On being rich (high income) again after a stint of unemployment

Prior to DH’s last unemployment spell, I was feeling uncomfortable about having so much income.  I felt guilt because I was one of the “haves” (I probably still feel this, and it’s probably a good thing for me!  So don’t talk me out of it with conservative talking points), but also I had this odd sense that I should be looking for things to spend money on.  Money felt meaningless and valueless and there was no reason NOT to just order that $80 bottle of olive oil, or two even, no reason not to put money on the nicest AirBNB available for the trip we never ended up taking etc.  The only thing keeping me from buying all the pens (and I did buy a lot) was the knowledge that they might dry up before getting used!

Then DH got unemployed for several months and we were living on just my income.  We lived comfortably, but mainly because we didn’t have any big expenditures due to luck (being between appliance breakdowns) and the pandemic returning all our travel moneys and preventing us from spending on any new travel or fancy camps or expensive daytrips to the city or even eating out much.  (I still bought pens.)  It sort of felt like we were back to normal, but with more masks, hand sanitizer, and stationery.

Now we’re back to making more money than we’ve ever made and more than I ever dreamed of and somehow money has meaning and I’m not just buying all the things. But also I’m not freaking out when our water heaters end up costing almost twice as much as they were supposed to.  It’s just money and we have money.  But also, when it cost $1K+ for DH and the kids to see family from the closest city airport this summer, we decided it was worth the extra 30 min drive to the closest airport to save $500.  Was that a good decision?  I don’t know!  I refuse to feel either guilty or superior about it.  It seemed like a reasonable tradeoff at the time– 30 min plus a small amount of gas and car depreciation to save $500.

Several of the extremely wealthy and high income (white male) economists I know are also pretty frugal.  They spend money when it’s worthwhile but they also take advantage of sales and bargain down in situations where you can bargain.  I’m not sure it’s rational to do that when your consulting rate is $500/hr, but, they seem to think it is.

I’m not sure what caused the change in me.  Maybe it was just time.  But also I think having experienced via his last unemployment spell the knowledge that this high income really isn’t forever.  DH’s current job is a start-up and it may end if it runs out of runway.  Maybe it’s the knowledge that DC1 will be starting college soon and we’ll have to cash flow some of it if zie ends up at one of hir top choices.  (If zie ends up at the state flagship I don’t know what will happen to all those savings– $228K as of this writing, down from a high of $275K(!)– but I’m sure we will figure something out.)

So what am I doing while we wait for another shoe to drop?  Mostly I’ve been putting regular money into the stock market– a little bit more than my take-home pay each month most (but not all) months in order to get down our precautionary savings to what we actually need as precautionary savings should DH suddenly lose his job at the beginning of an unpaid summer (or, alternatively, I rage quit).  We’re down to that number now, so there will be less funneling money into the markets next year.  Having that money put away also helps the feeling of being artificially middle-class.

We’re still living well, and we’re still in a situation where rising grocery costs just means we shift to buying more luxury goods (that suddenly cost the same as non-luxury products that used to be much less expensive) and we’re still able to not sweat unexpected costs or even stupid money mistakes.  But our money situation no longer feels quite so surreal or consumerist.

How are you feeling about your income vs. spending with rising prices and loosened pandemic restrictions?

obnoxious ramblings on income, unearned income, taxes, and so on

• We made 17K (!) in non-W2 income last year.  Some of that was honorarium and consulting (1099) and some of that was dividends and unwanted capital gains (I really need to do *something* about American Century Trust and its irritating habit of creating capital gains which it then reinvests in itself.  It didn’t used to do that.  But now it does.  Just selling it all will create an unpleasant tax situation come tax time, but maybe I should bite the bullet.)
• I don’t know what the breakdown between stocks and 1099 income is because DH mentioned this to me while he was trying to figure out our estimated tax situation for next year.
• He told me that our estimated taxes for next year would be 17K and I almost had a heart attack.
• Then I was like, wait… that can’t be right.  What was our non-W2 income?  We can’t be paying 17K in taxes on 17K of estimated non-taxed income.
• Then I said, on top of that, I switched all our Roth 401K/457 stuff to traditional (even though I know that’s not the optimal money thing to do, it’s part of my #resisting), so we should be paying lower taxes on top of the fact that we’re in a lower tax bracket despite higher income because congressional Republicans and their oligarch overlords are evil.
• It turned out DH had not paid any attention to the fact that we put tax-free (for now) money into a required retirement fund (6% of my income), a 403(b), a 457, and as much of a 401K as DH’s non-discriminating test failing fund will allow.
• Taking that into account brought down our estimated excess tax burden to something like $6K.
• We decided to take $500 out of each of my 9 paychecks and also send the government a check for $1000.  (They also have a small credit from this year’s taxes because we’d missed a bunch of charitable giving the first time we went through taxes and paid the bill.  Correcting that mistake put us into itemizing range and we saved something like $100, which we applied to next year’s taxes.)
• Our dividend income may be lower next year because PG&E which provides the bulk of my dividend income is having money problems (specifically, they’re waiting to see how much they owe for the CA wildfires) and has not been paying out quarterly dividends.  That’s about $700/quarter we will not be getting.  This has happened before– when I first got these stocks PG&E was bankrupt (but I still had to pay taxes on money I never got with money didn’t have… long story, but the dividends since have made up for that stress).