What to do with RSU

Have a Plan

With another segment of my Restricted Stock grant vesting on December 1st, I thought it would be a good topic to cover.  Before we dive in, I want to emphasize the importance of having a plan for extra income before it arrives.

Too often do we get caught up in the excitement of a bonus or windfall and if we haven’t planned carefully, the money seems to vanish overnight.  I’ve been guilty of this in the past.  It’s very easy to lose track of where it goes.

Due to my current debt circumstances, I want most of the extra to be applied to that.  I think it’s still important to get a little morale boost too, but we’ll be conservative with it.  In this case, I will be applying 80% toward outstanding debt, 15% will go to our investment account, and the remaining 5% will be used for play.

By the Numbers

The expected net income at sale will be around $3300.  This puts ~%2600 towards debt which will clear the outstanding Vet bill.  That gives us around $500 to add to our investments.  The remaining $165 will most likely go towards a nice dinner out with my wife.  With this plan, I can feel good about spending a little on enjoyment knowing that I put most of it to work for me.

Tax Implications

With my current grant, a number of shares will be sold at vesting to cover taxes on the gain.  I plan to sell the day it vest, so I don’t anticipate an additional tax burden.  My ESPP behaves differently and I will cover that in a future post (probably in January when that is up next).

Portfolio Management

Some people hold onto their RSU shares as an investment.  There are pros and cons to this approach.  My portfolio is small enough that the shares would be a larger percentage of my holdings that I want in any one security.  I like to keep each position to less than 1% of my overall holding (including all 401k, IRA, and Individual accounts).  This reduces the risk that any position would have a large impact on my Net Worth.

Since I’m still in debt reduction mode, that’s all intellectual exercise at this point.  It’s much more important to me to use the value to pay down liabilities than it is to hold on to the assets.




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