Money or Your LifeĒ and ďRich Dad Poor DadĒ. Rich Dad Poor Dadís style is a bit brash, but the concepts he covers are solid for the most part. Dave Ramseyís Total Money Makeover is also good at covering the basics. Heís not as great when it comes to how to invest your money. But right now, it sounds like you need the basics. You should be able to get all these books from your library.

I also echo the advice to keep all this money separate from your day job money. Live off your day job money and keep your expenses within that income. Do not spend a penny of your online work.

Get an accountant to help you sort out taxes. Donít go with someone who knows your family. Don't take them up on their generous offer to help you invest your money. If youíre in the US, you can figure out how to invest through Vanguard by reading the JL Collins series.

Finally, is there someone whom you can trust to mentor you? Someone who has proven that they are good with money? Not someone who looks wealthy, but someone who has a successful business, who retired early, etc.? Or is there an MMM meet up group near where you live? Itís easier if you donít have to do this alone.
I don't know who I could go to for a mentor - nobody thinks I have any money so it could be awkward.  I'll look at those books though!!

Thanks everyone this has been really helpful!  I know I have a lot to learn and I'm trying.  Just overwhelming but you're all being so helpful! <3

Freedomin5

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Re: How to plan life with (temporary) high income at young age?
« Reply #8 on: October 09, 2020, 03:53:55 PM »
It was overwhelming for me at first too, and I come from a financially solid family!

Thatís why everyone is telling you not to touch the money and to start reading and learning. Itíll take several months to a year but eventually youíll get used to it. Hang around the forums and keep asking questions as you read and learn. There are a ton of financially literate folks here who have already done what you want to do and who can support and guide you along the way. No question is stupid.

If you invest all of your extra income, you may be financially independent by age 25. As you can probably tell from my name, we reached financial independence in 5 years (starting with $0 net worth), saving about $10K per month. If you can save and invest more than us per month, youíll be very comfortably FIRE in less than 5 years.

ETA: I canít believe I forgot to recommend our own MMM Investment Order thread!
https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153

The thread also recommends the Bogleheads investment guide which is another good resource.
« Last Edit: October 09, 2020, 03:58:00 PM by Freedomin5 »

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #9 on: October 09, 2020, 04:00:51 PM »
It was overwhelming for me at first too, and I come from a financially solid family!

Thatís why everyone is telling you not to touch the money and to start reading and learning. Itíll take several months to a year but eventually youíll get used to it. Hang around the forums and keep asking questions as you read and learn. There are a ton of financially literate folks here who have already done what you want to do and who can support and guide you along the way. No question is stupid.

If you invest all of your extra income, you may be financially independent by age 25. As you can probably tell from my name, we reached financial independence in 5 years (starting with $0 net worth), saving about $10K per month. If you can save and invest more than us per month, youíll be very comfortably FIRE in less than 5 years.

ETA: I canít believe I forgot to recommend our own MMM Investment Order thread!
https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153

The thread also recommends the Bogleheads investment guide which is another good resource.
Thanks, that's really encouraging!  I think it could even be before 25 for me!  I'll look at that thread too! Thanks.

This forum is great.  I feel so much better about everything already. :)

Chrissy

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Re: How to plan life with (temporary) high income at young age?
« Reply #10 on: October 10, 2020, 05:40:55 PM »
Hi @kay02.  I'm late to this party...

In regards to education, you ARE running your own business, and might benefit from the classes that make up a Business Administration degree.  Meet with the head of the department, and ask what they can offer someone interested in being a small business owner.  (If you're asked what business, say you aren't sure, but "something that's a one-man-band gig like real estate appraiser or fee-based financial advisor.  Nothing with employees.")

Tax.  If your gig is "like" cam girl, I'm pretty sure you can truthfully tell an accountant that you're in Entertainment... my accountant really only cares if my income is 1099 or W2, cash, etc.  Just have a couple of phrases to avoid getting into it:  "Oh, well, it's... technical."  "It's more boring than people think."  "I wouldn't know what to tell you about it."  Go to the best reviewed person you can find.

After tax is all paid, check out the Investment Order.  https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153  I like the JL Collins series too.  It can be overwhelming, so just read what interests you at the moment.

I think you also have philosophical questions about the right priorities and values for someone who has resources.  I suggest The Old Money Book by Byron Tully.  Check out his blog of the same name.  In short, "you're going to prioritize being and doing over having and buying."  Core values include financial independence, PRIVACY, the pursuit of health, education, a good work ethic, decorum, and family.

When I was just out of college, I read The Millionaire Next Door which is a fascinating study of people who actually have millions of dollars... their businesses, marriages, what cars they drive, what houses they own, AND what total devastation is wrought by giving relatives money, which the book calls Economic Outpatient Care. 

Good luck, and keep us updated.


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Re: How to plan life with (temporary) high income at young age?
« Reply #11 on: October 12, 2020, 10:12:23 AM »
OP, you're smart to get organized as quickly as possible. Having super high income now can set you up so well for the rest of your life. You've gotten lots of good advice, but I am going to page @monstermonster as she is a financial educator and has worked in adult entertainment.

As for finding an accountant, I am also self-employed and have had the best experience working with an Enrolled Agent (EA) rather than a Certified Public Accountant (CPA). EAs are tax specialists. If you can find one locally who specializes in small businesses and self-employed people that would probably be ideal. They won't talk about your business to other people. Confidentiality is part of their job.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #12 on: October 12, 2020, 12:37:37 PM »
Thank you again!!!

I've been reading a lot the last few days and will probably post more asking more questions but right now I'm just trying to learn as much as I can on my own. :)

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Re: How to plan life with (temporary) high income at young age?
« Reply #13 on: October 12, 2020, 08:53:11 PM »
Congrats on your well-paying gig! I'll echo the advice from previous posters to mostly take things slow right now with your money while you read up on how investing works, and also to find an accountant to help you with the tax and bookkeeping side of things at least the first year. Once you get a feel for how all that works you may find that your situation is simple enough to do it yourself, or you may decide that you don't want to get into those particular weeds just yet. No wrong answer there.

I will point out that the end of the year is approaching in a few months. That's a key deadline for getting a self-employed retirement account such as a solo 401(k) set up. Doing so may be a very good idea, as it would allow you to put a pretty big fraction of your earnings into a tax shelter, but it's something you might not want to do if you might have other plans for this money in the short to medium term. I encourage you to put this topic pretty high up on your reading list. If you do decide to open such an account you'll probably want to get the ball rolling by the beginning of December at the latest. These things can take a bit of time. If you don't get around to it this year, no big deal. There's always next year.

With regard to college, I shake my head at people who go into it without a real plan in mind for what degree they want to pursue and how that's going to help them meet their goals afterwards. It's absolutely okay to change your plans after you get into it and realize that your chosen major isn't really for you, but just sampling freshman-level classes in a bunch of departments in a hope that you'll find your true calling doesn't seem like a great plan to me. This sort of thing is how people end up spending six years working on a bachelor's degree...or worse, spending 2-3 years on introductory classes, changing their major a few times, and dropping out with a bunch of debt because they still don't know what their goal is. I realize that you're getting a bunch of pressure from your family to enroll in a degree program. I think it's more than okay to say "Grandma, I'm not ready yet. I want a bit of time to research my options and form a better plan before I spend your hard-earned money on tuition."

AccidentialMustache

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Re: How to plan life with (temporary) high income at young age?
« Reply #14 on: October 12, 2020, 10:07:55 PM »
Get with the tax person asap as otherwise you're at risk for paying penalties to the feds for not having paid your taxes on time (eg, during the year).

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #15 on: October 13, 2020, 07:52:53 AM »
Congrats on your well-paying gig! I'll echo the advice from previous posters to mostly take things slow right now with your money while you read up on how investing works, and also to find an accountant to help you with the tax and bookkeeping side of things at least the first year. Once you get a feel for how all that works you may find that your situation is simple enough to do it yourself, or you may decide that you don't want to get into those particular weeds just yet. No wrong answer there.

I will point out that the end of the year is approaching in a few months. That's a key deadline for getting a self-employed retirement account such as a solo 401(k) set up. Doing so may be a very good idea, as it would allow you to put a pretty big fraction of your earnings into a tax shelter, but it's something you might not want to do if you might have other plans for this money in the short to medium term. I encourage you to put this topic pretty high up on your reading list. If you do decide to open such an account you'll probably want to get the ball rolling by the beginning of December at the latest. These things can take a bit of time. If you don't get around to it this year, no big deal. There's always next year.

With regard to college, I shake my head at people who go into it without a real plan in mind for what degree they want to pursue and how that's going to help them meet their goals afterwards. It's absolutely okay to change your plans after you get into it and realize that your chosen major isn't really for you, but just sampling freshman-level classes in a bunch of departments in a hope that you'll find your true calling doesn't seem like a great plan to me. This sort of thing is how people end up spending six years working on a bachelor's degree...or worse, spending 2-3 years on introductory classes, changing their major a few times, and dropping out with a bunch of debt because they still don't know what their goal is. I realize that you're getting a bunch of pressure from your family to enroll in a degree program. I think it's more than okay to say "Grandma, I'm not ready yet. I want a bit of time to research my options and form a better plan before I spend your hard-earned money on tuition."
Thank you for all this, it's really reassuring!!  I will def look into a solo 401(k).

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Re: How to plan life with (temporary) high income at young age?
« Reply #16 on: October 13, 2020, 08:52:15 AM »
You've had a ton of great advice from the others, so I'll just add something to watch out for: 

You're young, not yet educated on managing this new money, and you have a secret.  You're a conman's or a blackmailer's dream.  So while you're getting yourself in shape financially and legally, make sure you get yourself there emotionally too.  Be ready to explain if someone found out.  Make sure you can prove that you've followed laws, paid taxes, etc.  Don't show any shame in your choices, even if you choose to keep them private.  And always ask yourself what you'd be willing to do to keep your secret.  If you can't live with it, then stop doing it. 

anni

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Re: How to plan life with (temporary) high income at young age?
« Reply #17 on: October 13, 2020, 09:33:50 AM »
@kay02 Seems like you've got all the advice you can use right now. The only other thing I can think of is just googling whatever your online gig is + "finances", and seeing if there's a blog post or a reddit thread about managing income for it. I wouldn't be surprised if there are camgirls and onlyfans influencer-types that have written up their accounting strategies with accounting company recommendations.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #18 on: October 13, 2020, 10:09:31 AM »
You've had a ton of great advice from the others, so I'll just add something to watch out for: 

You're young, not yet educated on managing this new money, and you have a secret.  You're a conman's or a blackmailer's dream.  So while you're getting yourself in shape financially and legally, make sure you get yourself there emotionally too.  Be ready to explain if someone found out.  Make sure you can prove that you've followed laws, paid taxes, etc.  Don't show any shame in your choices, even if you choose to keep them private.  And always ask yourself what you'd be willing to do to keep your secret.  If you can't live with it, then stop doing it.
Thank you for thinking of me! I am careful and have a plan for that, but I still won't choose to let it "get out."  For now though, literally nobody in my life knows, and I am very careful that my clients will never find out my real personal info.

I'm willing to do a lot to keep my secret, but if it comes down to a conman or blackmailer, I'm fully willing to let everything out in the open.  I think I've taken precautions against something like that, but I do recognize and accept the danger.

Thanks for the kind words! <3
« Last Edit: October 13, 2020, 10:16:48 AM by kay02 »

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #19 on: October 13, 2020, 10:16:27 AM »
@kay02 Seems like you've got all the advice you can use right now. The only other thing I can think of is just googling whatever your online gig is + "finances", and seeing if there's a blog post or a reddit thread about managing income for it. I wouldn't be surprised if there are camgirls and onlyfans influencer-types that have written up their accounting strategies with accounting company recommendations.
I did this and it was actually really helpful, thanks!!

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Re: How to plan life with (temporary) high income at young age?
« Reply #20 on: October 13, 2020, 12:29:14 PM »
You asked about sending the money directly to your savings account or moving it yourself. Whichever is fine, but it's probably easier if you set it up so the money goes there directly.

Good luck! And yes, everyone's right about the taxes - but the IRS has a grace period so if you don't do quarterly taxes for 2020 you 95% most likely won't have to pay a penalty. That's why I didn't worry about it.

anni

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Re: How to plan life with (temporary) high income at young age?
« Reply #21 on: October 13, 2020, 01:13:44 PM »
@kay02 Seems like you've got all the advice you can use right now. The only other thing I can think of is just googling whatever your online gig is + "finances", and seeing if there's a blog post or a reddit thread about managing income for it. I wouldn't be surprised if there are camgirls and onlyfans influencer-types that have written up their accounting strategies with accounting company recommendations.
I did this and it was actually really helpful, thanks!!

Glad I could help, good luck and congrats on such a lucrative gig!

I just remembered a story about a friend of a friend in college whose family somehow still had access to her checking accounts. She ended up in a lot of trouble when they a) found out she was camming and b) drained her account as punishment! It sounds like you're not at risk of that, but just a cautionary tale in case anyone else reading is thinking of exploring secret online work.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #22 on: October 13, 2020, 01:27:35 PM »
@kay02 Seems like you've got all the advice you can use right now. The only other thing I can think of is just googling whatever your online gig is + "finances", and seeing if there's a blog post or a reddit thread about managing income for it. I wouldn't be surprised if there are camgirls and onlyfans influencer-types that have written up their accounting strategies with accounting company recommendations.
I did this and it was actually really helpful, thanks!!

Glad I could help, good luck and congrats on such a lucrative gig!

I just remembered a story about a friend of a friend in college whose family somehow still had access to her checking accounts. She ended up in a lot of trouble when they a) found out she was camming and b) drained her account as punishment! It sounds like you're not at risk of that, but just a cautionary tale in case anyone else reading is thinking of exploring secret online work.
OMG that's awful!  I've heard horror stories like that before, so my bank account is a new one I made a few months ago at a different bank that nobody knows about which I did as an extra safety measure just in case.

trollwithamustache

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Re: How to plan life with (temporary) high income at young age?
« Reply #23 on: October 13, 2020, 01:48:46 PM »
You asked about sending the money directly to your savings account or moving it yourself. Whichever is fine, but it's probably easier if you set it up so the money goes there directly.

Good luck! And yes, everyone's right about the taxes - but the IRS has a grace period so if you don't do quarterly taxes for 2020 you 95% most likely won't have to pay a penalty. That's why I didn't worry about it.

This is true.. but at 20-30K a month, OP you will very likely find yourself in a higher tax bracket (% taxes owed) than you are expecting... and it can be shocking for some. (I knew some Drs their first year out of residency... it was hilarious to see their politics change!)

ChpBstrd

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Re: How to plan life with (temporary) high income at young age?
« Reply #24 on: October 13, 2020, 02:09:26 PM »
@kay02 congratulations on the 20-30k / month gig! At that rate, you'll be a millionaire in a little over 3 years and optionally retired in 4.

That said, I'm not sure what the point of going to college would be when in the same 4 years you could be FIRE. I mean, having a degree is a point of pride, but being a millionaire is way better. Worse, if for some reason you focused a little too much on ancillary activities, there is a chance this opportunity could pass. Perhaps you are only a couple of years ahead of the competition, or automation, or maybe you're surfing a trend that will end someday. I suspect you are afraid to tell anyone for fear they would figure out how easy it is. How would you feel if those earnings were suddenly no longer available? All my instincts say milk this thing while it lasts because such opportunities are once-in-a-lifetime! Building a brand could help when the competition shows up, and could be done discreetly.

So basically my advice is don't distract yourself with anything unrelated to your business - not college and not housing changes. Yes, hire an accountant with a written agreement on confidentiality and let them do your taxes to avoid any distraction there. Get about $1.3 million in the bank (preferably in a brokerage invested in VTI, but again don't distract yourself too long) and THEN make your choices about where to go next. Maybe that's paying your own way through college in pursuit of your newfound passion for literature or chemistry. Maybe it's spending a couple of years traveling and gathering life experiences. Maybe you get the financial freedom to devote your life to helping others. Maybe anything when you're FI in your 20's!

If for some reason this market stops being so lucrative, and you ONLY walk away with $300k in the bank before it collapses, then pay your way through college and resume saving with a big head start.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #25 on: October 13, 2020, 03:34:47 PM »
Thanks, @ChpBstrd !  As another poster said it definitely feels like I've "won the lottery" in a sense.  I did not expect it to blow up like it did.  I'm definitely milking it for all I can while not burning out!  It's not something I'd want to or be able to do my whole life but for the money I am definitely happy to do for a few years.

I know it could essentially disappear at any moment and I sure don't rely on it for that reason.

Thanks for the shot of adrenaline in the arm though!  I definitely plan on doing everything I can to sustain this gig.  I don't really think it's a "trend" that could go away quickly, but who knows.  I have a few ideas to build it further and maybe even make more but mostly I just want to keep it going.  1.3 million sounds like a good goal. :)

Part of that focus-wise is my internal debate about quitting my "dayjob" (which is NOT high paying at all).  It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.

mozar

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Re: How to plan life with (temporary) high income at young age?
« Reply #26 on: October 13, 2020, 05:49:56 PM »



Quote
It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.
When I was in my 20's I felt like I had to tell friends and family my whereabouts. I'm 37 and I tell people almost nothing about my life. One of my roommates (pays me rent) thinks I work a full time job (work from home) and I haven't told him otherwise. He has no way of knowing because he is usually at work from 9-5 and when he is home I am on my computer so it looks like I'm doing something.

I personally would quit and just not tell anyone. But you could also come up with a convincing story like your job moved you to be entirely online. Other entirely online wfh jobs: bookkeeper, online marketing, seo, vipkids (which is teaching english online)
Are people expecting funny co-worker stories, career strategies?

There are some threads on here asking what to tell people about the fact that they retired. Early retirement is so out of the normal that a lot of people on this forum have had to come up with stories about what they do for work.
You could quit your fulltime job and take some business classes at community college very part time. That way you could tell people you are "in school"
It's also "normal" to say you're living off savings. Or you could say you're working in asset management (your own!)

LovinPSDs

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Re: How to plan life with (temporary) high income at young age?
« Reply #27 on: October 14, 2020, 05:56:29 AM »
Thanks, @ChpBstrd

Part of that focus-wise is my internal debate about quitting my "dayjob" (which is NOT high paying at all).  It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.

Kay02 - I'm with the group here... Ride this thing out as long as you absolutely can.  Your staring FIRE right in the face, it's simply a waiting game.  Even if it does disappear today.. investing say 200-400K at your age vs. nothing is an AMAZING start. 

as for the "day job".  I'd think long and hard about how to get out of that work and focus on the high paying gig.  You mentioned milking it for all you can while not getting burnt out, well I'm sure the day job doesn't help the burnt out part.  Trading my time for $15/hr while it could be 500/hr is crazy. 

What about getting your own place?  I know you don't want to lie to family and friends but if it means being able to solely focus on this I would really consider on how you can figure that situation out effectively.  Think about this.. If you are being smart about this, each month you chopping YEARS off your retirement age.  Laser focus is the ONLY thing I'd be considering right now.

Nice work, especially wanting to be smart about this at such an early age!!

BTDretire

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Re: How to plan life with (temporary) high income at young age?
« Reply #28 on: October 14, 2020, 11:20:52 AM »
 First a big congratulations on the income and the good sense to save it.
When I read your original post, my first thought was, don't tell anyone!
Reading through your other posts, I think you have that covered. But I'll add, there will be jealousy, friends and relatives that think you should share your earnings and always people that are out to find a way to make your money their money.
I read through the thread and compiled all the good Ideas as I see them.
Sorry for not naming the poster.

"I think you're smart not to tell anyone about your income. Just keep doing what you're doing and let the money pile up. No need to buy a house or anything like that.
Open up a savings account JUST for this money. Ally, Capital One, whatever.

"The other thing you need to do is start learning and getting better at money management. Develop a budget and get good at following it. For investing, I like to recommend J Collin's Stock Series (google it). Do this for 3-6 months. At the end of that time, you should feel a little more comfortable with things."

"Why don't you start at a community college next year?
you can take some basic classes"  (core classes that you will be required to take for any degree)
"they (the government) will expect you to pay quarterly taxes on your own."

"Hang around the forums and keep asking questions as you read and learn"

"That's a key deadline for getting a self-employed retirement account such as a solo 401(k) set up. Doing so may be a very good idea,"

"Don't take them (accountant or others) up on their generous offer to help you invest your money."

 I'll reiterate stay on the forum asking questions, there is so much knowledge here.
Also there are other forum to ask questions, no need to go into all the information you did here, just ask questions, how do I transfer money, how do I open a 401k, what do I do when the market drops.
 Also, as has been said, learn before you start investing. Markets go up and down, but up over the long term, it's up, so be prepared for that.
 Happy journey to you!

terran

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Re: How to plan life with (temporary) high income at young age?
« Reply #29 on: October 14, 2020, 12:01:23 PM »
Part of that focus-wise is my internal debate about quitting my "dayjob" (which is NOT high paying at all).  It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.

I was wondering about that. If this is something you can scale with more time spent maybe you should consider moving into your own place and/or quitting your day job. Doesn't make sense to limit something that's earning a good amount so you can "keep up appearances" if there are other options.

I'm a freelance web developer. People really don't ask a lot of questions beyond the title. Usually just "oh, it must be great to work from home" or "oh, I could never work from home." Some people work as virtual personal assistants or things like that if you want something that avoids the need to explain a skill gap. Of course, then you run the risk of people wanting you to help get them a similar gig (virtual and low skill), so you need a plausible reason why you can't do that. I'd suggest something as close to what you're really doing as you're comfortable with so you have less to make up.

Then again, since this is the MMM forum, maybe some out of the box thinking: How bad would it be if people knew what you were really doing? People do all kinds of jobs that other people find unsavory for whatever reason.

I'm sure there are lots of ways to go about this, but I'm sure there are much less expensive ways than giving up a bunch of extra earnings spending time working a low paying job so you have something to tell people.

trollwithamustache

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Re: How to plan life with (temporary) high income at young age?
« Reply #30 on: October 14, 2020, 05:04:42 PM »


Then again, since this is the MMM forum, maybe some out of the box thinking: How bad would it be if people knew what you were really doing? People do all kinds of jobs that other people find unsavory for whatever reason.


OP needs to keep quiet about income. If people can figure out how much she makes, that will bring a whole other mess of stress and expectations to pay for stuff and load requests ect.  This might actually be worse than any shame associated with whatever is possibly embarrassing about the gig. 

BTDretire

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Re: How to plan life with (temporary) high income at young age?
« Reply #31 on: October 14, 2020, 05:54:26 PM »
Ditto to keeping quiet about your income.
I also would ask, do you get any pleasure from your job?
Does it provide any structure to your life?
Will it keep you grounded?
Can you be the same person at that job while you have $200k, $300k, $400k?
I think you will know when it is time to leave, but in the mean time, does the job have other qualities for your life that make it useful.

Fish Sweet

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Re: How to plan life with (temporary) high income at young age?
« Reply #32 on: October 15, 2020, 12:09:12 AM »
If your lucrative gig is based around a specific platform (for example: Youtube, Twitch, Onlyfans, Patreon, etc.) I would personally plan around this being very temporary and earning less money, rather than more over time.  So plan your future as if you might earn 200-350k from this, rather than being able to ride the gravy train all the way past a cool mil (although it would be absolutely awesome if it does.)  The reason I say this is because platforms fall out of popularity, algorithms change, monetization rules fluctuate, and at the end of the day you're very much at the mercy of whatever that platform implements... and after they reach a certain critical mass, many of them start becoming less user friendly and adapting more onerous policies.  I hope you're able to make a nice awesome FIREable pile of money from this, but hope for the best, plan for the worst.

Maybe put some thinking into where you want to be in about five years and use that to make your decision re: college, day jobs, etc.  Not... career-wise, necessarily, just - what do you want to be spending your time doing?  Where?  With who?  Do you enjoy learning, and think being in a college atmosphere will help you grow as a person and open up more doors for your future self?  Do you want to own property and rent it out?  Do you want to stay close to family?  Do you want to go see the big wide world (after COVID...)?  Go surfing every day?  It's normal not to have the answers to any of those when you're still in your early twenties and just trying to get adulthood sorted out, but you're in a good position to be able to put more thought into who you want to grow into, and starting early to achieve your best life.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #33 on: October 15, 2020, 11:54:39 AM »
If your lucrative gig is based around a specific platform (for example: Youtube, Twitch, Onlyfans, Patreon, etc.) I would personally plan around this being very temporary and earning less money, rather than more over time.  So plan your future as if you might earn 200-350k from this, rather than being able to ride the gravy train all the way past a cool mil (although it would be absolutely awesome if it does.)  The reason I say this is because platforms fall out of popularity, algorithms change, monetization rules fluctuate, and at the end of the day you're very much at the mercy of whatever that platform implements... and after they reach a certain critical mass, many of them start becoming less user friendly and adapting more onerous policies.  I hope you're able to make a nice awesome FIREable pile of money from this, but hope for the best, plan for the worst.

Maybe put some thinking into where you want to be in about five years and use that to make your decision re: college, day jobs, etc.  Not... career-wise, necessarily, just - what do you want to be spending your time doing?  Where?  With who?  Do you enjoy learning, and think being in a college atmosphere will help you grow as a person and open up more doors for your future self?  Do you want to own property and rent it out?  Do you want to stay close to family?  Do you want to go see the big wide world (after COVID...)?  Go surfing every day?  It's normal not to have the answers to any of those when you're still in your early twenties and just trying to get adulthood sorted out, but you're in a good position to be able to put more thought into who you want to grow into, and starting early to achieve your best life.
I'm definitely planning with the mindset that it could all go away at any moment.  However it's not tied to a platform like that, thankfully.

Hopefully I have the answer to some of those questions by the time I hit my early 20s.  I honestly don't know.  I want the flexibility to be able to try any of those things you listed though. That would be nice.

Ditto to keeping quiet about your income.
I also would ask, do you get any pleasure from your job?
Does it provide any structure to your life?
Will it keep you grounded?
Can you be the same person at that job while you have $200k, $300k, $400k?
I think you will know when it is time to leave, but in the mean time, does the job have other qualities for your life that make it useful.
I "like" my job, but it's nothing super special.  It gives me some structure but it's hard to say if I need that kind of structure.  I'm really torn on whether it makes sense to stay.  I also feel bad that lots of people need jobs right now and I'm lucky to have one yet I don't really "need" it right now.




Quote
It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.
When I was in my 20's I felt like I had to tell friends and family my whereabouts. I'm 37 and I tell people almost nothing about my life. One of my roommates (pays me rent) thinks I work a full time job (work from home) and I haven't told him otherwise. He has no way of knowing because he is usually at work from 9-5 and when he is home I am on my computer so it looks like I'm doing something.

I personally would quit and just not tell anyone. But you could also come up with a convincing story like your job moved you to be entirely online. Other entirely online wfh jobs: bookkeeper, online marketing, seo, vipkids (which is teaching english online)
Are people expecting funny co-worker stories, career strategies?

There are some threads on here asking what to tell people about the fact that they retired. Early retirement is so out of the normal that a lot of people on this forum have had to come up with stories about what they do for work.
You could quit your fulltime job and take some business classes at community college very part time. That way you could tell people you are "in school"
It's also "normal" to say you're living off savings. Or you could say you're working in asset management (your own!)
Thanks, @ChpBstrd

Part of that focus-wise is my internal debate about quitting my "dayjob" (which is NOT high paying at all).  It would mean needing to tell my roommates and friends/family some story about what I'm doing for money, and I don't know how I'd handle that at this point.

Kay02 - I'm with the group here... Ride this thing out as long as you absolutely can.  Your staring FIRE right in the face, it's simply a waiting game.  Even if it does disappear today.. investing say 200-400K at your age vs. nothing is an AMAZING start. 

as for the "day job".  I'd think long and hard about how to get out of that work and focus on the high paying gig.  You mentioned milking it for all you can while not getting burnt out, well I'm sure the day job doesn't help the burnt out part.  Trading my time for $15/hr while it could be 500/hr is crazy. 

What about getting your own place?  I know you don't want to lie to family and friends but if it means being able to solely focus on this I would really consider on how you can figure that situation out effectively.  Think about this.. If you are being smart about this, each month you chopping YEARS off your retirement age.  Laser focus is the ONLY thing I'd be considering right now.

Nice work, especially wanting to be smart about this at such an early age!!
Thanks for saying all this!  Putting it that way (15/hr vs 500/hr) really helps me think about it!  I'm still so torn.  It does feel like I could scale up and make even more if it make it my only thing.

I like the idea of quitting but not telling anyone.  Or getting my own place.  Or both. :)  My own place could make some aspects of my work easier too.  I've also never lived alone.  Idk.  I don't make enough from my day job I think to afford my own place so how do I tell a landlord I have plenty of money even?  It might raise questions with other people in my life too but I guess I could just say I got a raise when I actually quit!

Sibley

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Re: How to plan life with (temporary) high income at young age?
« Reply #34 on: October 15, 2020, 01:55:07 PM »
Then again, since this is the MMM forum, maybe some out of the box thinking: How bad would it be if people knew what you were really doing? People do all kinds of jobs that other people find unsavory for whatever reason.

You're talking about a barely adult, financially illiterate individual from a poverty background. Do you have any idea how spectacularly bad this suggestion is? Take a look at what happens to lottery winners and pro sports players who come from poor families, because that is EXACTLY what this young woman is at risk for.

OP - if you read this, it's not intended as a diss. It's fact. It has NOTHING to do with your potential, your intelligence, or your abilities. It has to do with your experience. You can learn and become a strong young woman who IS able to stand up to your friends and family asking for handouts, but you're not there yet. This comment is me scolding Terran for posting something that would only hurt you right now. When you come back 6 months or a year from now asking for the next level of advice, I fully expect that you will have grown by leaps and bounds. So don't be discouraged.

Sibley

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Re: How to plan life with (temporary) high income at young age?
« Reply #35 on: October 15, 2020, 02:00:20 PM »
....
I like the idea of quitting but not telling anyone.  Or getting my own place.  Or both. :)  My own place could make some aspects of my work easier too.  I've also never lived alone.  Idk.  I don't make enough from my day job I think to afford my own place so how do I tell a landlord I have plenty of money even?  It might raise questions with other people in my life too but I guess I could just say I got a raise when I actually quit!

Don't quit. Not yet. Don't change anything in your day to day life this year. You need consistency and stability to give you time to learn and get comfortable. Yes, you could make more money by quitting your day job, but the added complications doing so would probably hurt more than the money is worth. Learn to budget, learn about money management in general, think about what you want to be doing in 2 years, or 5 years, or 10 years.

Go back to the first post I put up for you. There's reasons why I say to wait, to go slow. It's temporary. You are building a foundation. If you build your house before your foundation is strong enough, then it's going to fall down at some point. 

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #36 on: October 15, 2020, 03:13:48 PM »
Then again, since this is the MMM forum, maybe some out of the box thinking: How bad would it be if people knew what you were really doing? People do all kinds of jobs that other people find unsavory for whatever reason.

You're talking about a barely adult, financially illiterate individual from a poverty background. Do you have any idea how spectacularly bad this suggestion is? Take a look at what happens to lottery winners and pro sports players who come from poor families, because that is EXACTLY what this young woman is at risk for.

OP - if you read this, it's not intended as a diss. It's fact. It has NOTHING to do with your potential, your intelligence, or your abilities. It has to do with your experience. You can learn and become a strong young woman who IS able to stand up to your friends and family asking for handouts, but you're not there yet. This comment is me scolding Terran for posting something that would only hurt you right now. When you come back 6 months or a year from now asking for the next level of advice, I fully expect that you will have grown by leaps and bounds. So don't be discouraged.
Thank you!! I totally get what you're saying and it's so right.  Lottery winners in poor families are the exact opposite kind of trajectory than I want to have!
....
I like the idea of quitting but not telling anyone.  Or getting my own place.  Or both. :)  My own place could make some aspects of my work easier too.  I've also never lived alone.  Idk.  I don't make enough from my day job I think to afford my own place so how do I tell a landlord I have plenty of money even?  It might raise questions with other people in my life too but I guess I could just say I got a raise when I actually quit!

Don't quit. Not yet. Don't change anything in your day to day life this year. You need consistency and stability to give you time to learn and get comfortable. Yes, you could make more money by quitting your day job, but the added complications doing so would probably hurt more than the money is worth. Learn to budget, learn about money management in general, think about what you want to be doing in 2 years, or 5 years, or 10 years.

Go back to the first post I put up for you. There's reasons why I say to wait, to go slow. It's temporary. You are building a foundation. If you build your house before your foundation is strong enough, then it's going to fall down at some point. 
I know, I like your mindset you're saying here.  I have a lot of thoughts and some of these posts are just thinking out loud. :)  Lots of options.

terran

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Re: How to plan life with (temporary) high income at young age?
« Reply #37 on: October 15, 2020, 03:16:56 PM »
Then again, since this is the MMM forum, maybe some out of the box thinking: How bad would it be if people knew what you were really doing? People do all kinds of jobs that other people find unsavory for whatever reason.

You're talking about a barely adult, financially illiterate individual from a poverty background. Do you have any idea how spectacularly bad this suggestion is? Take a look at what happens to lottery winners and pro sports players who come from poor families, because that is EXACTLY what this young woman is at risk for.

OP - if you read this, it's not intended as a diss. It's fact. It has NOTHING to do with your potential, your intelligence, or your abilities. It has to do with your experience. You can learn and become a strong young woman who IS able to stand up to your friends and family asking for handouts, but you're not there yet. This comment is me scolding Terran for posting something that would only hurt you right now. When you come back 6 months or a year from now asking for the next level of advice, I fully expect that you will have grown by leaps and bounds. So don't be discouraged.

Chill out. I never said "tell everyone you're making gobs of money," I said maybe they should consider being open about what they do so they don't feel like they have to hide part of their life from everyone. Maybe that's not the right choice. If people they care about would really be that bothered about it from a moral standpoint that they'd essentially being cutting off contact by sharing, that might not be worth it. And maybe, as you seem to imply, there's no way to admit what they're doing without making it clear they're making tons of money, which I'll agree with you probably isn't a good idea. But no one posting in this thread other than kay02 knows anything about that since we don't know what they're doing. All we know is they're making lots of money, some people would find how they're making money unsavory, and it's not illegal.

LifeHappens

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Re: How to plan life with (temporary) high income at young age?
« Reply #38 on: October 15, 2020, 03:19:11 PM »
Thank you!! I totally get what you're saying and it's so right.  Lottery winners in poor families are the exact opposite kind of trajectory than I want to have!
This is great. I think you have a good head on your shoulders, OP. Other people in your situation might be out buying sports cars and $1000 cell phones. I think you're going to do well.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #39 on: October 15, 2020, 03:47:02 PM »
Thank you!! I totally get what you're saying and it's so right.  Lottery winners in poor families are the exact opposite kind of trajectory than I want to have!
This is great. I think you have a good head on your shoulders, OP. Other people in your situation might be out buying sports cars and $1000 cell phones. I think you're going to do well.
Thank you!! Haha, I'm using an old crappy phone and driving my grandma's old car so I'm def not doing that. :p

Freedomin5

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Re: How to plan life with (temporary) high income at young age?
« Reply #40 on: October 15, 2020, 04:08:10 PM »
Thereís a concept on this forum and among a lot of wealthy folks called Ēstealth wealthĒ. The idea is that we donít tell people how much money we make or have, and we live like we have no money.

We do this to avoid the hassles of looking rich. Namely, once people know you have a high paying job and make tons of money, they (especially poor family members and friends with no money of their own) treat you like their own personal ATM and start asking for handouts. And if you donít give it to them, they get offended and mad and can make life difficult for you by guilt tripping and accusing you of all sorts of mean things. My husband is from a poor family and as soon as he got married into a wealthier family, his sister started asking for him to pay for this or pay for that or pay for her vacation and her sonís sports clubs. Even with a good excuse (itís my wifeís familyís money), his sister is still resentful to this day (12 years later). She also doesnít like me much for not letting him spend my familyís money on her. People just arenít logical or reasonable when it comes to money.

Sibley is right. Donít tell anyone you have money. And donít do anything or upgrade your life in a way that makes them question where youíre getting this money (like getting your own place) ó not until you have a solid way of deflecting or addressing their questions, and not until youíre strong enough to stand up to them and their whining and guilt tripping and angry accusations.

Donít spend the money from your online job. So if you want your own place, then actually get a raise from your day job thatís enough to cover your rent and living expenses. If you want to retire early, upgrading your life and spending the money wonít help you get there. The goal right now is to learn how to best invest that money.

As others have mentioned before, donít change anything in your life right now. (Except getting a tax accountant who doesnít know your family and paying taxes on your income.) And following the steps in the Investment Order thread.

BTDretire

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Re: How to plan life with (temporary) high income at young age?
« Reply #41 on: October 15, 2020, 06:48:11 PM »
Kay02, I'm proud of hearing how you are thinking and the way you are handling the advice. Just take it slow and learn as much as you can. Your doing great!
 And it's only going to get better!
 As others have said don't get discouraged, it does take time, there will be bumps in the road, you just work through them. As people younger than me, and older than you said, "you go girl"!

ChpBstrd

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Re: How to plan life with (temporary) high income at young age?
« Reply #42 on: October 15, 2020, 08:23:49 PM »
You know, when you hit FIRE and presumably quit the gig, the easy way out is to just look up the highest returning stock of the past 3-4 years and tell people you bought some shares.

charis

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Re: How to plan life with (temporary) high income at young age?
« Reply #43 on: October 16, 2020, 07:42:23 AM »
Stealth wealth is a good approach regardless if you decide to confide in someone you trust at some point.  I think it's fine to get your own place, even without getting a raise, if it's very affordable or in line with your current day job income. I made peanuts after college but still managed to find a cheap studio-ish apartment.

slappy

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Re: How to plan life with (temporary) high income at young age?
« Reply #44 on: October 16, 2020, 07:53:37 AM »
You know, when you hit FIRE and presumably quit the gig, the easy way out is to just look up the highest returning stock of the past 3-4 years and tell people you bought some shares.

This is brilliant!

john c

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Re: How to plan life with (temporary) high income at young age?
« Reply #45 on: October 19, 2020, 04:19:53 AM »
As a tax accountant, I second the notion that we don't care about what you do for a living, as long as it's legal. 

One thing to keep in mind is that the Solo 401k contribution deadline is 12/31/20.  That means you have to put the money you want to save taxes on in the account by the end of the year.  Seek out and meet with an accountant (CPA or EA) before the end of the year and figure out about how much tax you'll owe. 

Never, NEVER let someone "invest" it for you.  Use a reputable investment company like Vanguard or Schwab, and maybe some new ones I'm not familiar with like Betterment. 

Young people often feel as directionless as you feel.  That's okay.  I do recommend college, even if you don't know what you want to do.  You can start working on your general education requirements, which you have to do anyways.  You're definitely not wasting time by working on them. 

However, if you don't feel like you'd do well in college because you're too disinterested, then consider waiting.  Don't go and then fail.  When I was your age, I was working hard on flunking out of college.  :)  I went back later in life, and when I was going for my own reason, it worked out for me.  But I was poor student.  If you're naturally a good student, then go and get some credits.  You'll be grateful later, and it's never wasted.

One thing about going to college is that you'll be around new people.  Generally, they're moving ahead with their lives.  Some or all of the folks you're working and living with probably aren't doing this.  Being around interested, interesting people is probably the best part about college.

Finally, the advice about preparing yourself for exposure is very real.  Have a plan to tell a blackmailer to "F*** Off".  Keep in mind this blackmailer might not be financial.  Many women in this bizness end up with a boyfriend/pimp.  I like the fact that you do have a support structure, in the form of your grandmother who truly wants the best for you.  (Also, there's nothing more your grandmother wants to do with her money that help her grandkids.  Take the money.  She'll enjoy giving it to you for school more than you'll appreciate getting it)

Dicey

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Re: How to plan life with (temporary) high income at young age?
« Reply #46 on: October 19, 2020, 05:56:03 AM »
What an interesting thread! Great info in the responses and a lot to process. The only quibble I have is the Dave Ramsey advice. If the OP is real, they do not seem to be struggling with debt. DR is fine for people who have dug themselves into a debt hole, but he is absolutely shitty on how to invest. Less than worthless, IMO. Certainly not mustachian.

talltexan

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Re: How to plan life with (temporary) high income at young age?
« Reply #47 on: October 19, 2020, 06:53:44 AM »
@Dicey, I'm actually going to push back a little on the Dave Ramsey thing.

It's entirely the OPs choice, but dealing with a very high, variable income, there are worse things than committing to not use debt (as Dave teaches). Listening to several segments in which Dave advises callers who experience sudden windfalls could also be useful to the OP, although those calls often involve much more money relative to future earnings.

I agree that Dave is too forgiving of high-fee active managed mutual funds; for stock market investing, you'll probably do better with JL Collins or the Boglehead principles.

kay02

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Re: How to plan life with (temporary) high income at young age?
« Reply #48 on: October 19, 2020, 10:20:24 AM »
Thank you again everyone!!  I'm starting to get an idea of what I need to do and this has been really helpful.  I'm not making any big changes right now or anything but I am starting to feel more in control!