Today we have our latest interview with a reader who has grown their income to at least $100,000 annually.
If you’re interested in participating in this series, please drop me a note.
This interview took place in November.
My questions are in bold italics and their responses follow in black.
Let’s get started…
Tell us a bit about yourself (age, marital status, kids, where you live, etc.)
I’m 31 and have been married for 7 years, together for 11.
No kids, and we plan to remain that way. 🙂
I’ve moved around quite a bit in the last decade and am presently living in Silicon Valley, approximately San Francisco, CA.
What do you do for a living?
By title, I’m a software engineer at a self driving car company.
I like to think of myself as a problem solver who knows how to use software. About half the time the problem I run into can be solved with software.
The rest of the time it’s either a people, process, or political problem.
How much do you earn annually?
My cash compensation is around $220,000 a year.
How does this amount break down (salary, bonuses, etc.)?
- Salary: $175,000
- Bonus: Varies, usually $25,000
- Misc side work: $20,000
Do you receive any additional compensation/benefits from your employer (401k match, stock options, etc)?
The benefits of my job are kind of insane:
- 401(k) with ~$10,000 a year match
- 100% employer sponsored health, dental, vision, and life insurance
- Gym membership
- Free food in the office
Too many others to describe. I honestly cannot keep track of them all.
I also receive equity in my company. It’s a bit tougher to estimate the value of this as it’s private and there is no marketplace for the equity. Based on the 401(c) valuation, the value of this is $50,000 a year.
I suspect many readers of this blog are better suited for this type of analysis than I am, but based on my own calculations I think the 401(c) valuation undershoots the present day value by about 4x. My personal strategy here is to go all-or-nothing on the equity. I don’t plan to sell my equity for any amount of money that’s not life changing. I’ll wait for that to happen, or for the value to go to zero. This strategy is not right for everyone, but works well with my personal financial situation.
How long have you been working?
I spent 6 years in college, and have been working for another 6 after that.
How long have you earned at least six figures?
I’ll get into the details below, but not very long. I first earned $100,000 a year in 2018.
What have been the key steps you have taken that have allowed you to earn this level of income?
My wife and I have known from day 1 that financial independence was very important to us. Growing up, we each watched friends and family members struggle financially. That left a lot of willpower in us to not make the same mistakes.
My parents funded 3 semesters of my college education. I worked my butt off to earn scholarships to fund the rest. I graduated in 2014 with no debt and a bachelors and masters in mechanical engineering. I had just enough money saved to move cross country to my first job.
My wife received no assistance through college and worked full time to fund her schooling (yes, it’s still possible these days but certainly not easy!) She was also able to graduate with no debt.
After college we “leap frogged” each other through growth opportunities.
- 2012-2014: Wife worked while I earned a master’s
- 2014-2016: I worked while my wife gained an additional certificate
- 2016-2017: My wife worked while I started (and destroyed!) a business
- 2018: First year we both had paying jobs
We have also been very flexible with our location to advance our careers. In the past 7 years I have done 5 moves that were further than 1,000 miles, including 2 that were coast-to-coast. I have twice moved to a city I’ve never visited before.
I feel like we’re finally reaching a point where this is beginning to pay off. Our 2019 household income was pretty spectacular, and I expect it to get even better with time.
Which of the following career advancing strategies did you employ (if any) and which were most effective: A. Doing well within your current company and being promoted. B. Jumping around from company to company always seeking a higher salary & responsibility. C. Entirely changing your career path from a lower earning field to a higher earning field (going back to school, etc)?
B and C.
My first job in high school was working back of the house in a restaurant and paid minimum wage. After a few months at the job I realized I was performing much better than most of my coworkers and asked for a modest raise. My boss said no, and a few days later I put in my notice to go work at a different restaurant that paid better. Suddenly he was able to give me the raise I asked for! This is probably the most valuable learning experience I ever had; hard work is important, but leverage is necessary.
Since then I’ve changed jobs very often. As soon as a better opportunity is available I pursue it. In the 6 years I’ve been in the workforce my average tenure in a role is 5 quarters. My longest is 7.
There are two things that I think are crucial for the strategy above:
- I work harder than any colleague I’ve ever met. This applies to both solving problems for my employer, and growing my own profession capabilities. As a result, I’m very valuable to my employer. Dollar-for-dollar, they get more results out of me than anyone else.
- I keep a very close professional network of “movers and shakers”. Every week I try to reach out to someone I haven’t talked to in a while, just to say ‘hi’. As I write this, I realize every job offer I’ve ever accepted has come through my professional network.
Every year, around February, I apply to 7-10 open roles that look interesting to me. I use this to help determine my own fair market value. One time I realized that my present role was paying fairly. Every other time I was underpaid I used this information to either help my employer correct or transition to a new opportunity.
Another thing worth mentioning; my education and first job out of school were both in mechanical engineering. I realized pretty quickly that earnings potential and career growth were limited; the job I was doing on day 1 was very similar to the job that folks with 20 years of experience were doing.
Fortunately, a mentor recommended I bend my career towards software. It took about 4 years and a few mis-steps along the way but I’m now working as a software engineer at a leading tech company. Here I feel like there is limitless opportunity for professional and salary growth.
When my friends complain about low pay I describe this strategy to them and they always have an excuse why it won’t work for them. Their boss is a friend and they can’t bear to put in notice, a cross country move would be too stressful for their dog (seriously!), their industry doesn’t support high pay, and the list goes on. It’s no accident that I’m able to do this; I worked very hard for many years to end up in a high demand field with lots of mobility.
One of my favorite posts on this blog is “If you want what I have, you must do as I have done”. Very applicable here.
What are you doing now to keep your income growing?
For the next few years I plan to stay at my present employer. I’m fortunate that this employer has pathways for strong career growth. I feel that I’m finally at a company that truly pays for performance and it’s nice to see the progress I’ve made already in a relatively short tenure.
They have very clearly defined pay bands and publish what it takes to advance level. I find this very valuable. My supervisor and I have regular check-ins to see what skills I should sharpen, and what the reward is once I’ve demonstrated increased capability.
Some find this stressful; I find it invigorating. Not very many employers do things this way and this is one of the reasons I plan to stay at this employer for a while.
What are your future career plans?
I see a few different paths from this point:
- A: Learn to be content with what I have, and focus my free time on doing what makes me happy.
- B: Continue to climb the ladder aggressively while working for someone else. I think I can increase my compensation another 2x in the next 5-10 years if I work hard at it.
- C: Start another business and shoot for the stars.
They each have their pros and cons, and I could probably spend the rest of my life debating which path to take. Part of me wishes I could do (A) but I think I would always regret leaving money on the table so early in my career. (B) is a good balance of low risk and decent pay. (C) is without a doubt the most work and stress but has the most upside.
Have you been able to turn your income into a decent net worth?
(I’ll speak in household values here, as this is the number I track)
Here are our numbers, to the best of my recollection / note taking.
The astute may notice that our net worth is increasing at about the rate of our taxable income in later years. This is because taxable income does not include HSA contributions, 401(k) + match, and stock options. These things are included in our net worth.
About half of our net worth is in an after-tax brokerage account with zero strings attached. The rest is in 401(k), private equity, whole life policies, and the like. We do not own real estate.
Our household expenses are around $60,000 a year, not including taxes. It’s a lot of money for sure, but we do live in an incredibly high cost of living area. I’m pleased with our expenses and don’t focus too much energy on minimizing it. We’ve found this spending point is pretty natural for us.
Why or why not?
My wife and I spent a lot of time getting to our high income stage. We earn and save a lot now but it has not been that way for long. We are still in our early days of being “super savers”.
While our net worth is not presently significant, I do expect it to increase around $300,000 a year from here on.
A brief aside…
We earn a lot of money and spend relatively little. We have some friends who earn a lot of money, and manage to spend even more. I often wonder if it’s possible to switch from one to the other and if we would actually be happier by spending more money.
At some point, probably next year, we’re planning to have a “spend everything we earn” month just to see what it’s like on the other side. I’m interested to see if this increased spending has any changes in our happiness.
My suspicion is that it feels good to spend money, but the longer term stress of paycheck-to-paycheck living is not worth it. Personally, I enjoy knowing I can walk away from my job at any time and have a decade or two before I’ll run out of money. This brings more happiness and peace of mind than any possessions ever could.
What advice do you have for people wanting to grow their incomes?
Do you want it bad enough?
For the vast majority of people I’ve found the answer is ‘no’. A lot of my friends say they want to earn more and I try to help them. To date, not a single one of them has been willing to make a lifestyle change to earn more.
To be clear, I have nothing against this. Some of my friends who are the happiest are content with where they are and what they have. In some ways I wish I could be like this too.
What bugs me is when folks complain, but don’t want to do anything to improve the situation.
If you do actually want it bad enough to do something about it, here’s what I would recommend:
- Find the right industry for you. It should be the union of what you’re good at, and what makes money. For me it’s computers.
- Figure out how to get into that industry. It will take a lot of learning. Your first job probably will not be a good one. My first job in software was, to put it politely, unpleasant. But it was a necessary entry point into the industry.
- Figure out what you do that adds value, and do it very well. After some time in a role you should be able to figure out where the money comes from, and how employers track and rank employees. Do everything in your power to maximize this to your own advantage.
- Invest in yourself! I have two bookshelves full of books that help increase my technical and soft skills. I invest heavily in career coaches, maintain a great professional network, and have mentors I can trust to help me with difficult decisions.
- Trade up early and often. I have never ever regretted leaving a role. At the same time, never burn a bridge. I stay in contact with many former supervisors and co-workers.
Questions for Commenters
- How do you handle people who say things like “you’re so lucky”? I’ve never successfully convinced someone they could be where I am if only they tried harder. It seems like most folks are looking for excuses why their earnings are out of their own control, presumably so that they don’t have to feel bad about not doing anything about it.
- When is it enough? Should I keep improving myself with all my energy, or is there a point when coasting is the right thing to do?
- I plan on leaving the workforce earlier than most. Part of me worries that it is an irreversible decision. Who will hire a software engineer who has been out of work for a decade? Has anyone experienced this directly?
p.boone says
Good job, and you’re on your way to being financially independent. I’m SF9 and MI238, and there’s a lot of similarities in your path; I’m just much older than you. 🙂
> How do you handle people who say things like “you’re so lucky”?
I gladly say “You’re right.” then stop there, and move on to a different topic. I gave up convincing people (friends and family) that they have all the power to change the direction and trajectory of their careers and lives. However, those that seriously seek help/advice, I give it to them and mentor them. I also value my time, so I’m upfront with that to the people I mentor — they have to do the work, and I don’t want excuses regarding not being able to read or implement their plan.
> When is it enough? Should I keep improving myself with all my energy, or is there a point when coasting is the right thing to do?
For me, it wasn’t enough until we hit our FI goal so we can RE. However, it didn’t mean that I pushed every day. Sure, I slacked, vacation, and enjoyed life a bit a long the way. Having a goal, setting milestones (with dates), and reassessing/reflecting regularly helped to know when to slack and when to push. At least that worked for me and my wife.
> I plan on leaving the workforce earlier than most. Part of me worries that it is an irreversible decision. Who will hire a software engineer who has been out of work for a decade? Has anyone experienced this directly?
My wife and I are leaving the workforce this year at 48 years old. I used to worry about needing to back to work later in life because of financial needs. However, I ended up saving and investing enough as a hedge (and learning how to invest). Also, knowing potential opportunities in the future helps. For instance, there is a Y2K-like issue with embedded C software coming up in 2038 (32-bit integers rolling from epoch time); and comfort in that people with non-software background taking data science bootcamps and able to find work (that is, it will continue to happen as the use of software and data evolve). RoR used to be hot, but not anymore. Now, there’s maintenance contract work available that can be had with good rates. The same goes for COBOL because there are still mainframes, and programmers are either retiring or, unfortunately, dying. Note that exciting, and glamorous work but they are also “break glass in case of emergency” type of work. I don’t plan on doing it, but it’s there if I need to.
SFI-13 says
Thanks for the input!
I like your approach for handling “you’re so lucky”. Perhaps I should stop casting such a broad net and focus on finding the 1 or 2 individuals where I could have an impact.
Re: Coasting at FI goal.
It’s kind of funny, when I was in college I was absolutely convinced I could stop working when I had $750k in the bank. Now that I’m there, I think it’s $3M. I was chatting with a coworker who has hit the $3M mark and he thinks it’s $10M. It seems like, however much money some has, they just need 3x as much.
I guess I need to set a milestone and hold myself to it.
Mr. K says
Awesome 👏. You’ve come a long way very quickly by making some hard decisions that most people won’t.
I personally do feel I have been lucky in a lot of my achievements. I’m sure you can find a few ways too. Dealing with people who put all of your success on the back of a lucky break are blind and likely a bit envious. Your goal shouldn’t be to convince them you haven’t been lucky and they could be like you. Say your piece and move on. They aren’t like you. They don’t have the same balance of want and willingness because they lack the willingness.
When is it enough? If you are happy on your current spending, with your income, you will be financially independent in a few years. Then ask yourself if you are living your best life and having fun. Coast for a year and see if it makes any difference. If not, take a year off to see if you like retirement from paid work or find a new work challenge. If you are happy and having fun at work, keep working and earning. With a few more years of working, you build in enough of a safety net that money should never be an issue.
Given your achievements so far, you could stay out of software for a decade, decide you want or need to work again and train yourself in another field if you choose (Or stay in software, and maybe start on a lower rung again). Most people who achieve success as early as you do will continue to achieve and grow, even in “coast” mode. Maybe just part of being wired for success.
Congrats and thanks for sharing.
MMiguel says
There are some interesting similarities in our trajectories, though I’ve got at least a couple decades head start on you. Like you, I worked s/w developing/consulting/coding while attending college full-time (putting in full-time work hours during my junior and senior years), while still graduating with honors from a top university. Its certainly not that I’m any sort of brilliant brainiac – far from it. I was simply MOTIVATED.
Like you, I grew up in a hand-to-mouth situation and I was compelled to do whatever I could to someday never have to worry about bill collectors. Those last couple of years of college I slept maybe 2-3 hours a night – when I wasn’t in class or studying, I was coding/working often well into the wee hours. When you are young you are capable of that sort of thing – most people simply do not understand their own potential. I still graduated with a mountain of student loans though, about the equivalent of $100K in todays dollars for which I have never quite forgiven my extremely “well-endowed” alma mater.
For much of my childhood and early adult life my family, including in-laws, have wondered aloud “why does he work so much… why doesn’t he relax more,” and then later in life some version of “wow if I had your money I would…” fill in the blanks “relax more, spend more, drive a nicer car, show off more bling, etc.” In any given family gathering wife and I would be driving the crappiest, oldest beater. Now we are worth more than all of them put together.
In the beginning, these same folks thought I was missing the whole point of life – to work as little as possible and maximize leisure. Now fast forward decades later and the economic gulf between us is is a source of envy – and not necessarily the nice kind of envy. Many of them are wondering how they will ever afford to retire, while I could have (maybe should have) retired many years ago.
Which leads to your questions…
How do you handle people who say things like “you’re so lucky”?
– I completely agree that at least where family is concerned, you can’t convince someone they could have done the same as you. Point of fact, maybe they couldn’t have. You and I no doubt are fortunate and gifted in certain ways others are not. Still, it’s impossible to convince them that they could have done better with a bit more effort and a lot less laziness. So, I don’t try unless someone is genuinely asking for advice – oddly family never asks me for advice.
When is it enough? Should I keep improving myself with all my energy, or is there a point when coasting is the right thing to do?
– I ask myself the same question. Mostly, at this point it’s a matter of ego. I’m closing in on the deca-million threshold if I kept working 3-4 more years. I would love to have those bragging rights. But, when I put ego aside, it’s clear to me that it’s time now – not necessarily to do nothing, but to do things that are more fulfilling. No tombstone ever said “deca-millionaire or worked like a dog til the end”
I plan on leaving the workforce earlier than most. Part of me worries that it is an irreversible decision.
– Can’t help you there, I have never left the workforce, but I have shifted careers several times. You’re clearly smart and talented. You would find a way to return if you had to.
Congrats on the success and best of luck!
RE@54 says
Congrats and “You are so lucky”. Ha ha.
As previous commenters have stated:
Don’t bother responding to people who say “You are so lucky”. You are going to get it all the time, retire early- You are so lucky, have money-you are so lucky, take a vacation without breaking the bank-you are so lucky, happy marriage- you are so lucky.
It is the go to response to justify why they can’t do something and to make a jab at you. I usually just say “If you say so”.
Point #2, only you can say when enough is enough. My enough will be different from yours. I am 51 and retiring in 2.5 years, so I might be coasting a bit now. When I was 31, it was different. You are loving what you do and absorbing information. Use it to your advantage now.
At the same time, enjoy what you have. “You are so lucky”. Ha ha.
Kudos to you and your wife!
Accidentally Retired says
Wow brilliant strategy to apply for new jobs every February and use it to catch up to market rate with employer or switch.
Curious how many times you’ve ended up having to switch vs stay?
Also glad to see you’re finally at a company that publishes pay rates and makes it easy to level up. We instituted it at my company and I think it definitely helped in retaining more of our talent.
SFI-13 says
>Curious how many times you’ve ended up having to switch vs stay?
At the time of writing I had only stayed once, and now it’s twice.
I think I’ve changed jobs 5 times now.
>We instituted it at my company
I’d love to hear a bit more about this from the other side! I agree it helps retain top performers, but that’s hard to measure. I was at a company that tried to institute this a few years back and did it only half-way; citing administrative costs.
Jane58 says
Congratulations you are doing superbly. I resonate with so, so much of what you say. As long as you are enjoying what you are doing and living the life you want I see no need for a change . I love your advice on moving jobs and leverage. I did the same thing. I was sometimes embarrassed about it as many in my industry stayed put. It was hard work but worth both the experience and the $.
I love your idea of taking a month to spend what you earn. We have never done this. I am a big saver. Our net worth is over $3mil, we raised 4 kids and we are set and partially retired but still saving. Maybe a month like this would be interesting. I do have moments of enjoying spending on things we do need, things we have put off for so many years but I fear I will start liking it too much. We have friends who make way, way more than us and complain too of not having enough but man they spend close to every penny they earn. The women between their hair and nails .. that’s my monthly property tax bill!
Great job enjoy the fruits of your labour.
Phillip says
IMO, keep up what you’re doing and job hop until you get those unvested equity golden handcuffs.
MI-119 says
A gym membership…and free food in the office.
Hmm. Hopefully it’s healthy food and watch those portions. Ha!
Based on your age, income (growth), investment focus, and net worth expansion you are doing and will continue to do very well.
SFI-13 says
It is indeed very healthy food; better even than what I cook for myself. Given that they pay my health and life insurance, no one has more motivation than they do 🙂
I like to joke that this is all a conspiracy to keep me healthy.
The more business savvy side is: There’s no reason for me to leave the office. Hungry? Food is a 60 second walk for your desk. Gym? No problem it’s right here. Coffee? Of course, 24/7.
It sounds like a great perk at first but after seeing how this boosts my productivity I do wonder why every business with salaried employees doesn’t do this.
MI-264 says
How do you handle people who say things like “you’re so lucky”?
The harder I work the luckier I get!
Stephanie says
Here’s a slightly different take. It’s terrific that both you and your wife are working hard and smart. Glad you are in a good place financially. But as you make your choices, remember to enjoy the journey and take some downtime to relax.
My husband and I worked really hard and were great savers. But we also bought a home in Florida about 7 years ago. Well before I was eligible to retire. I am so very glad we did, as I was recently widowed. My apparently very healthy husband had a silent cancer that was already stage IV when discovered. If we had waited until I retired (still 2 years away) we would never have had all those joyful experiences. Don’t get so caught up in the forward looking that you forget to be present in the present.
MI-173 says
Great read. I hear the “you’re lucky” comment sometimes, and usually respond that it’s a combination of hard work and some luck that brings success. Working hard, cultivating a good network, having a passion for learning – all those things are ways to set yourself up for the lucky bounces. And truth be told, we are all lucky in some ways. Being gracious in response to things like that is the best way to do it I’ve found.
I think of it like rebounding in basketball, which I play a lot. You won’t always get every rebound, but practice, knowing where the ball will come off the rim, proper positioning…all those things set you up to be most likely to get the rebound. Keep up the great work!
Meghan says
Thanks for sharing your perspective. I also work in tech, but used to work in government, and I can really relate to so much of your decision-making. People often give me a hard time for job switching so much, so it’s nice to hear about someone who has also gained a lot from this strategy!