Living in Texas on $1 Million A Year | Noah Kagan

Living in Austin, Texas on $1 Million A Year

My name’s Noah. I’m the founder of AppSumo and I live in Austin, Texas.

In this post, I’m going to break down how I make and spend over $1 million dollars a year in the city of breakfast tacos.

Let's dive in.

Living on $1 Million A Year in Austin Texas

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My Job & Income

First I’ll cover my job and income to give you an idea of what I do and what resources I’m working with.

What is my day job? And how does our company make money?

I’m the CEO of AppSumo, the number one digital marketplace for entrepreneurs.

Basically, I'm the coach and “the janitor.” I try to help everybody else to make sure they do their jobs well. And I build hype for AppSumo and make sure people know about it, especially if they're early in their entrepreneur journeys. I do a lot of that through my YouTube channel.

How do we actually make money?

Our team finds the best tools online, we get deals on them, and then put them on our marketplace and promote them to our audience.

We revenue share with all the tools we promote so they get money when we promote them, and we get a little bit of a cut.

How much do I make a year?

My base salary is $175,000 and we’ve copied Amazon in the way we do profit distribution. We try to reinvest almost all the profit that we make each year back into the business, so our overall profit each year is zero. That means every subsequent year is even bigger for our company.

With some of the profit we have at the end of the year, we distribute it across the team, and that’s how my salary is over seven figures.

Cost of Living in Texas #1: My Housing

I was just thinking the other day how grateful, lucky, and blessed I am to live in the house that I do, and just overall, for my life in general.

I've never really had nice housing growing up. And when I got older, I still lived really cheap. I lived on couches, I lived in basements, and I slept on friends’ floors.

When the pandemic hit, I rented a really nice house for around $20,000 a month to see what that experience would be like. I used to have this association that materialism = bad and if I wanted nice things, they would eventually go away or I would lose interest.

But… I didn’t.

Living in that house, it was so much easier to be happy. I loved hosting people, I liked being inspired by the place I was staying at. So I decided that I deserved to live in a nice house and wanted to treat myself to one.

So in January 2020, I spent over $2 million on my house.

But I’m glad I did the try before I buy thing. If you're thinking about getting a nice house, or a nice car, or any kind of fancy stuff, try it out first and see if it actually makes a difference for you like living in a nice house actually makes life a lot better for me.

I think in business, relationships, homes, whatever it is — the longer you have something and still feel lucky to have it, then you probably did the right thing.

When it came to buying a house and living in Texas, there were a few key things I wanted my house to have:

  • I wanted a garage to put my car inside. I've never had one.
  • I wanted a pool or hot tub. I’m a huge hot-tubber, so I just thought it'd be fun to have that.
  • I wanted something where I could host people. I love having people over almost every week.
  • I wanted to have a separate office. I've worked at my kitchen table since the beginning. So I thought it’d be cool to have an actual office but I still mostly work at the kitchen table.

I bought my house for $100,000 over asking. It was in the $2 million range and I bought it from a football player who’s still playing to this day.

One of the coolest experiences about buying my house was becoming friends with the sellers. Normally, when you buy a house you just talk to the brokers and you don't really meet the sellers, but we became friends and we text, and it was cool to know the story behind the house.

Cost of Living in Texas #2: Utilities

If you want to live in Texas and buy a house, there's no state income tax so that's a really nice benefit. But my property taxes are around $3000 a month. And they go up every year because they do a reassessment of the value.

Big houses are like big dogs — they need more food. So my water bill, electricity bills, and gas bills add up to around $500 a month.

I also have house staff — which sounds really rich to me, I don't know how it sounds to you — but I feel very fortunate to have them. And it may not be for everyone, but it’s how I'm choosing to spend my money in my lifetime.

  • Cleaners: It's about $200 every single week.
  • Lawn dude: That's about $300 - $400 a month.
  • Pool people: $300 - $400 bucks a month.
  • House manager: It's about $2000 a month.

My house manager is amazing. She figures out groceries, sorts out packages, manges returns, etc. It's unbelievable how many things there are to do around the house.

Overall, I spend somewhere around $4000 a month on staff to just maintain the house in this condition.

But, I've got to say that I'm so proud of this house.

I'm so excited to have people over and it's been a life upgrade so my baseline is now significantly higher.

The lesson here is not that buying a bigger house will make your life instantly better (it might!) but experiment to see if having a nicer place or a nicer bed makes your life feel any different.

Find the areas of your life where upgrading your standards makes a change to your life overall.

Cost of Living in Texas #3: Transportation

I have three vehicles.

  • 2020 Tesla Model Y
  • 2004 Mazda Miata (shout out to all those quarter life crisis men)
  • 2015 Buddy Genuine Scooter

The Tesla just takes electricity, which doesn’t cost very much, and I don't drive it too often. It costs about $700 a month for car payments.

The Miata was $6000 and that's paid off. And the scooter was about $4000 and that’s paid off as well. I pretty much drive both of those just on weekends, so the gas costs maybe $50 bucks a month.

The one thing you have to think about with cars, especially when you get a little bit more money, is the insurance. It’s more expensive on the Tesla, I can’t remember the exact amount, but I do have umbrella insurance which is somewhere around $2000 a month.

Cost of Living in Texas #4: Teachers and Coaches

Michael Jordan, Kobe Bryant, even Zuckerberg when I worked at Facebook, they all had coaches. But a lot of us think we're better than that.

I have a therapist, I see him every other week and it's around $300 a month. Honestly, it's just a space for me to talk about the things going on in my life and reflect on what I want to work on and not work on.

I have an executive business coach. He’s around $8000 a month or $100,000 a year. A business coach teaches you how to run your business better, and they work with your team as well to help make the company better overall.

I have a Hebrew coach who’s about $200 a month.

I have a boxing coach and we meet every week, that’s about $250 bucks a month.

So I’m spending about $10,000 a month on all the different coaches I have in my life.

Cost of Living in Texas #5: Going Out for Food & Drinks

I don't spend a lot on going out to restaurants. I don't eat out a lot.

Normally, I'll order in. I like GrubHub, UberEats, and WholeFoods Delivery.

I do go to TacoDeli quite often, probably at least weekly or every other week. There's also a bakery around the corner from my house and I get about 2–4 cookies a week and I buy coffee and support them.

But I'm not actively going out to a bunch of new restaurants, normally I'm eating at home.

I do have a chef though — I’ll talk about that in a bit.

So how much am I actually spending on going out to eat per month? It’s about $1000 a month just going out to restaurants occasionally and picking up food.

Cost of Living in Texas #6: Hobbies

Flying is probably the most expensive hobby I have.

I'm getting my pilot's license and anytime you go out on the plane, you pay for the plane and you pay for the instructor. It's about $400 every time I go, and I go once or twice a week, so it’s about $3200 bucks a month.

It's a pretty expensive hobby, but it's something that gives me a lot of freedom, so I'm really excited to be able to actually do it.

I also mountain bike. But once I bought the bike, I didn't really spend more money on it. Maybe I spend a few bucks on gel packets or water or LMNT (shout out them!) but I don’t spend much on bike gear anymore.

Bikes are great because you spend once and enjoy them forever.

Cost of Living in Texas #7: Groceries

This is where I actually spend a significant amount of money. I think my Amazon bill, which includes Whole Foods and other things, is around $3000 – $5000 a month on average.

Which is kind of wild.

For me, having a sick-ass fridge is something I'm really proud of.

I choose more premium products, more premium ingredients, and try not to limit myself in this area.

Some of my favorite products to stock in my fridge are:

And for me, feeling rich is having Fiji water, so I stock that too. But my sink has filtered water so when I buy a new bottle, I just refill it at the sink and put it back in my fridge.

The thing to think about here is figuring out what a rich life is for you. I know my buddy Ramit Sethi talks a lot about this. When it comes to groceries or anything else in your life, buy the things you can that make you feel like you’re living your rich life.

Cost of Living in Texas #8: Hosting

I've hired a private chef recently so I can make hosting a little bit more fun, so I’m spending around $2000 a month on hosting.

But I want to be generous, I want to feel generous, so being able to hire a chef and give her work as well as being able to have amazing food and amazing conversations with my friends is something I’ve definitely leaned into.

I've always liked connecting with people and doing it this way feels rich and it feels special. So I do it.

Cost of Living in Texas #9: Growing My YouTube Channel

I have a YouTube channel which is pretty expensive to run.

We spent around $300,000 a year at least just running this channel.

It takes a team to make this stuff. We have Mitchell who is the general manager, Jeremy is our lead producer, Cam is our video editor, Sasa does all the thumbnails, George does our marketing, Jenn does our social media stuff, and Nikki turns the videos into blog posts like this one that you’re reading now.

So why am I actually spending so much money on YouTube and everything else around it?

First, because I love it.

And secondly, because I have the money to do it, and I think it’s a long term investment. I’m putting in $300,000 this year and I think it’ll pay off in years to come as the audience gets bigger and we help more people.

Cost of Living in Texas #10: Clothes

I don't think I've ever dressed well.

My mom dressed me a lot in junior high school and elementary school, and it wasn't really the best. It wasn't a priority in our family. The thinking was to be happy that you actually have clothes.

So now, I buy whatever looks good that I’m excited about. And whatever I wear on my YouTube channel, I like to wear once and then pass it forward. So I’ll give it to friends or family or donate.

Cost of Living in Texas #11: My Personal Assistant

I have a personal assistant, which costs around $2000 per month. Her name’s Jamie and she’s separate from my house manager.

She covers basically all other aspects of my life like scheduling, buying things, refunds, planning trips, etc.

I basically ask her to plan stuff out which allows me to focus on the things that are the most important to me, which is AppSumo, my YouTube channel, and my book.

Cost of Living in Texas #12: Books

I spend about $100 – $200 a month on books and I love the Ryan Holiday method, which is if there’s ever a book you’re thinking about, just get it. It's literally one of the best investments you can ever have in your life.

Think about this: Books cost around $15 – $25 dollars and the amount of information you can get out of one book is way more than that.

Key Takeaways

The way I live in Texas might not be the way other people live in Texas — or the way you live no matter what part of the world you’re from, so the thing I want you to take away from this blog post is to find the word you want your life or your work to embody.

My word is generous.

I talked about that a little bit, but more specifically it's about being generous to myself as well as generous to others. To me that means doing things like donating to Wikipedia, or to the Boy Scouts, and making sure that people in our company are paid well.

I think the one thing that I see time and time again — literally across the board — is everyone overestimates how much money they actually need to live a great life.

If you want to become a millionaire… Ask yourself why.

You can probably live just as great of a life earning $100,000 a year, and you could do work that you actually enjoy.

For me, I've been very fortunate to do a lot of work that I really enjoy, and it ended up making a good amount of money. Now I'm in a place where I want to help the people around me like our customers, and partners, and the people that I work with, also make as much money as they want to be making.

That’s what it means to me to be generous and live a rich life.


 

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