How much would I save without RSUs?

When I look at how much I save vs. spend each month, I really start to feel like I’ve been spending too much money. My cash savings projections for the month is only $700* per month, but that’s after my maxing 401(k) contribution and $250 automatic savings to my car replacement fund.

That is only about 40% of my projected net income.

In January, I managed to save about $1,400 for a total of 50% of my net pay.

In February, $1,700 or 55%.

In March, $1,800 or 60%.

Then I go and save 100% of the net of my bonuses. 20% of the gross goes to investments and the rest is snowballed to cash savings.

I don’t know what my rent will be after June. I’m definitely expecting it to go up. Rent is more expensive when you sign a lease in the summer months versus in the winter months, but I didn’t know how long I was going to stay here when I signed the lease in February. If I had wanted to stay for 12 months, I could have gotten it for under $1,500 per month! That would be awesome. But right now, I’m paying about $1,550. I figure it’ll probably go up to $1,700 or more when the lease is up and if I don’t sign a lease at all, $1,900 – $2,100 per month probably. (I would only not sign a lease if I’m planning on buying and moving super quickly. I also won’t give notice until after I’ve closed on a place, so I will probably end up paying a month-to-month rate for the last month or two before moving, which is worth the peace of mind.)

Without my RSUs and this random strange place that extra money seems to find its way into my checking account (I really don’t know how this happens *every* month), I would only be saving about $700 per month towards my down payment. That would make it take 17 months to reach my condo down payment savings goal! But the RSUs** make a big difference. They are also a pretty reasonable part of my gross income for the year. With no raises or more RSUs this year and using an old 52-week low stock price, my RSUs account for just under 25% of my forecasted gross income for the year, or slightly less of my forecasted net. So not taking them into account would make a huge dent in my possible savings.

But then sometimes I feel like I shouldn’t anticipate getting them at all and then feel like those Wall Street people complaining about not getting their bonuses. (I realize that the $ value comparison is a bit of an exaggeration, but the idea is sort of similar…) It’s not like I count on them for spending, but I do quite enjoy them for saving. And if I didn’t get them, would I really let my monthly budget bloat up to the amount that it has (almost $3,800 including travel)? Probably not. But when my RSUs account for about 20% of my forecasted gross income, that is like the difference between a $80k salary and a $100k salary or a $104k salary and a $130k salary, which isn’t a small difference.

My employer sees them as part of my compensation for the year, so shouldn’t I? At the very least, I have used a 52-week low stock price in my calculations of what to expect. That way, when the stocks actually vest, I’m surprised instead of shocked/flabbergasted/upset/annoyed. Of course, that means I re-run the W-4 calculator after every RSU vest (which is four times this year and next!) and after a paycheck with a raise to make sure that my taxes are right. I tried using the current value for awhile but that went up and down so much that it drove me nuts. The 52-week high is a bit of a stretch since it never stays at that value for very long and any rolling average would be complicated to calculate, so I think I’m going to stick with the 52-week low in my calculations.

Readers, do you see regular RSUs or bonuses? How do they affect your savings or spending?

*This post was written before I knew how much my raise would be that goes into effect on my April paycheck. Most of the increase in my down payment savings account that you will see in this month’s net worth update isn’t related to this raise, but the amount saved from my paycheck towards my down payment is far higher than $700.

**RSUs stands for Restricted Stock Units. I have various shares granted that vest on various dates throughout the next few years. Basically, when I got the grant it stated that I get N shares over M time, with a specific vesting schedule. So at the time of the grant, the number of shares I will get are calculated. And then when they actually vest, those shares become mine. I have it set to sell-all, then some taxes come out of the brokerage account, and the rest is mine to use for whatever in cash.

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  1. #1 by nicoleandmaggie on April 30, 2012 - 6:05 am

    re: rent increases
    If you’re a good tenant who pays on time and doesn’t cause trouble, you can ask that your rent not be increased and often they won’t increase it (or won’t increase it as much if rents really are going up in the area).

    • #2 by Leigh on April 30, 2012 - 7:12 am

      Hah. My rent went up 20% on my old apartment this year, which I thought was atrocious until I realized that *everything* comparable was around the same price. Sigh. It is worth asking when this lease is up, yes, but I still foresee it going up 5% or so.

      • #3 by TJ (@SoCalTJ) on April 30, 2012 - 8:05 pm

        If you are happy with the place, why don’t you try committing to extending the lease NOW instead of waiting til summer?

        • #4 by Leigh on April 30, 2012 - 10:47 pm

          I’m on the fence as to my timeframe for buying a place, so signing a lease is a bit of a cost-risk analysis.

  2. #5 by SP on April 30, 2012 - 7:26 am

    Can you explain how (at the time of writing this) your net pay was $2800 ($1400 x 2) and you paid 1550 in rent and saved $1400? I’m sure I’m missing something here. I guess RSU’s aren’t included in net pay, but they are included in savings? Or you are living on -$150 a month!

    I live in a city with a lot of renters rights, and once a year is up, everyone is automatically month-to-month. They can only raise the rent by a relatively small amount each year. Honestly, I don’t know how I could go back. It is one reason why being a home owner is even less attractive for me – renting is very stable once you are in.

    • #6 by Leigh on April 30, 2012 - 7:42 am

      I was being purposefully vague around the numbers and just talking about the cash savings for my down payment.

      In March, I saved $1,800 to my down payment savings fund, $250 to my vehicle savings fund, and enough to max out my 401(k) equally throughout the year, plus I put some money back into my health insurance deductible fund. My net pay was around $6,000 or so.

      Haha, no I’m not living on -$150 a month! RSUs this year will add up to around $30k, most likely. We’ll see how the stock price does :)

      Here you can go month-to-month, but it’s expensive. Renter’s rights are pretty much nonexistent, except during your lease. Renting is so ridiculously unstable in how much you’ll pay per month. It drives me nuts! When I first moved here, the apartments that I was looking at ranged from $1,100 to $1,300 per month and now that same range is $1,500 to $2,000 per month. I also wish I could just write “enough” on the rental application when it asks for my income.

      • #7 by SP on May 1, 2012 - 6:54 am

        You actually were quite specific with numbers, though what the specific numbers meant was very vague :)

        I wish I could live on -$150 a month!

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