Entries Tagged 'Salary' ↓

Recently, several personal finance bloggers I read have taken the plunge and quit their jobs. They include The Silicon Valley Blogger at The Digerati Life, Trent at The Simple Dollar, and my fellow peninsula resident Lazy Man. Today my friend asked me how much income I need from blogging to quit my job, and I told him I’d probably be willing to take a gross pay cut of $30000 per year. He then said, “you are willing to take that big of a paycut?” I then sort of explained that it isn’t as a big of a cut as it seems. Here are my reasons why.

1.Taxes take a big bite out of things - An extra $30000 ends up being only $15000 after the various taxes I have to pay. (Federal rate 28%, State rate 9.3%, plus social security, sdi, medicare) So really I’m really only taking a pay cut of $15000 take home.

2. I can save money on my vehicle when I stay at home - I really don’t drive very much. My commute is 9 miles each way and I have a pretty gas efficient Honda Accord that needs to be filled up every two to three weeks. Nevertheless, it costs me over $100 a month to get the fill ups. If I stay home and drive less I can save over $2000 a year on gas and maintenance. So that $15000 I am losing now becomes $13000.

3. I will be able to cook more and save more - Out of convenience we still go out to eat a lot these days. We come home between 7 to 8pm and just don’t have the time or will to cook. Sometimes we cook some simple salads and pasta, but the other times we go out to eat. If I do stay home I will be able to cook more and save a lot of money on food. I will have time to coupon clip and be even cheaper. The savings there could add up to another $2000 to $3000 a year. (We spend around $200 to $400 a month eating out right now)

4. I can write a lot more - These days I blog on my lunch hour or when I get home. It takes a lot of time to write anything coherent and informative. If I could concentrate on writing more I could grow my income stream better. Then the paycut would become smaller every day.

Unfortunately, I am nowhere near the income I would get if I took a $30000 paycut and if I quit my job now it would be pretty devastating. Another thing is that I would probably have to pay some money for health insurance if I were to get on my husband’s plan. The good news is that February is the best month year in terms of income and exposure for my blogging. I have already gotten $250 through various sources and I hope March is just as good or even better. Write on bloggers! Maybe one day you can quit your job like these brave souls I mentioned at the beginning of the post!

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Apparently some of my friends and family were wondering where I was the past couple days. I was not online at all and my phone was out of reach. Well, I was actually at a company sponsored retreat for all of the engineering staff and it was absolutely awesome. We stayed at a camp ground in Pescadero called Costanoa and even though the surroundings were beautiful it was raining the entire time. However, all of our activities were indoors so it didn’t matter. One of my favorite professors from college came to our retreat and gave a week’s worth of lectures from his computer security class and I actually learned a lot. After dinner there were a myriad of fun activities including Scrabble, Belgian beer tasting, a poker tournament, and lots of arm wrestling. (I won the Scrabble and bested a Stanford grad and an MIT grad! Berkeley FTW in Scrabble!) The next day we had a security contest where we were all given an open source project to hack. My team didn’t win but it was still a lot of fun. Amidst all the fun our CTO gave a speech on the economy of all things, and I thought it is interesting enough to share.

Our CTO is a very smart guy that has been around the Valley for many many years (possibly longer than I’ve been alive). He said that he has been through many economic downturns and booms in this crazy place. As he tells it, when he attended college here the semiconductor industry was booming and highway 101 had traffic from 8am to 11pm. Then all those jobs were outsourced and the Valley was quiet once again. Then came the famous dot com bubble and bust. He recounted a conference he attended back in 2002 right after the burst. He and several other people were scheduled to speak to a room full of newly unemployed engineers. The first speaker was a recruiter, and he told the room full of people that there are absolutely no jobs, and advised people not to talk to him to look for positions because there is none. The second speaker was someone who was sort of an expert on real estate and basically told everyone that they will see a housing downturn and lose their homes. The third person was some sort of reporter and also said something depressing. Our CTO was last and he thought to himself, whatever I do I have to say something positive to this crowd of people. So he went up there and asked everyone, “How many of you are unemployed engineers?” Practically everyone raises their hands. Then he asks, “How many of you were doing mundane work like getting data from database and displaying it on a website and got paid obscene amounts of money for it?” A large percentage of the room raised hands. Then he says, “you know what, this is how you can fix our problem. I am sure there is someone smart enough in here to start something truly interesting, and all it takes is one of you to start a company that is amazing and not mundane and the rest of us can work for you.” Supposedly, that is the year our company grew from an idea to a band of the best engineers and researchers. Then he went on about topics such as the mortgage crisis and globalization, and here are my take aways from his talk:

1. Do Not Be Afraid - I came back from the retreat and the stock market was going crazy because of the Fed’s extremely large interest rate cut and various economic problems. The CTO did say that this is going on because of a lot of fear. There is a lot people who are afraid of what is happening to the banks and what is happening to businesses, but in the end things will get better because of innovation and increased productivity. Most of the fear people have is because of uncertainty. There is no clear indicator that everything is alright so there is panic. The right thing to do is to be innovative and try to profit.

2. Economic Downturns Can Be Great Opportunities - The CTO said that the best time to staff up a company and rent office space is in times of economic downturns. If a company has money, then they are getting a bargain because people are more willing to accept lower wages and commercial real estate rents drop drastically. So if you have cash during a downturn, then you are able to snatch up many bargains. As I wrote in a previous article, I will be on the lookout for sales in stocks or real estate.

3. Globalization is Necessary - He said that the world has been changed so much by technology that globalization is no longer an option. Every company and country needs to establish footholds globally to become big. Even though people are always complaining about immigrants in America and jobs being outsourced to India, these things are necessary and probably good for everyone in the long run.

4. Make Yourself Valuable - The CTO asked if we were afraid that we would be outsourced, and only one person raised his hand. He thought that was a good sign because we are a great group of engineers. He further said that if you keep yourself at the top of the pack then you can demand to be paid well and you will not be outsourced. I think that is good advice because there is no need to sell yourself short and if you keep on improving yourself, you should be able to charge a higher price.

5. Surround Yourself with People Smarter Than You - This is  something the executive officers say at almost every speech they do. They always say that they hired people smarter than them to create a great company. I think it is great advice because I learn a lot from those who are smarter than me, and in turn I become smarter. There is also a chance that one of them will start a company one day that is the next Google or the next Microsoft and I can go along for the ride.

Anyway, I thought the CTO’s speech was very motivational and candid. I am sure he can make a living by hosting success seminars, but instead he does funny things like making movies and cheering us on. So once again, do not be afraid and do the best you can this year.

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So, it’s New Year’s Eve and it’s time for me to write down my goals for next year. I am usually pretty clear what I want to do and I always want to reach my goals early. So hopefully I can accomplish the following.

Personal Goals:

1. Get more involved in volunteering — There are definitely opportunities to volunteer here in San Mateo. I just need time and a good cause.
2. Get more than 1000 visitors to this blog daily — I am averaging about 100 to 200 visitors a day now, so 1000 seems a reachable goal by the end of next year if I continue to write quality articles that people are interested in. I write a lot about my life and the Bay Area, but these are the things I know well.
3. Maybe lose a bit of weight – I know almost everyone has this goal and only a few of us actually manage to achieve it. My workplace does offer a gym membership reimbursement of $60 a month so I really should take advantage of it.
4. Help out more around the house — Every time my mother sees me she tells me to help my hubby clean. I guess I’m really not big on cleaning and cooking. My hubby actually said to me once, “you’re not good at anything but making money”
5. Be awesome at my job – I am still in my adjustment period at my new job, but I am definitely getting the hang of things and I am contributing. Next year I want to be recognized as one of the best. Though I have to say my whole team is pretty awesome.

Financial Goals

1. Pull in more than $100,000 in income — This would include my salary and all dividends & capital gains, and of course blog income! I am not including the hubby’s income in this goal because he is free to do what he loves and not care about the pay as much. I am actually pretty close to this goal this year but I took on a new job that doesn’t have as many bonuses as my old job so next year the salary income may not be as high. Then again there is no guarantee I would get good bonuses next year at the old job because revenues have been eroded by the mortgage crisis.
2. Increase our networth by 40% — This is a bit of an aggressive goal since I’m not sure what will happen to the stock market, but the hubby and I have been doing quite well in saving money. We have saved around 50 to 60% of our net income every month in the four months we have been married. Lately I have been sort of cautious about the stock market so I haven’t made any new equity investments, but we saved a good chunk in our Vanguard money market fund and 401ks.
3. Perhaps turn this blog into a business — From what I read many bloggers register their income producing blog as a business and then deduct expenses such as internet fees as business expenses.  I think this is something I could look into because right now my blog income pretty much covers our internet access and if that is tax deductible then that’s great.

As long as I set my mind to accomplish these things I will be able to conquer these goals. I think nothing on this list is outrageously difficult. We will see in a year what happens!

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I graduated from Berkeley’s Electrical Engineering and Computer Science program in 2005 and the Valley was in the midst of an economic recovery. It took me about a month to find a full time position paying $60,000 a year. Recently I did a little digging into the starting salaries of my major for the past 7 years just for fun. I am not surprised by my findings but it is pretty interesting.

This is the raw data from Berkeley’s career center which I copied from several different pages and pieced together. 2007 data isn’t yet available but the median salary is probably about 4 to 5% higher:

Since this data is self reported the reported salaries may be skewed a bit towards the higher end. Nevertheless it’s interesting to see that the class of 2005 is extremely small. I started college in 2001 and that was actually the year Berkeley EECS had the most applicants and it was the most difficult year to get accepted. I think the acceptance rate was somewhere around 11%. The reason was that everyone wanted to get into the high paying major and we all applied during the height of the technology bubble. However, I witnessed a lot of people drop out of the major after the economic downturn. Berkeley would then accept quite a few transfer students from community colleges to fill up the upperclassmen spots. I remember that my sophomore class was wittled down to less than 200 people, but junior year was filled up by an influx of new people so the final graduation count is above 200.

2003 was the worst year of all seven years, and the cheap ex-boyfriend was this class. Companies cut down the starting pay drastically and people had no choice but to take it because having a job is better than nothing. Now four years later, it may still be too optimistic to say that salaries have recovered to the peak levels because the cost of living in the Valley has risen significantly. Gas prices in 2000 were less than $2.00 a gallon, and now it has doubled. The same goes for housing prices. In 2000 a salary of $62,000 is more than enough to purchase a starter home in the Bay Area. I remember back then that my parents were contemplating buying a condo near Berkeley and it cost less than 180,000. Our family friend also purchased a home around then in Albany for 170 to 180k. Now these homes are all valued at around half a million and a salary of even $70,000 a year is nowhere near enough to cover the mortgage. If we take the cost of living into account, I would argue that our real wages have dropped significantly in the Bay Area.

The lesson here is that negotiating for a higher salary when you just start out is really important. Also, it is true that not every Berkeley grad stayed here in the Bay Area so perhaps life isn’t so bad for those that moved on to cheaper areas. Also, if you graduated in a bad year you would need to ask for bigger raises to avoid being paid less than new grads. If you can’t secure a reasonable market rate raise then it’s probably best to change jobs.

I am not sure what will happen in the next seven years. Some say that there is another technology bubble already here, but I don’t think that is true. I am working at another startup but it has a great product that brings in a good chunk of revenue and from what I have heard many other startups are also quite solid. It should be an interesting ride.

Source of data:

Data for class of 2000 via Internet Archives
Data for class of 2001 to 2004 via Internet Archives
Data for class of 2003 to 2006 via Berkeley Career Center

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About fourteen years ago the term “Generation Y” was coined to describe people of my generation. Recently my generation has started to enter the work place and I am reading a lot of articles about how hard it is for companies to manage and retain twenty-somethings like me. I would like to address what I have read in the media about my generation and work from my own experience.

A Sense of Entitlement — This is the number one thing hiring managers complain about Gen-Ys in the workplace. Basically they say that Gen-Ys want to be paid well and do not want to work their way up. Here is how I see it. If I have the same title as 50 year olds and I perform the same job, why shouldn’t I be compensated at the same rate? Why should I be paid lower if I can produce just as much quality work as people much older than me? So I don’t see asking for a good compensation package as a sense of entitlement, but as a sense of fairness. Recently a hiring manager told me that I am paid very well for a 24 year old and I am asking for a lot, but my answer to that is I am worth it and age shouldn’t matter in determining a salary. Additionally, it’s illegal to discriminate in hiring based on age. I did get an offer on that particular job but I turned it down. Another key thing companies have to realize is that years of experience do not equate to quality work.

No Respect for Authority? — Research states that Gen-Ys have a lot less respect for authority than previous generations. I don’t think this is true at all. I have a lot of respect for my highly intelligent and sensible managers, but I am not afraid to tell a person higher up that I think they’re wrong and suggest something different. I think most of my peers are the same. We have respect for those who deserve our respect, but when we encounter stupidity we will question it. The worst thing that can happen is that we get a new job. I think a lot of older managers are not used to this type of questioning from their subordinates and conflicts arise when they’re stubborn and want young people like me to follow directions to the tee. Basically, if a boss wants the best out of me he/she has to be at his or her best as well. Respect has to be earned and not taken for granted and abused. So I would say it’s closer to the truth that we have no fear of authority, but we do respect our supervisors if they are good coworkers.

Loyalty Has To Go Both Ways – Another big complaint of companies is that Gen-Ys switch jobs much more often than their predecessors. The reason for that is companies aren’t loyal to their employees anymore. I am young, but I am not stupid. I’ve seen how corporations lay off thousands of people in a blink of an eye for their own bottom line. Most hiring agreements are at-will and if companies are all about their own individual profit there is no incentive for me to stick around if there is a better opportunity. With the cutting of pension plans and benefits there is very little incentive for Gen-Ys to become “lifers” at a company.

Work Is Not the Most Important Thing in Life — This is a paradigm that isn’t practiced very much by older generations. I think a lot of people of my parents’ generation realize that work shouldn’t be the most important thing in life, but still work so much that they don’t spend time with their families. As children of these workaholics Gen-Ys want flexible working schedules and more time off because they want time to enjoy the fruits of their labor. Of course, this behavior is considered lazy and demanding by a lot of traditional workplaces. I think the growing popularity of telecommuting and flexible work hours is a change for the better and our older coworkers could benefit from it if they choose to.

Try to See Us as Equals and Forget About Age — I think most of us want to be treated as equals by older coworkers. I can see why people would be resentful when they’re being managed by those who are half their age when they feel more experienced and skillful. Heck, I have experienced a bit of this resentment when I interviewed older people. When there is a huge disparity in age in the workplace the older workers greatly underestimate the ability of the younger workers. I think everyone needs to just take age out of the equation and objectively examine the quality of work of each person. Otherwise, underestimating the ability of anyone based on their age is discrimination.

With that said, I am constantly learning from those around me regardless of age. I just think there are quite a lot of misconceptions thrown in the media about twenty-somethings. We are not lazy, and we don’t have an easy and coddled life. In fact, we’re facing lower pay, less social benefits, and higher costs so corporate America really can’t blame us for constantly searching for a better life. I think a lot of readers of this blog are young professionals like me and would agree with my observations, but I would like to hear about what you consider as a misconception about our generation. Also to my older readers, what irks you the most about twenty-somethings in your workplace?

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