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I quit the tech industry (eev.ee)
1017 points by jaimebuelta on June 10, 2015 | hide | past | web | favorite | 548 comments



This is what burnout looks like. Unless Yelp has a toxic work culture, it's likely the author brought it on themselves by pushing too hard. After several months, the author will probably start thinking about work again, and begin the job search once more.

Not to say that the author's points are invalid; it's a terrible feeling to have to spend your most productive hours working on someone else's problems. He or she may find themselves drawn toward entrepreneurship. There's nothing quite like working on your own idea...especially if that idea is going to make you cash.

Office culture is draining. Some people aren't cut out for it. Additionally, programmers tend to push themselves too hard for too long out of a misplaced sense of loyalty to the company. They're being paid huge sums and sometimes feel that they need to work extremely hard to deserve what they're being paid. They don't see that the work they do is extremely valuable in and of itself. Employment is a business arrangement; a coder doesn't owe the company anything more than their agreed-upon hours of work.

If/when the author does return to work, it's likely they will be much more likely to put themselves first and the company second. They'll likely have a plan to escape working for someone else ever again.


While not burnout related,

I found out a while back, and this is somewhat paradoxical, that if I care TOO much, I'm less happy. What happens is I notice all the stuff I can't fix, or need to fix, and other people get stressed out making them fix it. The end result is that I stop caring quite as much (I still care), get happy, and then start caring too much again.

It's especially hard at times when you have a lot of energy and want to make something work and you have to fight others who don't want to make it work. 8 hours plus of your day is a lot, so you want it to count, to matter, and that makes you care, to define yourself by that work, and that makes it hurt more. The alternative though, is just collecting the paycheck, which is also bad!

The trick is finding a balance and making sure you also define yourself by other things. And this is a very hard thing for creative folks to do, because it feels like their art, and it's easy to always want to hit the next target/goal/feature, in a never ending wave. The catch is they don't stop. It's a continuum. One of my first jobs as a kid was in a grocery store, and I learned clearing out the line was impossible, and the beeping doesn't stop. It is madness to want the beeping to stop because people from other lanes just come over to yours, and it won't.

I'm not great at this, but you just have to enjoy the people and the things along the way - as there's not a destination.


This is what is fundamentally wrong with the industry. Often those who don't care or don't do much are the highest paid and get more reward that the ones who care the most and always try to do something. Obviously, the environment eventually turns those who care into someone not caring as much. Eventually not caring at all, thus a toxic environment is formed. Some may also feel that this is the norm in most companies and leave for freelancing etc.


That's why I like open source projects. People writing open source might not write perfect code, but often they at least have opinions and beliefs about how things can or should be. Even if you disagree with decisions, you'll learn something.

Corporate code just mirrors corporate structure after a while. More and more lines, where other people are or were responsible, where any reason has been driven out (your learning experience by asking "why is this written or designed like this" gets short circuited with a quick "well, who knows") - which slowly but surely spirals down quality, engagement and fun.


I think I've encountered more vitriol on corporate software than corporate things (related to code). Much of the battle is often not about code, but about process, other parts of the organization, etc.

Or at least I should say a lot of OSS projects are corporate, so they feel the same way. The for-fun stuff can be, but it can also wear you down. There's a lot of hate among users of projects that you are directly exposed to, where a paying customer can often be a lot easier to talk to. It's weird.

It's ok and fun when you have a few users, but when you have lots, you find they can be really hard to scale -- so many different points of view, so many different conflicting needs, "managing" people you don't pay, trying to break up disagreements, many more points of compromise, etc.


I would have to say that in most cases open source is more "perfect code" than "corporate code".


I prefer open source applications for this reason. If the code is ugly it's less likely to work, and if you write ugly code publicly you are less likely to get work.


The author kinda hints at the key right here:

"They’re interesting for a while, but they’re also the same self-inflicted wounds everyone seems to deal with — why is this slow? why is this broken? how can we keep this old code limping along indefinitely without having to rewrite it? how does this thing a former employee wrote even work? They’re cute puzzles, and I can get into solving them for a while, but I don’t care about them. Because they aren’t my problems; they were just dumped in my lap, along with a canvas sack with a dollar sign on it."

Companies that write their own software create something where nothing existed before--and so by definition, all of their problems are self-inflicted.

Shit gets old, fast.


Fashion gets old, fast.

Decisions which are made after much thought, planning and running things from a long term perspective turn out to last really long freeing your time up to pursue new projects.

Jumping on to a new framework every few months because its trending on the internets is the reason why every one is in a hurry(to achieve a pointless goal) to do work which has already been done, over and over again.


Could you elaborate on this a bit ?

I mean , is it feasible for the ordinary developer to engage in a multi-year risky R&D project that might ultimately fail resulting in nothing ?

Most people barely have any time to code. It's just because Github is your Resume (TM) that makes most people crank out their own Javascript framework so they can have it on their resume.

Could you give any examples of any such long term one man personal R&D efforts ?


There is big difference between doing new things, and doing the same things(again and again) with new tools. Take the this whole big data craze for example, almost every body I see who wants to use these tools doesn't have a use case for it. The same with NoSQL. Or Twitter's Storm. When you subscribe to this way of software development, you start shoe horning your use cases into wrong design paradigms, leading to a lot of maintenance work.

This doesn't happen just in the backend. It happens even with FE frameworks. How many people have a use case for react or other jazzy frameworks?

A crude example I can give you is, this is like developing all your applications in awk or sed because that's fashionable currently. You are shoe horning your problems into solutions paradigms they don't belong to.


Great comment and I completely agree with you.

Programmers have a tendency to detach themsleves from the business where software is there to maximize the profit. It doesn't matter whether it's written in PHP, Ruby, or [language of the year] [0]. But if you let the programmers go wild, many of them have a tendency to pick the hottest thing just because [some reason that has no advantage from business POV]. I guess that's the sign of boredom.

Programming is fun, playing with new toys is fun, but it should not be forgotten that it's part of the business.

[0] Well, it sort of matters. Dev time costs money, good tools and languages will make you write it faster therefore maximizing money. But that's not what I am talking about here.


That section meant something to me too, but something different.

I was just talking with a friend that is really frustrated because in his view his team is not only trying to deal with a bunch of tech debt, they are trying to move so fast that they net create more tech debt every week. And he feels like he's the only one who will look at this squarely; everybody else just finds their little puzzles to work on. I expect eventually he'll quit and go somewhere modestly less pathological.

The root issue is not that the problems are self-inflicted. The shit-rolls-downhill ethos means that they are to the company, but not really to an individual worker. So most developer experiences are of dealing with an unending stream of unnecessary dumb puzzles, rather than challenging problems with real meaning.

This is not how it has to be. I've been on projects where the code got incrementally better each day. Where we spent most of our time on things that mattered to us and to the business, instead of sweeping up after the elephant parade.


So most developer experiences are of dealing with an unending stream of unnecessary dumb puzzles, rather than challenging problems with real meaning.

That's exactly what I meant by self-inflicted: thank you for stating it clearly!

I don't mind working on genuinely hard problems, even if we can't get anywhere. It's dealing with lots of unnecessary silliness or trying to get one more month out of the shitty legacy code that drives me nuts.


Perhaps the people who care too much aren't that smart in this case.

See the Napoleon anecdote:

http://www.johndcook.com/blog/2010/12/27/dumb-and-gets-thing...


Can we stop using the word 'smart' as a synonym for cheating and fraud please?

There is nothing smart about faking and pretending to contribute while doing nothing. All the while taking the rewards and benefits which should actually be going to people who do the real work. This even on a short period of time creates an environment which causes the real contributors to go better places leaving the overall ecosystem starved of much needed work.


Stealing credit for other peoples work aside. The hacker mindset to me is to do things in the simplest way possible.

Programmer: "I managed to migrate the database with the program I wrote over the past two months"

Hacker: "I migrated the database with 3 lines of code"


Programmer: "But you didn't account for all the edge cases. Your solution seems to work at first glance, but now someone else is going to have to redo what you've done and fix the data problems that resulted from the half-assed job you did."


In my experience, a careless engineer will create something brittle and unwieldy that works at first glance, declare success, and move on, leaving others to deal with a painful mess. A thoughtful engineer will think hard about design, comment where there be dragons, and often get rewarded by being reassigned to one of the aforementioned messes.

The enduring tension of this line of work, in my opinion, is how to balance my desire to take pride in my work with my desire not to be a thankless janitor for the chronically cavalier. Not to mention that there's value in a product that gets out the door while the competitors are still trying to make things perfect.


>The enduring tension of this line of work, in my opinion, is how to balance my desire to take pride in my work with my desire not to be a thankless janitor for the chronically cavalier.

That's a good observation.

Fortunately I've worked myself into the code troll position on my project - nothing goes into the mainline without my approval. Everyone knows I'll reject code that's not well thought through even in the face of looming deadlines.


I have also stumbled upon this catch—care too much and carry the burden of stress and disappointment, or care too little and find no fulfilment in work.

The solution I have found is to practice losing myself in work (achieve flow) and yet not be attached to the result. If it were your checkout line I'd try to be completely focused on dispatching the clients with efficiency and courtesy without looking at the length of the line.

Focused and productive work is a reward in itself. You leave the office feeling energized and the day flies by. The paradox is that by not caring about the result you often produce your best work.


Having too much passion? IMO, passion is not sustainable. I believe that dispassionate works much better over the long term. Of course, ymmv.


mpdehaan2 didn't use the word passion but caring too much. I've found myself in a similar situation. I didn't care about the company or work at all but, within the realm of job, I still wanted to excel at it. When you're forced to be somewhere 8 hours a day, you tend to want to make that time matter. Otherwise, what's the point. I've been through the exact same cycle and it sucks. It's worth it as a learning process though. Finding what the right balance for you, what works, what doesn't.


as you say ymmv but I can be nothing but passionate. If I don't care I simply won't do it unless I'm forced and the results will suck. I need it to matter to me or it's a complete fail. I've spent most of my career looking for a place where that works, I think I've found it but honestly who knows at this point.


Maybe it's just a question of managing to remain detached from caring too much about all the yucky stuff. If you are passionate about a field, it goes to reason that you are much more prone to also worry when you see things that are less than good about. Then you think how it should be different. Then you realize that it won't happen soon. Maybe you realize that you don't have the power to help change it. Now you feel powerless and depressed over the state of affairs -- and you care a lot about the state of affairs, since this is the thing that you're passionate about. Meanwhile, someone more disinterested don't care too much if everything is going to hell. He might not be as happy with what he does, but he has more peace of mind.

I think you can try to manage to detach yourself from the negative focus that passion can lead to. To try to numb your passion seems like a less good option.


Wow, this sums up clearly my experiences and what I've taken away from them. Very well written, this fits me so perfectly it's scary ... Makes me realize there are many more devs struggling with the same things. Thanks for that post!


This resonates, definitely. I don't "care" about these problems in the sense that my heart can't really be in them, but they are still blinding obstacles for me and my coworkers that I would like to resolve, and it's easy to get... very invested in them.

Until the day I realize all the low-hanging fruit is fixed and everyone else is pretty much content to put up with what's left, making it much harder and much less rewarding to continue.

I have enough trouble with searching for a finish line in projects I start myself, so I guess I'm tired of doing it when it's not even my race.


This is totally true. I find when I am most depressed and irritable about work is when I have become too engaged in it.

Pulling back and seeing it as just work, just time you are selling to someone else, clears my head and paradoxically makes me a better co-worker both in attitude and performance. Then I slowly get drawn back in and depressed again.

Its a cycle, but at least I can see it happening now rather than just getting burnt out.


I totally agree. If I care too much about what I'm trying to do at work, I just get upset.


> I found out a while back, and this is somewhat paradoxical, that if I care TOO much, I'm less happy.

I have a feeling that this realization might be central to a part of Buddhist philosophy/mindset.


ditto.


Please make more meaningful contributions rather than simply feeling similarities with other users. That is what the upvoting feature is for.


He's been here three times as long as you so I figure he knows how things work. On top of that I got him just fine.


The comment can be considered a meaningful contribution as well. Dialog is not only information but also flow enablers and/or facilitators. The fact that (s)he expressed sympathy/approval might show that others think the same, which in itself if a tidbit, if not too small. But it can greatly help others to chime in and relate or expand.

If you block these expressions then you get a lecture/dissertation, chock full of info, but not a dialog within a community.

So the question is: what do you see HN to be: a knowledge repository or a place that allows technology-minded people to share and belong?


HN has always blocked these kinds of responses, just as how they block pun, joke and meme threads. Memes are arguably more indicative of a community as they are an in-group norm, but HN has a clear stand against them as they dilute the quality of the discussion.


He has actually done one of the best things that he can do in that situation: eliminate expenses.

When I tried bootstrapping my startup years ago with periodic contract work the albatross around my neck wasn't anything to do with the company, it was the mortgage and other home expenses that continually made it harder and harder to go without a steady income.

People always focus on income without looking at expenses as much, but the closer you can get those expenses to zero the wealthier you really are since you NEED so much less cash flow. It's a huge multiplier.

If I had the ability to pay off all my debt overnight, using my time the way I want to would be a whole lot easier. I absolutely sympathize with the author here. There are several things that I want to build but I have a full time job, a wife and 2 kids. At some point I had to decide that being a good father and husband is more important than pursuing those entrepreneurial dreams. There's only so much time in a day.

I'm lucky in that I have a great job with a company who's mission I fully support and ownership that treats their employees better than any company I've ever seen. It makes it significantly easier to put the company over personal ambitions.

Time and a place for everything.


I've always wanted to make $200,000 or so from a successful personal project on the side, just so that I could pay off my mortgage so I didn't have to worry about it anymore.

But when I think about really getting that money, I realize I wouldn't do that. If my mortage is $1200/month, I just bought myself 166 months, or ~14 years. If the idea is to quit your job and invest in a company, that's not the smartest move. You're better off stocking away $72,000 so you don't have to worry about your mortgage in 5 years, and investing the rest in the company (you will not be making money for a while, and on top of paying your own salary, you will need to buy advertising).

If the idea is to avoid the interest on your loan, and be completely emotionally free from that debt, than by all means do it. This would work well if you are just going to do consulting since the cash flow swing isn't as dangerous.


While I agree with you on that point, just looking from a cash flow perspective if you were to keep working for a little while after paying everything off you'd likely be able to save a huge amount of money very quickly. Save, invest, relax on a beach...any of it's easier without that mortgage eating away at you.

I remember when I finally got around to doing the math on my first mortgage and realized I was actually going to pay close to triple the sale price of the house if I waited the full 30 years. The real trick, if you don't want to pay off the whole thing, is to make a lump sum payment to pay down about half of the mortgage early. It's the first 10-15 years on a 30 year where the payments are so interest heavy that you're really just throwing away money.

Get about halfway to payoff as fast as you can though and those payments are a whole lot closer to just paying back a cash balance.


> I was actually going to pay close to triple the sale price of the house if I waited the full 30 years.

Did you adjust for inflation? Even at today's inflation rates, the dollars you pay in 30 years will be worth considerably less than the dollars you pay today. There's also an opportunity cost issue. Paying off your mortgage means not putting the money somewhere else.

> you're really just throwing away money.

No... you're paying for access to a resource that you don't have yourself. There's more utility in that than in literally throwing the money in the garbage.


Matter of perspective I guess. When I looked at my early mortgage payments and 85% of the payment was interest so after 10 years I would have barely paid down the principle at all. To me, that feels like waste.

I invested with steady 12-14% returns for 10 years and then watched it all get wiped out. The interest rate on paying of debt doesn't change. Granted, at current rates it's a lot tougher to make the argument for mortgage interest vs other types of debt.

Nobody ever shows a compound interest chart with anything other than a steady interest rate (aka - 30 years of 10% return = millionaire!). A single negative or downturn can have a pretty dramatic effect on those projections. If you look at those same projection charts and take the amount you'd look to invest over the first 10 years, but put into into debt payment instead of investing so that you get everything paid off, then take that same amount you would have been investing, start investing it plus the money that you're no longer paying in monthly expenses then you'll find the end of the 30 year period to be an almost identical result. The only difference is that after 10 years you've eliminated virtually any risk of personal bankruptcy.

If you can find something with a guaranteed long term return higher than the mortgage interest then it's another ballgame, but those are pretty hard to come by. Right now dividend investing seems to be the closest approach that generally lets you ignore the actual interest rates over time and instead focus on building cash flow.

But this is one of those topics that is part math, part point of view and part personal comfort level. This was just my perspective.


I largely agree with you on this. I focused on my mortgage and as a result I have less than a year of payments left. I didn't ignore investments either - roughly 10% of my income into the market - but I did not pay the minimum mortgage payment in favor of investments.

There was a point a few years ago where liquidating the investments could pay off the mortgage. To me it seems that you can get some of the benefits of the emotional release of being debt free if you have the capability to liquidate and clear debt.

While many people will make the argument that instead I should have paid the minimums and had more money invested with the net effect of reaching the liquidate/pay off point, I agree with the reasoning behind your argument: market volatility will not wipe out debt that has been cleared.


Nobody ever shows a compound interest chart with anything other than a steady interest rate (aka - 30 years of 10% return = millionaire!). A single negative or downturn can have a pretty dramatic effect on those projections.

Exactly. NYTimes had an interesting visualization a few years ago that tracked the S&P 500 to show real-world results. It really shows the effect that doldrum years can have on returns:

http://www.nytimes.com/interactive/2011/01/02/business/20110...


To fix the problem of all your payment going to interest, look at a shorter term. A 15 year mortgage is much less popular than a 30 year, but you start seeing a difference in the outstanding principle right away.


You can always get a 30 and pay extra. Why give up that flexibility. In today's market interest rates are so low the difference between the 15 and 30 rate are negligible. Also, ask yourself why the bank wants you to take the 15? It's because they make more money that way. Nit from you directly but they have more money they can loan out the faster you pay it back. Plus they have leverage with the fractional reserve system.


>>I invested with steady 12-14% returns for 10 years and then watched it all get wiped out.

I'm guessing you mean that all your gains got wiped out, not that your investments all went to zero.

On the other hand, a lot of people spent years paying on a mortgage only to get foreclosed on and lose everything including their principal. ie, that investment went to zero, or maybe even negative.

There's a lot to be said for paying down your mortgage, but remember that until you've completely paid off the mortgage all of your equity is at risk.


Fair point. Getting it fully paid off is the only way around that.


> if you were to keep working for a little while after paying everything off you'd likely be able to save a huge amount of money very quickly. Save, invest, relax on a beach...any of it's easier without that mortgage eating away at you.

Except the money you spend on your mortgage is year 1 is worth a lot more than the money you spend on it in year 30. Especially with rates where they've been the past several years (our mortgage is 3.25%), cash flow is really the only upside to paying off a mortgage decades early.


> cash flow is really the only upside to paying off a mortgage decades early.

In my limited experience, the freedom of not having a mortgage and a car loan, or any other type of debt, far outweighs the benefits of just cash flow. We now have a sense of freedom we didn't have Before. I think it is going to be very individual how one reacts to it, but for us having a minimal mortgage or none has made a big difference for us. Taking risks, having run startups for the last 20 years, this was a major contribution to being able to do this.


Unfortunately, because of the way monetary policy is structured, it is not possible for all, or even most, to live without debt. Debt is fundamental to our economy. You can only be without it if someone else takes on some amount of debt.


It is interesting that in Sweden, the debt of the population in Sweden has not grown as fast as the assets. Since 1996 when the assets where 2x the dept, the gap has widened. The debt is now nearly 3x the debt. (The last graph in on the page, unfortunately in Swedish). It didn't say anything how this debt and assets are distributed though.

I am not saying debt isn't a fundamental part of policy, but in a place like Sweden actually not having more debt than you can handle is possible. http://www.scb.se/sv_/Hitta-statistik/Artiklar/Bostadslanen-...


Who takes on debt if you pay off your mortgage early?


In order for you to pay off your mortgage, you need to receive money. That money was generally created through the creation of debts.

So it is hard to say exactly who took on that debt, but someone probably did.

For more on how debt creates money, read up on http://en.wikipedia.org/wiki/Fractional-reserve_banking. And the person you replied to is exactly right - our entire economic system only works right if there is a lot of debt to go with it.


Paying off a mortgage destroys debt (and therefore, the money you used to pay it off).


Even if you have enough cash to pay off a mortgage, if you can invest it with better returns than the mortgage interest rate (not hard these days), then it makes better sense to do that.

Even Mark Zuckerberg has a mortgage...


While the math doesn't really support paying off your mortgage first, I think for some people is more for the mental peace of mind that you don't have something hanging over your head. I can see why that would be the right choice for some people that are looking for a total change in their life.


Exactly this.

General rule of thumb when deciding between eliminating debt or investing is to compare if the debt interest is greater than investment interest (investment rate of return).

If (debt.interest > investment.interest ), pay off debt first. Else, invest.


That's the equation, but you also have to consider risk when you make it, and weigh it against your personal risk tolerance. Paying off a mortgage is like making a risk-free investment for the term of the mortgage with a (pre-tax) return equal to the interest rate. Right now, 10-year T-bills are yielding around 2.4%, most mortgage loans are in the 3-4% range. Your risk tolerance may be higher, in which case by all means put your mortgage principle toward investing in the stock market or your startup, but be aware that a market crash can leave you deep in debt.


If (debt.interest > investment.interest ), pay off debt first. Else, invest.

I disagree with this tremendously. With your strategy, essentially what you are doing is buying stocks on margin. This magnifies your profits if things goes your way and magnifies your losses if things go against you.

Think about it this way - Interactive Brokers is an online brokerage with extremely low margin rates which are often half of current mortgage rates (see https://www.interactivebrokers.com/en/index.php?f=interest&p...). Using your logic, the right thing to do is to leverage yourself to the hilt for every penny Interactive Brokers will loan you at 1.63% or less and cross your fingers you make the right investment choices otherwise you're bankrupt.

Buying investments on margin, no matter how it is done, is extremely risky. You might understand those risks and have a high enough risk tolerance but please don't pretend investing on margin is a general rule everyone should follow.


When they said "investment.interest" I think they meant investment return percentage. I don't think they were advocating for investing on margin and maximizing leverage/risk, but rather deciding whether to put your $ towards your debt or towards an investment.


I don't think they were advocating for investing on margin and maximizing leverage/risk, but rather deciding whether to put your $ towards your debt or towards an investment.

It's the same thing. If it makes sense to keep $300,000 in debt to keep a $300,000 investment then it makes sense to go into $300,000 debt to make a $300,000 investment.

Whether that debt is a mortgage on a primary residence for a tax-equivalent-rate of 2.75% or margin interest for a tax-equivalent-rate of 1.63% makes little difference. This is what people who keep a high mortgage and invest the proceeds of that mortgage don't get. They are doing the equivalent of investing on margin which is extremely high risk. They could lose a large portion (or even all) of their investment and still be left with the debt.


From a google search: "Buying on margin is borrowing money from a broker to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you'd be able to normally."

That's not what I meant, definitely wouldn't borrow to invest so much as decide to invest (if I came into a new chunk of money) money on hand.

I'm not sure where the assumption is that I meant to invest on margin - it feels like I'm missing something.


The person you're replying to wasn't trying to say you meant to invest on margin but that what you are doing is the same as investing on margin.

When you do margin trading you take on debt to allow you to buy more stock. In your case, you aren't actually "taking on" debt technically, but you choose not to pay it off so that you can buy more stock.

After all, the scenarios break down to debt + more stocks or no debt + less stocks.

Obviously there are some differences, but I hope that explanation of the analogy made sense. The point is, by investing money instead of using it to pay off debt you are increasing your risk and reward whereas when you pay off debt you decrease it.


Sure, if you enjoy pedantry, please go ahead and assume that I mean that's the one golden rule and I'm sitting here blindly buying up mutual funds with every spare dollar I have.

You make the world a better place.


I thought he made a very interesting point. Your pseudocode looked good until I read that counterargument - now I've got food for thought.


Paying off a mortgage is just like any other investment - you need to look at the terms to see if it's worth doing. It's very illiquid, you can't get your cash back without getting another mortgage. On the other hand, it's a guaranteed rate of return that's probably significantly more than any other guaranteed rate you can find.

If you think you can do better with a different investment then go for it. But remember, someone with a lot more money than you decided that their best bet was to finance your mortgage.


The guaranteed rate of return is a crucial point. (There are admittedly also some tax reasons why not paying off the mortgage early can be relatively beneficial.) However, way too many people look at the overall stock market returns over the past few years and conclude that anyone who pays off their mortgage early is an idiot. By that logic, anyone who could should have taken out a HELOC and bet it on the market.

It would have indeed worked out over the past few years. The conclusion for guaranteed or very low risk investment returns is far less obvious and probably has more to do with liquidity and psychological factors.


The guaranteed rate on your equity is 0%. Got $500,000 in equity? Then that's $500,000 earning 0% interest. Of course you aren't paying mortgage interest but with mortgage rates at 3.5 - 4.25% it's easy to find investments with higher guaranteed returns.

Infinite Banking (using overfunded, dividend paying, whole life insurance) currently has 4.5% guaranteed floors with actual rates with dividends currently at 5.0 - 5.5%. Lots of other benefits as well, life insurance, and being able to borrow money against your policy any time you want for any reason, no questions asked.

Also, a 4% mortgage is only 4% of the whole balance in the beginning. At the end it is 4% of a very small balance. If you use level payments you effectively cut the interest rate in half to make comparison.

Taking out a $10,000 loan at 5% and investing it at 5% results in a profit.

Year 1 - Make a $1000 payment, $9000 balance (5% is $450). Your investment is $10000 at 5% or $500. $9000 loan and $10,500 in investments.

Year 2 - Make a $1000 payment, $8450 balance (5% is $423). Your investment is $10,500 at 5% $525. $8450 loan and $11,025 in investments.

...


Your math is wrong. The loan balance isn't reduced by the entire payment, the interest is subtracted first. And it's on the beginning balance, not the end balance. At one time there were progressive payment loans where the balance actually went up the first few years, because the payment didn't cover the entire interest.

Year 1 - Make a $1000 payment, lose $500 interest for a $9500 balance. Your investment yields $500 interest, but you had to withdraw $1000 to make the payment, so you're at $9500.

Year 2 - Make a $1000 payment, lose $475 interest for a $8975 balance. Your investment yields $475 interest, minus the $1000 withdrawal leaves you with $8975.

And so it goes, down to the end. Compound interest works both ways.

Remember what I said above: somebody thought that investing in your mortgage was the best return they could get. Are you willing to bet against them?


You can apply the interest before or after the payment, it doesn't really make that much difference, especially when you pay monthly and it compounds daily. The more often it compounds the less of a difference it makes between interest computed before or after the payment.

It's simpler and more accurate to say that the interest is added to the loan balance and then payments are subtracted. They don't subtract interest from payments, they add it to the balance. Extra payments don't have any interest applied to them, they go straight to principal.

The comparison though is between paying your extra cash flow towards a mortgage or investing it. You don't take money from the investment to pay the mortgage. You pay the minimum to the mortgage and then invest the difference.

As far as why banks want to do loans, you have to understand how banks work. What banks do is different.

Banks take money from deposits and then loan that out. They pay 1% interest on saving account deposits and charge 4% on loans. They are effectively purchasing something at $1 to sell for $4. That's a huge markup (400%). Of course banks want to do loans. They also have fractional reserve working in their favor. They can loan out more money than they actually have in deposits because the money is created out of thin air.

This is the same model used by savvy investors. They make investments using Other People's Money™.


OK, have it your way. Here's a spreadsheet to compare a loan+investment with simply saving the payments. I changed the payment from a nice round $1000 to $1010.24 so that the loan would be paid off in exactly 14 periods. On the left, you see the investment grow while the loan is paid down. On the right, you see an account grow as you add $1010.24 to it each time and collect 5% interest on the balance. They reach the same value at the end.

https://docs.google.com/spreadsheets/d/12NGCBeup3rCygMsSbcOn...

As for the origin of mortgage money, you're forgetting about the secondary market. Lots of loans originated by banks get bundled up and sold off. That's a very lucrative business for some banks, because they can collect fees for the origination and get their money back right away with no risk.


>It's very illiquid, you can't get your cash back without getting another mortgage.

Well, you can take out a HELOC but you're right that's more or less the same thing as getting another mortgage--albeit with more flexibility.


The "Dave Ramsey" approach of paying down debt rather than investing is appealing to me, and I think a lot of people ignore the extra risk of investing. If I can make 4.5% risk-free paying off a mortgage vs 6% in stocks, I'd pay off the mortgage. But here is another consideration I've never seen discussed before: mortgage interest is static, but investment returns are dynamic. My mortgage interest rate is fixed for 30 years, and that's a long time for the stock market to change. What I mean is, the day I close, my interest rate is probably only a little lower than stock market returns. But surely in 10 or 20 years the stock market will have times at 10% or 15% returns, and I'll still have that low-interest mortgage. It almost seems unfair to the bank! So even though my natural inclination is to pour retirement savings into my mortgage, I wonder if it would be better to keep the leverage of such a low-interest loan so I'll have cash for investing when the market has better returns or lower risk. 30 years is a long time. What do people think?


This might be one reason why interest rates are typically not static in Europe. They have a static interest margin, though. The "weird" thing is that the interest margin is low when the economy is doing well but high when the economy is not doing well (e.g now), but the Euribor rates the inverse of that.

In other words, someone who took a mortgage 4 or 5 years ago are probably now paying close to zero interest, and anyone who takes a new mortgage now has to pay close to 1.5% interest (which is almost completely composed of the margin). And when/if the economy picks up in 3 to 4 years, that person with the 1.5% margin is going to be paying a lot of interest..

It's also very difficult to get a mortgage with a fixed interest at least in Finland. Not unheard of, of course, but the terms are likely pretty bad.


And there will be times when equities will lose value. And you can't reliably time any of this anyway. In general, the best strategy is to diversify and maintain some level of liquidity. By all means, pay down your mortgage principle from time to time (or increase your monthly payment a bit) but probably not to the degree that you have no equity investments and/or very little cash on hand.


Not a fan of Dave Ramsey. He's great if you don't know finance but his advice is geared towards people in the poor and lower middle class brackets that want to stay there. Same with Suze Orman.

Get an overfunded whole life policy and put the extra money into that. Google "Infinite Banking" or "Cash Flow Banking" to understand how it works.

Current guaranteed rates are 4.5% with dividends it comes out to around 5.5% (in the current market, it tends to follow interest rates very closely). That's 4.5% guaranteed for life from companies that have been around longer and still posted profits through the great depression, dot com crash, and 2008 housing crash.

Gains grow tax free and if you take it out as a loan it is tax free as well. Any money you withdraw is tax free up to the amount you have contributed so far.

You can take out a loan for any purpose, for any reason, at any time. If you don't pay back the loan the company could care less because they are getting the interest and it just comes out of the death benefit. Actually, they prefer you don't pay it back because they make more interest. So it really is win/win. Tax free "withdrawal" for you and more interest for them.

Also, it's a loan against, not a loan from. That means you are borrowing money from the insurance company not your money. The entire balance is still compounding.

And, as an added bonus, you are getting permanent life insurance for your family.

Some risks with paying off a mortgage earlier:

1) Equity in a home earns 0% interest. You're money is not compounding. Got $500,000 in equity. Guess what, that $500,000 is earning 0% interest.

2) Your leverage is decreased when you pay off your mortgage. If you have only 20% down (500% leverage) and your home goes up 10% then you just made a 50% gain. If you pay off your loan then your 10% gain becomes a 10% gain.

3) The money you put into your loan could have been earning interest. Yes, you're paying money on the mortgage interest but the mortgage balance is decreasing while the investment balance is increasing.

You can think of it this way. Should you take out a loan at 5% to invest at 5%? The answer is yes, you will come out ahead. The reason is that you are only paying 5% of the whole amount in the beginning. Towards the end you are paying 5% on a very tiny balance. If you pay in level payments then your loan is effectively costing you 2.5% while your investment is getting 5%. It's net positive.

4) Paying down your mortgage means you have more money at risk and less options. If you have some bad luck and default then the bank gets first right to all of your equity. If that equity is stored in a whole life policy it is protected from creditors (may vary from state to state but most are pretty generous). If the bank stands to lose a lot of money they will work with you and give you some flexibility, lower rate, allow you not to make payments for a while, etc. If they can just foreclose then they will do that. The reason a foreclosure is more favorable when you put in more equity is because they can sell it at a lower market rate and still get their money back. If it is underwater and you have very little equity then they would be forced to take a loss from the foreclosure.

5) Your mortgage interest may be tax deductible depending on your circumstance. You are giving that up.

Todd Langford has a really good series of videos that talks about finance and opportunity costs:

https://www.youtube.com/watch?v=lp1BZcex6ds

https://www.youtube.com/watch?v=v7QCe3rmAv0


Whole life policies are pretty terrible, because they're high-fee and opaque. It's very difficult to compare them like-to-like, and that's on purpose - each insurance company wants to sell a slightly different set of guarantees, risks, benefits and fees. Term life insurance is what you need to protect your family. 401ks, IRAs, then simple index funds are superior investment vehicles.

Here's the really short guide to life insurance: http://www.reddit.com/r/personalfinance/wiki/insurance


If you are going to have life insurance until you die, then whole life insurance is cheaper. 95% of term life insurance policies expire and are not renewed. The reason is because term insurance gets extremely expensive as you get older. WL is the same cost every year until you die. Include the cost of term insurance for a person who is 99 years old and term life is extremely expensive. It doesn't make sense to me to have insurance when there is close to 0% chance of you dying and to have no insurance when there is near 100% chance of you dying.

Plus there are the tax and loan benefits of WL. They are inferior with 401k and IRA plans. You can't take out a loan whenever you want. You can only take out a certain amount (usually up to 50%) and only under very strict circumstances. There are maximum contributions with 401k. No so with WL. 401k's are taxed as ordinary income. There are more fees over the longer run with 401ks (2-3% every year vs just high front load with WL). You can't withdraw before 59.5 without penalties (except for 72t). There are strict provisions on when you have to pay the loan back.

With WL you can take out your money whenever you want with no penalties. You can take out loans whenever you want and pay them back whenever you want or just not pay them back at all. Most smart people will just take out loans against their policy and effectively access their money tax free. You can't get that with 401k and IRAs.

https://www.youtube.com/watch?v=oZSwnPApNWs

https://www.youtube.com/watch?v=GP2d3BhzWB0


That's kind've the point though. Ideally, by the time you're out of the 30 year term for life insurance your investments and assets left to your family will be more than enough to pass on to them. With a 30 year term policy, you can pay $50 / month for 30 years from age 35 to 65 and if something ever happens you'll be able to leave $500,000 for your family. That's a total cost of $18,000 over 30 years for $500,000 in benefits which is an outstanding value.

Taking out loans against whole life policies isn't something I was aware of though. I'd be interested to know what type of rates you could get with the loans against that compared to home equity loans or equity lines of credit that you can also use to get at the money you put into paying off the mortgage if you need it.


I see your points here, but these are trickier than you're making them out to be.

Using the numbers you're putting out here, if you put 20% down on a $500,000 home ($100,000 while borrowing $400,000) there's a couple of discrepancies.

First, paying off the mortgage early. You're right, once it's paid off you will be earning 0% interest. Assuming you don't pay it off early and go with the full 30 year schedule and I'm going to assume a 4% interest rate here, your total payment price will be about $875,000. By paying off early you're eliminating those losses. It's not that you're earning 0%, it's that you're not losing over -100%.

If your home goes up 10%, regardless of whether it's paid off or leverage you actually didn't make anything. You don't make anything on real estate until you sell it to cash out. Until then, any gains in a home that's paid off or mortgaged are identical. The only difference is if you didn't put 20% down and were also paying extra for PMI then the increase in value could get you out of PMI.

Yes, the money on your loan could have been earning interest. Instead it's losing interest so you need to find a guaranteed return higher than your mortgage rate. Guaranteed is the trick there. If you can pull it off with a whole life policy, then great. Without the guarantee market volatility comes into play. If you're a person who is comfortable taking out a loan to invest in something else, your perspective will clearly differ here though.

#4 is admittedly a very good an interesting point that I had not considered at all.

Regarding the mortgage interest being tax deductible, that only gets you back the equivalent you would have paid in income tax. 80% of it is still full interest.

I'll definitely look into the videos and whole life policies though. Anytime I talk about putting money into paying off a mortgage early I always have an equity line open on the house so that I can pull most if it back out for emergencies, including making the actual mortgage payments in the event of a lapse in income for some reason.

With that, available it makes it easier to avoid the foreclosure because you've got a way to use the equity to avoid default and by yourself time. You just have to open the line of credit when you aren't having bad luck.


I really appreciate your comments! So what are the downsides of a whole life policy? It can't all be pros and no cons, right?


The downsides are:

1) It can tie up cash flow. If you don't make the minimum payments your policy can "eat itself" until it lapses, at which point you lose that money. That being said, there is a large degree of flexibility when designing policies. Set the minimum low and contribute more. Fall back to the minimum when times get hard. If you are further into the policy it can self-fund (basically the dividend payments can cover the premiums and then some). At that point, you don't need to continue any money whatsoever to continue the policy. Most people still contribute money though since it is effectively free interest.

2) It has high load in the beginning. It typically requires 7 years just to break even. The first 3 years you typically will be losing money. It's only designed for long term.

3) You have to be able to qualify for insurance. If you can't you can insure someone you have an interest in parent, child, spouse, sibling, nephew, etc.

You're basically trading a little bit of flexibility with your cash flow in the beginning. If that money is going to be going towards investments anyway though, it really is a good strategy.

Also, you can always take out a loan against in the policy to invest in something else. If you have a decent investment you're actually getting increased leverage.

See this video for how this strategy can be used with real estate investing to get much higher returns:

https://www.youtube.com/watch?v=cgK_dOIesZo


> it's likely the author brought it on themselves by pushing too hard.

Don't fall into the trap of thinking this. It is the case some of the time, but not all of the time.

When I first started working in tech in the mid-90s, it was only a year or two before I was considering going back to school in music or to get an MBA. Since about 2004, I've known that I would like to abandon the tech industry. It is now 2015. I have dreams of opening a restaurant, retail store, starting any kind of business, becoming a professional writer, etc. But, this is where I am.

All that said, I read the tech and science news everyday. My relationship with tech is love/hate. I can't get enough of it and will obsess about it or coding something at home, but I know it makes me unhappy.

I feel I'd be better off just being a caretaker of some sort, or in some sort of service industry. I've talked to several developers over the years that dream of being a groundskeeper. This is reality for some of us out there.

I'm personally dealing with it by losing weight and working towards the goal of being independent from an employer.

Here are some ideas for those that feel burned out or hate their job:

* Get a hobby OR focus on your family/self and stop trying to be so much.

* Pretend you are going to quit and seriously look into how you could make your dream happen, even if it seems financially irresponsible.

* Keep a watch on cheap plane, train, etc. tickets to figure out how to escape your life, or think about where you would go to get away from it all.

* Find a place where you can go to just chill-out and think.

* If you have sleep apnea or feel tired a lot and don't dream at night, consider going to a doc to get CPAP or an oral device and dedicate yourself to losing weight.

* Talk to a psychiatrist and get some meds.

* Find a friend/person you can talk to about it.

* Do your best to stop thinking negatively for some period of each day, or all day, even if it is so normal to be negative that it seems fake not to be that way.

* Don't be afraid to cut back hours at work. If they fire you, so what. And if you think they would kill you if you stopped, run away. You will be ok.


  I've talked to several developers over the years that dream of being a groundskeeper.
A little about this. I worked plenty of my summers at a country club (my dad is a superintendent) and there is something to the work. There's some really shitty jobs (how about weed-eating the the creek banks in 90 degree temps and 90% humidity?), but mowing grass can be really enjoyable. When working at nicer clubs there is a certain amount of pressure to cut straight and even lines on greens/fairways/tees which is a nice little challenge and rewarding to look back on when you've done a good job (its art). Being out in the sun and working your body a little bit makes a man feel good and you're done around 3 (you start at 6).

It's funny how when we're young we'll look at a job like that with a sort of scorn as if we've got better things to do, but then as you get older you long a little for those nice summer days of cruising up and down the fairways, just you and your machine.

I don't think I'm ready to quit tech anytime soon as I do enjoy it and feel like I might eventually make some lasting impact somewhere, but thinking ahead towards "retirement", there's something appealing about the idea of heading down to the local country club, filling out an application and collecting my $10/hour to cut rough 3 days a week.


The best, most fun job I ever had was being a bag boy at a golf course during the summers when I was in undergrad. Got to spend the day outside, talk to the golfers as they came in, and everyone I worked with was enjoyable (one of my best friends actually ended up working with me when he found out how great it was). Plus, free golf, and during the downtimes we would go hit balls on the range or something. And picking the range (driving the machine around to sweep up the balls off the range) was incredibly chill and relaxing, like you described mowing.

As much as I loved that job, though, there's no way I could do it for a living. There's a reason it's only high school and college kids that do it -- the pay is horrible. Which is honestly fair, since the job's not very intense.

But there's a reason a lot of guys end up as golf course rangers in their retirement years.


> It's funny how when we're young we'll look at a job like that with a sort of scorn as if we've got better things to do, but then as you get older you long a little for those nice summer days of cruising up and down the fairways, just you and your machine.

Totally... also, there are some places that hire summer students and pay kind of lousy money and have rough conditions. But there are other places that will prefer to hire someone older, stabler, long term, and recognize that they won't be able to hold onto such a person without at least paying a living wage. That could be alright. More like $15-20 an hour for relaxed, reasonably well respected work with plenty of exercise and outside time.


> It's funny how when we're young we'll look at a job like that with a sort of scorn as if we've got better things to do, but then as you get older you long a little for those nice summer days of cruising up and down the fairways, just you and your machine.

The problem with a job like this is the lack of variety. Cruising up and down the same fairways for the seventeenth year can really get to you.


> * Talk to a psychiatrist and get some meds.

Do you have experience with this? I'm afraid if I'm on meds, I'll end up neglecting my life even more, rather than taking these strong hints from my mind and body that this isn't the way it should be.

I would absolutely love to hear any perspective on this from anyone.


I'm currently on an antidepressant and antipsychotic for a variant of depression called major depression with psychotic effects - basically, if depression gets bad enough you can start to lose touch with reality.

I was afraid to go on meds, but I'm very glad that I did. I have stopped neglecting my life, because I am able to go about my day without that 1000 pound rock on my back. It makes life much, much easier.

They are not "happy pills" in the sense that they make you relentlessly optimistic, but they take away the incredible pessimism and irrational despair that characterizes depression. I still have good and bad days, but they are related to actual events and not just relentlessly bad for no reason.

They are not without side effects (which thankfully for me have been very mild and have gone away after a few months - mild nausea if I take them on an empty stomach, some sexual stuff for a few months) but on the balance it's been incredibly positive.

You might hear some doubts about their efficacy, but from what I've read it's proportional to how badly off you are - the worse you're feeling, the more likely it is due to a chemical problem rather than just everyday sadness.


Meds can have disruptive side effects that make them difficult to adjust to. This is the primary reason I don't take them now. This is not true for everybody, and the side effects often wear off after a little while.

I wouldn't be afraid of neglecting yourself more. It's difficult to describe the effects of antidepressants, as their onset is extremely gradual (weeks to months) and it's been a while for me, but they basically shift the average mood up from "everything is kinda awful" to a more neutral equilibrium.

Antidepressants aren't the only option. Therapy is also effective, and if you feel that you're neglecting your life it does give you a place to talk about it.


Man, I might be slightly depressed at the idea of going back to another job, but meds scare the fucking crap out of me.

I was trying to do a class a semester and work at the same time at a startup as a junior full stack engineer for something I truly couldn't care less about (advertising).

I think the key thing that's making me look forward to my next position is 1: I found a spot where I'll have an office thus eliminating much of the distractors that are present in these ridiculous open office layouts. Creative people are distracted very easily [0] and the open office layout was really destroying my love for being an engineer. It was very funny because when I'd come home I'd be exhausted, but if I sat and tried to do my homework I'd actually get more done when I was exhausted because there weren't 100 people walking around me.

2. The office has a window. I hated working in this cramped, open, shared space we had for a while. The closest window was probably 25 feet away in a small conference room. And there was nothing on the walls.

3. This new position that I haven't quite accepted yet gives me the opportunity to write one day a week to create entries for a technical blog and writing is something I'd like to do anyways so the opportunity to be able to contribute to the tech community in that manner is tremendous.

4. This is a recruiting firm so I'll actually hopefully get to see some people get hired because of the things I do! How neat to have a real world impact.

5. They do lots of charity events so I can always respect that. Lots of companies focus on the parties but parties are just a way to escape in a lot of ways, I think giving back will feel tremendous.

6. I'll be helping to work out what to do next with the CEO, this could potentially be stressful, but I really love the idea of having the opportunity to develop performance indicators, plan out entire systems, and build a team. This allows me to be more than just a cog in the machine or one man on a team, it allows me to feel like a real god damn fuckin engineer. A contributor. I have so many ideas all the time, why not be employed somewhere where I'm more than just feature X, maintenence Y, and feature Z ad nauseum?

That being said there are a few downsides such as not being able to have a close mentor. I am still relatively junior. This means I'll have to work a bit harder on my own in order to stay fresh and keep building my skills which means some homework time with Code Complete and other resources like that. I may ask for them to hire me a mentor every fortnight for half a day so that I may improve and to keep the quality of everything I do for them up to snuff.

So, while I'm a bit apprehensive about starting up again (thats a lot of weight on my shoulders!), I'm very excited to start at a place where I think I'll really be able to have an incredibly positive impact in the environment that I really feel will have the most positive impact on my performance and well being. If I'm easily distracted by people slurping sodas, why is it that most of the choices for offices for tech workers force me to accept that the only acceptable place for me to do incredibly complex engineering work is near people making jokes and slurping sodas?

I may have taken a small pay cut (although bonuses will hopefully make up and then some if I really shine) but for me to finally have the opportunity to do engineering work in an office, and to be a part of the decision making process, and to have duties beyond just feature A and feature B including nontechnical technical writing, that excites me.

So I guess my advice is, maybe instead of seeking meds (although therapy on its own I'm sure might be incredibly good (I've not been yet (although it wouldn't surprise me if I probably should have))), maybe do some introspection and figure out exactly what it is that is draining you day after day and then try to change those.

For me, I think, it was an inability to get into the zone at work, thus making me spend so much of my energy just on maintaining a decent level of focus. When I'm home, I don't need that and the time flies whenever I actually sit and do work. To get rid of that energy drain should be tremendous for me. Maybe you guys will see some tech articles by me in the future, I sure hope so ;-)

[0] - http://m.huffpost.com/us/entry/6831248


This isn't burnout:

" I stay up hours later than I mean to, not even doing anything, just trying to put off sleeping — because the next thing I experience will be waking up and going back to work."

This is straight up depression. We need to stop using office-cliches like "burnout" and start addressing the very real mental health issues in the tech industry. Maintaining my mental health is like staying in shape, eating right, etc. Only as an adult have I learned how much work it takes to stay mentally healthy and not fall into these traps. Things like pacing yourself, recognizing when you're stressed, being able to say 'no,' taking enough breaks, having a dialogue with your boss/clients on what your realistic expectations should be for this project, self identifying with your job too much, not having outside interests outside of tech, etc all matter.

Techies seem to love stress. We're competitive, asocial, difficult, etc. No wonder stuff like this is so common. How many high profile tech suicides have we had in the past few years? We're doing the opposite of staying mentally healthy. Turns out human beings are incredibly delicate creatures, but no one wants to admit it as to not look "weak."


I thought that feeling was just normal. I've experienced it basically since I started working in tech. I can't imagine most people want to actually wake up and go to work. It's not possible.

The funny part is I find myself dreaming of going back to stocking shelves at a grocery store like I did in high school. I'd never make enough money to support myself doing something like that though. I romanticize the Peter Gibbons move to go work in construction even though I know I probably wouldn't be happy doing anything. I long for stress free days. Especially when most of the stress I experience is just completely artificial or manufactured by my boss or company. Most of the problems I have at work shouldn't bother me after hours but they never leave.


I also thought that feeling was normal. I sure have felt it during my entire career.

It's getting worse though. I've soon reached the point where I really can't give a rat's arse about my job. The software I get to develop doesn't help making the world a better place. It doesn't help people, other than making rich people richer. It doesn't advance mankind. Not does it bring joy or excitement to anyone. It's just so pointless, drab and dull.


It is possible. I actually love going to work. Just wanted to provide a counterpoint here.

I didn't always feel like this. I used to work for a depressing place. But since I started working for my current company, the culture, the people, have made it worthwhile.


It's the lack of feeling you've completed anything. I work for a major telecom company doing field support, mostly patching holes in the dike, and because of this, I can only rarely point to something and say "I did that" and feel good about completion or a job well done. It comes down to fighting the fire and moving on, which when combined with no feedback from management is a great way to leave work dissatisfied every day, and dreading the next.


These people do exist, I actually do enjoy getting up and going to work. I've had a few multi month spans of unemployment, and found that sitting around the house/apartment all day was not for me. Also, now that I have small children at home, and a spouse that works, going to the office feels like a vacation.


It's not depressions. Depression doesn't go away for the weekend or after work hours.


I wouldn't say burnout is just an office cliche, but your point appears to be supported by current research. Quoth the wiki:

> The symptoms of burnout are similar to those of clinical depression; in a study that directly compared depressive symptoms in burned out workers and clinically depressed patients, no diagnostically significant differences were found between the two groups: burned out workers reported as many depressive symptoms as clinically depressed patients. Moreover, a study by Bianchi, Schonfeld, and Laurent (2014) showed that about 90% of burned out workers meet diagnostic criteria for depression, suggesting that burnout may be a depressive syndrome rather than a distinct entity. The view that burnout is a form of depression has found support in several recent studies.

https://en.wikipedia.org/wiki/Burnout_%28psychology%29


Is this really burnout? I feel like I've been burned out before but from what the author was saying, this doesn't seem like it. If anything it just seems like he has a lot of other things he wants to do and work prevents him pursuing them which made him unhappy.

Of course, he still tried to pursue them in his spare time but then he just didn't have enough time to do them as much or as well as he wanted.

Is this really burnout though? I ask because I relate to much of this situation, but I actually love my job, my company, and my coworkers. It's very interesting and I am very happy working. I just wish there were more time because there are still other things I would like to work on and I'm only getting older.


I think this post makes a strong argument for the industry accepting more of us as external contributors, or with incredibly flexible work schedules.

I don't mind inheriting other people's problems, and I don't mind coming into the office - I find it's helpful to swim with the school, so to speak - but sometimes I can better solve a problem out on a good bike ride or will have an epiphany about team dynamics while playing basketball, and after that, the next hour of work is worth more than two weeks of sitting around.

It's difficult to quantify, it's difficult not to get lazy, and when you _fail_ to achieve your goals, people feel better if they watched you toil. I think it's human nature.


I quit the tech industry over a year ago and I'm not itching back.

Maybe if I did something part time that could work, because I don't want to spend more than 20 hours a week working.


What industry are you now in, that you can work 20h/week? Just curious, you are living my dream.


I've been doing devops contracting for a startup at 25 hours/week lately. I'm digging it a lot, because it gives me two days during the work week to go outside and plenty of time to work on my own stuff. I don't feel guilty when I go home after one of those work days and don't put time in on one of my projects. That's a powerful thing.

(Shameless plug: one of my arrangements is ending soon and I'll be taking on more devops and automation work; at every place I've been I've added pretty big multipliers to engineering output in a fairly short amount of time, and my email's in my profile if that appeals to you.)


I work in a Teradata shop in a major financial institution and the hours are reasonable and the work is borderline relaxing. There is a nice middle ground between 20h/wk and the startup meatgrinder if you seek it.


For me 20h/wk is middle ground between fulltime and not having to work at all.


It literally is in the middle between fulltime and not having to work at all, so it's not just you.


I play poker professionally so I get to set my own hours.


>Unless Yelp has a toxic work culture

Yelp's business model is quasi-extortionate. Even if the work environment itself was OK, writing code all day for that purpose would certainly leave me feeling pretty crappy about my job. That kind of thing doesn't wash off very easily if you have a conscience.


Whispered rumors of Yelp's business model have been greatly exaggerated. In almost four years I have never seen anything within the company to substantiate them in any way whatsoever.


Generally speaking, if you have to pay people to do it, there is something nasty about the work. It's strenuous or dangerous or dirty or degrading or stressful or boring. If it were actually fun, people would be doing it for free.

(Exceptions, anyone?)

We programmers are quite lucky. At its worst our work is only frustrating. And we are well compensated, usually.

Don't get me wrong; programming itself can be lots of fun. But what you get paid for isn't the fun stuff. I doubt there is anyone who gets excited about upgrading and debugging aging Java applications.


> if you have to pay people to do it, there is something nasty about the work

a) Even if it's a job I would do for free, you need to pay me because I need money in order to live.

b) Even if it's a job I do because I love it, you need to pay me to ensure that I do it at the pace and with the guarantees you need.

I wouldn't call either of these "nasty", although the first is arguable at a global scale.


Generally speaking, if you have to pay people to do it, there is something nasty about the work.

It's also a question of time management. I can only do N things in a week/month/year. If you want one of those things to be your thing, you're going to have to convince me to priorities it over other things. Money is a quick and convenient way to do that.


> Generally speaking, if you have to pay people to do it, there is something nasty about the work.

Unfortunately, I can't pay my rent with 'delightful work'.


Do you think tax returns and complying with other bureaucracy is fun?

There are myriad reasons why people form firms and a body of literature around it. Start with Coase's Nature of the firm :

http://en.wikipedia.org/wiki/The_Nature_of_the_Firm


> Generally speaking, if you have to pay people to do it, there is something nasty about the work.

I don't believe this is true. Almost all people need to earn money to live a reasonable lifestyle, society as it is.

Considering the number of hours in the day: enjoyable, non-nasty tasks may be off the radar unless they are paid.

I feel like what you are saying is an excuse for employers to treat employees poorly. "We're paying you, so..."

It doesn't have to be this way.


> Generally speaking, if you have to pay people to do it, there is something nasty about the work.

No, generally speaking, it just means that the work you do has some value for the people paying for it, since they need it done and they lack the skill, the time or the will to do it.

It says nothing about how fun or stressful or nasty the work is for you (it might be fun for you and boring for someone else).


I've been getting paid to do fun stuff my whole career. No sense in doing it for free if someone will pay you to do it though. :-)


>If it were actually fun, people would be doing it for free.

How much fun? Whatever you think is fun, I'm pretty sure I can think of something more fun. That's not me saying I know what is fun, just saying it is a subjective term. Also, what is fun today may not be in 2 weeks time.


>> Generally speaking, if you have to pay people to do it, there is something nasty about the work

I think this misses the point that a) you need people to do the fun awesome stuff at scale (you can't do everything), and b) you may not have the skills to do the fun awesome stuff yourself.

Practically speaking, I think you're right, but you don't have to accept that as the status quo.

>> If it were actually fun, people would be doing it for free

The trick is combining fun with career. Doing fun things for free is not scalable as we do kinda need money to survive.


> if you have to pay people to do it, there is something nasty about the work

Even if someone loves doing something they can still ask to be paid to do it for other people


Sometimes, doing it for other people is the nasty bit.


The work doesn't scale and do more things and handle more customers if you don't hire more people and develop better systems


>> "They're being paid huge sums..."

Everyone who works in finance just lol'd.

But seriously, relative to the value a good hacker adds to the business, "huge sums" is probably not an accurate characterization of engineer comp.


Huge sums in relation to the average American worker. I'm being paid below average for a programmer of my caliber, but it still feels like a ton of money because I grew up in humble circumstances.


But you should compare your self to your peers in other professions.


> Unless Yelp has a toxic work culture, it's likely the author brought it on themselves by pushing too hard.

I think the reality is probably more complicated. Probably Yelp pushes to much work on its employees and the author allowed it to happen.

To be honest, I think more tech jobs are toxic than not; it's very hard to find a good tech job, and even when you do, a good tech job can turn toxic as quickly as a manager leaving. I've always been aware of this and tried to put myself first, but it's not always an easy or even possible thing to do.


It is also possible that this is just the way companies in our industry work today. I keep seeing junior developers who somehow think that their job is to write beautiful, elegant software with well designed architectures etc., while in reality the goal that matters is to get product out the door. When they get yelled at for going 2x over time because they ended up refactoring many times more code than necessary they get discouraged. I think it's just a matter of arriving at the right expectations, which sometimes takes time and experience.

There are certainly roles where software can be an end itself. Academic paths focused specifically on software, open source, perhaps some R&D shops (think Guava guys). But in most companies it's a means to an end.

This article makes some good related points on the topic of technical debt and what amount of it is optimal for enterprises.

http://bigeng.io/post/118399425343/why-the-way-we-look-at-te...


> It is also possible that this is just the way companies in our industry work today.

Yeah, I think that's true.


I am going to start working soon. This makes me think if full-time work is really worth it. Wouldn't multiple short-term contracts with regular breaks be able to cut it in today's world? Isn't there people with experience on working on short-term contracts and still living well-off?


I do this, but it's not all roses. Getting and keeping those contracts continually takes effort and time. It's stressful when you don't have much line of sight into the future. And even though you can charge a high hourly rate, it's difficult to work lots of billable hours. I need time for context switching, administrivia, marketing. And the one problem I don't see discussed much: on-demand motivation.

If you work a salary job and don't feel up to it for at the moment, you can coast for half a day and get your shit together. On your own, that's a half a day of lost money. My brain needs breaks, and I just can't do code 40 hours a week and not burn out. I've tried. It just hasn't worked. So that downtime is a requirement, and you lose money for it.

The best part is that a decent programmer can make a moderate income working relatively little. Or you can make a lot of money if you work very hard. It's your choice at any given moment. But don't underestimate the drain of having to work for one to three people at a time, managing your time, and making sure the pipeline doesn't run dry all at the same time. It's pretty annoying/stressful when two important clients have deadlines on the same day. It's not like you can just pull in more help. Or if you can, you then have two problems - you have to go out and find the help, manage it, etc.

I don't think I could bill more than 25 hours a week and keep my sanity. But I'm not exactly a workaholic, and 25 hours a week is a pretty good living.

Milage may vary.


One more thing. Getting a mortgage is a pain in the ass. You will be held to a higher standard than someone with W2 income, so you might not be able to borrow what you can actually afford, and won't get anything at all until you've got a few years of track record on your tax returns.


So, in a way, you are actually running a software consulting/development firm, however, in this case, you just have to manage yourself. Scouting for clients, deadlines are similar to a firm/agency running multiple contracts. I get that it requires pretty good networking and communication skills. Thank you for sharing your experience.


Basically, yes. Don't let it discourage you. It's a great way to earn a living, but it has downsides - so go in with open eyes. It's not a life for "I just want to code" types. They're better off with full time jobs.


Well said. After consulting for a few years, the only way I'd ever do it again is if I had at least a year's wages in the bank as a "cushion."

Also: I found it extremely difficult to date or maintain a relationship while consulting.


Working lots of short-term contracts are fine when the economy is good. But when the economy goes bad, you'll see those contracts dry up very quickly. Then you're looking for a full time job along with everyone else who was doing short term contracts at a time when companies are scaling back hiring. Most of you are going to have a bad time.

A full-time job offers some protection from volatility. I'm not going to pretend that nobody has ever been laid off from a full-time job, but if you work contracts you have ZERO job security. And contractors are the first thing to go in cost cutting mode.

If you go the independent contractor route, make sure your emergency fund can cover 18-24 months of expenses. Also, recognize that while the pay may be higher, if you're in the US you also are on the hook for 8% payroll tax that your employer would normally pay on your behalf.

If you go this route, you need to adjust your definition of "well off". If you are looking to keep pace with your friends working at Google and making $150k, that's pretty unlikely. But you can probably pull $60k and still meet your savings goals, and $60k/yr is more than enough to live comfortably on. And that number won't be static; some years you might make $100k and some years you might make $20k. You need your savings to be able to survive the lean years.

All that said, based on your comment I assume you have no work experience. Why would you hire yourself for a short-term contract over someone else? Go work somewhere full-time for at least a few years until you have a good answer for that question. You almost certainly have a whole lot of tradecraft to learn as well. Once you've built up some experience (and some contacts) you can think about contracting.


> Also, recognize that while the pay may be higher, if you're in the US you also are on the hook for 8% payroll tax that your employer would normally pay on your behalf.

You are on the hook for more than just that. Federal, state and often county taxes (gross receipts, business licenses) will need to be paid. Plus you will need to acquire health insurance, fund your retirement, pay for needed business expenses, etc. Not to mention, most contracts you sign, will require that you also carry some form of business insurance (errors and omissions for example). All these things will slice and dice your hourly rate down severely.


I am not even sure now that this will work in good economic times, since there is saturation in contract-based assignments, with agencies hiring programmers on very low rate in developing countries. All I can take away from this is that, one needs to have experience and a great network (potential clients) before thinking about contract work. Thank you for your input.


Yes, a great network is essential. But there is plenty of room for independent developers; just target some of the less prevalent tech like Ruby, Erlang, node.js, etc. Most of the big shops go after Java, Oracle, SAP, etc. and don't bother with some of the smaller technologies because there's not consistent enough demand to support their scale.


A 40 hour a week job works out to ~1/3 of your time while awake which is fine. ~(40 * 48)/(16 * 365)

The problem is it's easy to get worse than that add a 1h each way commute and 10 hour days, and skip vacations that's half your waking life. ~(60 * 50)/(16 * 365) And of course you need a few hours a day just for prep time and meals etc so quickly you only get free time to relax on the weekends.


Right; its important to realize that the marginal cost of work hours goes up geometrically. There are only so many in the day, and each remaining one becomes more desperately important.


> Isn't there people with experience on working on short-term contracts and still living well-off?

This is just my opinion and I can only speak from a US perspective, but yes and no. The ones who are able to do this have already gotten a 10+ year head start and have built up a deep network from which to source work from. The ones who are starting out today are more than likely having a very tough go at it. Competition for contracts is much more intense compared to 10, 15 years ago and you really need to bring more to the table than just "javascript developer" or "wordpress consultant".

I know there exists this love-affair on HN with running off to become independent contractor, live on a beach writing code and making your own hours. I'm not saying it's impossible, but the reality though is that in the end you are building a business (even if it's just you). All the energy, time, risk and money that it takes to run a regular businesses will be just the same with running your own consultancy. The downtime you think you will have to yourself in-between contracts will be eaten up by having to find the next contract. If you happen to unfortunately live in or near a city with a high cost of living, the pressure will be even more intense.


You could be very right here, since most of the people I come across working on contracts are already in the market for at least 10 years. In today's market, for someone new starting out, I guess there will be cut-throat competition to get programming contracts, with people ready to work at a very low rate (e.g. on Freelancer, oDesk).


That was the case 10 years ago as well. Most of my contracting friends started out with $15/hour webmonkey work.

The thing you have to understand about contracting (and really any paid work, I've noticed the same effect as a big-company employee) is that people will pay a large premium for a track record of delivering working solutions. When you first start out, your asset is "I know this programming language", your clients just want someone who knows that programming language, and you're competing with all of these people on oDesk and eLance who also know that programming language. After you've delivered successfully on your first couple projects, your asset is "I delivered on these projects and it made my clients $X", your clients want someone with a track record of delivering on projects with minimal handholding, and you're competing only with other people who have had wins of similar magnitude. The supply of these is much lower and the demand is much higher, and so you can charge much higher rates.


It gets easier over time. The first contracts are the hardest to get. Then, if you're any good, you start to get referrals. You just have to make sure every single client is happy. If you go out and network, you will eventually get to a point where you can stop trying so hard, but it's never what I would call "easy". The hardest part is making a living while you're getting started.

I would avoid oDesk type rates at all costs. You're better off going to small business networking groups and making simple brochure sites and wordpress installs for $1000-$2000 a pop.


Full-time work can be worth it. Financial stability goes a long way towards contributing to happiness. You ultimately have to ask yourself what your goals are, and why you're working. A job should be a tool to help you get what you really want out of life.


I think many of us end up working fulltime because we are trained throughout schooling that fulltime employment is the norm. Also, we start working fulltime on low income (we are young, after all) so need to work fulltime to afford to live / buy the things we want etc.

When we reach a threshold of income and financial stability, some of us forget to evaluate why we're working.

As it turns out, I haven't reached this threshold yet so have to carry on working, but it is probably a good idea to look around and ask "why am I working?" if there's no real need for fulltime work.


Yeah, as obvious as it is, one always tends to forget what are the ultimate goals one is working for? As long as there is motivation, maybe it wouldn't be so bad.


The difficulty is guaranteeing a steady stream of short-term contracts. If you can get them and line them up I am sure it is great but I would not like the "unknown" factor of that.

I would do it once you have a steady foundation and some savings to fall back on should these contracts not materialise for a while.

Working fulltime is alright (it means you can be stable for a while) but not all of us are paid huge sums :-(


I wish there was more part-time employment gigs out there for programmers. I know I would jump on something like that, but I've never seen anyone advertise a position as part-time.

That leaves the contracting route. The issue there is you now end up a salesman. The people I know who are good contractors are businessmen first, software engineers second. They know how to close deals, attract clients,and have excellent "soft skills." They are mediocre developers. Not because they couldn't be excellent developers or were excellent developers before becoming contractors, but simply because their work day is no longer centred around engineering. This is fine if what you want is to run a business and be a businessman. Not so much if you're trying to escape the trappings of business to find more time to devote to focusing on just developing.

This is all anecdotal of course, I'm sure there are contractors who see a wide range of experiences that differ from mine.


I'm working as a contractor right now. I have a few different clients. I set my own pace and schedule. If I want to take a day off I do it. In 2013 I took an entire month off and still made a very decent amount of money. Contracting is great you get exposed to a lot and you can walk away without too much trouble. If you have a lot of debt and overhead, it's not so easy, though.


Be sure to check back in a couple months. :)


"it's likely the author brought it on themselves by pushing too hard."

Or being in a job or a situation that didn't fit them and they exceeded their capabilities or their ability to deal with stress.

Yelp, or for that matter any job, is not an elementary school that you are assigned to that you can't change because you are 6 years old. It's a job. People have all sorts of capabilities that allow them to work or not work at a particular career or company.


This is what burnout looks like.

I agree.

Boys and girls, as you likely know, burnout is real. But, you can manage it. I'll tell you what I do. Here's the secret:

Put yourself first.

Now, that sounds quite selfish on first-blush. What exactly does that mean?

For me, it means I take care of my health, first and foremost. Before the day is started, before the family is awake, I head off to the gym to be with The Iron. Henry Rollins wrote about it much more eloquently that I can, so I urge you to take a moment and read his words [1].

Once you've been with The Iron, nothing can stop you. Sure, you will still have rough days. But, I will tell you that, having been with The Iron, you will know that there is nothing that can bring you down. You will know that you have earned it for yourself on that morning. There is very little that can shake you when you know that. When all else fails around you, when software fails, when management fails, when fear, doubt, uncertainty and self-pity come rumbling toward you like a freight train, when friends forsake you... I am here to tell you that you will gently remind yourself in the midst of the storm:

"I rolled out of the rack to bring it. When most of the world around me was asleep, I paid the price [2], and that is what truly matters today."

And, over time, you will build that attitude, and you will find that you are unshakable. You will find that you will manage your time to make it happen. You will find that, even while you work hard at work, you will not let it control you. The work will always be there; the inbox will always be full, so put yourself first.

You will find that you will start eating right, because you realize that there is a price to be paid in order to stave off feelings that certain foods can cause. The roller-coaster of junk food and caffeine will fade from your life, because you will find that they have a net-negative impact regarding how you want to feel and perform. You may even find that you want to start meditating, to balance the mind.

I know it's old advice. I know that it sounds cliche. But I urge you to try it. Do it for yourself. If you can't do mornings, then do it when you can. Mornings just set the tone for me, but do what works for you.

Take time to put yourself first, every day.

[1] http://www.oldtimestrongman.com/strength-articles/iron-henry...

[2] I'm very fond of Vince Lombardi's words here:

Football is a great deal like life in that it teaches that work, sacrifice, perseverance, competitive drive, selflessness and respect for authority is the price that each and every one of us must pay to achieve any goal that is worthwhile.

To achieve success, whatever the job we have, we must pay a price.

Success is like anything worthwhile. It has a price. You have to pay the price to win and you have to pay the price to get to the point where success is possible. Most important, you must pay the price to stay there. Once you agree upon the price you and your family must pay for success, it enables you to ignore the minor hurts, the opponent's pressure, and the temporary failures.

I've never known a man worth his salt who, in the long run, deep down in his heart, didn't appreciate the grind, the discipline.

A man can be as great as he wants to be. If you believe in yourself and have the courage, the determination, the dedication, the competitive drive, and if you are willing to sacrifice the little things in life and pay the price for the things that are worthwhile, it can be done.


> To achieve success, whatever the job we have, we must pay a price.

Actually, to achieve success, we must do the job.

Some people find lifting heavy weights and whatnot helps them do that. I certainly have. Others find it's quiet contemplation under a tree. I've done that too, in another place, not here.

Time and chance happen to us all, and having a deep toolkit of techniques for dealing with the truly astonishing variety of slings and arrows the world can huck in our direction is at least as important as our dedication to any one of them. Because when we fail--and we will fail, if we truly strive to achieve anything interesting or important--having a different set of techniques to catch ourselves can come in handly.

For myself, the secrect of my success is being able to go on in the certainty of failure, because taking one more step forward is worthwhile, even when I know the destination is unreachable. And sometimes I'm wrong, and reach it anyway.


Love Lombardi. I have the last paragraph of your quote here written down and stuffed in my wallet, for at least 10 years now.


Because I see you attend The Iron Temple, you must also be a worshipper of Brodin. Wheymen.


Because I see you attend The Iron Temple, you must also be a worshipper of Brodin. Wheymen.

I wasn't aware of any of the references that you used (e.g., "Brodin", "Wheymen") until I looked them up just now.

I suspect that you're joking, but for the benefit of other readers regarding my intention:

I would personally find it terribly unfortunate if what I've sincerely written in my original post above were to be misconstrued in any way with the Brodin references, which come across as a part of "bro" culture; this was categorically not my intention.

Strength training is for everyone, and both the physical and mental aspects of exercise of any type (e.g., cardio, strength, yoga, etc.) are beneficial to everyone.


I thought you offered great advice. My gf works out where I am mostly lethargic and I can see the difference it has made in her personality and attitude.


Ahh yes, well if you can't take a message of support from someone who (independent of your article) supports "bro" culture, I should note that I do not support your lifestyle, that of the "uptight tool."

All the best :)


>He or she may find themselves drawn toward entrepreneurship.

The author may find the change refreshing, but I've never been as burned out as I have with my own company. It's like taking all of the other stuff, then adding an order of magnitude to the stress level. This comes from having responsiblity for everything, including the pressure of making it work overall (i.e. the dark side of the control and "freedom"). As well, you can frequently feel unappreciated by customers, staff, partners, etc. And, I've found myself far more sensitive to this than to the same from any manager or employer I've had.


I hear Netflix also has a very high pressure culture and if people cant cope up, they are given a generous severance and asked to leave. is this right? how long can a person survive in such environments?


Maybe long term survival isn't the point. I once interviewed with a team and was concerned that everyone seemed very young. I asked, "What's the turnover like?" They said, "Working on this team looks great on your resume and is excellent preparation for your next career step." I read that as: ride 'em hard and burn 'em out.


I can definitely see that. Also maintaining a younger work force comes with a lot of benefits for the company ... cheaper insurance costs, no family to run home to, no sick kids, no distractions, work long hours, etc etc ... keep them well fed and entertained, they will work 24 hrs a day.


There's a lot more to being a professional than being good at the technical aspects of what you do. Communicating, coordinating, scheduling, etc. all play at least as much of a role in getting the job done. I think if you are handling those aspects of the job well, you shouldn't feel like your pants are on fire everyday, no matter where you work. [Edit: assuming it's not some kind of sweatshop. Don't waste years of your life at one of those.]

Also you probably have other priorities in life so remember those every day rather than look back two years later saying "how did I forget everything else in my life?" It can be done. Stand up for yourself, and what you want out of life.

[I've worked 20 years in Silicon Valley, currently at Netflix.]


That's not burnout. He's doing the correct thing, where your jobs sucks is time to try a different thing. Good luck !


I went through this. Not sure what toxic culture entails, but fucked up deadlines burned me out. Why do all software companies rush so hard.


There are 2 reasons:

1) Developers cannot reliably estimate software timelines. That often comes with experience and age, but many never learn that skill. It is a skill like programming itself. It comes with practice.

2) Break down in communication between management (product managers) and engineers who are writing code.

On the first part. Usually junior software developers simply have not had experience shipping software in a full software cycle. From initial requirements, to design, to deployment, to maintenance. They did projects perhaps in school and homework exercises. Later some eventually learn that they chronically underestimate the time, and just start adding a factor (2x) to what their initial estimate is. That is a step up. But many never learn. There is also a race to the bottom -- the ones that promise shorter timelines get promoted and seen as smarter, more aggressive, better team players. The ones that are realistic are seen as maybe "taking it easy", "not working hard enough". Then everyone sees who gets promoted and show doesn't and learn -- "Aha I need to be like cool cowboy coder Joe over there, he is now running his own department". And so it spreads. Notice how there is often no feedback loop to punish the cool cowboy coder after the project is not delivered on time.

On the second part -- even if there are engineers who know how to estimate the time, nobody asks them. Because the person who promised the feature already played golf with the customer and told them they'll get the new shiny toy in 6 months. That person might have never been a developer, they might have an MBA or where a football coach or something like that. And they usually have a higher position in the company. So they promise and then everyone is pushed to deliver on that deadline. If it fails the failure is usually attributed to the engineers doing the work because they haven't worked "hard enough".


> 1) Developers cannot reliably estimate software timelines. That often comes with experience and age, but many never learn that skill. It is a skill like programming itself. It comes with practice.

This is true. But this is the problem that Agile is supposed to help solve -- with the caveat that most companies don't do true Agile. I guess people are now calling it Continuous Delivery, but the idea is the same: you don't tell people when a feature will be done, only when you will be working on it. But even then, even with experienced estimators, the rule of thumb is to add 15-30% to their estimates.

> 2) Break down in communication between management (product managers) and engineers who are writing code.

Totally agree that this is very common. Unfortunately, the best way to solve this is with process, and developers hate process. But developers often don't realize that they can use the process to their advantage: a strong engineering lead can refuse to accept poorly defined requirements. That allows you to push back on product to force them to define the requirement better.

IMO this breakdown is caused by just that: developers who say "oh yeah, I can do that", then start working on the problem and realize that there are a lot of undefined edge cases. If they promised it to the client in 6 months, fine, but define what "it" is.

From the perspective of an MBA, if we have to bring in a contractor to implement it, fine. I know where I can go to hire certified rockstar contract developers at $200/hr, which I will do if the client is lucrative enough. There is no feature I can think of that would take more than 6 months of development.


Process doesn't work, it can't work, because Process isn't the problem, it's top-down management infrastructure. Process is orthogonal to that.

In a top-down management style, your so-called "Lead Developer" is just the first head on the chopping block. They're leaders of puppet regimes. If the real leaders don't like them, they install a new one. It comes in many forms: layoffs, "performance" related dismissal ("you're not getting enough done!" because of all the rejected requirements docs), even reassignment to "re-engineering initiatives" that have no real chance of seeing the light of day.

Finding a management infrastructure that actually cares about feedback is incredibly rare. I have personally never found it, in 10 years across 6 companies. No amount of process is going to change a bad manager.


Any company of a certain size must convert to a top-down management infrastructure. I've seen what happens in large companies that don't -- you get 15 teams building different versions of the same product, and internal politics decide whose version becomes the 'official' one. But invariably, the internal user community settles on the one that's actually best for their use case, so you end up having to support 3 or 4 versions of every product you create. It's an absolute support and integration nightmare.

You talk about a business like it's supposed to be a democracy. It's not. You need clear direction, and democracy is messy and opaque if your company is too big for you to know the name of everyone who works there. Now the way you describe top down management is a bad implementation of it -- executives need to work to develop their middle managers -- but every company eventually has to convert from a democratic decision making process to a chain of command.

I've been working recently with a number of household-name startups that are having this exact issue. They've hit a plateau in their growth because the culture is dead-set against top-down management, but the company is now too big for people to self-organize. Engineering initiatives that would have taken 2 months in startup mode now take 2 years because they have to go back and rebuild half their systems to make them flexible enough to support the multiple use cases that they now have. Or because they were a startup, they didn't worry about geographic redundancy because that wasn't part of the MVP. So it was put off for later, and now they're a billion dollar company operating out of a single datacenter because their databases and applications were built without multi-datacenter being a requirement. Product can't even reliably tell engineering what features to implement because nobody on the product side has enough authority to shout over the crowd.

So having an infrastructure that cares about feedback is good, but the infrastructure also needs to empower people to do something about said feedback.


I know, I really understand what you're saying. And I am not saying a democracy is a better option. But I just don't think the things you're describing are attributable to top-down management. It certainly has never prevented the problems you've mentioned in any of the places I've ever worked. I agree that clear direction is needed, but your garden-variety middle manager isn't going to provide that. What he will usually provide is a sense that the failures of the organization are the fault of the leaf-nodes.

For every SV-brand startup, there are dozens of small-time consultoware shops serving their local market. They're the kind of places that have been around for 20 years and still only have 100 employees each. They can't ever seem to grow beyond that size because the one-way communication flow from sales to development keeps them in massive technical debt.


Middle managers don't provide direction; they are communication points. As to how effective they can be, it all depends on how the org is structured. If it's a product-centric organization (i.e. P&L rolls up under product and operating costs are charged back to the product org) then it can work pretty well. If it's a functional organization (revenue rolls up through a sales org on a regional basis and is combined with costs at the corporate level) then there's really no amount of management that will make it a good place for developers to work -- under the latter model, finance is running the company and you're a pure cost center. The manager's primary focus will be cost control, not product quality. That's a bad situation to work under.

I agree with your second assessment, but it's more of an issue with the consultoware business model than anything. Most consultoware shops start up thinking they're going to get hockey-stick growth, but it turns out every implementation is super-custom and it ends up as a consulting business. Many companies fail to realize this has happened, and end up operating like a software company when they should be operating like a professional services company with hourly billing. Under a professional services model, if a customer wants a feature, you can quote them a price for developing and implementing it. Tech debt gets dealt with because it becomes a bottleneck for revenue growth when you can't charge clients to add functionality.


Very quick reply because I have to get to bed (it's 1:30 am here!). I shouldn't work so hard... :-P

Estimation (i.e. pulling numbers out of your posterier) is not necessary (or usually desirable). What you want to do break down the problems into roughly equal size pieces -- the more the better. Each piece will take a certain amount of time. You can measure this and record the average. This becomes the estimated amount of time for each piece. Obviously the estimate has an error with some kind of distribution (my sleep adled brain is unable to remember what a likely distribution for the amount of time something takes).

It doesn't really matter because the sum of all the pieces will give you an estimate for the overall completion time for all the pieces. This estimate will have a normal distribution.

If you write down a list of all the pieces in priority order, you can draw a line at one piece of functionality and determine when it is likely to be completed, along with error bars.

Of course you are unlikely to actually to do the things on your list because if you were able to correctly guess all your requirements before you started the project then you would be in fantasy land. So what you do is tell the stake holders that this is what you are going to do unless they tell you that they want to change their mind.

Of course when you start they will say, "We're not going to change our mind. We're 100% certain that this is right". To which you reply, "Excellent". Every 2 weeks or so, once you have done some work and can show it to the stake holders, you should also have a list of new ideas. You should explain these new ideas and say, "Do you want to change the list to add these new ideas". Whether they say "Yes" or "No", you should reply with, "Excellent" and carry on.

Often the stake holders will have an "emergency" and decide that they have new opportunities which change your list. To this you should say, "Excellent" and change the list.

You should release whenever your stake holders are happy to release.

In this way, you have given the best estimate you can to help the stake holders plan. Any changes to the plan will be made by the stake holders themselves at the earliest possible time. You don't get caught up trying to deliver at any particular date because the stake holders are aware that they are changing the deliverables. You may have to ask them where they want to draw the line and give them new estimates for completion every time they change something, just to reinforce this idea.

The really tricky bit is breaking the work down into small enough pieces. This is very, very difficult and requires a lot of experience. The sucess or failure of the above will very likely rest on the ability to do this, so expect to pay a lot of money for someone with a proven track record doing it. It is often worth hiring a consultant if you have nobody on staff with this experience.

Hope this helps.


Well said


> 1) Developers cannot reliably estimate software timelines.

Disagree. Developers can provide reliable low risk estimates that will most certainly be rejected or truncated by management.

The problem is not estimates, the problem is every manager fantasizing that their Captain Kirk strategy,

    "I'll have it fixed in 4 minutes, Captain"
    "Do it in 2."
is some form of motivating leadership.


EVERY manager? Hyperbole there...


I misspoke. I meant more along the lines of

> the problem is any manager

If your greater point is that some developers really are poor estimators, I agree, but all of them operate under pressure to err on the optimistic side.


There are two ways to parse that sentence:

1. Every manager does that

2. Every manager that does that is the problem


I've spent a lot of time thinking about why software projects go over budget so often. I think that developer estimation only plays a minor role, and the big problem is failure to manage project scope.

I'm specifically talking about projects which go like this:

1) A set of high-level business requirements are put together, and given to a tech lead to estimate.

2) The tech lead's estimate, based on the requirements as-given, is used to determine a budget for the project, and probably a schedule as well.

3) Once the budget and schedule are approved, the project commences.

4) As development begins detailed software requirements are worked out, which usually exposes holes in the high-level business requirements that need to be fleshed out as well.

5) The estimates are never updated, and any attempt to increase the budget due to the new requirements are seen as a sign of failure.

What I see happening in #4 is two kinds of scope creep. The first kind is the sort everyone is familiar with: a requirement was missed, a new feature needs to be added, and since this wasn't in the original budget the budget needs to be increased. It's easy to identify these new/changed requirements, easy to see the big chunk of time needed to implement them, and easy to make prioritization decisions about the new requirement vs the other original requirements, so that maybe something can be dropped in order to avoid increasing the budget.

But there's a second kind of scope creep, and it's insidious. It comes from turning high-level requirements into detailed requirements into implemented and tested code. Every decision a developer needs to make about how to implement a feature is an implicit detailed software requirement, and you just can't know how many of those decisions will be needed or what their impacts will be until you get into the details. The time needed for these all add up, and I consider them to be scope creep because they aren't part of the high-level requirements used for the estimate and budget. We try to add padding for them because we know they're going to happen, but if you add sufficient padding across-the-board for all of the detailed requirement decisions that might be needed your project will never get approved. So we pad insufficiently, hoping that some of the requirements will be easier to implement than we estimate to cover the ones that aren't, and we don't manage this kind of scope creep at all. It's invisible, because it's just adding a few minutes here, a few minutes there, until our estimates have been blown away and we're over budget and we can't really say why.


I agree with you. I was mostly thinking of one iteration (a simplistic view) of "we know the scope, we go to work, we deliver (or fail) the result" which happens only in small projects.

The two types of scope creep is a good observation, I'll have to remember that idea.


Good points but there are also company wide reasons, namely self absorption among leadership. For example, fear. Fear of running out of money, fear of losing to competition, fear of tarnishing brand if we don't respond to this service issue right away, fear of insignificance, etc. impatience - we got a really promising thing and I want to fucking make it/make my mark/cash out! Greed - if we squeeze everyone a little harder I can make more money (even though I'm really well off).

These are all real human struggles. I have them for sure. I just wish you find a place with self aware leadership that endeavors to keeps these emotions in check. Usually startups with leaders who have families are a little better because their family essentially forces them to focus on someone else, at least a little.


I agree with what you said. I think there's also a third primary reason and maybe a fourth:

3) Developers are expensive. If you have a team of 5 developers each being paid a salary+benefits of $1,500-$3,000 per week and they tell you a feature will take four weeks, management does a little mental math and says holy shit, that's a lot of money and it's understandably tempting for them to want to see if that team really needs four weeks, or if maybe it can be done in three weeks. (Meanwhile, as you said, the feature will probably actually take six weeks because developers cannot reliably estimate...)

4) Developers have a hard time saying "no." We have a culture of working crazy hours. Management knows this and often intentionally or unintentionally exploits it.


Your point about the overly aggressive golf-made deal: how do we fix that? I really don't have an answer, but if we, as developers, are really so smart, we should be able formulate the problem and find a solution. We will have to avoid imagined constraints and thinking the answer is related to producing more code, but it's got to be there. Is it related to playing the office politics game better? And if so, can that be a learned and tolerable skill? Is it to do with organizing? With preferring self employment or contracting?

I am probably naive, but I think if we say: the situation is now X and I want to be Y, we can find a way to get there.


Company I work for tried to solve it using this rule -- don't hire any MBAs. Every manager, product manager, and even salesperson is (or at least was at some point) an engineer.

This works in our context (and has worked for many decades apparently). But I doubt this scales to a large size.


IIRC Palantir subscribes at least nominally to this philosophy, too. And they're trying to scale it, so we'll get to see how that works out in the near-ish future.

(Unless you work at Palantir, in which case I feel silly).


That sounds like a very silly policy. Would your mind be blown to learn out there exist many MBAs with engineering backgrounds, and that they're actually not idiots?


It's more appropriate to take a "no MBAs" rule as "no one who self identifies primarily as having an MBA". In my experience, an engineer with an MBA who neglects to even mention their engineering schooling/experience in favor of the MBA is a rare animal.


Self-identifies primarily as having an MBA? I don't even know what that means. If I interview with your company, should I not mention the MBA and instead say that during my 15 years of writing software, I took two years off to go wind surfing? Really? That's considered better?


I think the parent comment meant "self-identifies" as "your only qualification for this job is an MBA", not that you would hide having an MBA. If you wrote software for 15 years and applied for a job in tech, I would imagine the software experience was on your resume alongside the MBA -- you're not just an MBA who wants to get into tech because tech is hot but with no prior industry exposure, someone who could equally likely go be a VP of Paper Product Distribution at a Midwest conglomerate.


I think its the ones who do a BSC and immediately do a MBA without the required 10 years so or so in a real job - that they don't want to hire.


It is silly I agree but it worked for many decades, in the sense the customers are happy and engineers here seem to be happy. One can also say it didn't work because the company hasn't turned into Google or "existed" with a huge cash windfall for founders.

Of course that was just one variable and it wasn't isolated. There could have been other factors and reasons for the said result and it might not have had anything to do with "no MBAs" rules.

I just presented it as a reference or what others do as a "solution".


" all software companies rush so hard."

I suppose it depends on the business model the software is part of. If you want a pace that is compatible with proper engineering I would suggest looking into companies that deal with products whose lifetime is measured in decades such as CAD vendors or other highly technical software.

All freshmen to software engineering have this weird idea that a piece of code can ship once it builds and just shipping as much code as much as possible is the best road to maximize productivity.

Until they get hit in their faces time and again by recurring bugs and they start to understand that the way to manage long term software profitably is by making sure as few bugs as possible leave the software engineers desk, at which point best practices and long term planning starts to take hold.

That's at least my view, YMMV to a large extent, probably.


just shipping as much code as much as possible is the best road to maximize productivity

Just like juggling is a matter of throwing as many balls in the air as fast as possible ("What do you mean they come down again?")


Disingenuous comparison is disingenuous.


Well, it was more of a joke.


Because to most project managers the problem always looks easier during the spec phase than it actually is. Very few people can groc the problem before doing it. Occasionally you over-estimate, but usually you are under. That's why a good manager of project managers usually just slaps a 25% increase on any estimate (adjusting for his knowledge of the particular PM's abilities).


Project managers should not be providing the estimates, but this comment works equally well for the developers who should be.


Not all software companies do. I work at a place that is very much "we'll ship it when it's ready" and some people here still feel burnout.


> The only things they have in common are that their main products are websites with tertiary features that let you buy things. Yet both of them ended up scrambling to write their own payment platforms from scratch. What the fuck is going on?

* Raises hand *

I was the first dev hire at Datacash and wrote their back-end servers. Datacash only came into existence because an earlier (circa 1995-96) startup trying to sell stuff via the web couldn't handle payments without a card reader and a dialup connection. Handling payments properly is hard, especially as if you do it right (and your business grows) you turn into a juicy big target for black hats everywhere.

I also resemble the OC's burnout, except fifteen years down the line and mostly recovered ... by not working in tech any more. I'm a novelist and I set up and do my own projects more or less in my own time and (as a much earlier tech burnout case said, in Tracy Kidder's "The Soul of a New Machine") I try not to deal with any time frame shorter than a season.

Yes, there is life after you quit your last high pressure tech sector job. And yes, you can find things to invest your personal interest in that don't chew you up and spit you out and which earn you a living. The problem is with the way corporations are internally constituted -- especially with hierarchies of control and command where the people at the top don't have any deep understanding of the problems the people at the bottom are engaged with.


Sorry to say, I'm glad you burned out - otherwise no "Halting State",....


Hilarious. I just finished reading your memoir of that period.


This is inspiring and encouraging, thank you :)


I have been working for myself for last 8 years after completing my masters, in hindsight financially I did not do too badly (tho there was some great and ups and incredible downs!) and it is NICE working from home and watching your kid grow (tho there are quite a lot of distractions!!! says he who is procrastinating reading HN :D )

BUT if I was offered a job with guaranteed employment and steady wages and (gaaasp pension!) like being a teacher I would go for it. Having kids changes your perspective.

I would have been financially much better of if it wasn't for punitive taxes in Ireland, here you reach ~53% high tax rate with only about ~$35K in income. And then there are new property/water taxes they brought in now as well as 23% VAT :( All of these taxes really make you ask yourself "why bother work harder and longer" and really kill any incentive to work. And no we do not get free healthcare here still need to pay for medical insurance out of aftertax earnings. And as a business owner I do not qualify for the full welfare if things go to shit, despite paying high rate of social taxes.

edit: Now that I read my rant in second half of my past, no wonder no good startups come from here, the atmosphere is toxic to entrepreneurship.


I did exactly this. Was contracting for 8 years in Dublin, commuting almost 3 hours daily. I was making good (but not amazing) money. Then the kids came, and that 3 hour commute became 3 hours that I could spend helping my wife or spending time with my kids.

Got offered a full-time job in the tech industry with (gaaasp pension!) outside of Dublin, 5 minutes from my front door, with better salary, bonuses and healthcare. Things can work out well (and I really don't mean to sound patronizing here) with patience and a bit of luck.


> Got offered a full-time job in the tech industry with (gaaasp pension!) outside of Dublin, 5 minutes from my front door, with better salary, bonuses and healthcare. Things can work out well (and I really don't mean to sound patronizing here) with patience and a bit of luck.

While it seems to have become the trend to rail against traditional 40 hour/week jobs, the stability they can offer it extremely enticing to people with families. Eevee lives with 3 other grown adults and no children.

As someone looking to make the jump from a traditional job to financial independence (and self employment), I've noticed that people like Tim Ferris and Ramit Sethi all have one thing in common: no children. They are able to take the risks they can because when they fail, it's only on them.

With kids and a house, it's no longer the case. The people I follow who have successfully made the transition (Mr. Money Mustahce, Simple Programmer) have all used the traditional job as a means of support until they were ready to launch.

Also, there is nothing fundamentally wrong with just wanting to put in 40 hours and go home.


With kids and a mortgage, my perspective definitely shifted. I could have continued on doing what I did with the contracting, but I know for a fact that my family life would have suffered as a result. Having a 40 hour a week job is great because it gives me the ability to plan better for my family, in terms of time and money.

Yes, it does feel 'transitional' but that's not necessarily a bad thing. I really like the company that I now work for, and I still have time to work on 'side projects' at home whenever I feel like it. It's also a hell of a lot stressful. I have the ability to 'let go' of work stress a lot easier than ever before.


A pension? I've never heard of a pension in tech (though I am from a different country than you). I've never heard of companies taking part of their earnings to invest in the well being of their people. The most I have heard of are perks like ping-pong, a free beer once in a while, and conferences. They often even give you a computer to work on! And a chair to sit in!

(I kid you not, these are often listed as perks in tech job ads)

Obviously startups are not the place to look for a pension but I haven't even heard of established companies in tech offering them.

Seems like a dead-end career if you care about retiring and sending your kids to a decent school (if that's what they want). My grandfather-in-law was set for life when he retired as a mechanical engineer. I'm in my mid-30s and I don't see my career ever ending and my financial future seems like it will always be at risk no matter how I invest and manage my savings.

What kind of company, might I ask, offers such a rare thing?


Outside the US the term "pension" also is used to mean that the company pays into some(semi-) government scheme that provides a pension. I think the company itself paying the actual pension when you retire is a US only phenomenon.


I can't speak for the person you replied to, but I live in the Netherlands and here (and if I'm not mistaken in most of Europe) offering a pension plan is obligatory for companies in most sectors, including tech. Then again, our perspective on these things is quite different from for instance the USA, health insurance is not an option, it is obligatory.


A private pension (where the company pays for retirement) just doesnt make sense when lots of major tech companies havent even been around for a decade. This model was a better fit for when companies would last 50+ years and people would have their entire career at a single company.

These days its better handled by a federal/social investment fund that all companies contribute to and then pays out to each individual. But that's basically social security.


In the UK all companies (this is being phased in) have to offer a pension to their employees.


A mid-sized software/services company in Ireland.


It is (was) great for Ireland, though. That's how they attracted tons of (large) tech companies to Ireland. It's the perfect match: low corporate tax, no incentive for people to go away and do their own startups, which means you can get paid less as there as less alternatives for you. Very smart play by Ireland.

Then, the EU went back to them and told them they couldn't keep doing this, and very soon (is it 2016?) they will rack up corporate tax and make a fortune. And if you're Google, you built a large office and hired thousands of people, you're not going to leave anytime soon.


And if you're Google, you built a large office and hired thousands of people, you're not going to leave anytime soon

Plenty of people have said that about other employers in the past and come into work one day to find the doors locked.


> And if you're Google, you built a large office and hired thousands of people, you're not going to leave anytime soon.

You think? I don't think big business tends to fall into the sunk cost fallacy like we do. It may take a year to move out, but if they save no money in Ireland over the US, why stay?


There are no plans to change the corporate tax rate and the EU have no jurisdiction in these matters.

What is happening, rightly so, is the dismantling of some mechanisms which allowed large corporations to avoid paying the corporation tax at all. I think, though not sure, that this includes dismantling the double-irish arrangement where companies declared the majority of their income as expenses for licensing the product/brand etc from a parent company.

http://en.wikipedia.org/wiki/Double_Irish_arrangement


>~53% high tax rate with only about ~$35K in income

I'm sorry but you cant just go on to HN and make stuff up.

You pay 20% on the first €33,800 income and only 40% on income over €33,800 if single.

You pay 20% on the first €42,800 income and only 40% on income over €42,800 if Married with one income.

You pay 20% on the first €67,600 income and only 40% on income over €67,600 if Married with two incomes.

You pay 20% on the first €37,800 income and only 40% on income over €37,800 if a single parent.


Way to ignore USC (Universal Social Charge) and PRSI (Pay Related Social Insurance), these two alone + income taxes add up to over 50% rate on every euro earned above about 32-33K

thats without even going into property tax which could also be taken out of your income (and probably water tax soon)

The government has deliberately made the "income" taxes so complicated with 3 major different variables, and plenty of other minor nuances dependent on the persons circumstance

In my case for 2014:

----

Gross Pay €32,876.69

Income Tax €4,941.44

USC €1,620.17

PRSI €1,315.08

Net Pay €25,000

----

Thats for tax year 2014 (wasn't married yet, own company director), any euros earned above this I would have had to pay a rate of 50%+ tax (income+usc+prsi),

This year it is a little less (few hundred euro) due to getting married and budget 2015 being a tiny bit more forgiving.

You have ignored PRSI and USC and ignored that company directors lose a good chunk of their tax credits (and to add insult to injury no longer qualify for full welfare when things go bad!) for bothering to start a company, I suppose you work for someone else and do not comprehend how toxic the tax regime is towards small businesses. Revenue views all small business and sole traders with absolute disdain the EXPECT them all too be crooked and ASSUME you are guilty of tax fraud and place the onus on you to PROVE you are innocent of any tax misdoings (which costs time and accounting money)...


I found a handy calculator here: http://ie.thesalarycalculator.co.uk/salary.php

There's a UK one here, if you'd like to compare: http://listentotaxman.com/

(Both are very simple, it's 10 seconds to fill in the form.)


ys1010 is (accurately) describing the marginal rate which effectively applies to all income above a threshold (although the different taxes/charges have different thresholds). It’s quite the thing when it kicks in.


Maybe including City / Local taxes?


Nope. I'm Irish and confirm those figures. There is no city or local taxes in Ireland. (Ireland, with a population of 4.5mil isn't split into many different juristicions like the USA)


Go to Poland - 19% flat income tax rate for companies - you can get flat by 400 euro / month in biggest cities and work remotely for foreign clients.


Go to Poland - 19% flat income tax rate for companies - you can get flat by 400 euro / month in biggest cities and work remotely for foreign clients.

To expand on this: one can operate as a sole trader company, and enjoy the 19% flat income tax rate. You can also register your company for VAT, and then claim back the VAT on company purchases.

The only other cost is ~$270 / ~240 EUR / ~180 GBP per month in social insurance taxes.

I've been here for the last five years, and the low cost of living (very low cost outside of Warsaw) combined with low taxes makes Poland a very forgiving place to be when your first few side businesses inevitably fail.

(for that matter, the startup community here in Warsaw, centred somewhat around Reaktor - http://reaktorwarsaw.com - is really picking up steam)

If you do what I do - remote consulting for clients in the UK and USA - and you have the talent to charge western rates, you can build a sizeable nest egg in next to no time.


You know what sucks. As an American I'd still have to pay American income taxes. I cannot wrap my head around how we can say that's ok. Sure, there are ways to get around a portion of the taxes, but those involve things like never coming to the US for more than a set (short) amount of time.


No! You would not have to pay American taxes on the income you have earned while living abroad. There is the foreign income exemption which essentially says that the IRS does not care to tax the first $100,000 you earn. For taxes above that, you first deduct dollar for dollar what you have paid to the foreign tax authority. Ball-parking it, you would have to earn more than $180,000 per year to need to pay US taxes. You still have to file US taxes, which is a cost and an inconvenience, but is manageable.

Of course, you must be genuinely living abroad to apply for this. This means either spending enough time outside of the US (> 330 days in a tax year, if I recall correctly) or have enough proof that you are really living abroad (things like primary residence in your name, bills, bank accounts, mortgage, insurance, kids at school -- regular every day stuff).

Now if you want to game the system and just "kind of" live abroad in order to take advantage of the income exemption, that's a different story.


> Sure, there are ways to get around a portion of the taxes, but those involve things like never coming to the US for more than a set (short) amount of time.

I know about being an expat and how to avoid SOME of the taxes. Point is, unless you make under that limit and don't spend more than a month per year in the US, you are liable for US taxes. They give credit for foreign taxes paid, but you'll basically be paying the US income tax rates when it's all done. Not to mention the sheer stupidity of having to file in the first place.


I'd still have to pay American income taxes

On personal income. It sounds like the UK's "IR35" loophole - if you leave the money in the company you don't have to pay tax on that. So you can accumulate capital in the company.


You know what sucks. As an American I'd still have to pay American income taxes.

Agreed, it always feels scandalous to me whenever I hear this fact.

No idea how it works in practise. I known plenty of Americans who have settled in Poland for a good portion of their lives, so it must be possible to overcome the burden.

Maybe it's one of those things where, as long as you can afford to pay a good accountant (and you really should be able to afford it in Poland), they take the pain away for you?


This is false, false, false. Please everyone, if you stay out of the US for ~ 330 days a year, you are untaxed up to about 100k (changes every year). I've done this 2 years and the savings are insane. Federal income taxes are a huge drain on your salary. Go abroad!!


You're also exempt from the Obamacare penalty for not having health insurance if you're out of the country for 330+ days per year. For 2015, it's 2% of your income, and next year it will be higher.

The penalty is 0.1666% per month you didn't have qualifying health insurance for any 3+ month period(s) you didn't have it, e.g., if you didn't have insurance in the months of February-April, you'd be assessed a fine of 0.5% of your income.


How is it 'false, false, false' exactly?

I mention that there are ways to avoid some of the taxes. I've BEEN an expat so I know how it works.

I also know that I still had to pay taxes even when I stayed out of country long enough just due to income levels. Additionally, with all of my family in the US it was pretty hard to stay out of country enough to avoid taxes.

Am I saying you shouldn't move out of the country? NO! I loved living in Europe. And if you live in a low cost of living country you will save lots of money if you get a US salary or contracts. What I am saying is that as an American you'll likely end up still paying US taxes and you'll still have to file with the IRS every year.


Don't follow the rules to comply? Then you don't get the tax savings.

http://www.irs.gov/Individuals/International-Taxpayers/Forei...


Income tax, perhaps. Corporation tax, probably not?

If you can structure your work and business correctly, I'm sure you can bypass such taxes. Assuming you don't want to renounce your nationality!


> As an American I'd still have to pay American income taxes.

And as an American you would still receive the support of the US government in case of war or other disasters.


And what of all the other countries that provide 'services' for citizens living abroad that DON'T make them pay taxes? Obviously it can be done.


Or not really Shengen. But as EU citizen I don't really care. Bulgaria has 10% flat rate. Cheap cost of living also.


Or not really Shengen. But as EU citizen I don't really care. Bulgaria has 10% flat rate. Cheap cost of living also.

You have to learn the Cyrillic alphabet on top of learning a Slavic language though! I tease, I tease.

Isn't Bulgaria due to join the Schengen area pretty soon? Inside the next couple of years, at least?


  Isn't Bulgaria due to join the Schengen area pretty soon? Inside the next couple of years, at least?
It should have been included together with Romania a couple years ago.

The problem is that both countries are still considered too corrupt for inclusion into the Schengen treaty. Romania seems to have cleaned up their act better then Bulgaria, but there are still grave doubts that the countries behave according to the treaty and don't, for example, sell visas to people, who are not eligible for them.

To the best of my knowledge, both countries are still on an waiting list, but given the current anti immigrant sentiments in most of central Europe this could take a few more years minimum.

Note that I'm not singling out the countries as crooked I'm just stating facts. Organized crime, for example, is still a huge problem in Bulgaria and corruption is still a huge problem in both countries. [1]

[1] http://www.transparency.org/cpi2014/results


No need to learn. Reliable Accountant and lawyer :)


how come it's so cheap to live in poland?


how come it's so cheap to live in poland?

Off the top of my head:

- The state's still transitioning from a post-communist economy.

- Wages are very low.

- Relatively high emigration rate "brain drain" (although people are starting to return).

- More supply, less demand.

You can buy a brand new apartment close to the centre for somewhere around $2000 per square metre / $200 per square foot. Depending on how your housing market work, that's either scandalously high, or shockingly low.

It is however, very very affordable as soon as you start earning a reasonable wage.


There are plenty of parts of the United States with similar housing costs.


But these were the prices for a big, vibrant city. If you go to places with worse economy, it can get as low as $600 per square metre - in/near a nice historic city cente. And there are virtually no guns or organized crime in Poland, so even in poorer areas there isn't that much to be worried about in terms of security.


It's cheap if you're coming from a developed nation and are comparing local costs with what you earn there.

Remember, the average wage in Poland (according to GUS) is around $12750 yearly, so a $550/mo apartment (the average, from what I know amongst friends) in Warsaw is quite expensive for the average Pole.

So, why are wages so low? Well, we'd like to know as well :).


you can pay only 100 Euro for insurance for first 2 years(no pension contribution)

The only problem is communication with government, rather impossible without polish.


The only problem is communication with government, rather impossible without polish.

Very true - and very difficult at first, if your Polish is rather poor.

That said, my Polish was terrible, and I managed to bluster through it.

I recently helped an acquaintance through the process, and it turned out I'd done it the wrong way around. First hire a good accountant (mine costs slightly more than usual at $100/mo, thanks to processing many many many invoices/mo), sign over power of attorney for submitting tax documents, and they'll take care of the rest for you.


How are Warsaw and Krakov for families with children?


I can't speak for Kraków, as I've only had a family since being in Warsaw.

I think Warsaw's great. Plenty of green spaces, lots of child-friendly environments, and it's pretty easy - if you choose - to find yourself living in a community of similarly-aged kids where they all look out for one another.

The only downside I can think of is navigating stuff like vaccinations, doctors, and general bureaucracy. The majority you'll be fine with, but some working Polish - and having Polish friends - will be helpful as English is in short supply in some vital areas.


I guess you can do the routine stuff in private health care, where they actually care about the quality of service (so they should be able to communicate in English). It's not really expensive too; in Warsaw appointment with a specialist (cardiologist etc.) is $25-$50. For serious stuff (like surgery) it's best to go with public health care though.


I dunno, I think it's very dependent on the health provider in question. I've had some shockers from Lux Med, both in terms of incredibly bad service (eg doctors clocking off early and then claiming I turned up late, despite being obviously and easily provably false), and issues with a lack of English speakers, despite being assured that it wouldn't be a problem.

In fact, they're bad enough that I actively campaign against them.

Whoops, turned into a rant there by accident, sorry about that :)


Go to Georgia (Europe) - tax haven (0%) for software companies

http://www.upsoni.com/blog/?preload=virtual_trade_zone.txt


Georgia is not quite Europe though ;-)


It is not in EU yet, but for some companies this might be even preferable ;)

I'd say, so far, Georgia is one of the most capitalist states in Europe.


Thanks to the Internet numbing my moral compass, it's not often I'm shocked, but 53% is just horrifying :(. On the other foot, I live in Australia where most can't afford to buy a house in Sydney, even with what would be considered pretty good wages.

That's why I moved out of core tech and became a librarian (which is still pretty tech) in a more regional city. Lower wages but slightly more affordable houses mean I might still have a chance at giving my kids a mortgage one day..


In addition to the other responses, remember that US federal income tax is a graduated tax rate, so even at ~40% on 120k, you're only paying 40% on your income over like 90k, lower tax rates for income in lower brackets.


Between (hidden) payroll taxes and state and federal income taxes a developer making 120k in San Francisco isn't too far below 53%.


120k is in the top 20% of wage earners in the U.S. That's quite a bit different than $35k which is in the bottom ~30% (in the U.S.)


It's only 40% in California at $120k. And 25% at the $35k level OP mentioned.


Which has always been one of the downsides of Cali life, your local tax bracket and your federal tax bracket are not on the same program.


Between that and the cost of property in Dublin (rental prices are insane at the minute, and I haven't looked at buying but I figure it's the same) that's why everyone graduating in ireland is leaving


Well they're idiots because there are plenty of really well-paying job in the tech industry.


I'd love to get some links to these high-paying jobs in Dublin? Last I checked, IBM were offering sub 30k for graduates, and Microsoft weren't far off the same amount. In US terms, that's 34k USD, for a city where you'll spend 800 dollars a month of your salary on renting a room, and another 170 dollars on communting by bus.


> Last I checked, IBM were offering sub 30k for graduates

You expect to walk into an 80k a year job straight out of college? Everyone has to start somewhere. If I was a graduate, I'd much rather be working sub 30k for IBM than sub 40k for Dublin's next Groupon killer/Airbnb for iguanas.


You just said: > there are plenty of really well-paying job in the tech industry.

And I can walk into an 80k job outside of Dublin. Considering the cost of living in Dublin vs the salary for tech grads versus... anywhere else in the world, you'd be crazy to stay.


> Considering the cost of living in Dublin vs the salary for tech grads versus... anywhere else in the world

London, Singapore, Tokyo, Hong Kong, Paris... all way, way more expensive than Dublin.

But if you can find a job that will pay 80k euro equivalent to a graduate with a computing degree from a Dublin university and zero industry experience, you should definitely take it, 100%, and I wish you the best of luck.

Describing people who want to do this as 'idiots' was too harsh of me. It just makes me sad to see young people leaving the country.


> London, Singapore, Tokyo, Hong Kong, Paris... are all way, way more expensive than Dublin.

From a brief google, Tokyo looks comparable to Dublin, but the others, yes. However, I wouldn't take a job for 30k living in any of those cities either, that's just nuts. However, it is absolutely possible to get jobs in places where your ratio of cost of living to salary is better than it is in Dublin, even before you factor in how much more you would take home before you end up paying the nuts VAT rates, PAYE, PRSI, USC charges that push you into almost 53% tax at 32k euro. I moved to Edinburgh when I graduated, and forgetting about my salary, my rent is a good 300 euro less a month, my transport bills are lower, I live in a nicer flat than I did before, and general costs of living are lower than they were in Dublin. I have more disposable income than I would have had on the same salary, and the ballpark offers that I have received here are the same as, if not better than home.

The reddit thread in [1] has plenty of people who came out at over 80k euro starting salaries. I'm not saying that everyone can get it, but there are some available.

http://www.reddit.com/r/cscareerquestions/comments/1oiwc2/ne...


I graduated last year and got offered 34k to work in one of IBM's offices outside Dublin.

I ended up moving to Canada where I earn the equivalent of 36k euro working in a startup. I would say that living expenses are comparable.


Firstly, not everyone works in tech. But even from that perspective Dublin tech salaries do not offset the taxes and cost of living there to the point of being an idiot for leaving. Particularly if you're a high earner paying the punitive tax rates here.

In my case I could move from Dublin to Silicon Valley and make 30% to 50% more cash and pay way less in taxes, I would be an idiot to not consider it.


Some source on Irish taxes? Last time I checked income tax in Ireland was one of lowest in Europe. Bellow €40K (+-) was 20%, everything over 40%. Same income in Germany is taxed way higher.


Try this calculator, in the last few years taxes have increased a lot. Also keep in mind if you are a director of a company (Startup etc) you lose a good chunk of your tax credits

Anyways to answer your question, play around with calculator http://download.pwc.com/ie/budget-2015/index.html

A single 30 year old (average age of HNers?) earning €100K will receive €58,869 after all the income taxes

From this money he/she will have to then pay water tax, local property tax (if renting the landlord will pass it on), VAT of 23% on almost everything and so on, and god help you if you buy a car!

---

41% is the highest tax band BUT there is also USC and PRSI tax which needs to be paid which brings up the highest rate to above 50%

basically there are a lot of hidden taxes and it is a very complex tax system which allows the government to make the figures appear palatable


If you can't live well €100K in Ireland you are doing something wrong. Do you realise that you are in the top ~12% of household income with that sort of money?

I do sometimes wonder what kind of self-awareness people have of their status.


I just pulled a round figure that someone working in tech either in US or EU would be expecting

http://money.usnews.com/careers/best-jobs/software-developer...

A lot of HN readers are from US and would be shocked at the tax rates here (on everything) and they further shocked as to how little we get to see for our tax money (no free healthcare etc)


It's very difficult to compare like for like though. For example, US property taxes are a completely different animal than Irish ones and by and large they are massively higher. Healthcare costs are not free in Ireland but they are significantly lower than in the US. And if anything really bad happens to you or your children in Ireland you are financially far more secure.

The US always appears to have a much lower tax rate but once you compare similar lifestyles things are not as different as you might imagine.


I agree there are so many variables to consider when comparing and the US itself has a wide range of living costs and salaries across the 50 states.

BUT here in Ireland the government has made it an artform in introducing indirect hidden taxes which on a quick glance one might miss and quickly add up. for example: Americans would be shocked not only at our petrol prices but the total cost of running a car (and no the public transport is not great) for example and property taxes have come in and are widely expected to rise year on year and will probably be at US levels in 10 years.

I have been to the US many of times and traveled across almost all the states so it is not just case of "grass is greener on other side"


I just had a look at the numbers, UK vs IE you're about 10% worse off in Ireland in terms of take home pay. Then as you say, you need to pay another X grand on health insurance. That's a pretty raw deal.

What a crappy system, to simultaneously make it great for corporations and bad for workers.

There have to be some other major upsides that I'm not understanding. It's a pretty country, that's something :)


> A single 30 year old (average age of HNers?) earning €100K will receive €58,869 after all the income taxes

I just put it into the calculator and the number for 2015 is: 59,019

This results in an effective tax rate of 40% approximately (this is with a property tax and water tax)

The Property tax being so low is one of the causes of the housing bubble. And some people blow their (yearly) water tax on a night at the pub.

And believe me income taxes are not that much better in other places (or there are other issues)

Yeah, healthcare could be better, but it's not a big issue (as opposed to something like the USA)


And? I would still consider it pretty reasonable tax for Europe. My relatives are paying 60% taxes from ~€15,000 salary.


I'm surprised. Where do they live?


Czech republic


Social insurance, health insurance and income tax will be around 25% on €15k annual salary in Czech republic. And that's assuming they have no children. With children it's even less.

source: http://www.penize.cz/kalkulacky/vypocet-ciste-mzdy


Supergross salary rings a bell?

15000*27/12 = 33750CZK/month = 42.5% taxation

Add VAT 21%, petrol tax 52%...


Except the VAT and petrol tax have nothing to do with income tax. So you can't just add it to the ~40% income tax. 21% VAT is quite normal in the EU, so that's nothing special.

Also source on that petrol tax? According to http://uk.reuters.com/article/2014/07/23/uk-czech-tax-idUKKB... it seems to be one of the lower in the EU, as the cut would have "put Czech petrol taxes below minimum rates allowed in the European Union"



they look like the figures for the UK, Rep of Ireland is not the UK.


Well, you've just convinced me never to return to Ireland until I retire, thanks!


Yeh me and my kids will be paying for a long time for the worlds biggest banking (per capita) debacle and the destruction of the economy in the 00s by various governments. With kids its sort of hard to leave :( Tho' it is a nice place to live despite all the carry on.

But hey look over there at the news yet another multinational setting up to launder/funnel money onto somewhere warmer and seems like a housing bubble is re-inflating again.

--------

edit: last year i arranged my salary to remain under the high tax rate band Gross: €32.6 K Net (after PAYE,PRSI,USC): €25 K

The accountant said that above this €32K line i would have lost about ~53 cents in taxes for each €1.00 earned by ending up in the highest tax band...

So I left the extra money in company (corporation tax 12.5%) and will spread out my wages over few years, tho is risky practice if the company gets sued and loses the money.

There is an option to pay into a pension but with the pension funds being so mismanaged and the government actively robbing all pensions and destroying the pension reserve that would be downright stupid.


12.5% corporation tax! That's really low. Just had a look around - is it 35% in the US?!


Set up a trust or a separate management company that cannot be easily sued (only one client: your other business). If for some reason Irish tax law doesn't work for this case, you can probably set up a foreign owned management company or quality assurance company. Another option is to buy business insurance for lawsuits, though really do you research and record the call you have with the rep because he will promise you things that are not true. If you don't have one party consent for phone calls in Ireland do it from a country that does.


Yeh the problem is you do not want to cross Revenue, they do assume your are guilty and you have to prove your innocence when it comes to tax matters. Best if possible not do anything which they might interpret as dodgy.


Doesn't Ireland have a graduated tax system?


Doesn't Ireland have a graduated tax system?

According to Wikipedia, it does:

http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ire...

"The taxation of earnings is progressive"

Which makes the OP's post rather confusing.

Does any country out there not tax progressively?

I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!"

Edit: On second reading, I think I understand what the OP is talking about: leaving money in the company they operate, which pays out (I guess through dividends?) at a lesser tax rate than if it were paid out directly as wages. I'm pretty sure this is a standard technique in the rest of the world, and not particularly unique to Ireland.


  Does any country out there not tax progressively?

  I just can't imagine it - "Great, you got a pay rise! Now 
  you get to take home less, until your pay rises by 
  another $5,000!"
He's just whining. At no point under the progressive tax system do you get penalized for earning more: the first $35K of your income is still taxed at the lower rate. When you earn dollar number 35,001, that dollar is taxed at 53%, but your average tax rate only goes up a hundredth of a percent.

This misunderstanding of how tax brackets is so widely pervasive that I can only assume it's the work of enemy action: people who want to reduce income taxes, or to move the tax burden to the poor by implementing a flat tax rate.


He's still paying a significantly higher tax rate on that dollar than if he didn't earn it this year.

If he is not hurting for cash and he could defer it until next year (or year after that) with no penalty at all and (arguably) negligible risk, thus paying the lower personal income tax rate on that dollar, why not do it?

I don't see what part is misunderstood. If you're being paid by your employer, obviously you want to take the raise regardless of higher taxes. If you are your own employer, both entities are paying taxes and each dollar of taxes paid is coming out of your own pocket.


Sure, but 50c is better than €0.


The money doesn't appear out of thin air. It takes time and stress to earn each euro. Especially if you work for yourself or in a startup, you are probably working for someone else so you do not comprehend the perspective of someone who is trying to make his own way in the world.

The tax system here puts a huge disincentive to work hard and earn a lot, at least there is an option if you have your own company to defer and stretch your wages over longer period BUT that comes with all sorts of risk since IT IS NOT YOUR MONEY but company money and corporation tax.


That's very short-sighted. If you are incorporated for yourself then:

> each dollar of taxes paid (by either entity) is coming out of your own pocket

You can keep it in pocket A, the corporation, and pay taxes once (on profits only, I guess), or move it to pocket B and pay taxes a second time also, at a much higher rate (and on overall income, again a larger basis than it would be to count up personal profits.) If you can replace some personal expenses with corporate expenses, end-around pocket B completely, now your business has also made less profit, so pays less corporate tax. I am not a tax accountant (or even remotely skilled in taxes) and this is not tax advice, but it makes pretty good sene to me. Certainly some part less than all of what I suggest would be considered illegal tax dodging or corporate malfeasance.

Sounds like a good incentive for CEOs/majority owners of small businesses to live frugally and to refrain from looting their corporate coffers excessively. Sure, a bird in the hand is worth two in the bush, but it also seems very clear to make the case that two whole birds in the bush are worth more than 0.94 birds in the hand.

You are thinking like an employee.


That's approximately how I read it. Even if it's his company, money he puts in his own pocket needs to have income tax paid on it (I would suppose this means, after any appropriate corporate taxes are paid by the corporation).

If the money does not actually leave the company and go into his pocket, the only taxes that would need to be paid are those (low) corporate taxes.

Of what value is money you can't have in your pocket and spend, of course, is an exercise for the reader, but presumably it could be paid out as personal income over a greater number of years (if the company survives that long) without ever paying $0.53/1.00 in personal income taxes on any portion of that money.


This is what I do. I worked hard for three years, pay myself a wage thats in the minimum pay bracket and will travel until the company money is gone. I'm not give a cent more than I have to to those crooks.


Can you not pay yourself in dividends?


There's no scaling tax relief on dividends in Ireland, it gets taxed like any other income.


Really it's the no healthcare that is the issue. How can you tax your residents so much and not provide healthcare? My payroll tax rate in Canada is about 30% on ~$55K


There is "free" healthcare if you are unemployed and qualify for a medical card, tho if you open the newspapers any week you would hear all sorts of horror stories about our public hospitals. The public system is under immense stress after years of negligence and cuts so your experience of a public hospital might quite literally be your last.

If you are employed you have no choice but to pay for private insurance:

* Family with 2 kids ~ €2600 per year

* Singe person ~ €500-€1000 per year (dependant on age etc)

Tho the costs for health insurance are rising of course...


> All of these taxes really make you ask yourself "why bother work harder and longer" and really kill any incentive to work.

http://en.wikipedia.org/wiki/Laffer_curve


Good lord, 53% tax plus 23% VAT plus utilities tax plus monthly healthcare premiums plus...?

I'm a bit of a socialist living in the U.S. - I believe in higher taxes on higher earnings and universal healthcare - but what in all that is holy do you get for your tax money??


Good lord, 53% tax plus 23% VAT plus utilities tax plus monthly healthcare premiums plus...?

The OP's overstating their case a bit, see the tax calculator here: http://services.deloitte.ie/tc/ (you'll get close to 60k in your pocket from 100k.)

The wikipedia article's pretty comprehensive: http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ire...


Actually I was discussing that once you reach the low threshold for higher rate tax of about ~€32-33K every single euro above this will be taxed at over 50%, below this its about 20-25% depending on a wide range of circumstances and variables.

This punitive tax regime makes you question as to why bother working longer and harder and kills any will to start new projects since you know you will be robbed if you ever (in the unlikely minority) become successful

AND to add insult to injury you do not get much for your taxes and from your after tax income you endup paying all sorts of further hidden taxes just to live here.


Actually I was discussing that once you reach the low threshold for higher rate tax of about ~€32-33K every single euro above this will be taxed at over 50%, below this its about 20-25% depending on a wide range of circumstances and variables.

Honestly, I'm genuinely not scandalised about the rates you've listed; they seem pretty standard for Europe.

This punitive tax regime makes you question as to why bother working longer and harder and kills any will to start new projects since you know you will be robbed if you ever (in the unlikely minority) become successful

A top rate of 50% isn't that scandalous. It's a lot, and there are plenty of means to reduce it. Personally, I'm far more concerned about getting the point where the top tax rate is a serious problem for me in the first place.

AND to add insult to injury you do not get much for your taxes and from your after tax income you endup paying all sorts of further hidden taxes just to live here.

I fear that if you think living elsewhere is going to result in a major change on your life from the tax rate alone, the options are few and far between. I've heard that you either love or hate Dubai, for instance.

(of course, there are always exceptions on prices of e.g. clothing, computing goods etc. etc. Always idly tempting to imagine moving somewhere that doesn't have VAT!)


I was hoping for a nice pie chart on http://www.budget.gov.ie/Budgets/2015/2015.aspx , but no. Can't seem to find one on the internet. If Ireland is similar enough to the UK, then a large chunk of it will be on pensions.


>> but what in all that is holy do you get for your tax money??

Frankly, not much. I was born and raised in Ireland, and left a few years ago from Scotland. In comparison to Scotland (and the UK in general), the quality of public services in Ireland is a joke.


$35K monthly or yearly?


He would be talking about yearly.

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