A Big Raise For This Year

This year’s raise is less than previous year, but my raise is still about the double of the average engineers in my group. It’s fairly good by any measure.

One of the best ways to make more money is to invest yourself in your job and career. Whether it’s spending more time, volunteering, attending seminar and conferences, or picking up some broader knowledge. In the long run, it will pay off.

I was blessed to be recognized for my contribution, after pulling off a mission impossible, delivering a complex design in less than 4 months, which would have been normally completed for 8 to 10 months. I was working about 100 hours a week for about the last two months during that crazy schedule. It was a mis-management on the product map, but engineering came in and saved the day.

My working group has all the best people, so I probably won’t rise up to become a manager for another 10 years, even though I’m very experienced already. It’s very weird to have a (or multiple) former regional manager from a big company to work at the same (lowest) level as you are. But that’s just how good the quality of my working group is.

Unfortunately, by the time when I could possibly rise up to the next level, I think my industry would have been either outsourced to Asia, or being taken over by Asian companies. High-tech industry in the US is getting less competitive as China rises up. Therefore, before my retiring age is reached, I will probably need to find another career.

But I don’t think it would be such a big deal. I respect every profession as the necessary component of the entire society, and I’m sure I won’t have a problem doing something else.

Quit Lag

Life changes rarely happen alone. I mentioned here the birth of my daughter in February. My mother-in-law has been staying with us since then. However, she’s leaving next week. After some long discussions, my wife and I decided that I’ll be the one staying at home to take care of our daughter for a couple of years.

There are many, many dimensions for this decision. Foremost on our minds is the well being of our daughter. I’m thrilled with the prospect of spending time with her and teaching her all I know. There are obvious financial implications in this decision given the loss of my income and associated benefits. Fortunately, my wife has a good job and supports my decision.

Looking at salaries alone, it would make more sense for my wife to stay at home instead if one of us has to. However, I’ve been mulling a career change and this is a great opportunity. As a research scientist I’ve built up expertise in a narrowly focused field that is, unfortunately, not very transferable. My wife, on the other hand, has a job that is in demand in most of US. Furthermore, my job demands a greater amount of time commitment than my wife’s. So we agree that it makes more sense for me to do this now and restructure our life for maximum flexibility down the line.

I’ve been writing mostly on concrete options in investing/personal finance, but big picture issues like where to live and what kind of job to take actually have far greater influence on the quality of life and overall well-being. Unfortunately, most of us are so bogged down by the pressures of daily living that we feel powerless in affecting our situation. For our working lives, my wife and I have been living beneath our means and investing diligently. We were not delaying the instant gratification of buying NOW in order to hoard, rather we were acutely aware of the freedom that a solid financial foundation can provide. It’s this freedom we’re cashing-in now.

Quit-lag mode
I’m leaving my company on very good terms. There is no sense burning the bridges even though it’s unlikely that I’ll go back. I gave more than a month of notice although my employment contract requires only two weeks. It’s also unusual that management let the news out over three weeks ago. I guess it was because I have a large number of tasks to hand over. Anyway, I have been in this quit-lag mode for a while now. This was a term that I first came across in this Business Week article. A quote:

When I went back to my desk, the piled-up papers looked like annoying debris. Now that I was leaving, my projects-in-process were meaningless to me. But I had two weeks to kill, so I went to work. I started creating a manual for the person who came after me. I wrote down procedures and lists of contacts and important events coming up in the future. That took about three days. Then I got to work cleaning house.

I threw out papers and cleaned out files. I reorganized employee records and made sure vendor contracts were current. I walked around the office and visited employees who had pending benefits issues or other matters that needed attention. Boy! they said. You are really on the ball this week! Heh, heh, I said to myself. What else do I have to work on?

I’m not sure if I was that much more efficient. But I’m certainly no longer sweating the things I can’t control. Several people commented on that I look relieved, and that’s on about six hours of discontinuous sleep per night!

Preparations for leaving
I’m not sure how common my experiences are, but I want to share my financial to-do list nonetheless.

  • I got supplemental disability insurance. The disability coverage (65% of income, to age 65) I receive through my employer will end shortly, so I work with an agent (my sister-in-law actually) to get some supplemental insurance. You may have to do this well ahead of the final date.
  • I re-read my employment contract so I’m clear on my rights and obligations.
  • I still have company stock options that I have 3 months to exercise after departure. I have been exercising them gradually this year. I will continue with cash-less exercises at certain price targets. I decided against exercise-and-hold because of the AMT implications and the high expense of put options I would need to purchase to guard my profits.
  • I set aside one year’s worth of cash needed to pay for living expenses (in addition to my wife’s income) and put it in our HSBC online savings account.
  • I started investigating income generating securities. [If you were wondering why I was writing about those high yielding closed-end funds, this is why.]
  • I started a self-employed 401(k) account at Fidelity in preparation for rolling over the 401(k) at work. [See why I’m not rolling it into an IRA here.]

Friday is my last day at work. This is going to be a whole new experience for me. Wish me luck!

Cautions On Rich Dad: Robert Kiyosaki

Many thanks for one of my readers, BlueDaze, for posting this link in the comments:

http://www.johntreed.com/Kiyosaki.html

If I recall correctly, I visited this very same link probably three years ago, when Kiyosaki only had his very first book on “Rich Dad, Poor Dad”. I got all the negative information on Kiyosaki, which I never thought could be possible.

About Rich Dad’s books, I have only read his first book “Rich Dad, Poor Dad”. The only things that I walked away from is a good, but basic summary of how everyone makes money. I must say that he was quite good at putting these things together as four quadrants of E/S/B/I (employee/self-employed/business owner/investor), and explained the cashflow & taxes of each quadrant. But it was nothing new to me. The rest of the pages is simply not helpful in getting a person to become a better B/I, or even a better E/S for that sake. A couple of my friends are so enamored by his books and him, and even lent his books to me, and talked to me about his books constantly. My only reaction is almost puking. The Bible says NO IDOLS. If you have ever contemplated on that commandment, it really means no idols of ANY kinds, whether it is a wooden statue, or a singer, or a book-writer, or any persons, or any physical thing. I think no one should ever adore another to an exceeding extent.

Robert Kiyosaki has a lot more books after his first one. When I am in the bookstore, I never want to lay my hands nor my eyes on those books, so that I won’t waste a second. In fact, I did pick up the Rich Dad’s series of OPM: Other People’s Money by Lechter because I was going to write a negative article on the book. Actually, it turned out to be so much different than Kiyosaki’s empty talk. Tagging the book as Rich Dad’s series is really degrading Lechter’s book.

Unfortunately for the unwitting readers, this guy, Robert Kiyosaki, pretty much speaks of anything possible that can happen, and of course, these readers will be even more enamored by his “correct” prophecy. Any valid predictions should always be properly stamped with the predicted timeframe. If you don’t give any timeframe, or give a wide timeframe, you will most likely eventually be correct. Just let time approach infinity, and all kinds of things can happen.

Kiyosaki’s negativity towards E or even S is simply not correct. A good education and good grades in school will give you a good paying job. With a good salary and a saving habit, you can go very very far (as I myself have demonstrated, saving $360K in 9 years). If there is anything that I regret not doing is that I should have listened to my parents, and given more thoughts to becoming a medical doctor. If you know how much medical doctors can make, you will not be complaining to be a S (self-employee). The savings that can result from the high salary or self-employee as being a doctor are probably 2X to 5X of my savings. That really makes a huge difference.

To all the young people who are still in school, I advise: To become wealthy, you need to start with first penny, and start with solid learning in school. Don’t think that you can study later. Life does not give you the luxury of going back in time. The only time that you can study in school is NOW or probably never. Going back to schools after having a family is extraordinarily difficult and only put unnecessarily emotional and financial stress on yourself and your family. Mathematically speaking, studying to become a medical doctor or an accountant or a lawyer, has a much higher probability of becoming a (multi-)millionaire, comparing to daydreaming of becoming a successful business owner, or winning the lottery.

Engineer Salary In Silicon Valley

The following 2006 salary numbers are from http://www.salary.com. (Took me a long time to pull all these numbers out). The salary is defined as total cash compensation (cash + bonuses). From my personal contacts & experiences, the numbers seem to be fairly accurate. All the experience levels are defined as follows:

  1. Level I: 0 to 2 years experience after Bachelor’s degree.
  2. Level II: 2 to 4 years experience
  3. Level III: 4 to 6 years experience
  4. Level IV: 6 to 8 years experience
  5. Level V: 8 to 10 years experience

A master’s degree I believe counts as 1 or 2 years of work experience, and a Ph.D degree counts as 2 more years of experience beyond the master’s degree.

I have used San Jose metropolitan area, and only looked up job titles related to IT, software, and hardware because they’re the more commonly held positions. Other good sources of salary surveys include http://www.engineersalary.com/, and IEEE salary survey which you need to sign up. Somehow http://www.engineersalary.com/ was giving a smaller salary number.

Job Title

25% percentile

50% (median)

75% percentile

Software Engineer I

57054

64261

71759

Software Engineer II

69680

78013

87687

Software Engineer III

82257

91992

102755

Software Engineer IV

99007

109277

121146

Software Engineer V

108396

118815

129968

Software Engr Manager

107251

144540

168786

Programmer I

54352

61471

69101

Programmer II

63227

71120

80328

Programmer III

79794

90449

101798

Programmer IV

93145

104937

118120

Programmer V

101645

113366

125687

Network Engineer I

61185

70121

81522

Network Engineer II

72530

84018

96087

Network Engineer III

88818

102424

115711

Unix Administrator

86539

101505

117370

Webmaster

68356

81674

98782

Electrical Engineer I

59568

65512

71383

Electrical Engineer II

70396

78463

86313

Electrical Engineer III

82583

94489

107386

Electrical Engineer IV

99243

106999

114990

Electrical Engineer V

115228

124574

134377

Hardware Engineer I

53110

58237

65744

Hardware Engineer II

62075

70848

78601

Hardware Engineer III

74289

85399

94336

Hardware Engineer IV

84128

91916

102182

Hardware Engineer V

94660

103215

118742

Design Engineer I

60769

67821

77379

Design Engineer II

74834

82994

96126

Design Engineer III

95297

108677

127039

Design Engineer IV

113352

124909

148304

Engineering Manager

110482

128783

152304

Engineering Director

163910

178921

203392

If there are any missing entries, such as Design Engineer V, it is because it is not available. The last two entries, Engineering Manager and Director didn’t seem to be specific enough. I expect that the data may be mixed with all kinds of engineering.

After my recent salary raise, it appears that I am still underpaid by about 10% to 18%, which will take a 11% to 22% salary increase to adjust to the market. Obviously, it is fairly unlikely to get such a big salary raise from the boss. The fastest route of adjusting your salary to the market price is still changing jobs.

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