Should I use supplemental income like RSU to pay off debts and be more financially independent?

Microsoft / Eng
Goivenglav

Go to company page Microsoft Eng

Goivenglav
Apr 24, 2019 8 Comments

I’m in my mid 30’s, no kids, and have a significant other with a non-tech income. We have recently begun sharing expenses, which is good because I’ve maxed out my 401K contribution and so I’m making less per paycheck. To give myself some extra cash each month (~$300), I decided to sell some MSFT stock ($7K worth) and pay off the remainder of my student loans ($7K) a few years early.

I want to be able to have more control over my savings and investments, which to me has always meant ice any recurring debt that I can and keep more of my earnings in my pocket for savings (especially for purchasing a home or funding emergencies down the line).

I’m now thinking to myself that I could do the same with my car. I have about $5500 left to pay on it, and this would put another $350 into the bank per month. Car is 2014 Ford Focus (38K miles) which I may have better leverage trading in down the line if I don’t have negative equity. Additionally I only drive once a week or so and as such not putting too many miles on the car.

Has anyone else done this? Has it helped you take better control of your savings and achieve financial goals? MSFT has been up lately, so seems like a good time to sell. I still have more refreshers coming, so those options will vest in the coming months.

L63. 7 Yoe. TC: base is $165K RSU $57K (RSU awarded last year and still have on-hire vesting each year).

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TOP 8 Comments
  • Oracle
    HKF045zh

    Go to company page Oracle

    HKF045zh
    Debt is dumb. It’s awesome to not owe anyone anything.

    Sure, Oracle doesn’t pay much, but my only monthly expenses are food, property tax, garbage, fuel, and maid service. Bought solar panels a few years ago to eliminate the monthly power bill. Water is from a well. I pay cash for a car when I want one. I don’t need the job and don’t have to take shit.
    Apr 24, 2019 0
  • Flagged by the community.

    • Microsoft / Eng
      Goivenglav

      Go to company page Microsoft Eng

      Goivenglav
      OP
      Great read so far, thanks! Yes I think it’s intuitive to pay down debts before investing further. I should also clarify, by investments, I am referring to any number of other activities to help grow my money later on, doesn’t necessarily mean I need to go in on risky securities. Just seems intuitive that you can’t really do that when everyone is asking for their cut of your regular income.
      Apr 25, 2019
  • Amazon
    seattle'd

    Go to company page Amazon

    PRE
    Amazon
    seattle'd
    Depends on how much interest you will pay in future versus payoff now. If interests are lower in dollars, then why pay off? Instead keep money invested.

    Btw, your TC of $222 at L63 in MSFT is for SDE role?
    Apr 24, 2019 1
    • Microsoft / Eng
      Goivenglav

      Go to company page Microsoft Eng

      Goivenglav
      OP
      Yes, L63 Senior SDE. In interest over the next 1.5 years, I’ll save about one whole payment, but will be able to actually save more of my income month to month, which is the upside. Plus the way I have presently calculated my most recent awards that have vested will be about equal in value to paying off the car. So it would sort of leave me in the same place in brokerage account as I am now (in a state where I don’t need to regularly draw on it), but keep more income for house savings and other investments.
      Apr 24, 2019
  • Okta
    duckingbay

    Go to company page Okta

    duckingbay
    Yes. Less debt is more freedom.

    If you get caught in a layoff, having a low burn is great.
    Apr 24, 2019 0
  • Microsoft / Eng
    HINs46

    Go to company page Microsoft Eng

    HINs46
    Think it economically. By paying off the debt, you eliminated the interest cost, but you also payed the opportunity cost by unable to invest the money in other places.
    In short, if you think you can do better in investment market than that apr, then keep the money. Oh, don't forget the capital gain tax.
    Apr 24, 2019 0