6 ms·

">As a coder, your pay will definitely plateau." There are two problems with hitting a plateau @ 300K: Housing costs and College Tuition. At the traditional 3

by 001sky 13y ago

">As a coder, your pay will definitely plateau." There are two problems with hitting a plateau @ 300K: Housing costs and College Tuition. At the traditional 3x debt to gross income metric, your home mortgage would be capped around ~$900k, vs the $1.3-1.5MM range of current trading prices. Which is not terrible if you lock something in. However, once you are at 4x paying for schools becomes a far greater challenge. You could be looking at anywhere for $175-250 per kid. So, capitalize this and you are at $350-500K. That is, your combined "future obligations" would be something in the range of $1.7 to $2.0MM (exclusive of retirement). Which is something closer to 6.5x gross income. Which is pretty highly leveraged. You're after tax cash flow without real-estate tax shields could easily be ~200k, so you are looking at something like 10x cash-flow leverage. That is about as high as most PE guys will take a decent c-corp. Just start shielding your income and assets as soon as possible. Strategize to minimize exposure to asset inflation (housing, education). The IRS (tax man) and the "doo gooders" in academia (ironically, the new "alternative minimum tax" man) have really boxed in the middle class (read: the not-rich enough) from the perspective of lifetime earnings. Most of your "savings" will be at risk to get swept from you, thanks to "financial aid" effect driving college tuitions. These numbers get bounced around every now and then but they are worth considering. Inflation in "raw materials costs" for knowledge workers (kids) need to get passed on to customers (ie, employers) if you want to stay in the same place (red queen effect and all that). This is relevant when you are evaluating career moves down the road. ======== 3 bedrooms (Weekly Average Prices, San Francisco) $1,339,274 $1,573,313 $1,805,297 $1,720,736

nostrademons 13y ago
Just throwing this out there: if there's a problem with developer salaries being capped at $300K, think of how hard it is for all the families who are making the U.S. median household income of $53K/year, or hell, the Santa Clara County median income of $45K/year. I understand that everybody wants more money - hell, I want more money too. But a lot of that is because everybody wants to be in the top 1% of nice neighborhoods, nice homes in nice neighborhoods, nice colleges, etc. You can have a life that is just fine on far, far less than $300K/year.
- shiraabel 13y ago
  Problem - the school systems are funded by property taxes. Live in a low rent area, your kids will be at a crappy school. It's why a family needs to be earning at least 200k, preferably 300k. Rent for a family of 4 is at a minimum of 5k - 6k. The alternative is to live in the midwest, with snow. And a lot of people who don't understand working in tech. And less opportunities.
  - eru 13y ago
    How about private schools?
  - johnmaddox 13y ago
    Its sad. But the solution seems to not marry at all.
  - SomeCallMeTim 13y ago
    I deal with snow, yes. Though it's not THAT bad. >And a lot of people who don't understand working in tech Boulder, CO, has the highest density of people working in tech in the country. You were saying?
- 001sky 13y ago
  Point is don't be lulled into a false sense of security. Also, these things drive observable behaviour today. It's not a question of passing judgement on it (or not).
  - nostrademons 13y ago
    I don't really disagree, but neither do you want money to feed a sense of insecurity. You want to rationally pursue means that maximize your take-home income and wealth, but usually if you get emotionally attached to money you a.) will be a lot worse at rationally pursuing lucrative opportunities and b.) are in for an unhappy life.
- phektus 13y ago
  Sounds great, can you share what ]helped you become a top earner?
oneiric 13y ago
"There are two problems with hitting a plateau @ 300K" Luckily, since you're making $300K you have essentially no problems outside of this. Aside from your sourpuss attitude.
- collyw 13y ago
  Agreed. I am a solid developer with ten years experience living in Spain. 1/5th of that salary is good money here.
danbmil99 13y ago
Over 25 years on both coasts, I have yet to see someone strictly coding (no exec or mgmt duties) break $200K. All the families I know in SV are either lawyer/finance/medical, 2-income households, or cashed out.
- gohrt 13y ago
  Most devs with ~10yrs experience at a B2C software company you've heard of earns >$200k total comp.
  - danbmil99 13y ago
    > Most devs with ~10yrs experience at a B2C software company you've heard of earns >$200k total comp. I don't think that's accurate. Most? Really? Maybe the top 5 or 10%, and in most cases I suspect they are team leads with 3+ devs either reporting or defacto following their lead. It's absolutely not the case outside of USA coasts.
- jasonkester 13y ago
  It's dangerous to extrapolate from there to "nobody makes that much". It's only a short leap to "I'll never make that much" and eventually, "$70k/year isn't so bad". There are in fact lots of developers doing nothing but development making well north of $200k. That's less than a $100/hour bill rate, which is not at all uncommon as a contractor. If that's something you want, know that it absolutely is attainable. I think you'll find that, in all walks of life, people who make lots of money tend not to post on internet message boards (or salary surveys) about how they make lots of money. Definitely don't take the lack of people spouting off here about their 1%'er incomes as a sign that those people don't exist (or aren't, in fact, here reading this thread).
vehementi 13y ago
Only a problem if you curiously believe that you must buy a home in such an outlandishly expensive place. If you make $300k and have money problems, it's 100% by your own choice barring unavoidable emergency medical costs, etc.
ednaxe 13y ago
Aren't you forgetting your spouse's salary?
ctb_mg 13y ago
> At the traditional 3x debt to gross income metric Can someone give more information/source on this?
- gaius 13y ago
  Traditionally, a mortgage would be 10% deposit + 3x your salary. That's what I did. In retrospect I should have done what everyone else did, 0% deposit and 5 or 6x salary, then let the govt bail me out by artificially holding interest rates so low. People who behaved irresponsibly made out like bandits, and honest folk are seeing their savings destroyed.
  - prpatel 13y ago
    +1 What's the point in saving money when it gets eroded by near 0% interest saving returns combined with continuing inflation?
  - saalweachter 13y ago
    Traditionally a mortgage would be 20% down.
- ctb_mg 13y ago
  Did some research. To answer my own question: DTI is a debt-to-income ratio that is considered during mortgage negotiations. It's desirable to have less than a 36% DTI such that your monthly debts (CC payments, mortgage, car payment, etc.) do not exceed your monthly income.
SomeCallMeTim 13y ago
>There are two problems with hitting a plateau @ 300K: Housing costs and College Tuition. I moved out of the Bay Area and own my home outright. The offer lets me work from home where ever I want (with some restrictions). So home cost isn't relevant to me. And on the college tuition front: While I wouldn't necessarily advise it of today's high school graduates, by the time my kids are ready for college I don't expect college to look like it does today. Or rather, I expect companies to be more concerned with what you know instead of how you learned it, and with the huge movement toward making effectively entire college educations free online, I think that the face of college will be transformed -- and made correspondingly less expensive -- by then. It's already true to some extent, and if the question is between going into serious debt or getting a college degree, I think the prudent choice might be to use free or inexpensive online courses to get a degree rather than piling up serious debt for a questionable advantage in getting a job. It seems like "free internships" are already the way to get on-the-job experience, and that's a lot harder to accomplish if you've got a huge debt that's demanding to be paid. In addition, politically speaking I think we're at the extreme right end of the pendulum swing right now, and once things swing back a bit to the left, state schools will become more affordable again. A lot of the rise in costs has been correlated with the fall in state funding. Though the rest of the rise in costs can be attributed to the rise in administration salaries; almost a half million/year for a UC Regent? [1] How much value can that regent possibly be bringing to the UC system? How many others like him are burning up the money that people are paying to get a good education? [1] http://www.sfgate.com/education/article/Brown-slams-regents-over-Cal-head-s-pay-4072062.php http://www.sfgate.com/education/article/Brown-slams-regents-...
benjamincburns 13y ago
According to globalrichlist.com, if you earn $300,000/yr, you earn more than 99.97% of people in the world. If you were to walk past a random sampling of 10,000 people on the street - only three of them would earn more than you. It also happens that the same basic financial strategy one might employ whilst making $30,000/yr applies whilst making $300,000/yr. That is, spend less than you earn. Or to put it a little more brazenly: Debt to gross income metric? You fucking make $300,000/yr! Why on Earth do you need to be borrowing money? So you can afford to live in the bay area? So you can "put it all on black" investing in something-or-other? I'm not saying you're wrong to do it, but for Christ's sake don't complain about not having enough opportunity. Your problem isn't your leverage, it's your stupidity. Spend less than you earn!
- sokoloff 13y ago
  Most of the $300K/yr jobs are in locations where housing is expensive. SF, NYC, etc. It's not like there are tons of $300K/yr work-from-home-in-Indiana jobs out there. If your $300K/yr job is in the Bay area, and you like the job and area, it seems eminently reasonable to borrow money to buy a house there.
  - benjamincburns 13y ago
    Unless you want to be increasing your net worth. It's certainly a matter of opinion, but I think if money is your priority, you're much better off in the wop wops making $120k/yr with little to no debt.
    - sokoloff 13y ago
      Your net worth difference between those two scenarios hinges almost entirely on how your real estate purchase in the Bay area changes value. (You are highly leveraged and concentrated in the Bay area home ownership case. That can cut both ways.)
joncooper 13y ago
Given that each educational cashflow is 0-22 years in the future, carrying at a discounted NPV would be more appropriate. Whatever the assumption, carrying at the multi-decade-forward FV is a bit punitive.

by 001sky 13y ago

nostrademons 13y ago

Just throwing this out there: if there's a problem with developer salaries being capped at $300K, think of how hard it is for all the families who are making the U.S. median household income of $53K/year, or hell, the Santa Clara County median income of $45K/year. I understand that everybody wants more money - hell, I want more money too. But a lot of that is because everybody wants to be in the top 1% of nice neighborhoods, nice homes in nice neighborhoods, nice colleges, etc. You can have a life that is just fine on far, far less than $300K/year.

shiraabel 13y ago
Problem - the school systems are funded by property taxes. Live in a low rent area, your kids will be at a crappy school. It's why a family needs to be earning at least 200k, preferably 300k. Rent for a family of 4 is at a minimum of 5k - 6k. The alternative is to live in the midwest, with snow. And a lot of people who don't understand working in tech. And less opportunities.
- eru 13y ago
  How about private schools?
- johnmaddox 13y ago
  Its sad. But the solution seems to not marry at all.
- SomeCallMeTim 13y ago
  I deal with snow, yes. Though it's not THAT bad. >And a lot of people who don't understand working in tech Boulder, CO, has the highest density of people working in tech in the country. You were saying?
001sky 13y ago
Point is don't be lulled into a false sense of security. Also, these things drive observable behaviour today. It's not a question of passing judgement on it (or not).
- nostrademons 13y ago
  I don't really disagree, but neither do you want money to feed a sense of insecurity. You want to rationally pursue means that maximize your take-home income and wealth, but usually if you get emotionally attached to money you a.) will be a lot worse at rationally pursuing lucrative opportunities and b.) are in for an unhappy life.
phektus 13y ago
Sounds great, can you share what ]helped you become a top earner?

oneiric 13y ago

"There are two problems with hitting a plateau @ 300K" Luckily, since you're making $300K you have essentially no problems outside of this. Aside from your sourpuss attitude.

collyw 13y ago
Agreed. I am a solid developer with ten years experience living in Spain. 1/5th of that salary is good money here.

danbmil99 13y ago

Over 25 years on both coasts, I have yet to see someone strictly coding (no exec or mgmt duties) break $200K. All the families I know in SV are either lawyer/finance/medical, 2-income households, or cashed out.

gohrt 13y ago
Most devs with ~10yrs experience at a B2C software company you've heard of earns >$200k total comp.
- danbmil99 13y ago
  > Most devs with ~10yrs experience at a B2C software company you've heard of earns >$200k total comp. I don't think that's accurate. Most? Really? Maybe the top 5 or 10%, and in most cases I suspect they are team leads with 3+ devs either reporting or defacto following their lead. It's absolutely not the case outside of USA coasts.
jasonkester 13y ago
It's dangerous to extrapolate from there to "nobody makes that much". It's only a short leap to "I'll never make that much" and eventually, "$70k/year isn't so bad". There are in fact lots of developers doing nothing but development making well north of $200k. That's less than a $100/hour bill rate, which is not at all uncommon as a contractor. If that's something you want, know that it absolutely is attainable. I think you'll find that, in all walks of life, people who make lots of money tend not to post on internet message boards (or salary surveys) about how they make lots of money. Definitely don't take the lack of people spouting off here about their 1%'er incomes as a sign that those people don't exist (or aren't, in fact, here reading this thread).

vehementi 13y ago

Only a problem if you curiously believe that you must buy a home in such an outlandishly expensive place. If you make $300k and have money problems, it's 100% by your own choice barring unavoidable emergency medical costs, etc.

ednaxe 13y ago

Aren't you forgetting your spouse's salary?

ctb_mg 13y ago

> At the traditional 3x debt to gross income metric Can someone give more information/source on this?

gaius 13y ago
Traditionally, a mortgage would be 10% deposit + 3x your salary. That's what I did. In retrospect I should have done what everyone else did, 0% deposit and 5 or 6x salary, then let the govt bail me out by artificially holding interest rates so low. People who behaved irresponsibly made out like bandits, and honest folk are seeing their savings destroyed.
- prpatel 13y ago
  +1 What's the point in saving money when it gets eroded by near 0% interest saving returns combined with continuing inflation?
- saalweachter 13y ago
  Traditionally a mortgage would be 20% down.
ctb_mg 13y ago
Did some research. To answer my own question: DTI is a debt-to-income ratio that is considered during mortgage negotiations. It's desirable to have less than a 36% DTI such that your monthly debts (CC payments, mortgage, car payment, etc.) do not exceed your monthly income.

SomeCallMeTim 13y ago

>There are two problems with hitting a plateau @ 300K: Housing costs and College Tuition. I moved out of the Bay Area and own my home outright. The offer lets me work from home where ever I want (with some restrictions). So home cost isn't relevant to me. And on the college tuition front: While I wouldn't necessarily advise it of today's high school graduates, by the time my kids are ready for college I don't expect college to look like it does today. Or rather, I expect companies to be more concerned with what you know instead of how you learned it, and with the huge movement toward making effectively entire college educations free online, I think that the face of college will be transformed -- and made correspondingly less expensive -- by then. It's already true to some extent, and if the question is between going into serious debt or getting a college degree, I think the prudent choice might be to use free or inexpensive online courses to get a degree rather than piling up serious debt for a questionable advantage in getting a job. It seems like "free internships" are already the way to get on-the-job experience, and that's a lot harder to accomplish if you've got a huge debt that's demanding to be paid. In addition, politically speaking I think we're at the extreme right end of the pendulum swing right now, and once things swing back a bit to the left, state schools will become more affordable again. A lot of the rise in costs has been correlated with the fall in state funding. Though the rest of the rise in costs can be attributed to the rise in administration salaries; almost a half million/year for a UC Regent? [1] How much value can that regent possibly be bringing to the UC system? How many others like him are burning up the money that people are paying to get a good education? [1] http://www.sfgate.com/education/article/Brown-slams-regents-over-Cal-head-s-pay-4072062.php http://www.sfgate.com/education/article/Brown-slams-regents-...

benjamincburns 13y ago

According to globalrichlist.com, if you earn $300,000/yr, you earn more than 99.97% of people in the world. If you were to walk past a random sampling of 10,000 people on the street - only three of them would earn more than you. It also happens that the same basic financial strategy one might employ whilst making $30,000/yr applies whilst making $300,000/yr. That is, spend less than you earn. Or to put it a little more brazenly: Debt to gross income metric? You fucking make $300,000/yr! Why on Earth do you need to be borrowing money? So you can afford to live in the bay area? So you can "put it all on black" investing in something-or-other? I'm not saying you're wrong to do it, but for Christ's sake don't complain about not having enough opportunity. Your problem isn't your leverage, it's your stupidity. Spend less than you earn!

sokoloff 13y ago
Most of the $300K/yr jobs are in locations where housing is expensive. SF, NYC, etc. It's not like there are tons of $300K/yr work-from-home-in-Indiana jobs out there. If your $300K/yr job is in the Bay area, and you like the job and area, it seems eminently reasonable to borrow money to buy a house there.
- benjamincburns 13y ago
  Unless you want to be increasing your net worth. It's certainly a matter of opinion, but I think if money is your priority, you're much better off in the wop wops making $120k/yr with little to no debt.
  - sokoloff 13y ago
    Your net worth difference between those two scenarios hinges almost entirely on how your real estate purchase in the Bay area changes value. (You are highly leveraged and concentrated in the Bay area home ownership case. That can cut both ways.)

joncooper 13y ago

Given that each educational cashflow is 0-22 years in the future, carrying at a discounted NPV would be more appropriate. Whatever the assumption, carrying at the multi-decade-forward FV is a bit punitive.