Agree. In your 20s, your main competitive advantage is your ability to take risks. Plus your skill set is incomplete, so you’re likely to see much better returns from investing in yourself than the market.
Honestly if you’re a Stanford engineer those things aren’t mutually exclusive. You can take big risks and stash some cash.
Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone).
> Even in the Bay Area when I was getting paid $120k with a lot of stock and supporting a family I could still put away $2k/month. (Granted, that was after student loans and all other debt were gone).
Tangential question if you don't mind. I'm currently staring at an offer in the bay area, and the cost of living is mind boggling. Where did you live on that 120k, while still saving 2k a month and having a family? I'm not asking this sarcastically, I'm asking because I'm looking for a place with good schools, 3 bedrooms, and not $5K a month in rent in order to decide whether this is the right move. If that's possible without commuting 1.5-2 hrs each way, I'd really love to know!
As an European, reading things like these never ceases to amuse me, both the salaries that engineers earn and the crazy high cost of living to go with it. In Germany $120k is the salary of your average successful internet startup CEO and generally speaking an outrageous amount of money, in the Bay Area is about enough to get by, pay rent and save. The disconnect is astounding. And it's not like the quality of life in the Bay Area is ten times greater than in the top cities of Europe either, not to my knowledge anyway.
> In Germany $120k is the salary of your average successful internet startup CEO
If that CEO salary figure is even close to accurate (I have doubts a successful German tech CEO is taking home just $120k a year), that arguably speaks to how few enormous .com/tech success stories have emerged from Europe (we're not exactly overflowing with Googles, Apples, Facebooks and such), which is arguably a problem in itself in 2017.
I don't know when the OP was last working here, but I'd also point out that ~$120k is increasingly a pretty common level of remuneration this area for a reasonable entry-level engineering position, if you are good and make the most of opportunities significantly more than this can be made, worth remembering when looking at cost of living comparisons.
> it's not like the quality of life in the Bay Area is ten times greater than in the top cities of Europe either, not to my knowledge anyway.
This is clearly a hugely subjective, not to mention anecdotal measure, but having lived in several major European cities as well as the Bay Area for a number of years in each instance, I definitely do have the best quality of life I've had for my family in California, and for me anyway it's been absolutely worthwhile. There are very few cities anywhere that offer the incredible range of activities, nature, jobs and educational establishments etc all within driving distance that the Bay Area offers, which is a huge factor in why so many people are trying to move here.
There are very few cities anywhere that offer the incredible range of activities, nature, jobs and educational establishments etc all within driving distance that the Bay Area offers
The primary appeal of California is outdoor activities. If you're not interested in the great outdoors, it's pretty thin gruel, IMO. I far prefer Europe, for the sheer density of diversity in culture, food and way of life.
As a Canadian... :(. We get European tech salaries with rapidly-approaching American cost of living. On a median-income vs cost-of-living basis, Vancouver is actually now more expensive than SF and NYC. We lose all of our good talent south of the border on NAFTA visas.
$120k is about what a good experienced generalist developer can make in London. You can up that significantly with domain expertise, or contracting.
IMO companies on the continent, outside of places like Switzerland, pay peanuts for developers. And you know what they say: pay peanuts, get monkeys. It's a bit of a head-scratcher if people with talent didn't leave. Could have an impact on that innovation, too.
Not OP but in the Midwest big companies like John Deere start their engineers in the $60k range (at least when I interned there). The cost of living is just that much cheaper. My studio apartment while in college in Iowa City was $500 a month for a location just a five minute walk from the campus.
> You're saving more than 50% of your pre-tax money? That is impressive and unusual.
Many in the Financial Independence community are upwards of 70%. Having a partner with the same goal can keep that savings rate as high even with kids. Otherwise it's not very likely.
I don't understand... I live in NYC on a $130k income and am having trouble figuring out ways to spend more than 50% of pre-tax.
What exactly are people spending on? I'd think it'd be really easy for people in tech companies to save upwards of 70% with high salaries and the performance of tech stocks.
Germany also has such a big safety net that the only homeless people literally just don't want to change their street lifestyle. It's a trade off. Living in Chicago, which has a large homeless population, I think Germany is doing it right. You have less max earning potential but you also know that your basic human needs will always be paid for and everything you earn goes to a nicer house, nicer food, nicer clothes etc.
From the past tense in that post, I'd guess this may have been a few years ago. Today, the white-hot realestate market means living expenses are much higher.
At $120K, you're looking at a tax rate of close to 30%, which puts the usable figure at $80K or so. You want to maximize your 401(K), so your salary goes down to $65K, which is about $5K/mo. A decent 3BR with good schools (Cupertino) will run about $3500/mo (1), which leaves $1500/mo for everything else. Not doable, unfortunately.
Appreciate the concrete math, it helps ground the abstraction of living expenses.
The missing piece here is the salary inflation over a very short period of time.
As a Stanford engineer, one should use the leapfrog technique (stay at a job no more than 18mo) to increase your salary by 2x in 5 years. That would mean by 27-years-old, this person should be in the $250k range, 35% tax = $160k usable, $15k 401k = $12k/mo.
YMMV, but this is should be entirely doable by the median Stanford grad.
It's not possible. You can try to get your kids into a better school via the Allen Bill which means they can attend the school district where you are employed. For example, say you work in Palo Alto but live elsewhere. Otherwise you might have luck finding something in Union City / Fremont. But everyone is in this boat.. Hopefully, with increased parental involvement, the schools will improve.
Technically, no, but I would imagine something could be worked out on a case base case basis. They might, for example, let your kids finish out the current academic year and in some cases they might let you finish the school you are at (e.g. a junior in high school). You may also be able to find another job in the same district as well.
I lived in San Leandro and earned less/saved the same or more as the other guy. Two bedroom apartment for $1600, 45 minutes to an hour commute into the city for work. Definitely not a place I'd send my kids to school though.
You might have luck on the other side of the bay (Alameda is where I'd live if I ever went back) or far enough south out of the city. But no matter what cost of living will be higher than it should be.
Do you work in downtown SF? I live in the Tri-Valley area: Dublin, Pleasanton, San Ramon. You can get 3BR for under $3k/month, quick BART into the city (a little less than an hour each way). Though that doesn’t commute very well to San Jose/Palo Alto
I am a family of four living in a 1 bed. Sleep with ur wife in the living room, kids in a bedroom. I manage to live in the city in a nice (albiet too small) apartment with 15 min commute for 3.8k rent a month. You have to compromise somewhere. I am on more than 120k though.
Still very possible:
- Rent a room for less than 1000$
- No car (use the shuttle or other yuppies way of transport)
- Don't overspend on drinking/eating
you should be able to save upto 3k a month with a 120k salary
Given the high marginal tax rate at that income level, it “costs” very little to max a 401k. The first $1400/mo in savings should be easy with the tax advantage. To save substantially more than $1500 on top of that, you’re probably going to need roommates and/or an hour-plus commute.
I think $3k is totally doable, but “way more” involves very substantial loss of quality of life. Also some of that after-tax savings will be eaten by medium-term projects like travel and moving.
$70k in the Midwest and $120k in the Bay Area are pretty close on CoL calculators.
the big difference is that i don't have a family.
But i'm not super frugal.
I pay $700/month with utils + internet for my own 1Bedroom apartment. I could've gone much cheaper if I didn't live Downtown (120,000 city population) and could've gotten a roommate in a 2Bedroom aprt. Plus I also eat out at Chipotle/Jimmy Johns almost every other day, then I go drinking maybe once or twice a month. So I could easily save another $500 if I wanted to
If you are getting a $70k salary AFTER taxes, which would then be roughly 90-100k BEFORE taxes, then that'd be equal in the bay area to what? 150k-170k? I don't think this is an equal comparison.
all back of napkin but im guessing you're playing with 55k after taxes, so 4.6 k a month.
so your total costs (rent/mortgage, food, kids, all in) is only 1.6 k? and you're saving ~65% of what you take home? you must live extremely frugally, this is not normal. so kudos, but don't try to make it sound like everyone should do what you're doing. most people do just fine saving 20-30%, even less.
I pay $700/month with utils + internet for my own 1Bedroom apartment. I could've gone much cheaper if I didn't live Downtown (120,000 city population) and could've gotten a roommate in a 2Bedroom aprt. Plus I also eat out at Chipotle/Jimmy Johns almost every other day, then I go drinking maybe once or twice a month. So I could easily save another $500 if I wanted to.
Not to harp, but the big difference is your relative cost of living. $700 for 'complete' housing is a pebble compared to > $2000 a month for housing in the bay area. It might not be frugal itself but the choice to pay what you're paying is a luxury compared to the person above.
If he pays 2k a month and you pay 700 a month thats $24,000 vs $8400 a year. Given that 120k in the bay after tax is probably roughly 95-100k (guesstimate) the simple question is, is OP's after tax pay comparable to your pay relative to housing? No its not, he pays 2.8 times more rent than you. .8 of that is EXTRA because of where the location is (extra 6k a year). So given that plus OP's family expenses its actually fantastic hes saving 2k a month. That 'extra' $500 you 'could' save is what OP pays extra per month (that 6k/12) just for you to be able to say 'oh but thats the bay area'. To make my point more clear take that extra $500, add it to his take home pay. Great, now you are both making equal amounts compared to housing. OP saves 2.5k a month, you save 3k. Now, have yourself a family and try to save 3k with family expenses.
> In your 20s, your main competitive advantage is your ability to take risks.
Why is this some "special ability" of 20-somethings? I definitely prefer the approach of becoming financially independent and then having 50+ years to do what I want ... seems like having 50+ years to take risk after saving aggressively for 10-12 allows for even more risk/reward tradeoff by eliminating the worst consequences of failure without a safety net.
your submissions so far:
1.
Ask HN: What are the strongest arguments against Net Neutrality?
6 points by leifaffles 4 days ago | flag | past | web | 3 comments
2.
Tim Ferris: “Silicon Valley also has an insidious infection... McCarthyism” (reddit.com)
10 points by leifaffles 8 days ago | flag | past | web | 1 comment
3.
CloudFlare CEO Plots to Slow Service for Political Opponents (twitter.com)
5 points by leifaffles 9 days ago | flag | past | web | 1 comment
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