But I'm hesitant to describe my salary needs in terms of my household costs. I want to get paid by the value I bring first and foremost. And, similarly, what the market clearing rate for an engineer with my capabilities is. Not "market rate" unless I'm truly a median engineer, especially since companies tend to be underinformed about market rates.
I'm sort of in the same position as the parent. I've crossed the threshold, a little more money or a little less money makes no difference to me. I don't buy stuff I don't need. The amount of money that'll completely change my life is like x10 so likely won't happen (so moving from the "have enough" to the "mildly rich" category) and really I'm not sure that would mean anything to me anyways...
I want work that I can enjoy, with good people, that challenges me, and pretty much all the pay in the world won't make me go work for some sucky place (ofcourse everyone has their price, but my price would be higher than what they'd be willing to pay).
Retirement savings (and to a lesser extent because the numbers are way smaller, college savings) drive the need to accumulate 25x your annual expenses.
I have a sign "The Goal is to not have to work" right above my monitor in my home office. Every career/learning/spending/saving decision I make is in furtherance of this goal.
Related is the sustainability of work: I don't want to need high earnings past 40. I want to retire into a second career I'll find more fulfilling but which might pay dramatically less. Higher pay now is the only way I can achieve this.
I asked someone that in my mid 20's. He said "It's nice knowing I can support my family working at McDonalds if I have to." That stuck with me. Something fundamental changes in your life when you become debt-free.
Being able to pay off a debt at anytime is equally freeing, for me at least. Paying off a loan with an interest rate significantly below inflation is not a great use of money[1] (and an opportunity loss). Putting that lumpsum into bonds (any bond with interest higher than the loan) is better, or even investing in stocks with a stop-loss. If I lose my job and have to flip burgers, that's when I'll pay off the loan and get a little extra from the investment/bond, thanks to the power of compounding interest.
1. Its the equivalent of someone offering you a 6- or 7-figure loan payable in 20/30 years at 2-3% when inflation is 6%, and you decline.
Let me remind you that in 2008 things were so screwed up, some lenders lost track of who owed what. Having a hard copy document that shows a debt was close out is not the same as having assets that could pay off the loan. Keep in mind too that it was also not a good time to trade investments for cash.
There are risks in every approach. I can't imagine taking out a loan on a property today and investing the money thinking it will beat the interest payments over the next couple years. At other times, it's less risky but the rates will probably also be higher at those times.
How is a bunch of money tied up in debt, and an equal amount invested to hedge that not a huge opportunity sink?
This to me is the only legitimate criticism, and it really boils down to risk-reward.
If you're holding cash for say a backup fund, great! That's good security and everyone should aspire to that. But also acknowledge that with 6% inflation, you're actually losing 6% on that backup fund.
Inflation is insipid. You _must_ take risk with your funds just to not lose the value of it.
At least monetary wealth can be diversely invested; so you have some control over it. Most of the risks that come from owning a house are completely out of your hands.
This certainly seems to be the case, but it's fustrating. I can think of no fundamental reason why it should be so. Other than speculators and govt policies backfiring to destroy the safety of alternative places to keep your money besides cash.
Then add to that the fact that you're taxed on `gains` for investment.
So buy an ounce of gold. 1 year later sell it for 6% more than you paid. Cool, beat inflation right?
Well, no because now you pay capital gains on something that isn't really worth more than when you bought it.
Inflation _is_ a tax...
> govt policies backfiring
Yeah sure, they're `backfiring`...
The stated goal of govt seems to be low (but positive) levels of inflation and high growth. The current situation with high inflation and low interest rates makes even tax-free govt bonds undesirable. And they will need to raise rates. So I'd say policies are backfiring, yes.
> The stated goal of govt seems to be low (but positive) levels of inflation and high growth.
Yes, and I disagree with that position too, but people are taught Keynesian economics, so even beginning to unfurl that mess is asking for a downvote storm.
The same people that will argue inflation is beneficial for growth tend to believe they are also open minded, free thinking, and well `educated`. It makes for a difficult argument often resulting in a lot of pointing to `authorities` on the matter.
You can save up so that you have enough money invested to cover all the remaining loan payments and consider that having paid off the house. But don't send the money to the mortgage company, invest it into something stable that pays more than the mortgage interest and you're better off.
(Not historically always possible, but with today's interest rates pretty easy.)
One is guaranteed, one is not. Markets are volatile. I lived through 2001 and 2008 as a working stiff, that shit can drop on a dime.
Right now, I have no debts. House and vehicle are paid off and I have an "oh shit" account that's pretty good. I can sit here as a hermit for at least a year or two, three if I really hunkered down and pinched pennies. It's a good feeling; one less thing to worry about.
Now if I put all that money into the market and shit hit the fan, not only would I not be willing to sell stocks due to their price plummeting, I would still have a mortgage and car payment. I'd be in this situation for 6 months to a year. Not a great situation.
Ensure your freedom / ability to live first, then invest heavily, IMO.
That 3 years of cash on hand would be better off in some kind of investment and if you're worried, supported by a volatility buffer.
Source: https://www.straight.com/news/canadian-home-prices-have-rise...
Go buy a house that will increase by >5%/year, but then don't pay it off any sooner than you have to.
Make the minimum payments, and invest in something that will return a stable 5%+ with your remaining income.
Just because the house itself increases in value, doesn't mean you should pay down the ~3% interest rate loan any faster than you have to.
And really, once you've built enough via this strategy, you should either invest in a more expensive house or buy a house to rent afterward.
This is all the consequence of inflation and easy money/loans, but the smart money move is to never pay off low interest rate loans. This is particularly true when inflation (acknowledged anyway) is 6%.
Using the 6% number, you're actually gaining (on average) 3% on a 3% loan just by using the cash.
Make 3 columns, "mortgage paid," "investment", "no-mortgage". Pretend the house is $100k. With the mortgage you get to keep that money and invest it, so first row in "investment:" should be $100k. Put $0 in the "no-mortgage" column, put $-421 * 12 in the "mortgage paid" column. I got that number from a mortgage calculator, assuming $100k loan and 3% interest over 30 years.
Then in row 2, "mortgage paid" cell should be previous cell - $421 * 12. You will keep paying this for 30 years.
"investment cell" should be previous cell * 1.05. We assume the investment return is 5% over long term.
The no-mortgage column stays 0. You spent the $100k to pay for the house, so it's gone right off the bat.
Repeat this for 30 rows (years). Then at the end look at the difference between investment vs. mortgage paid columns.
And then get back to me and tell me if you still think that is a "smaller total return" :-)
I'm just old enough to remember what the financial crisis did to people's pensions. I'm happier to take risks with the rest of my money if my home isn't exposed to them.
During a crash I'd expect to lose on both earnings and investments. Losing my home as well would suck.
You never know when they're going to pull the rug from the infinite growth market. Maybe Crypto will do that? Maybe a few more years of lockdown? Who knows?
I agree that it's an unlikely scenario, but I'd rather be poorer and own my house than be dependant on a bank - even if that means compromising on its size or location.
The worst ever 20-year return for S&P 500 was +6.4% per year for the 240 month period ending in May 1979.
FIRE. Money buys a lot beyond your monthly food and rent.
> I fall into the group where I could probably make more
If you don't know for sure it's also hard to judge if you're making the right decision. I also wouldn't risk a nice and stable situation for a +5%, but recent threads on HN have been mentioning way higher bumps lately, hence compensation #1 (again on HN, SV-centered etc.).
> there is risk with leaving (bad boss, toxic culture, too much work, etc)
The chance goes both ways though, there's also a chance you might end up at a better place on top of a better compensation. If you're risk-averse that might not be for you, but there's probably a compensation bump at which it makes sense even if you're risk-averse.
When $PREV_EMPLOYER closed the office in early 2020 and everyone shifted to remote work, I learned how much I depended on coworkers for daily social interaction. My friends live far away, so the last two years has been extremely isolating and lonely.
That lack of socialization meant work rapidly deteriorated into "just a paycheck" territory, and once that happens, there's no going back.
In other words, I think the results can only show motivating factors, but can't satisfy it as a sufficient condition for departure.
> There is a threshold where you have enough money.
You've answered your own question.
US companies pay 2-3x as much at the top end (if you relocate, probably less for remote). With that kind of gap it's pretty hard for pay not to be a major factor.
I'm not making $150 an hour though.
I also don't live in Toronto, Vancouver, or Victoria.
A publicly traded company I left some years ago had dozens of different little "things" they offered instead of better salary and/or better hours for the salary paid. They're now worth a tenth of what they were when I departed.
> $150/hour as a dev
That's about $25k/mo gross. Minus ~50% for taxes and vacation (hourly pay means you buy your vacation). So call it $13k net.
> housing costs $1m+
If you live in a top 10 major metro in the US, this is your city. So call housing ~$4k if you have a family. Now you're at $9k. Buy health insurance for $1500, tally at $7500. Did you mean to save 15% of your gross income, as is the guidance? Minus another $3,750. Tally at $3,750. You haven't bought food or paid for transportation, vacations, clothing, etc. yet. You're not an intense saver, so you need to be confident you can earn at this level for decades to come. You probably are in the process of eating the inflation of '21 & '22 as your contract is not going to re-price automatically, so your earning power is being eroded.
This is why people are pushing to earn more. If you are fortunate enough to have a spouse who is also a high earner, great.
$150 an hour is a charge out rate for a professional engineer not in programming or IT, and trades are closer to $100. $150/hr on salary you probably are in business consulting with a phd and charge out at $400/hr.
$9k usd/mo after paying taxes and for housing is not something that’s readily available here, I don’t think even in IT.
Money will always be a concern for the majority.
That said, I agree that once you've bought a house, you can cover your expenses and holidays, who cares about making more money. It's just not a very common position.
If you view this multi-answer poll from the opposite perspective, the question is, when would someone leave for a lower compensation job? I suspect that would be an extremely low number. Higher on HN because of the demographic, but still low.
Even a 10% pay raise was meh with that in mind.
How many engineering companies are prepared to give 15-20% pay raises to keep up with these kinds of conditions? How many are handing out 7% adjustments proudly?
Is this a serious question?
This is a leading question to expand on why compensation matters. Personally, I fall into the group where I could probably make more but really like my group. So, there is risk with leaving (bad boss, toxic culture, too much work, etc) vs making more.