Tag Archives: income

Is Income Inequality Necessary?

As we get into the thick of election season, it becomes apparent we have two Americas — the Trump ‘merica, and the Sanders America. Everyone else falls somewhere in between. Trump’s success stems from his “I don’t give a shit” mentality, offering solace to those angry over years of political correctness getting them nowhere – he wants to “make America great again.” Sanders offers a voice to those who see corruption – legal or not – causing greater inequality and the downfall of our country.

Who’s right?

I’m bi-economical. I’m a socialist and a capitalist – but neither at the same time. Socialism sounds great, until you realize how that limits the opportunity to work hard and get ahead. Capitalism, however, requires inequality. It provides the opportunity to get rich, but that opportunity is light years away for those who didn’t inherit wealth, or work hard and due to a mix of luck and tenacity and good timing make enough money to catapult them into the upper echelons of society. Old money versus new money.

There is no right, persay, but we can look at which countries are happier than others, and how that relates to inequality across their residents. In this Gallup Poll and the World Top Incomes Database, the point is made that in countries with the biggest income gaps between rich and poor, the middle class find themselves unable to afford some simple luxuries like private schools and a house in a good neighborhood.

 

Obama decried income inequality this week in his final State of the Union address. The standard Democrat message — support a thriving middle class  — was front-and-center in the speech.

“Companies have less loyalty to their communities. And more and more wealth and income is concentrated at the very top,” he said. These trends have “made it harder for a hardworking family to pull itself out of poverty, harder for young people to start on their careers, and tougher for workers to retire when they want to.”

Many blame Silicon Valley as a leading source of furthering income inequality. A 330-page report by the World Bank released on January 14 notes that “the economics of the internet favor natural monopolies, the absence of a competitive business environment can result in more concentrated markets, benefiting incumbent firms. Not surprisingly, the better educated, well connected, and more capable have received most of the benefits – circumscribing the gains from the digital revolution.”

I know that income inequality is at play in America because I’m in the top 5th of income earners and am in the fourth quintile (of five) of all U.S. households in terms of my networth, and still I am unable to afford a home in a good neighborhood or to send my “future” children to private school, should I want to. If I feel this way, I can only imagine how the rest of America feels, outside of the .01%.

Paul Graham, a prominent super-rich Venture Capitalist went on recently about how we need income inequality. “You can’t prevent great variations in wealth without preventing people from getting rich,” he wrote in an essay that went viral online last week, “and you can’t do that without preventing them from starting startups.”

Starting in the 1980s, a gap has been widening between what the best-paid Americans earn and what everyone else in the country earns. Economists Barry Z. Cynamon and Steven M. Fazzari shared in a new paper that “Rising income inequality is now a significant barrier to economic growth and full employment.”

I’m worried. I’m worried about the future of America. History has proven that income inequality, when let go for a long time, causes big problems, even civil wars. And in 2016, lower pay for the poor is causing an even wider income gap.

Since the late ‘70s, most of the growth in workers’ earnings has gone to the people who have made the most money. To be precise, the wages of the top 1 percent of workers have grown 138 percent since 1979, while the wages for the bottom 90 percent grew only 15 percent during that period. Yikes. This especially hurts our social security system, which underestimated income inequality, making higher income earners pay a much smaller percentage of their income in social security tax than lower income earners.

This is a huge problem since the number of seniors will double by 2060. If we think income inequality is bad now, it will only continue to get worse.

I find my idealistic side wishing we could get rid of money altogether, but my realistic side worried about creating a decent life for my future family. Where I live, it certainly feels like the only way to do this is to have a household income in the 1% ($400k+) per year, and even that is really just “upper middle class” here. Achieving that is very challenging. It’s much more likely that I’ll be priced out of Silicon Valley as I decide to have a family, and I’ll drop into a lower household income level to be able to afford a middle class lifestyle somewhere else.

 

November Networth Check-In and Retirement Update

Now that I am “in between incomes,” so to speak, I am re-focusing my objectives for total assets this year, and beginning planning for 2016 based on my potential earnings at my new opportunities.

As a reminder, my goal was to close out 2015 with $400,000 in net worth. That figure was always a stretch, but it isn’t going to happen this year. My new goal is to wrap up the year with at least $350,000 in net worth, which is about a 15% increase in my nest egg – not bad but not great either. My goal is to give birth to my first child in the summer of 2017, when I’m about to turn 34 (yikes.) That means getting pregnant in the fall of 2016 or soon after would be ideal. That means that I still want to aim for $500k in net worth by the time I have my first kid (let’s call that July of 2017.) This is about 19 months to increase my net worth by $150k.

Let’s start with where I am today — according to www.networthIQ.com my current net worth is $380,783. I will subtract my car ($8000) and stock options that will soon be worth nothing from that ($16,000) to what is my “actual” net worth — so about $356k. I’m also losing money now since unemployment doesn’t cover my monthly expenditures, so assuming the stock market does decently this month and I land a new job for December start (which is looking quite likely) I should be able to close out the year about $350k. A reminder, in January of 2009 I had about $5k to my name (see graph below.)

november net worth

In order to hit my goal of saving $150k in 18 months (assuming ending 2015 with $350k), I need to “save” $8333 per month. How is THAT going to happen?

If I (knock on wood)  increase my income levels in my next job to $190k (which is super exciting and feels like too much yet if the market will pay that for my services, I’ll take it!), that is a take-home of about $9400 a month (which is a lot and really starts making this dream possible – this is where it gets exciting!) Even with my average spending of about $3500 a month,  I will have $5900 per month to put away. But this also, theoretically, is two years of 401k investment, which I can max out each year. So that’s $36,000 of the total $150k right there (assuming I can keep my job and do well at it!) Ok, so one opportunity has a 3% match of your salary on that, which is awesome (I’ve NEVER had a 401k match in my entire career!) That means each year I’d make an extra ~$5700 just for putting the money in my 401k (if I’m understanding the match thing correctly.) So that is $11,400 on top of the $36k. Ok, so that takes care of $47,400 of the $150,000, and leaves a slightly more realistic $102.6k left to save over 18 months, or, $5700 per month. Income is reduced a bit with the 401k investment, of course, by $18000 a year – but that’s all pre-tax. But with bonus, etc, it should balance out to still taking home somewhere around $9k a month, or maybe a little less. That’s still a lot for the short-term goal.

Now, let’s assume my stock portfolio / the market increases by an average of 5% each year. It could be less and it could be more, but let’s say 2% – 5%. That is somewhere between $7000 and $17500 for year one, and a max of $20.9k in year two (at 5%), minimum of $8368 (for the entire year, but I’ll count that in these numbers since even if I’m not working my portfolio will continue to gain interest.) Ok, so on the more conservative end with just a 2% year-over-year gain, I’ll have another $15,368 covered by investment interest…

$150,000 goal
$36,000 = 401k investment
$11,400 = 401k match @ 3% of income
$15,368 = portfolio interest at 2% YoY
———————————————
$87,232 to save in 18 months, or,
$4846 per month

This is very doable, as long as I select a job where I can stay a minimum of 18 months. One opportunity does not have 401k match, so I am leaning toward the one that does, since this clearly helps substantially in reaching my long-standing goal of $500k by childbirth.

Once I have kids, I am expecting to work part-time and see my annual savings levels decrease. Of course, I’ll have a husband who is also working, but he doesn’t earn as much as I do or invest his savings beyond a Roth IRA (which he’ll no longer be eligible for once we’re married – yeay marriage.) We’re not really combining incomes when we’re married – just continuing to split major household expenses. We’ll probably start to split a little more… right now we just split rent (I pay more since I make more) and food (we spend way too much on food for two people) — but in the future when we’re married I can see us splitting healthcare expenses, and maybe things like gas/transit. When we have a kid all those expenses will be split too. Luckily I have a penchant for household accounting. What a great hobby!

Seriously, though, if I can get to $500k before I have a kid, this frees me up so much from this looming fear of the future I have. It’s not exactly a nest egg that will make me rich, but it’s a very good start to be at $500k by 34. The goal was by 30 but so what… goals are meant to be hard to reach, but they keep you focused on getting to where you need to be.

With $500k, if I can manage to not touch that money until I’m 65, at an annual return of 5%, that gets me to about $2M in retirement (not counting any future earnings or my husband’s earnings/savings. At a 10% YoY return that’s about $8.7M in retirement. Heck, if that grows at 10% YoY in 20 years once hitting $500k, that will be worth $3.3M – not exactly placing me in the .01%, but certainly providing enough income for early retirement / starting my own business / doing what I want when I’m 55 years old. I know a lot of women in their early 50s and I can see this age being a good time to have that flexibility. You’re still healthy enough to trade and have fun, your kids are old enough to appreciate spending time with you (hopefully) and overall if you’ve been smart about saving over the years, you can take a moment to actually enjoy life.

So when people read this blog and comment about how this $500k goal is so silly, well, it really isn’t.

The MOST important thing right now for all of this is picking a job where I can stay stable at for the next 19 months, at a minimum. That’s a long time and I’m going to take it month by month and focus on being so productive my employer couldn’t even dream of replacing me. 18 months is just 6 quarters, and that will go fast, especially if I’m pregnant for half of them!

I really hope I can do it. I’ve come so far. This seems within reach. Having my first kid at 33/34 is not ideal, I’m going to have to have my second at 36 and if I want a third, well, that’s going to have to be pretty much right away after that. This leaves me little time to keep earning at the same rate, especially in my field, where having kids doesn’t seem to align with the amount of hours required to work. I have to make the money now, so I can leave the options open for the future.

 

 

 

 

 

 

 

 

what i’ve learned making a lot of money

I used to think that people, especially before their 40s, who made low-to-mid six figures were in the upper echelons of career nirvana. Yet every year throughout my career I’ve made more and more money. At first this was a little game for myself – how much more could I earn if I just asked for it and exhibited confidence. I’ve gotten fairly good at negotiating, but not so much at holding my value. Big problem.

The thing I’ve realized now that I’m, in my mind, making a lot of money (mind you, not like, wall street money, but still, a solid upper middle class income) is that, surprisingly, I’m not the type of person driven by money. With the high salary comes different kinds of expectations in terms of professional polish and management ability. To just look at myself in the mirror and say “you know what, maybe I’m not cut out for this, and that’s not a bad thing,” makes me feel a whole lot better.

No matter what field you’re in, or what you do, there are opportunities to become an expert at it and make a decent sum of money. But just letting life bounce you into a field that you aren’t naturally good at, and somehow have managed to con people into thinking you can do the job, isn’t an ideal way to live. It’s hyperventilatingly stressful, depressing, and ultimately not good for anyone involved. At some point you have to look at yourself in said mirror and say “listen, you aren’t a six-figure professional, and that’s ok.”

What’s more, I know I’d be incredibly inspired if I were to be able to actually work on the product side of the house vs the more business side. I’d still leverage all of my knowledge form the business side, but at the end of the day I want to build great products. I’ve been saying this for the past 10 years. I just keep finding myself in jobs that pay more and require more responsibilities at something that isn’t a natural fit for my abilities.

When I interview candidates who just LOVE this profession, it becomes very clear to me that I’m in the wrong role. And right now I’m open to a lower salary if it means being in a position where I’m a better fit. I just don’t know how to get there. The lower salary doesn’t bother me, especially if I move to somewhere with a lower cost of living, however to even make the transition it seems grad school is still the easiest way — and then it seems silly to pour a hundred-thousand dollars into a degree that will land me a job that pays a hundred-thousand dollars less than what I make today. But I guess if that’s what it takes, that’s what it takes.

If money doesn’t make me happy, and it clearly doesn’t beyond meeting basic needs, then I need to figure out what will — and chase after it as if my life depended on it. Because it does.

Money is an Easier Goal than Happiness

Since 2007, I’ve been writing, on an off, for HerEveryCentCounts. I was reading another 20-something-year-old’s blog and was massively jealous of her networth that was around $250k. I thought about my massive savings account totaling $7k and how my part-time job and internship were not even making it possible to break even every month. I learned a lot about personal finance and got myself a Roth IRA account. I started investing. I pushed myself to increase my income year-over-year. I got to the point, a few years ago, where I made a goal for myself to hit $50k in networth growth, year over year.

What’s crazy is that, after a lifetime of never focusing on one thing long enough to achieve my goals, and even with my life consistently crumbling around me due to my bipolar depression, I managed to hit my fiscal goals time and again. Nothing else made me quite as happy as seeing my networth increase every month in my OCD spreadsheets. I didn’t really know what I was doing when it came to investing, but I kept on putting money into the stock market, especially when it went down, and I saw my networth grow.

At the end of last year when, on paper, I reached $300k in networth, it felt like the biggest accomplishment in my life. I’ve never run a marathon or won a competition. I’ve never really done anything impressive. Hitting $300k at age 30, which was the goal I had set out for myself when I was 22 – at the time when it seemed completely impossible – was achieved. All of the ups and downs over the years seemed to be, at that moment, worth it. $300k wasn’t enough to retire on, but it wasn’t chump change. Suddenly my also unreasonable goal of $500k in networth before having children seemed possible, if I could just hang in there for a bit longer.

My boyfriend does not share in my money-obsessed ways. He saves a bit here and there, but he hasn’t invested any of his money outside of a Roth I convinced him to open when he turned 31. Meanwhile I’m throwing most of my earnings into the stock market, which is maybe dumb, but so far it’s worked out. As of Feb 15, my networth is ahead of monthly target towards my annual goal of $400k (this is the first year I’m trying to achieve $100k networth growth vs $50k.) As of Feb 15, I have $319k in networth. The stock market has performed quite well for the past few weeks, so this upward trend probably won’t last, and there will be pullbacks, but I’m excited to see that 1.5 months into the year I’m already trending towards my goal.

All I know is that I have to work hard for the next two to three years until I have my first child. There is no way in hell I can do the job I have now with children. I may have to change careers at that point, or at the least, accept a lower-paying job in order to be the mother I want to be. I’m strongly considering leaving my state and moving somewhere where I can purchase a nice house with a backyard for $500k, not $1.5M. My boyfriend is open to moving as well. It would be tough because it takes me a while to meet people, and at the least we have a few friends in the area, but I know if we stay in our region I will have to maintain my level of work and simultaneously raise a family. It’s just not going to happen. I see my friends who are parents who are either not working or working from home part time, and I can’t imagine how I would be able to keep my current job, or something like it, and also take care of a young kid.

While saving money, investing, and seeing my networth grow is exhilarating, at the end of the day, it’s my own little semi-secret. My parents still see me as this ongoing series of failures, jumping from job to job every few years. My boyfriend doesn’t care about my savings, which is good, but I don’t get any sort of extrinsic reward from his acknowledgement of my success. I guess that’s why I keep this blog to begin with, because it feels good to impress someone somewhere with my little fiscal victories, month over month, year over year. When you’re an adult no one really gives a shit about the amount of money you saved every month. I guess that’s why people buy fancy cars and big houses – because then it’s easy to show off your success. I don’t need to show it off, I want to be renowned for being the millionaire next door – one day – for being a woman who, despite suffering from crippling mental illness, has saved enough to be able to take breaks from work when depression hits, or when she wants to spend time with her future children instead of spending 10 hours per day working.

Then, I also realize it’s really dumb to want any sort of recognition for saving. Everyone does it. And my own saving has been made possible due to my parents paying for my college diploma, and my graduating without any loans. I’m too scared to dip into my networth to go to grad school, even if it means finding a career that I would be more naturally suited for, so I just hold my breath and hope I can last long enough to see another paycheck come through. I am well aware that my income, strong as it is right now, is likely short-lived. All I can do is push hard and save as much as possible each month — climbing as quickly as possible to my $500k goal.

I know $500k is an arbitrary number. It’s a lot of money but it really isn’t a heck of a lot of money. What $500k means to me is the ability to take a $60k a year job that is meaningful in a state where costs of living are lower, let the $500k grow and use the $60k to cover basic day-to-day costs, along with the income my boyfriend makes. $500k growing at 5% rate over 30 years is $2.1M. So if I can not touch my principal or the interest income until I’m 65, I’d have $2.5M in retirement. That’s how much I think I need for a comfortable retirement. And if it happens to grow at 8% YoY by 65 I’d have $6.3M in retirement.

So that’s why $500k is the magical number to hit before I can start doing things I actually want to do in my life… like being a mother, working part time building my own business, or writing for a local newspaper, or attempting to write my first science fiction novel. I still need to earn an income that covers my annual expenses, but I believe $500k is my version of financial freedom. I would still have to work, because I couldn’t tap into that money until retirement, but I’d be pretty much set as long as my average rate of annual return was at least 5%.

The exciting part of this picture is that the $500k by 32 IS possible, if I can succeed at my job and maintain my current salary for at least two years. I may come out of that with a head of grey hair and a heart attack or two, but I’ll be able to be the mother I want to be.

Feb 1 Networth Progress:

Screenshot 2015-02-14 19.54.19

Holy Cow: 1 in 5 Millennials Living with Parents

Today The New York Times posted a piece “The Boomerang Kids Won’t Leave.” Apparently one in five people in their 20s and early 30s lives at home today. And 60 percent of young adults receive financial support from their parents. Despite the challenges I’ve faced in my career, I know I’m extremely fortunate to have been able to… boomer… without the rang.

Nearly 45 percent of 25-year-olds, for instance, have outstanding loans, with an average debt above $20,000. Student loan debt is frightening. I’m a privileged spoiled brat. My parents paid for all of my overpriced, mid-tier private school BFA and a ridiculous amount of expensive art supplies along with the typical library of never-look-at-again textbooks. While I picked up a very part-time job in college at my school (because I didn’t like feeling that spoiled) the reality was the little money I made barely covered, well, not much at all.  Continue reading

Women = Breadwinners. Man = Breadmakers.

It looks like I’m not the only woman in the world gearing up for a life of winning some bread. Four in 10 American households with children under age 18 now include a mother who is either the sole or primary earner for her family, according to a Pew Research Center analysis of Census and polling data released Wednesday. This share, the highest on record, has quadrupled since 1960.

The public is still divided about whether it is a good thing for mothers to work. About half of Americans say that children are better off if their mother is at home and doesn’t have a job. Just 8 percent say the same about a father. Even so, most Americans acknowledge that the increasing number of working women makes it easier for families “to earn enough to live comfortably.”

The median household income for married women who earn more than their husbands — more often white, slightly older and college educated — is $80,000. When the wife is the primary breadwinner, the total family income is generally higher. That’s probably because if men work they’re doing it for the money, whereas there are woman working just because it fulfills their blessed hearts, if they happen to be married to someone wealthy. Continue reading

Oh the Progress You’ve Made…

Sometimes I forget just how far aheads I am (in terms of savings) than most of the American population, let alone most people my age (28.) I obsessively check my networth and investment growth, and have this month watched my “investing for fun Sharebuilder account” hit $100k. Sure it’s down a few thousand now under that mark, but I’m confident it will inch over the line again. My total Networth is now $200k, a goal that seemed completely impossible just 5 years ago on my then $50k a year salary.

A few months after I started investing in this “fun” account the stock market crashed and it was hard to keep watching my investment account go down. At the time, even though I had about $15k in the account, it was painful to watch it slip to $10k or less. I knew that was the right time to invest as much as possible, so I started to try to pour as much as possible from each paycheck into my investment accounts.

Interestingly enough, my more “safe” investments — such as my Vanguard index funds — have not performed well at all over the last 7 years. Meanwhile my fun account — which is unfortunately taxable but the only place to put my investment dollars when either I have no 401k option or I’ve maxed out my 401k and Roth — had performed quite well. It’s had its ups and downs, but I realized overall since starting the account it has made about $25k — on less than $75k investment. Knock on wood as things can always change, but the performance has definitely been much stronger than my safe accounts that have barely moved at all.

I recently met up with two of my friends from different aspects of my life — one who I grew up with back east, who moved across the country to go to culinary school and has been moving her way up in the world as the manager of a hotel. The other, also my age, I met in a summer program in high school. She too picked up and moved across the country and is now working as a video editor. All of us are middle class — the hotel manager, I’ll call her Sally, owns a 2br condo in the suburbs, which her parents helped her purchase despite the fact that they were struggling with money. I don’t know her exact income but I’d guess it’s around $60k. My friend the video editor has been at the same job for 6 years now, and hasn’t received much of a raise in those 6 years. Her income I estimate to be about $50k. She likes her field but is unhappy with the company and some colleagues, but is comfortable without change. She hasn’t saved for retirement yet and is living in a 1br apartment for about $1200 a month (which isn’t bad for the city she’s in, but having roommates could help her save more.) Meanwhile, my boyfriend just quit his PT $20/hr job and has $0 in retirement savings. He turned 30 last March and is finally getting his act together and looking for a FT position with benefits and such.

I’m sitting here today staring at the net worth in my PersonalFinance.com account, with the number $200,947.58 staring back at me. This isn’t a fake number or guesstimate of my networth today. This isn’t filled with some questionably accurate estimate of a car or home value. This is $200,947.58 of straight-up cash and stock investments. This isn’t meant to brag — for one, I could have been much wiser with my money to date and saved even more, and two, I know I’ve been fortunate in my upbringing to be able to get where I am today, with no student loans and $5k from my parents plus $10k from a lawsuit when I was a kid to buy my first car and get started in the world.

Still, my friends noted above had similar situations. My friend the hotel manager may have student loans, but her parents bought her a 2br condo. My friend the video editor had her college education paid for and is likely going to inherit a large sum down the road. My boyfriend’s college education was paid for by his mother, and he lives at home paying $0 in rent in a part of the country where jobs that pay well are relatively plentiful. So, in short, I feel ok comparing myself to these three people I know in understanding my level of success versus the rest of the world who may be less fortunate.

In June, the average American family saw their net worth drop 40% in that three-year time period from $126,400 to $77,300. Going on 29 and single, I’m already well above that. It’s sad to think that most families do not have more than $77k in networth! I’m still shocked that I’ve been able to save and earn this much on my investments in less than a decade of work. I’m a bit terrified of how little i’ll be able to save once i have a family and kids — I’m pretty sure the whole financial advice that marriage is good for your finances is actually going to be the opposite for me.

Looking ahead, I’m focused on continuing to save $50k per year. My goal has always been to hit $250k by the time I turn 30. As long as the stock market cooperates next year that may be achievable. Given I’m at $200,947 right now with 3.5 months left in the year (and a big iphone release coming out which will only help Apple stock ride up in the short term), I could theoretically hit this goal much sooner than thought. The car purchase will definitely get in the way — it’s kind of funny, but one thing my DUI proved is that large expenses don’t have to get in the way of your goals. I’m still pissed at myself for all the chaos that one stupid day caused to my life, but the reality is the DUI was my largest-ever “expense” and I’ve lived to tell about it. I estimate the DUI will cost me $10,000 all things said and done, whereas previously my most expensive purchase was my car for $7500. Sure, without the DUI I’d actually be able to purchase a car right now and be well over my networth goals, but in a way it’s shown me that you can spend money in life and still save quite a bit.

My goal has always been to have $500k in the bank before having children. The plan right now is to get married at 31 (in 2 years) and start my family in 3 (wedding in 2014, start family in in 2015.) That gives me 3 years to save $300,000, so that goal is highly unlikely. This year my stock performed well but in reality I’ve saved about $25k and the other $25k was earnings on my investments. That may not happen in future years and it very may well go in the other direction. Eeks. But even if I can save $50k per year, that’s still just $350k by the time I want to start a family… no where near the $500k goal. I could wait another 3 years to start a family and put marriage off as well, if I can continue as planned saving $50k per year I should reach $500k by 34. But I’m worried 34 is too late to start having children given my PCOS and how hard it will be for me to have kids in the first place. Sigh. I get very freaked out about how fast life is going and all the choices that need to be made. But I really don’t want to have children until i hit that $500k networth mark. Of course my company stock options can significantly impact this. If my company is able to have a successful exit, my networth could skyrocket past that goal. That’s always in the back of my mind, but I don’t like to consider that in my planning as it also very well may not happen. It’s crazy to think that there’s a better-than-winning-the-lottery chance that it may, but until the day that happens I’ll stick to my plan of saving $50k per year, and try to up that quite a bit so I can get to $500k earlier than 34!

June Networth Update: $174.5k (-0.78%)

It’s been a rough networth month for many of us, as the stock market, which was doing so well earlier this year, has decided to take a turn in the other direction. In May, my portfolio took a hit, as I managed to spend a bit of money on a few weddings (gifts, dress, shoes, etc.) I’m honestly surprised I ended the month just .78% down.

Assets: $181.628 (.43%)
Cash: $11,870 (124.56%)
Stocks: $113,634 (-2.33%)
Retirement: $52,735 (-3.56%)
Future Kids College Fund: $3389 (-1.77%)
Debts: -$7,087

Networth: $174,541 (-$1367, -0.78%)

In order to hit my goal of $200k this year, I need my account to increase $3637 in June, or 2.08% of my current networth.

$3637 Gain Goal in June? Here’s how…
$1125: 401k auto investment
$1500: savings
$942: growth on investment (.5%)

Of course, if my stocks don’t play nice, this could be an unfortunate month. But, the good news is, I am eligible for a bonus again this July (and again in September) which could help offset some of the losses from wonky markets.

2012 Self Operating Plan to save $50k for $200k Networth

This is a big year in my networth saving. I hope to have $200k in all of my accounts by Dec 31, 2012. This will have me on track to $250k by 30; and $500k by 35. Somewhere between 30 and 35 I plan to get married and start having kids, so that will change the story a bit, but I don’t want to get married and even think about having children until I have $250k across my various savings and investing accounts.

Since graduating college in 2005, I’ve increased my networth from $10k to $145k. On average over the last six years, I’ve saved (or earned interest on my savings) an average of $22.5k per year (my income for the past 6 years has been $15k, $25k, $35k, $55k, $65k, $85k, and now $90k.) My goal these days is to save $50k per year, but that remains a difficult feat on my $90k salary. Lately I have been eligible for a bonus of up to $20k, and I hope to hit my objectives in order to achieve a $110k per year salary including a bonus.

In order to reach my $200k goal in 2012, I will have to be very strict with my spending. I’m not sure that amount of saving is even possible (unless the stock market rebounds) but my plan of income vs spending below will need to be followed spotlessly if I am going to achieve my goal in 2012. Continue reading

Without a Raise, How my Salary Increased from $20k to $90k in 5 years.

Some people get annual raises of 3% to keep up with inflation, or more if they’re lucky, and less if it’s in the middle of a recession in a company that can’t afford to offer raises.

I’ve never gotten a raise. Since graduating from college in 2005, I started out making $18 an hour at a non-profit and am now making $90k a year. This was not through raises. In fact, my income trajectory is due to learning to pick myself back up when I lost my job, re-brand myself as something more valuable, and attack the job market with as much belief as disbelief in myself, which allowed me to take a lot of risks as I wandered my career path to where I am today.

Had I remained at my first job for longer than 6 months, I might have received annual raises and be making somewhere north of $25 per hour today. I’d have five years of Admin Assistant at a non-profit on my resume, which, if I were to leave to another position, would move me into yet another admin role, or a very low-level assistant position in another department.

Instead, I got laid off. Well, in that case I was fired. I was in the depths of one of my worst depressions that year (yea, got to love being bipolar) and my boss didn’t exactly understand why depression made it hard for me to drag myself out of bed and get to work on time. So that job ended, and within a week I managed to land my first full-time position as an editorial assistant at an international magazine making $35,000 a year. At the time, I was extremely excited to be making more than $20k.

I stayed in that position for a year and it went well enough, though the career path was not quite right and when the opportunity to jump ship came I jumped. This was the only time I was actively recruited, and thus my salary went up from $35k to $50k. This was a huge jump. Again, had I stayed at my employer where I was working as an editorial assistant, I’d be lucky if I were making $50k today. Instead, I left. And I stayed at my next position for three months, at which time I discovered I was (and still am) a terrible reporter (too socially anxious to be a good reporter and ADHD to pay attention to all the facts) so I left that role, again depressed, thinking I had thrown away all chances I had of a career, and moped around for a few months.

But then another opportunity came up. I found a part time job writing copy for a local startup at a rate of something like $35/hour. My contract there expired monthly, and I managed to re-negotiate a higher hourly rate each time. It got to the point when both my boss and I were tired of negotiating, and he offered me a full time job. I pushed the salary up a bit in our final negotiation to $65k, which I was offered. At the time I felt like I was rich.

Two years later, I’m laid off again. This time because the product I was working on was being shut down. I go for a month without a job and again fall into a deep depression — oh woe is me — oh woe — oh what am I going to do?

I land two jobs in those two months — one full time contract at a large, international tech company where I’m able to negotiate a $65/hour payrate (! — I inquired how much the role paid — $30-$60/hr, told them I wanted $70 an hour, totally thinking I was going to throw away the job by asking for so much, and they came back with $65) and another hourly role at a startup on the side at $40/hr. After a two month hiatus from the work world, I had the most profitable 6 months of my life. But that too had to come to an end.

The contract role at the big tech company was not extended because the product I was working on was being shut down (story of my life) — but I was ok with that. The startup I had been working for over the length of the contract was doing well enough to hire me on full time. And while I could have pursued a full time role in the large company where I had the contract (I had a few leads that might have turned into something) instead I decided to jump to the startup, assuming I’d have a stable salary and health insurance, vs the contract setup.

Mission accomplished. I secured a role with not only a $90k salary, but also a title that (assuming I am successful in this role) sets me up for higher-paid positions to follow. I doubt I’ll get a raise in this job either, but I also assume that within the next 3 years I’ll move on to a new position, and ideally break six figures, because now that I’ve found an industry and role I’m good at, I am sculpting myself into a valuable prospective hire.

Those first few years were really rough, and I’ll undoubtedly have a ton of rough times ahead, but at the very least I am confident that the harder you fall, the more room there is to leap higher than you’ve ever leaped before.