To be fair my calculation is if you’re not at near peak TC band when you enter top tech companies it’s hard to impossible to catch up, so the anxiety is warranted.
That's precisely my point regarding the rat race - what is one trying to catch up to? Is there economic or social anxiety at 350k/yr which evaporates at 400k/yr?
Absolutely. Purchasing real estate (or even a Tesla, etc) is out of reach for people like me, and likely will be for 10+ years from now.
Say someone makes 150% or more of what I make (ergo are valued 150% superior in a fair labor market) and they can save far more and build a their net worth significantly faster even with a more luxurious lifestyle.
But the person earning 150% more than _them_ isn't purchasing a Tesla. It's a Lamborghini or a Bugatti. It's not a 3br home in SF - it's a summer home in Napa, or a chalet in Tahoe.
The person earning 150% more than _them_ is coveting the latest Bell Jetranger, or Gulfstream G700.
You know I hear this argument a lot and I don't buy it because it ignores a baseline at the lower end.
I think there are a lot of people that are not concerned with the luxuries you reference but are deeply concerned with their base needs and random setbacks life throws at them. They basically want to save for a rainy day so as avoid stress when they encounter bumps in the road.
It's like asking someone who works for minimum wage why their worried about moving up to a salaried position because compared to the people in Sudan, they have a life of luxury.
I think the point is about working out when you have enough.
No matter how much you have, there is always the opportunity to be envious of others who have more. Acquiring more will not stop the envy or satiate that need.
But you can decide that you have enough right now. Or you can set a goal and say "that is enough for me". That goal might be really high, or it might be really simple, that doesn't matter. The part that matters is deciding that you have enough at some point.
I've been homeless, and having a warm safe place to sleep was enough. Now my sights are somewhat higher, but comparing myself to a friend who exited a few years ago is a constant source of misery. I have to keep reminding myself that I have enough at the moment, and to be grateful and enjoy what I have.
I think the baseline becomes irrelevant at around 50k, maybe up to 100k-150k in some areas, but in those areas it's not hard to make 150k as a software engineer.
I make 75k and save almost half my income while having all the material items that I want. Granted I don't want a lot, but I actually believe quite strongly that not having that constant desire for more and nicer material items makes me much happier than those who are stuck in that cycle.
Not to sound douchy but I think that kind of materialism that is so extremely common across all levels of society seems to me like such an enormous and obvious problem that most people fall into for some reason regardless of how smart they are, and they would almost all be significantly happier just not caring about such sh*t. It's a crutch and prevents people from finding real meaning and happiness and for most it lasts their whole life or at least until they are too old to change.
I know this isn't a novel idea, any slightly rebellious teenager can and will point out the obvious harm of this kind of mindset, but that only makes people disregard it even more. It's such an obvious problem, and most people even agree when you point it out, but then those same people live out the rest of their lives without doing anything about it.
I blame social pressure and peoples tendency to not wander to far from the norm, combined with some conditioning and of course the addiction-mimicking dopamine effects
You're completely correct, diminishing returns of income on happiness is well established, and I would be surprised if people here were not aware.
This community skews very hard towards high earners though, so people here probably view that as something that goes without saying, but that isn't within the purview of this particular discussion about the rat race in tech.
Among this community, it's probably true that a significant raise wouldn't significantly change their day to day lives, although obviously that is less and less true as their baseline income goes down.
Is this a joke? $350k annual income puts you in the top 1% of earners in the US. Surely you don't believe less than 1% of people in the US can live comfortably and have a safety net, do you?
Going through the realization right now that I need to go “FANG” or get out of the Bay Area right now. Just got engaged and I have been looking at costs. I thought I could make a small family work here on $170k. That’s dead wrong. I would need at least $300k to make a family of 4 comfortable here. My wife and I both want her to stay at home and focus on the kids and she makes non tech money anyway. Even at this amount we are looking at a an uninspiring life thats most about paying interest on a way too expensive house and not having enough for retirement or sending the kids to college.
Startups in tech aren’t paying close to family raising salaries in the Bay. FANG does albeit reliant on stock continuing to grow like it did last decade. I am personally studying math/algos/leetcode and getting good at interviews. Its sad because it takes up all of my free time that I could spend building. It sucks to make $170k and feel like you can’t make it somewhere.
I finally had a breakthrough with my fiance last night and we are talking about moving to Salt Lake City! My current job would allow me to go remote and there does seem to be a scene there. $170k is more than enough.
>That’s dead wrong. I would need at least $300k to make a family of 4 comfortable here.
The Bay Area has a combined population of over 7 million, with a mean household income of $137k. It sounds like you have unreasonable expectations if you need at least $300k to live comfortably.
A lot of these people got into the housing market before the explosion in prices over the last 15 years. Also, that stat also doesn't tell you if people on those incomes can afford their houses or how soon they can retire.
It sounds like you either don't live in the Bay Area or you make about what I make and haven't realized if you don't make $300k and your options aren't very pleasant.
I don't know if you came from an extremely privileged background, but I find it ridiculous that your minimum standard of a comfortable living starts at over double the median household income for that area.
I grew up in the Rust Belt in rural PA. Mean salary where I am from is about $22k. You either haven’t lived in the Bay Area or can’t do math if you think what I am saying is crazy. Anyway check this out https://www.google.com/amp/s/www.cnbc.com/amp/2019/09/11/you...
My wife and I went through the exact same thing back in 2006 and I can tell you while fear of the unknown is real, it might have been the single best decision we ever made.
Also, Phoenix is pretty reasonable cost of living wise and they have a growing number of opportunities tech wise. June 15 - Oct 15 suck but you get used to it.
Thanks, I will check out Phoenix. Assuming you are a little older since you moved in 2006, do you feel like the top end of your career has been held back at all by not being in one of the major tech hubs? What does your role look like now.
I was surprised to see that Amazon (Twitch) is in SLC as well. What sort of paycut would I be expecting. I think my current gig would probably make me go from $170-$150k if I went remote. I assume the top end wouldn't be what it is in the Bay Area but maintaining > $150k is reasonable with 10+ years of experience?
If you can find stable remote work that you enjoy that's surely something to consider. If you are flexible on where you can live you can really skew the relative compensation in your favor. I think for most situations you'll find the decrease in pay is more than compensated for by the decreased cost of living compared to the left coast.
I'm including series D companies under the term startup. I agree with you about early stage companies. Jobs at non FANG that don't IPO are not that sustainable imo.
It's helpful to remember that the Bay Area is extremely expensive, and even more helpful to remember that some people have large families.
I could pretty comfortably raise a family of 6 on $100K in a midwestern city, or a family of 6 on $80K in the rural midwest/south. Without sufficient retirement savings, mind you, and my safety net would be non-exisent. I'd need at least another $30K-$50K on those numbers to build a strong safety net (remember, it's a safety net for 2 parents + 4 kids, not for one person...).
Doing the same in SFBA would probably require at least $250K. Maybe more.
> Surely you don't believe less than 1% of people in the US can live comfortably and have a safety net, do you?
The number is larger than 1%, but probably still smaller than you think.
The average American definitely doesn't have a sufficient safety net. IME, the average American raising more than 1 or 2 kids almost certainly doesn't have a sufficient safety net.
So, no, you don't need to be in the top 1% of earners in the US to have a safety net. But if you have a large family, you probably have to be in the top 10% to live comfortably and have a safety net and retirement.
> Doing the same in SFBA would probably require at least $250K. Maybe more.
Why? Each child might consume, generously, an extra 5k of food and 2.5k of clothes and other inputs per year. This is an increment of $30k on top of housing. For housing, you could add one or at most two bedrooms for four children. This does substantially raise housing costs, but there are still places in Sunnyvale for $1M or just above that that have three bedrooms. They may not be the nicest houses, but they would do.
So, before you have kids, save your downpayment. On a 250k salary, this would take one to three years if you're thoughtful about it. Then buy the house and start popping out babies. Times will be tight if you need to pay for childcare, but that's a defined and short period of the childrens' lives. You're not going to be taking lavish vacations, but if you wanted those, you wouldn't have four kids anyway.
Or, be involved with your school board, and raise up the schools you can afford to send your kids to?
Ego seems to be at play here, a bit. No one wants to admit that they're in the same boat as the people sending their kids to "those schools," but they are. The numbers don't lie. Looking on the bright side: admissions look at class rank. An outstanding student at a mediocre school has better odds than a mediocre student at a "good" school.
There are plenty of houses listed near $1M on Zillow that have acceptable school districts. They aren't the best in the Bay, but I'm not a buyer on the premise that you need a 10/10 school for your child to have a good opportunity at success and happiness.
Depends on where the home is. With admonishments from every corner for my not squirreling away $100/month out of my ~$1800 take-home pay, someone making $250k a year should be able to easily put away the linear equivalent of $10k a year. 5 years of that is a down payment on something decent, somewhere decent.
Of course, my bread costs about as much as their bread, so they could probably getaway with a bit more. It's all about making good financial decisions, right?
Just to toss out another example. I make about $150k. I'm a single father. I put the legal maximum into my retirement account every year, which I think is $19k this year. I have 6 months of expenses saved up in my emergency fund. We take a nice vacation every year and have luxuries like season passes to Broadway. Yes, I think it's all about making good financial decisions.
When I was making $35k/yr I was putting 10% in my retirement plan. I just had cheaper vacations, older cars, and fewer luxuries. People don't like to hear it but most financial problems are a character problem more than they are an income problem. The good news is that character flaws are not permanent. We all have them and if we can be self aware enough to acknowledge them, we can address them.
>Did you rely on your family/friends for ANYTHING (including something as innocuous as "storing your childhood possessions")?
>Did you have any chronic or acute health issues?
>How far did you have to drive for work?
>Did you have friends or family you were obliged to support, even occasionally?
>Did you have a side hustle?
And so on.
Broadly-speaking, making $35k before taxes in 2020 in any major metropolitan area is a tightrope walk at best. The best way to encourage saving is to pay people enough money that they feel comfortable charting out a plan to save. That's a sliding scale, but I would say you hit 80% around the median wage, which is not $35k/yr.
IME the people giving this advice have a critical misunderstanding of either costs or the value of cash relative to when they started out.
Before, median household income for my city at that time was mid-50ks. Of course median household income is with 1.5-2 workers. I wasn't married, but I did split rent on a house with friends... so adjust accordingly I guess.
>What year?
circa 2005
>Where did you live?
A 2nd tier major metro. Not NY/SF/LA, but a city you've definitely heard of.
>What was your monthly rent?
I don't remember
>Did you rely on your family/friends for ANYTHING (including something as innocuous as "storing your childhood possessions")?
No. My parents did have my childhood possessions but I grew up in an abusive household and never went back to retrieve those items.
>Did you have any chronic or acute health issues?
No
>How far did you have to drive for work?
30 mins
>Did you have friends or family you were obliged to support, even occasionally?
Yes, I helped friends pay rent a few times if that counts.
>Did you have a side hustle?
No
IME people will look for any excuse not to face their own personal failings. These are all the wrong kinds of questions. Instead of seeking an excuse for bad behavior, the right kinds of questions are about strategies for achieving better outcomes.
No, I think you've proven my point. $35k in 2005 is roughly $43k in 2016, which I'll use as a point of comparison because it was when I was myself making roughly $32k before taxes.
I'll just stop now to point out that this would be enough alone to allow you to drop 10% - and then some - into retirement savings, without living any more or less comfortably than I did. As I said before, the best way to encourage saving is to increase pay.
I assume you were paying less than my $900/month in rent (a studio price in a similar market to the one you describe), between your having the privilege of being able to split rent, and dealing with rents that were ~5% lower on average. This, again, would allow for a hefty savings rate compared to my baseline of losing roughly $100/month on necessities, even without the higher pay rate.
Considering all of this, I have to conclude that you were actually a poorer financial steward of your income than I was - again, even though I was losing money every month. Living under circumstances similar to yours (higher pay, lower rent), I could easily have put away 20%+ of "my" earnings - you only managed 10%. However, the truth is that we lived under different circumstances, yours much more forgiving of carelessness or mistakes.
Dropping all this nonsense about the labour market being "fair" will help you deal with the reality of it. Interviews have a huge arbitrary element in them of personal preference, and end up selecting for "looks and sounds like the interviewer" or "went to the right school" far more often than they would like. And remember the era of noncompete agreements?
Lol that's not how getting rich actually works. People get quickly used to new income, a bit better phones, clothing, cars, vacations etc. Plus 50% increase doesn't actually translate to 50% net income, taxes % go up in most western world pretty steeply, so the jump is not that big.
This isn't valid for 100% of the folks obviously, but say 90% fall into this trap one way or the other. It is paradoxically easiest for folks already burdened with ie mortgage, because usually the motivation to pay it back sooner trumps the need for some extra gadgets and to show off.
You know what's funny? Their overall long term happiness and life satisfaction doesn't improve a bit. In fact, in many cases it goes down due to ie extra worries about good investments, plus you earn cash by doing extra work.
Myself I increased my net income compared to my first full time IT job more than 20x in last 15 years, and I can tell you happiness comes from different place. Money just help a tiny bit on the path to it, that's all. Some folks, especially those competitive that article talks about, will never be truly happy. Of course is you live in like US with utterly broken healthcare, in some cases money can actually mean saved/improved life, but that's a bit special use case.
Let's say that I'm getting by, but only just. There's things I'd like to do - take a vacation, or replace the carpet, or trade up to a better car - but I don't bother thinking much about them, because there's no point. Those things I can't do bother me a bit, but I don't dwell on them very much.
Now my circumstances improve. Now I can take that vacation, or replace the carpet, or trade up to a better car. But note that I said "or", not "and". I can do one of the things I want, but only one. Now each of those things is realistically possible, and I can seriously consider doing it. But in the end, I can only do one of them.
In this way, it's possible to have more money, and therefore more options, and still feel worse about the things you can't do because you don't have enough money.
Unless you're just doing the passive index fund thing, which there is obviously nothing wrong with, I don't think many understand the stress levels that come from trading. Insane highs. Insane lows. Lows you will eat at you for years.
Nothing with trading, I don't have mentality to thrive there. Still doing IT, still +- same job, just started low and gradually moved to much better place. Plus (I would like to think that) I know how to negotiate salary during hiring. Or maybe just luck, can't really say.
Not even self-employed, which is great but goes opposite to stability, and some goals I have in life are not financial.
Weirdly, I've never made more than about $130k/year, didn't inherit that much, have more real estate than I strictly need, don't particularly want a Tesla (although I've been considering a 5 or 6-year old luxury car lately, as I'm old and fat and tired of crawling in and out of the 2004 Corvette) and I find the "I have to have an initial offer $400k/year or I'll never be able to afford a car or a house" completely inexplicable.
Pro tip: I am a negative example; don't do what I did. If you are success and prestige oriented, do not chase hard problems. Go after easy problems that are well compensated. Hard problems run the risk of failure, from which it is difficult to "catch up", and typically aren't all that well paid.
Say someone makes 150% or more of what I make (ergo are valued 150% superior in a fair labor market) and they can save far more and build a their net worth significantly faster even with a more luxurious lifestyle
That person thinks the same way about someone who earns 150% more than them... this cycle never stops
I probably make < 10%, I'm just fine here. My mind is my own.
>Nobody cares if you can make pasta from scratch and it’s not going to make any money
I don't live up to other peoples expectations, their expectations are irrelevant to me. I have my own expectations.
I did learn to make the macaroni and perfect it. Since perfection is personal preference it's better than the fancy restaurant.
The horse is behind the cart. We make the money to buy the macaroni. I go straight for the macaroni. There is no money in learning to tie your own shoes or make your own bed? ha-ha
Lol that's not how getting rich actually works. People get quickly used to new income, a bit better phones, clothing, cars, vacations etc. Plus 50% increase doesn't actually translate to 50% net income, taxes % go up in most western world pretty steeply, so the jump is not that big.
This isn't valid for 100% of the folks obviously, but say 95% fall into this trap one way or the other. It is paradoxically easiest for folks already burdened with ie mortgage, because usually the motivation to pay it back sooner trumps the need for some extra gadgets and to show off.
You know what's funny? Their overall long term happiness and life satisfaction doesn't improve a bit. In fact, in many cases it goes down due to ie extra worries about good investments.
Nah. That's just sour grapes. Saying that more money leads to less long term happiness and life satisfaction. It's not true. It's not hard at at all to find good investments. If you have some money, and are willing to take some risks, your investments will grow. The rich get richer. It's a law of nature.
>To be fair my calculation is if you’re not at near peak TC band when you enter top tech companies it’s hard to impossible to catch up
I'm not sure I understand. What is the point you're making? Why is it hard to catch up? What's stopping someone in a mid or low TC band from switching to another company and increasing their TC?
Switching usually means a downlevel or a lateral level transition (extremely rare that someone uplevels from a switch) which limits the upside. You'd always be tied to your prior TC in some way and the effects compound.
So? Is the point you're making that you won't be the highest paid employee in a company?
Your TC is tied to your prior TC, which is tied to your internships and college, which is tied to your high school performance. Might as well take it down to kindergarten.
If you're not a child prodigy, then you won't be the most talented, highest-paid employee.
