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Treating the Bay Area as like working in the mines

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Re: Treating the Bay Area as like working in the mines

#11

Post by nostrademons »

null0pointer wrote: post #9
nostrademons wrote: post #7

Earlier quoted context omitted.

Hence roommates. $5500/month split 2 ways is $2250/month, which would still be ridiculous in any other city but is doable on a $130-140K base. Split 4 ways (that's doubling up in a bedroom) it's $1125/month, which is basically how non-tech-workers do it.

The author specifies living alone > $5,500 a month at market rate, which is affordable to a mid-level programmer at a large tech firm living alone I understand what you mean that roommates are the only way it could make any sense. But I'm trying to understand where the author is coming from.

Oh, right. He also specifies mid-level developer (eg. Senior SWE or higher). I assume he means someone who's been working at a FAANG or late-stage startup for a couple years at least; by then, your stock options have started to vest and you can cash them out. Including stock mid-level compensation is usually well in the $300Ks for Bay Area large tech companies.

You actually can pay for rent or food with stock at a public tech company; just sell it immediately upon vesting. Many mortgage brokers will consider it part of your income for the purposes of qualifying for a mortgage. For non-public late-stage companies, you can often get liquidity in secondary market sales; the banks don't like this and usually won't count it toward mortgages, but once it's cash it pays for rent the same as anything else.

Re: Treating the Bay Area as like working in the mines

#12

Post by wffurr »

null0pointer wrote: post #10
tehlike wrote: post #6

Earlier quoted context omitted.

Rsus do stack up with refreshers.

But you can't use your options until they vest right? Maybe I don't understand exactly what you mean

So your first year is tight, but then your stock grants begin vesting and it's basically extra income at that point if you sell immediately.

Re: Treating the Bay Area as like working in the mines

#13

Post by null0pointer »

nostrademons wrote: post #11
null0pointer wrote: post #9

Earlier quoted context omitted.

The author specifies living alone > $5,500 a month at market rate, which is affordable to a mid-level programmer at a large tech firm living alone I understand what you mean that roommates are the only way it could make any sense. But I'm trying to understand where the author is coming from.

Oh, right. He also specifies mid-level developer (eg. Senior SWE or higher). I assume he means someone who's been working at a FAANG or late-stage startup for a couple years at least; by then, your stock options have started to vest and you can cash them out. Including stock mid-level compensation is usually well in the $300Ks for Bay Area large tech companies. You actually can pay for rent or food with stock at a pu…

Is 'mid-level' really senior or higher? You are probably right about the authors assumptions.

Interesting that mortgage brokers consider it part of your income. Though I guess it makes sense. I didn't realise exactly how high compensation was in the Bay Area. People always throw out numbers but I've always struggled to find any actual data. Perhaps I should head to the 'mines' for a bit...

Re: Treating the Bay Area as like working in the mines

#14

Post by topmonk »

null0pointer wrote: post #5

At $5,500 per month is that to rent or buy? I currently spend about 25% of my after-tax salary on rent and I consider it too much for me. $66,000 => $264,000 after-tax. Californian marginal income tax bracket for $52k - $268k is 9.3% So $264,000 after-tax => $291,000 pre-tax (I know that's not how tax brackets work but I'm just estimating) And that must be base salary since you can't pay rent or buy food with stock o…

> Side note: My marginal income tax rate in Australia is 37%... I feel absolutely robbed looking at these California tax rates

You're missing federal. You have to add both together to get a final tax. At that income federal would be about 30% after deductions. So totally it's around 37% - 39%, depending on your deduction.

Re: Treating the Bay Area as like working in the mines

#15

Post by vostok »

nostrademons wrote: post #3

I'd say it's more like conventional factory towns from a couple centuries ago. I grew up in the Boston area, and on a recent trip back home, took my wife to see Lowell National Historic Park, birthplace of the industrial revolution in America. It struck me how similar the stories of the young women who went to work in the mills were to the young people who now flock to the Bay Area. Like today's workers, they were fl…

> Many of the women who worked in the mills would "retire" in their mid-late 20s or early 30s, having saved up the majority of their wages.

Thanks for sharing. I was under the impression that this was a relatively new phenomenon with the advent of sky high compensation in tech roles.

Do you happen to know how common it was for them to be making, say, $300k in inflation adjusted terms by, say, age 26?

I'd love to read more about this if you have any links. All the stuff I remember reading in school was about how horrible it was.

Re: Treating the Bay Area as like working in the mines

#16

Post by vostok »

null0pointer wrote: post #13
nostrademons wrote: post #11

Earlier quoted context omitted.

Oh, right. He also specifies mid-level developer (eg. Senior SWE or higher). I assume he means someone who's been working at a FAANG or late-stage startup for a couple years at least; by then, your stock options have started to vest and you can cash them out. Including stock mid-level compensation is usually well in the $300Ks for Bay Area large tech companies. You actually can pay for rent or food with stock at a pu…

Is 'mid-level' really senior or higher? You are probably right about the authors assumptions. Interesting that mortgage brokers consider it part of your income. Though I guess it makes sense. I didn't realise exactly how high compensation was in the Bay Area. People always throw out numbers but I've always struggled to find any actual data. Perhaps I should head to the 'mines' for a bit...

> I didn't realise exactly how high compensation was in the Bay Area.

Important to note that $300k isn't really a typical number for a midlevel developer in the Bay Area even if it is a typical number for Google and similarly competitive companies. It's like looking at investment banking comp and deciding that it's a typical number for a midlevel employee in finance.

That said, it's a perfectly achievable number a few years out of college.

Re: Treating the Bay Area as like working in the mines

#17

Post by smivan »

null0pointer wrote: post #5

At $5,500 per month is that to rent or buy? I currently spend about 25% of my after-tax salary on rent and I consider it too much for me. $66,000 => $264,000 after-tax. Californian marginal income tax bracket for $52k - $268k is 9.3% So $264,000 after-tax => $291,000 pre-tax (I know that's not how tax brackets work but I'm just estimating) And that must be base salary since you can't pay rent or buy food with stock o…

Here are real numbers.

Background: Average of 10 programmers who range ages 22-25 and are 2-3 years out of college.

Base: 140k Bonus: 30k Equity: ~60k Total: $230k year pretax.

Taxes: - 33% federal bracket - 10% state bracket - 7% FICA+Medicaid. (50% total)

Brackets listed are marginal rates, actual rates are noted here: https://smartasset.com/taxes/california-tax-calculator#p9c7Y...

Let's run the math - $230k comp - $83k taxes = $147k/year - assuming no other expenses, no retirement savings and no other income, that's 147/12 = $12.2k/mo, post tax. At this point $5,500/rent is easy.

Realistically, the breakdown is more like this: $147k post tax income - $20k retirement - $18k food/drinks ($1500/mo in SF is reasonable) - $10k car payments - $10k insurance/misc = $89k/year

$89k / 12 = $7,400/mo post tax and expenses. A $5,500 rent is still doable, but again extremely stupid because you aren't saving.

Re: Treating the Bay Area as like working in the mines

#18

Post by woolvalley »

null0pointer wrote: post #5

At $5,500 per month is that to rent or buy? I currently spend about 25% of my after-tax salary on rent and I consider it too much for me. $66,000 => $264,000 after-tax. Californian marginal income tax bracket for $52k - $268k is 9.3% So $264,000 after-tax => $291,000 pre-tax (I know that's not how tax brackets work but I'm just estimating) And that must be base salary since you can't pay rent or buy food with stock o…

$5500 is not a realistic rent option for someone living alone. You can get one bedrooms or studios in nice neighborhoods for under $3000-$2500. You can also live 45 minutes away from employment centers and pay less. So the math is significantly different from that inflated price he is talking about.

Also by commuting you can use company busses if you work at bigco, subsudizing living far away.

Re: Treating the Bay Area as like working in the mines

#19

Post by titzer »

After 5 years there, my conclusion was that the Bay Area runs on human souls. It might not be like the black lung, dirt-faced dangerous mines of old, but if you end up working 10 or 12 hours a day, are caged, distracted, annoyed (but fed!) at work, go home to a meager existence, have zero friends, zero romance, and your mind is hijacked to the point where you literally cannot think about anything else and relax, then your soul is being pretty much sucked dry.

Get out if you can.

Re: Treating the Bay Area as like working in the mines

#20

Post by NeedMoreTea »

nostrademons wrote: post #3

I'd say it's more like conventional factory towns from a couple centuries ago. I grew up in the Boston area, and on a recent trip back home, took my wife to see Lowell National Historic Park, birthplace of the industrial revolution in America. It struck me how similar the stories of the young women who went to work in the mills were to the young people who now flock to the Bay Area. Like today's workers, they were fl…

I would hope it's not like that. Not after reading a quote someone posted about Lowell just yesterday: https://news.ycombinator.com/item?id=18060336
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