Lower income to high income... What are the next steps?

[Robbie82]

Hello everyone,

I have been on the journey to financial independence by educating myself in real estate, business and financial literacy over the past few years.  I have been blessed with a new opportunity in my field of work recently. I was a Property Manager earning around $40k per year, but I have been offered a position in a different field (one that I have been working on growing my own business in) that will earn over six figures as a base not including the sales commissions which could increase the number by a decent amount.  I also get to keep my side hustle/business as well.

Currently, I live in Florida, but the new job will have me moving up to MD.  There will be a state income tax which will be new.  I will be paid as a 1099 contractor, so I will be responsible for making the quarterly tax payments as well.  I am sure I will have to change my health insurance plan, car insurance coverage, and several other various aspects.

My question is what are the next steps you would advise me to complete?  I move in early April, and I look to be able to "retire" in my 30's. I am 26 now.  I just read over "The Simple Path To Wealth" and understand what to do regarding those steps in investing in mutual funds, but as far as finding a tax professional, accountant, opening bank accounts to set aside money for taxes, etc, where would you recommend I start?  From a low income to high income point of view, I am a little lost on what to do next.  Eventually I want to invest in Real Estate, contribute to the retirement accounts available to me, and have money to help others and my family.

I am frugal at heart, always have been, always will be.  This position will be a perfect fit for me and I am thrilled to have been given the opportunity.  I want to make sure I proceed with the right steps as this kind of money is nothing that me or my family is accustomed to earning, so this is all new to me.  I appreciate any opinions/advice any of you may have.  If you have specific questions, please feel free to ask, thank you.

Robbie

[ChpBstrd]

First, don't count any chickens before they're hatched or make any big purchases such as a new car or house. New jobs often don't work out after the first few months, as employers are not highly invested yet and they might have posted the job in anticipation of work they don't end up getting. Additionally this one raises a few red flags such as going from 40k to 100k+ just by moving, and the factor of commission being involved.

Sales managers often use their sales skills to attract new recruits into sales jobs that somehow never seem to meet their income potential. Car dealerships are notorious for this. Eventually the recruits quit when they're not making as much as they were told was "possible". The point is to persuade somebody to work for cheap for a while until they quit. To recruit people they tend to to show how it's technically possible to earn a high income if you sell enough, and then blame the employee when the product/service doesn't sell. Actually, selling one car per day or one house per month is a helluva lot harder than it sounds. There is a lot in common between mainstream sales jobs and multi-level marketing schemes.

That said, the job might also be 100% legit because employers are desperate for talent right now and missing out on growth for every unfilled position. By all means, dive into this opportunity, but don't get too settled for the first six months or so. I'd even be reluctant to sign a one-year lease.

FIRE is the outcome of a collection of habits, and you will be disrupting several habits by moving. While you're already disrupting habits, find more economical ways to live, eat, transport yourself, use energy, and entertain yourself. Lower your standard of living in MD if possible, so that you can start fresh on a new frugal baseline. Entertain yourself by exploring your new surroundings instead of paying for entertainment. Move in with somebody who needs a roommate instead of signing a lease - or worse - a mortgage. Avoid the temptation to find a new favorite restaurant. Do not shop to fill the time. Etc.

Of course, all the usual advice applies as well. Max out the 401k, kill all credit card  or student loan debts, open a Roth IRA, etc. Be aware of the local income and sales tax situations. Study the market before buying a house. Avoid ownership of an expensive car if at all possible. Incorporate exercise into your lifestyle. Don't spend $5k moving $500 worth of used furniture. Pay attention to the lease terms of the place you're vacating. Make a list of everyone who has sent you mail in the past 4 moths and make the address changes. Then set up mail forwarding.

[mozar]

Well I guess it’s too late to renegotiate now, but 100k doesn’t go very far in Md. Unless you are moving to the border of Pennsylvania you are in for sticker shock. I’m assuming you are moving to Montgomery County. If so it is unlikely you will be retiring as soon as you think. I would Airbnb it for a few months while you look for an apartment. You’re going to want to be in Md for showings, your not likely to be able to set something up from out of town.

You can either pay a lot of money to live near your work or live near a metro, or live somewhere cheaper and spend an hour or two in traffic. If you have google maps look up directions from your job to potential apartments during rush hour.

There are lots of excellent cheap restaurants in this area, you are missing out if you don’t sample a few.

[Robbie82]

@ChpBstrd

Thank you for your advice!  This opportunity is not a sales position in a normal context.  We are working with a specialized product and the owner, my boss, has done this for 20 years and has been incredibly successful.  I went up there in February and we worked out the details, and we have known each other for years at this point, so I am not as worried about stepping into a new company that I do not have any ties with.

As for your other recommendations, I will definitely be as frugal as possible and do not plan to live beyond my means when I was making $40k a year.  I have no debt, good credit score, and have hobbies that are very low cost, so I will continue to save and invest the rest.

@mozar

Thank you for the info.  The pay will be worth it to move, and I understand the taxes/expenses will be high, but being that I get to keep my own side hustle on top of this will help even more.  We will be working out the schedule so that I can avoid the traffic at its worst, and I will be living in a more inexpensive part of town.  Really appreciate the advice.