IAMAM

SADNESS

Home budgeting with commish?

We recently had a baby and as such, are looking to buy a new home in a HCOL area and a hot market. My comp is 50/50 base/OTE. I've run the numbers forwards and backwards and we can essentially afford all fixed costs with my base alone and commission world go to all spending and savings. Always going to be some ups and downs in sales as we all know. How are you all budgeting your monthly expenses with regard to base/OTE? Trying to justify this purchase without ending up house poor! 🏡

🧠 Advice

💸 Investing

💴 Money Management

29 comments

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SaaSMaster

Politicker

Strategic Partnerships Manager

Very similar to what you said, I do all my budgeting based on just my base and then commission becomes spending money or goes into savings

JustGonnaSendIt

Politicker

Burn Towns, Get Money

DO this. This is what I do also. Budget based on your fixed salary and make your commission the fun money / additional savings.

Yeah, yeah, you technically can't ball out with a mcmansion without years of diligent saving on this plan. But at least you're not stressed as fuck when that deal pushes to the next quarter because suddenly you can't make your house payment. Particularly with a new child.

IAMAM

Catalyst

SADNESS

Mortgage would be just under 28% of current gross with 100% quota attainment. About 45% of gross at base only with 0% attainment. We would also have a decent chunk in savings after selling our current home as buffer for emergency or a down month (ie 18-24 months of base salary, depending on sale price).

JustGonnaSendIt

Politicker

Burn Towns, Get Money

Seems a bit risky but not terrible IMO.

If you have car payments, student loans, or other debt that needs servicing, this could really squeeze you if the commission has big peaks and valleys in it. I've been there.

My current Mortgage (inc. taxes and insurance escrow) is ~26% of my gross salary (not gross OTE). This provides for a very comfortable month-to-month budget since my commission has huge peaks and valleys in it.

I also have 12 months of household operating expenses in an emergency fund as a buffer.

You do you, but that sounds like a bit too much house for me if I had your numbers.

IAMAM

Catalyst

SADNESS

We don’t have any credit card debt or student loans. 18 months left on just a single car payment. That being said, we would be walking a fine line, but there is nothing else for less in the area and we have completely outgrown our current home. I was including taxes, insurance,and escrow in my numbers too.

JustGonnaSendIt

Politicker

Burn Towns, Get Money

In a HCOL, that's just the way it is sometimes. As long as you're going in eyes open it sounds like you have a plan. Just gonna have that monkey on your back to hit your numbers :)

poweredbycaffeine

WR Lieutenant

☕️

Live on your base, invest and spend on your commission. This is the way.

Also, most mortgage brokers only consider your base for your qualification unless you have 12+ months of consistent earnings history with your company. Make sure to look at that and discuss it with your lender.

IAMAM

Catalyst

SADNESS

Our mortgage broker is using commission due to the history.

jefe

Arsonist

🍁

This is the way.

TheOverTaker

Politicker

Senior Account Executive

I will never *again* take a job where the base doesnt cover my basic expenses. It was a terribly stressful time especially the first 6 months

IAMAM

Catalyst

SADNESS

My base is quite strong, we just live in an area that’s impossibly expensive, so wondering how much of my commission I can/should rely on for monthly budgeting purposes.

braintank

Politicker

Enterprise Account Executive

You're on the right track. The rule of thumb is your mortgage payment shouldn't be more than 28% of your monthly pre-tax income. Have you started working on mortgage yet?

IAMAM

Catalyst

SADNESS

Mortgage would be just under 28% of gross at 100% quota attainment. About 45% of gross at base only with 0% attainment.

DataSlangah

Politicker

SAE

The only advice I would give you is PAY YOURSELF first. That means the savings and investing should be the first thing that comes out of your paycheck, the rest is what you can afford.

Sunbunny31

Politicker

Sr Sales Executive 🐰

You're either paying a mortgage or paying someone else rent. Mortgage becomes a fixed, relatively stable monthly cost (property taxes being the variable), whereas with a lease, you're at the whim of the landlord and the market.

Mortgage all day every day - and since it's possible to cover it with your base, albeit a bit uncomfortably - it seems like it's the right decision.

I live in a HCOL area. We bought our first home years ago. It (somewhat unbelievably) recently sold for just under a million dollars, just a hair over 2X what we sold it for in 2008. It was a very cute house, we loved it, but it's very very small. Point is, housing is $$. Worst case scenario, if you end up needing to sell, you may (probably will) come out ahead.

IAMAM

Catalyst

SADNESS

Yeah, we own currently but have outgrown the home with the kiddo. Buying a new house and selling our current so the equity we pull out will replace the 20% down we are putting into new place. End of the day, we are going to have a decent chunk in savings (around 18+ months of my base if our current home sells for what we are expecting), but was feeling a little freaked out by the monthly mortgage being 150% of what we pay today!

Sunbunny31

Politicker

Sr Sales Executive 🐰

Buying and selling at the same time is grueling. I applaud you. We only left our lovely little house because we had also outgrown it. No regrets, but the process is such a challenge. We also bumped the mortgage up 150%, but acquired a huge amount of equity in the process that has only grown over time.

Definitely keep your base in mind through all of this, but honestly, you're not doing anything outrageous.

Kids are expensive. Set up a college fund ASAP if you haven't, and realize that whatever extracurriculars they will want to do will be surprisingly costly, but well worth it in the long run.

IAMAM

Catalyst

SADNESS

Yeah, it’s kind of a shit show with the home sales crossover, but will be good to have the cash equity for a safety net. I suppose if the lender is willing to finance us, we can’t be that outrageous at the end of the day!
And yea - we already started an Acorns Later account for little man and contributing $200/month, plus some lump sum deposits every so often or when grandparents provide a gift of any type for him. Feel like that’s a good start for now, but we will bump it up as income continues to grow.

Wellss

Tycoon

Channel sales

I agree with lots of other people here, budget using your base alone. Commission can be so unpredictable, I mean we all saw what happened the last couple years & how it affected the market. It will feel good knowing that you're covered in terms of house payments no matter what, and the extra commission can be used for other wants & needs.

LordOfWar

Tycoon

Blow it up

I live off my base and commission is for savings/fun stuff. We also just bought a house and by making smart decisions and not overextending (plus a couple of record years) we could actually get another now as a rental property if we wanted.

Lots of things can go wrong and issues outside of your control can affect income, best to play it safe with a new little life to take care of. You'll have surprise expenses and saving for college/uni is no joke.

It will also help you sleep (somewhat) easier knowing you have a growing nest egg. You can always get a bigger house later if/when baby no. 2 comes along.

Beans

Big Shot

Enterprise Account Executive

Budget on base, extras and wants come from commission and additional investments.

LordBusiness

Politicker

Chief Revenue Officer

I buy more than I make. Great motivation 😆

Justatitle

Big Shot

Account Executive

When I did mine I budgeted based on guaranteed money. You will sell and all that jazz but you don’t want to rely on that as a justification for spending too much and then digging a hole. Good luck with buying and find a good inspector for the house.

Mr.Pickles

Arsonist

Sr. Customer Success Manager

never budget on commiss - always go for the base and any extra goes for savings

TennisandSales

Politicker

Head Of Sales

Yeah I always look to make sure my monthly budget is covered by my base salary. not just expenses but everything we want to do in a month is covered by the base. (i am lucky that I can do this)

Then commission is used for anything else, savings, investing, fun purchases ect.

I was on commission only at the start of my career for 4.5 years and that shit was the WORST for trying to do any sort of planning.

NotCreativeEnough

Big Shot

Professional Day Ruiner

Always budget off my base. Commission is for vacations, investing, fun purchases, etc

CuriousFox

WR Officer

🦊

Congrats on your new addition ❤

kelvin26

Fire Starter

administrative manager

https://timebrookinvestment.com/u/sign_up?r=kryptotitan

https://t.me/+L_3GDbXlz904MDg0

kelvin26

Fire Starter

administrative manager

https://timebrookinvestment.com/u/sign_up?r=kryptotitan

https://t.me/+L_3GDbXlz904MDg0

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IAMAM

Home budgeting with commish?

29 comments

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