I recently finished reading the book Never Split the Difference and I would highly recommend it. It's a slightly different take on the traditional negotiation tropes we've all heard.
I've managed to employ many of the techniques in my day to day as a PM with success, but his discussions on salary negotiation resonated with me. I'm sure you can find some notes on the book to derive 50% of the value, but the author's stories and explanations drove it home for me.
I recently finished Never Split The Difference too. It was a good read and provides a different perspective on the whole negotiation process. I couldn't help but think however, that the various techniques outlined in the book were nothing more than parlor tricks. Seems like the more these techniques are known, the less useful they become.
Am I wrong? Now that I know how it 'works' I can pick out Ackerman bargaining tactics from a mile away so it's basically a moving target. I feel truly great negotiating tactics are an artform. To succeed you need creativity and flair that can't be duplicated mechanically.
I can't speak for negotiating in general, but I had some experience in leadership courses. This was in the context of an outdoor club in university, and they taught us techniques on how to make new people feel welcomed. Even among the group who were all given the same instruction, the techniques were still effective! I wouldn't discount it entirely just because the other party is also aware of the same information.
Its more about the emotional effort and control than the techniques themselves, else everyone could easily be a master salesperson.
Just because you can pick out the tactics doesn't mean you can't be worn down, or still end up trusting a person. Some folks emotionally mirror so much that they just don't end up having control in the situation.
I've read that book and others. NSTD is both extremely good and extremely bad.
TLDR: It's a great book if you can ignore his attitude. And ignore every negative thing he says about Ivy MBA programs and their books. He is simply wrong about them.
The good:
The methods advocated in the book are somewhat "simple" to remember. This is because he focuses on what will work 70-80% of the time, whereas other books tend to also target the remaining scenarios, creating bloat and complex methods.
This is probably the best book when it comes to the psychological aspect of negotiation. The other books do have it, but tend to focus more on the rational aspects.
The bad:
Writing style can be very offputting. An incredible amount of boasting. A lot of it is justified, given he was one of the FBI's top negotiators. But he goes well beyond it. He starts the book describing how he walked into a Harvard class on negotiating and completely dominated the other students with his negotiation prowess. And he goes on and on about how he beat the Harvard students. Really? In my warped view of the world, I thought it was a given that a Harvard student new to negotiations should be able to beat the FBI's top negotiator.
This was beyond pathetic. It's as if Roger Federer wrote a book boasting about how we visited a tennis academy and managed to trounce everyone. What an achievement!
The anti-academic bashing is strong, and quite unjustified. Throughout the book he boasts that his techniques are way better in the real world than what the academics/Ivy schools teach. Umm... no. I read the Ivy school's books before reading this one, and roughly 70-80% of the techniques in NSTD are the same as the ones taught in MBA programs.
I've noted many parts of NSTD where he makes a false claim against the Ivy Books, or where he claims the Ivy Books don't teach Y. One day I intend to write a detailed review on a blog somewhere listing all his claims, and next to each one quoting one of the Ivy Books refuting his claims. It's just very dishonest of the author to criticize other books this way.
(And no, I don't think any of the Ivy Books actually suggest splitting the difference as a good strategy - I recall one even saying it is an option, but mostly if nothing else is working and your BATNA is not good).
Finally, some good books talk about different negotiation strategies based on your relationship with the person. When you don't care about the other person (e.g. haggling in a marketplace), the strategy you would use differs very much from one where you value the relationship (e.g. business partner). He doesn't really distinguish, and it's not surprising given his background where most of his professional negotiations were one-off.
Please be careful when using his tactics with people you want to maintain good relations with. They work well the first few times, but some of them really start to annoy people. One of my managers left our team and was replaced by another one (new to managing). The new manager used some of these techniques, although she had not read the book (especially the continual "How can I do that?" questions). She was relatively successful in the negotiations, but it damaged a lot of relationships. 3 people eventually moved to other teams.
If one is looking for additional books to read, I recommend:
- Bargaining For Advantage (not very prescriptive, but this is the best one to make someone interested in negotiations and want to learn more).
- Getting Past No. You probably should read Getting To Yes before reading it, though. GPN has some overlap with NSTD regarding the psychological side of negotiating.
Getting To Yes is often recommended. It's decent. My only caveat is that it is not as broad as BfA, and because it gets recommended all the time, a lot of people feel GTY is "sufficient". When it fails for them, they abandon the whole discipline thinking they're just not cut out for it.
Not specific to negotiations, but I recommend as well:
- Influence. Many books (including NSTD) invoke this book.
- A good book on communications (e.g. Nonviolent Communications or Crucial Conversations).
A lot of negotiation techniques are derived from these two topics, and they'll make a lot more sense if you've read them.
Finally, regarding salary negotiations, there's actually a really good one in the book, which is the flip of what is usually taught. The conventional wisdom is that if you can't get your desired salary, negotiate on other things (work environment, work from home, hours, vacations, perks). He flipped it around. If it seems they won't match your salary, keep asking for benefits/perks that are somewhat reasonable, but you're confident they can't provide them. The company will usually say "Sorry, we can't provide that perk, would a $x increase in salary do?"
I haven't tried it, but I can see it would work - most large companies have a limited set of variables they can tweak, and cannot customize much for a single employee. So they compensate by increasing the offer.
Interesting that their suggestion "People often get tired of hearing their own name. Switch tracks and use your name instead." is at odds a bit with Dale Carnegie's "Remember that a person's name is to that person the sweetest and most important sound in any language."
While I still think Carnegie's book is a must read, I feel like it can be summed up by: "empathy, have some."
But his ethos is applied and over applied so much that some times it's a breath of fresh air when a sales person just cut to the chase. Especially in this day and age in most cases, the user probably have had a couple weeks to try and thoroughly read the manual on your product. The sales calls are basically a formality. Beating around the push just wastes everyone's time. Just my 2c.
Every time something like this is posted a, likely very good, engineer who does not live in the Valley post about how overpaid these engineers are.
Compensation is heavily dependent on market rates. It's far more difficult to hire a strong senior engineer in the valley than it is in most other cities in the US. Even companies in fairly remote areas can hire a remote developer or pay a SF engineer to relocate for less than what most Valley engineers make.
It's not about what you can actually do... It's about what you can do compared to the other available people around you.
It's all relative to how much things cost. Suppose one of these engineers wants to buy a home. Here, somebody of similar skill could afford any one of:
a. new McMansion
b. waterfront property with a boat dock and canal access to the ocean
c. canal access for an airboat
d. a condo literally on the beach
e. 11 acres, sheep, goats, can fire an AR-15 in the backyard
For each of the above, I've had a coworker get it. For half those prices, a house within a couple thousand feet of work can be had. An actual house right on the beach seems possible too, perhaps requiring a 30-minute commute in low traffic.
That is single-income by the way.
So, are these things available? If these would be unaffordable, you're underpaid, no matter how big your dollar figure may be.
Why are you using a McMansion and a boat dock as part of the canonical benchmark lifestyle? What if you want to live in a tiny apartment and direct your money towards travel, cars, hobby gear, or index fund shares so you can retire at 35 instead? All these things cost the same whether you live in the Bay Area or rural Kansas, so you’re better off maximizing absolute income even it means living somewhere with expensive real estate.
Or even better lets say you want to save 75% of your income for 20 years then do some fun stuff. Suddenly high income/high cost areas look much better.
What if you don't care about a McMansion? It's like a restaurant where they give you a 3-pound steak, but it tastes kinda crappy and you cannot box it.
We have a 1300sqft house in HCOL and it still has a bunch of unused space; we used to have the same problem even in a 1100ft apartment. My friends have a cheaper big house a 40-minute drive away; the reason they have a big house is because they want to be near certain outdoor activities, and there are no small houses in that area. Half the house is literally unfurnished, nobody ever goes there.
Come think of it, my two main problems with my house is that (1) it's too long of a walk to a bus (like, 7 minutes) and bars/etc. (like, whole 5-15 minutes); (2) (didn't affect us directly yet) heroin addicts stealing stuff. Both of those would be worse in a typical LCOL where I could afford a McMansion I wouldn't bother fully furnishing.
I'm not in BA and I think BA is vastly inferior to where I'm at, but for me an apartment in BA >> a 4000sqft house in rural Kansas. It's like, not even on the same level.
Judging by the prices, many people agree :P
Those problems listed in your 3rd paragraph would not be issues of concern at all.
Nobody wants to take the bus. It doesn't run 24x7. It doesn't go direct, door to door. At the beginning and end of the trip, nobody wants to walk 7 minutes in unpredictable weather while lugging a bunch of stuff. Nobody wants to endure a slow trip, stopping every couple blocks, with a couple bus changes that take a half hour each. Before you get your groceries home, either your ice cream melts or your hot chicken gets cold. You just wouldn't do that. You'd hop in your car, go a couple miles without any traffic, and use the free parking.
Heroin addicts aren't normally a problem in reasonable non-city areas. Yes, you could choose to live in the worst neighborhood, maybe renting for $200/month, but that isn't normal for a "software-engineering" person. More likely you'd be in a neighborhood where calling the cops about a suspicious person would get the cops there in a couple minutes, and/or you'd be in a place where burglars get shot at with full approval of the state legislature.
I actually want to take a bus, or walk. Taking the bus for groceries is insane, only someone living in suburbs could come up with that ;) You should be walking for groceries. Buses save a lot of time since you don't have to drive so you can read or even work; even in my location where buses are far away and there's no express bus nearby (so I make a transfer), for my commute in realistic, not over-the-top traffic the bus is only about 1.5-2.25x slower counting parking time in the free garage, so the net wasted time is actually higher by car; buses are way cheaper (same commute, $2.75 by bus, $5-6 by car before even counting tolls and with free parking); less bad for your health, esp combined with walking; much less stressful; you don't have to bother with parking that is often scarce in the areas you'd actually want to go; you can drink 3 beers and not worry about who will drive; if the weather is terrible like now in Seattle, buses mostly keep running even though most people cannot drive and Ubers are non-existent.
Mind you, that's all in the city where buses actually kinda suck. Where I'm from, subway runs 19 hours a day, and peak hour train interval are 50 seconds, up to 7 minutes at night. Many people still drive (it actually takes much longer at rush hour), well as I say, why stop the self-inflicted suffering, there are all kinds of kinky people :)
The way I see it, driving yourself is a menial job that makes about as much sense to do as pumping your own overflowed sewer with your own advanced plumbing gear. If you cannot pay someone else to do it (no plumbers or buses/ubers accessible), either you live really far in the mountains, or the place you live in is run by idiots.
Crime rates, except for the most benign property crime like car prowls and package theft, seem to be way higher in the LCOLs I looked at, ~4 years ago when we were deciding where to move to. I was actually surprised how much higher, although I don't remember the details. Anecdotally, someone I know lives in a LCOL in Texas and they got burglarized no problem in a gated burb that is way far out, you cannot get there in any way other than by car.
You must be very comfortable in crowds, without much concern for the fact that some other person could do something bad to you. Suburbia exists largely because other people disagree. These other people can not relax on a city bus.
Fixing your own sewer is something people do for privacy (strangers again, IN THE HOME), scheduling, and to take pride in doing something with real physical results. It's like cooking your own food, changing the oil in your car, walking your dog, washing your dog, teaching your kids to read, driving, and mowing your lawn. All these things can be paid for, but that takes variety out of life and reduces privacy.
Getting burglarized in Texas is pretty special. Somebody knew he wasn't home, or at least that he wasn't armed.
I shouldn't be walking for groceries. The HCOL/LCOL distinction sorts by family size, being both cause and effect. (you choose a place according to family size, and then the choice you made will influence your family size) I have 11 kids, so try to imagine hauling the groceries for 13 people.
Going by your price, it's $35.75 for us to take the bus.
I think burbs combine the worst of rural and urban; it's still noisy and everyone can see you and there's often enough crime to not feel quite safe; but it's also soul very inconvenient in every way and you have much more house maintenance to do. And you get unique things like rural house work is sometimes combined with crappy HOAs enforcing same; and also unlike both rural and urban cases finding a place with good views / lots of open air is very hard. It's just literally hell made to raise kids. For every other purpose it's about as good as a HS building that you cannot leave is in the rankings of the good buildings to spend time in.
The most important problem for me at living in a similar place was just one thing: lack of women.
I was compensated for not having a girlfriend, as it is a scarce resource that a high salary can't buy. By looking back in my life to those years, it wasn't worth it.
Why is housing the benchmark of wealth ? And the great thing about living in a high income area is that you can have a nice vacation home that matches your criteria above
What bothers me about this is not the figures, but the feeling that the only thing that matters to increase your salary is competing offers.
The more articles I read the more convinced I am that this is by far the most important factor in an offer, including interview performance. Companies seem to rely in a 'wisdom of the crowds' of sorts.
I've had two options last time I negotiated, and I couldn't really tell which project would be better. It's really hard to tell from the outside when the people giving you answers about the good and bad aspects of the job are the people trying to hire you. So in the end I just chose using the money. The not-so-surprising part is that the project is not as good as it was described. The surprising-but-unsurprising part is that the negative aspects are not at all what I would have predicted. Sure, I could have gone with the other company for less money; the odds are, I would have still had no idea beforehand w.r.t. what I'm getting into. Unless one of the teams/offers is obviously better, it's a crapshoot and the money is literally your only reliable data point. If you have to bail in a year (which I never had to do so far), at least you get more out of it.
You should strive for a deal that allows you to go independent after a few years. They want to keep you dependent on them of course. I wonder if the practice of law-firms should work for IT, at some point you get an offer for partnership. Otherwise even if you work for Google and all your income is spent on living, including family, then what safety is there for future. You should be working for somebody else in order that at some point you no longer have to work for somebody else.
Those salaries seem high compared with the equity, what is your level? Never heard of FB/GOOG L3 making 180k base, although the equity sounds about right (for someone with aggressive and well-planned negotiation).
Nice work. I went through the experience recently, although with two offers instead of six... and that was stressful enough! Well worth it in the end, obviously.
What are people's experiences around having requiters you submit a competing offer for them to negotiate against it?
I've had recruiters tell me they need to see a copy of an offer letter in order to match against it. I assume this is to minimize people lying about competing offers to squeeze a few extra percentage points out of their offer and to give the recruiter maximum negotiation leverage.
What response do you get if you just tell them "no"?
They absolutely refused to move without a copy of the competing offer. I kept pushing but finally gave up and sent them a screenshot of the offer. They called me within 30 mins offering a 40% increase over their "best and final offer".
One thing to keep in mind is that (in theory, but also from what I have seen in practice) better starting salary at Google will fairly quickly be negated by smaller raises in the future.
Same level / performance will be equal after a few years, so the really important thing to work on is (perceived) performance.
Wow. I have 15 years of experience and am making under 220k in NYC. There’s no way I’d have offered that much money for someone with 2 years of experience. It just isn’t worth the price.
Options, in the vast majority of cases, are worthless. We can trade anecdata all day, but each individual's personal stance towards options is shaped by their own experience and the experiences of those who they've worked with. I've never met anyone who made any money off options.
With that disclaimer/explainer out of the way, I can say with confidence that I don't factor options into my comp. When an employer gives me options, I say thank you. When they don't, I don't feel upset.
200k+ for 2 years experience in the valley? That is crazy. This guy is overpaid. How realistic is this? I work in the valley I have roughly a decade of experience and I am definitely under 200k.
None of the numbers in the article seem unrealistic to me.
Keep in mind the big tech companies (FANG et al) are really a tier above in terms of pay, and also that the numbers given here include both RSUs and a projected performance bonus.
If you're a new hire, getting a $300k/year offer is rare for L3 and possible for L4 if you negotiate. If you've been around for a few years and performed well, it's possible to cross $300k/year as L3/L4 given how much FAANG stocks have grown.
Six offers is also well above normal. Most people I've talked to did not have a single competing offer.
Salaries normalise over time though, if performance is similar to peers then comp eventually will be as well (meaning other people will get bigger raises).
Profit per employee is not a very good measure of anything, because it depends on how much the company is reinvesting in itself at that time. A much better metric is revenue per employee.
In NY/SF I remember 1999, it was just like this.
In NY I remember 2006, it was just like this.
Things spike up or down, but that doesn't mean it wont revert to the mean. Enjoy it while it lasts. Dont get cocky and come to expect it. Definitely dont make long-term commitments assuming it will go on forever.
I have 8yr experience and saw offer for total comp of 225k/yr in bay area. No concurrent offers, non-faang company, publicly traded. Salary is extremely variable is my takeaway.
How good are you in algorithms? At the end interview performance is what really matters, not programming experience. You may day it's not fair, but it's at least a transparent process.
True. For the offer I saw it was about 169k base salary, 10k signing, and then 46k of equity. We're heading into the end of a market cycle imo so I figured that the equity value should probably be discounted by some factor.
No job lasts forever. You will eventually move on. When you do, you will leave un-vested RSUs on the table. That's pay that you will never collect. "Total compensation" is not the same as being paid an actual salary.
Unvested RSUs are not part of "total compensation". Total compensation is obtained by tallying up the cash you get from salary, bonus, and sale (or rather, its value at vest) of all the vested stock you get in each year.
That’s why only the annually vesting RSUs are counted in total compensation, not the total grant. If you make 200k base and get 400k/4 years of equity, then your TC is 300k, not 600k.
The yearly TC numbers take the initial RSU grant (that vests over a 4 year period, usually with a 1-year cliff followed by monthly vesting) and divide it by 4 to get the "initial RSU grant options vesting per year".
Typically you never want anyone (that you want to keep) to be fully vested, so it's expected that you'll get new grants to top up after a couple years if you're doing OK.
Cool website, but I had some difficulty with the pagination control. I sorted by company name and wanted to skip to the middle of the alphabet, but once I skipped to page 5, the control would only provide a button for the next page.
Anybody willing to pay me 200k+? I'm a python expert. I know golang. I can do fullstack work but my preference is for the backend. I'm basically a polyglot, willing to do anything from scala, haskell, python, lisp, you name it.
I have good fundamentals, and extensive experience diving into and navigating large/old codebases.
This might be an unpopular opinion here, but I would change how you pitch/market yourself.
First, if a candidate talks about programming languages a lot (especially if they're talking about Lisp and Haskell), that can be a sign that they're going to be unhappy working within the confines my team's Java/C++/whatever codebase, and that they're going to complain a lot and try to rewrite things in other languages. That's not a dealbreaker, but it's not a great first impression.
Second, bragging about how many languages you know also codes as "junior engineer" or "recent graduate", even though the rest of your post makes it sound like that's probably not the case. Most teams are looking for someone who has demonstrated that they are really productive in at least one language, so focus your sales pitch on that. Again, this is just a first impression issue.
Finally, I probably wouldn't claim myself as "expert" on anything, unless I was a top 10 committer to the project or I was specifically trying to bill myself as a consultant on that specific technology. Seeing "expert" sets off people's BS alarm bells, and they'll evaluate everything else you say with a more skeptical eye. It can also get you in trouble in interviews. Point #7 on this blog post explains it better than I could: https://steve-yegge.blogspot.com/2007/09/ten-tips-for-slight...
Anyway, please read this as constructive advice rather than someone on the internet trying to tear you down. I'll echo what the other comments have said - practice coding interviews, apply to the big tech companies that have a presence in your area, and don't get discouraged if you don't get an offer right away. The big companies are full of people who had to interview 2-3 times to get an offer.
I recommend not even mentioning a language in your resume, just explain what you worked on. If they ask if you can program in X, the answer is "of course I can program in X", because of course you can, languages are easy to learn. If they ask if you worked with technology Y, you say "yes" or if that's not true, you say that "I worked with similar technology Z, and I looked at Y and it seemed easy enough to learn in a few days".
You want to position yourself as a person that will do anything that needs to be done, and if it requires learning something new, you'll learn that quickly, as you've already done many times before. Just don't lie, as it can easily poison the well.
Some companies are looking for e.g. Rails developer, and they might reject you if you're not Rails developer, or they don't realize that you are. This is fine, these companies almost never pay $250k+ anyway. Companies that do are looking for people who can do anything they ask them to, not just some simple well-specified tasks.
1. Spend a few weeks practicing the whiteboard interview format. Seriously practicing it. Get a friend to grill you for an hour over the weekend. Next weekend, get a different friend to do the same. Repeat until you can solve whiteboard bullshit problems in your sleep.
2. Interview at FANG.
3. If you get a junior-level offer, you're looking at 160-180k total comp. If you get an engineer-level offer, you're looking at 190-240k. If you get a senior-level offer, you're looking at 240-300k. These numbers will increase if you perform well for 12 months.
I have 5 years experience and make >200k in total comp at Google at their Mountain View campus. Google was also not the highest number offer when I was interviewing 2 years ago either (but it was the more interesting role + benefits).
Well, google is different right? They hire the cream of the crop. They don't only hire for experience. They also hire for innate, inborn intelligence. I might get in, but I have to work hard to pass that interview.
Idk where you got the idea that being a Google engineer is innate haha, man the marketing and hype around the role is incredible.
The “secret” is Google tries to hire smart hardworking people, not divinely ordained superhumans. My advice would be to study hard for the interview and let them figure out whether or not you pass the bar. At the very least it will be good practice for othe interviews and you might be accepted and find a role you really like!
So I agreed with you until I talked to Gayle Lackman. There's a thread on quora somewhere where I asked her the question whether or not there exists engineers with a lot of experience who are not smart enough to ever work at google no matter how much they study?
Her answer was yes. She went on to elaborate that google hires and targets CS knowledge along with Innate General Intelligence.
Straight from the horses mouth as she was part of the hiring committee. I would source this thread unfortunately I can't find it anymore.
If you don't believe me you can always direct a question towards Gayle on Quora as she's an active user.
I think the truth is somewhere in the middle. I think in the higher echelons of google, they are actually trying to hire for higher IQ. What actually happens is different. The filters actually allow people who study to slip through the cracks despite how much they try. In general though, the overall group that gets hired at google is still generally smarter than a typical programmer working for a much less famous company.
Also as with every job, performance on the interview is highly uncorrelated from performance on the job, unless google has the big data numbers to prove otherwise.
The modern tech interview selects for luck and quick response under pressure as major decision factors that project the appearance of innate intelligence.
Note that salary isn't the number being quoted, but Total Compensation. Base salary, Equity, and Bonus. Equity grants -- RSUs -- tend to be quoted as a big allocation vesting over a 4 year period. So roughly, divide by four and hope the stock only goes up to factor it into annual income. Critically, companies offer 'refresher RSUs' to employees on an annual basis to replace expiring equity grants. Which means at year 4, you've reached a steady state of RSU vesting. Because of this, people often tend to just add RSU grant to base without dividing, figuring they'll get a stream of refreshers. Bonus is more discretionary, but basically works like salary.
Engineers with TC over 200k is not rare in the bay area. More tricky is people who's equity is pre-IPO; startups often pay low base salary in exchange for equity / lottery tix.
"Median Facebook Salary" on Google returns ~$240K/year and I think they're up to 34,000 employees and still making more profit per employee than most companies.
Do you think that a $200K/year salary is pretty high for tech in the Bay Area? At a global level $200K/year is very high, but regionally, between tech employees in the and their incumbent landlords, it is not that high.
I don't care much for titles. But you can call me a "senior software engineer." Polyglot. Extensive experience with python and golang. I can do fullstack work as well.
The key is concurrent offers - until you're Dale Carnegie himself any other negotiating strategy doesn't even come close to the concurrent offers - those companies when pitted 2-3 against each other aren't unheard of to take the modest starting senior engineer offer of 500K all the way to 800K+. This guy pitted the 6 - I dont believe he ended up with just the meager 300K :)
To put this in bay area perspective, that $300K per year gets broken down as:
42% Tax bracket. Net $180K per year
$6K per month in rent/mortgage. Net $108K
$3K per month in living expenses. $72K
$1K student loans (maybe). Net $60K
$1K in insurance (health / renters / home). Net $48K
$1K disposable income. Net $36K
$8K vacation. Net $28K ( or about $2.3K per month for savings)
Not bad. But you can see how bay area cost of living can quickly erode income.
Add kids, dependents, cars, transportation, day care, private schools... and it's a net wash (or possibly even net negative with more debt).
[EDIT: If we're getting precise here, the effective tax is 38.18% before deductions. The point being that $150K yr is near the poverty line in bay area. $200K is barely enough to survive. $300K is what a FAANG will pay 90 percentile Engineers to ensure they're comfortable]
This math is remotely not accurate. 42% tax rate ? Tax rates are progressive. I made a whole lot more last year and my effective Federal + State was 28%. Remember, there are a ton of deductions available. $6k in rent ?? Who pays that ? I have a large house and my mortgage payment is close to 4.5k. And I am building massive equity on my home as well as paying down an expensive asset. Home insurance is $1k for the whole year, while health insurance is roughly $250/month for the whole family. If you play your cards right, you can save upto 200-300k in 3-4 years. Now here's the cherry on top. Add a partner who makes the same amount.
I entered "married" in the same calculator and it gives me a 29.75% effective rate and 210k take home. If your math above is for a single person, I haven't met anyone who is paying more than $2500 in rent. $6k for a single person is way out of range.
I filed my taxes with TurboTax last year. Did you account for state tax deduction, mortgage deduction, property tax deduction, standard deduction, child tax credits, 401k deductions, charity deductions, and a myriad of other options ? There is no way for anyone to say what an accurate effective rate would be. Mine was 28% last year
There are new rules that are not particularly advantageous for people making good money in CA due to the fact that CA has a fairly high state income tax rate and the new limits for the bucket of deductions it fits in.
you get hit by AMT. Or at least it used to be the case, before Trump changes - didn't do my taxes this year yet.
30% Federal + 15% state, and when you try to do deductions, you hit AMT.
Sure, you can easily spend that amount, but it's hardly a living expense. For a single person, that a long European vacation, with no effort made to control costs.
This is BS. I was renting in BA (a 3br in Inner Richmond) in 2015 and my total spend without kids and with gf not making much at all (i.e. I paid for most of the good stuff like vacations and restaurants), calculated precisely by Mint, was about 70-80k a year. That includes 1-3 vacations a year in places like Italy, China, etc. Sure, in 2019 it would be 90-110k due to the rent, big deal. Wtf are the living expenses excluding rent and insurance that add up to 3k, do you eat foie gras every day in rural Kansas?
Also, look up "marginal tax rate" and "effective tax rate".
Maybe that total would put someone in the 42% tax bracket (if you include city/state taxes, and even then I’m not sure), but that doesn’t mean someone would only keep 58% of their income, due to how a marginal tax system works, and that’s also not counting any itemized deductions and exemptions.
Any decent accountant should be able to save at least $10-20k more of that fast and loose tax total.
Also— if you’re paying $6k a month in rent, and you can afford the down payment, why not just buy a home at that point? If you want to relocate you can sell it and you’d get a decent mortgage interest deduction that would affect the bottom line.
Agreed. For a married couple at $300k in the bay area, less than $90k goes to taxes, and that's assuming just standard deduction. Realistically, if you're paying $6k/month for housing not including insurance, you're probably itemizing another $5-$10k above the standard deduction. And at $300k, you're hopefully maxing out a $19k 401k contribution pretax. Probably you'd be spending <$80k/year in tax.
Those numbers are really high. Keep in mind the person who wrote this article mentioned 2 years of experience so they are probably ~25 years old. They probably spend half that much on rent/living expenses, like 10% of that much on insurance and probably do not take $8k vacations. They should be able to save at least ~60k per year.
I thought their numbers would be really bad because of that but it was actually pretty close. Effective tax rate in SF would be 38% and if you are maxing your 401k you are left with 175k net.
I've managed to employ many of the techniques in my day to day as a PM with success, but his discussions on salary negotiation resonated with me. I'm sure you can find some notes on the book to derive 50% of the value, but the author's stories and explanations drove it home for me.