Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

My Path to Financial Independence as a Software Engineer

software.rajivprab.com

Post reply on HN
Print view View original

221–230 of 583 posts

Re: My Path to Financial Independence as a Software Engineer

#221

Post by charlesdm »

bjornsing wrote: post #209
charlesdm wrote: post #200

Earlier quoted context omitted.

You can't just work your way to wealth. You need to reinvest what you make into other assets and let them compound... That said, I know self employed developers making 150-200k (EUR) gross per year as contractors. But I also know employees that get allocated a few 100k/year in stock options as part of their compensation. Yes, you do need to be exceptional. And you need to be smart in the choices you make. I thought t…

> That said, I know self employed developers making 150-200k (EUR) gross per year as contractors. There’s nothing unusual about that. I was making that kind of money 15 years ago. But one problem is, that’s about what I can make today as well. There is no upward mobility in pay. And it has nothing to do with ability. It’s a cultural thing. (Also, the deal is typically that you sell your social career progression. So…

Consumption yes. But how do you get to 70-80% for reinvesting? Corporate taxes are 20%, dividend taxes 30% on remaining 80? That gets you to 44% net tax. From gross to net. Income taxes are higher but still not 70-80%?

I agree income taxes are high throughout most of Western Europe, but the way to grow wealth is by acquiring assets that can grow without having to sell them and pay taxes.

An investment fund (or a property) can often grow for a long time and throw off cashflows that are taxed more efficiently. So can a business where you build up value in the equity. Cashflow keeps the lights on, but equity (even in a small business) builds wealth.

Re: My Path to Financial Independence as a Software Engineer

#223

Post by refurb »

pyrale wrote: post #131
sneak wrote: post #95

Earlier quoted context omitted.

Your flip comment seems to belie the fact that he's only earned at least a half a million dollars for one year. Most of his years he earned substantially less than that. The majority of his NW comes from investment and savings, not income. The point of the article is that cutting expenses, saving, investing wisely, and aggressively pursuing pay raises can yield a few million well before retirement age. These sort of…

> Your flip comment seems to belie the fact that he's only earned at least a half a million dollars for one year. I would say $475k is close enough, in all honesty. > The majority of his NW comes from investment and savings, not income. Sum of (earnings - spent) over the career is $2,611,000. Net worth by the end is $2,400,000. In order for investment returns to be above savings on income, taxes would have to be 42.3…

Income tax in CA at that level is 33% per year approximately. Even at $150k. So knock 1/3 off earnings and subtract expenses, what do you get?

Re: My Path to Financial Independence as a Software Engineer

#224

Post by refurb »

cutler wrote: post #144
darkwater wrote: post #127

Earlier quoted context omitted.

So you have to not enjoy the best years of your life and spend time and energy keeping track of investments to... get bored as hell later because your brain is so used to just work and save and nlt enjoying life that you will feel guilty spending that money? I want to retire at 55 but I'm really skeptical about the FIRE community, especially by the ones in their 20's

Yeah, can't imagine this guy's conversation on a date. Oh, wait - having a partner is an additional expense so out of the question.

Huh? My partner was not an expense at all.

Re: My Path to Financial Independence as a Software Engineer

#225

Post by bjornsing »

Invictus0 wrote: post #194
bjornsing wrote: post #51

> Disclaimer: I acknowledge that I’ve been very privileged, especially in the educational opportunities I’ve had. This might sound reasonable from a US-centric perspective, but to me it reads like utter nonsense. The main privilege here is access to the US labor market and tax policy. There are no stories like this one where I live (in Sweden). Absolutely none.

Just move then, your feet aren't bolted to the ground.

If I could give my younger self some advice it would probably be: slack off, or leave.

If you are talented and enjoy slacking off then you can have a pretty nice lifestyle in Sweden. Most of the exceptionally talented engineers I know work part time as consultants.

Re: My Path to Financial Independence as a Software Engineer

#226

Post by dkdbejwi383 »

dogma1138 wrote: post #40

So rough calculation here.. $100K first job which is around £74K in the UK… you aren’t likely to get anywhere near that as a grad masters or not here but after taxes and student loan payments (which are deducted from your income in the UK) and all other deductions you’ll end up with £42,908.26 per year, that’s $56K. And this is where this breaks down for people in tech outside of the US at least. In the UK the path w…

USA salaries are really unbelievable. That £74,000 which seems to be a poor salary in the USA judging the the OP would be a really very good salary in the UK

Re: My Path to Financial Independence as a Software Engineer

#227

Post by refurb »

martincmartin wrote: post #196
refurb wrote: post #184

Earlier quoted context omitted.

With that income? Sure, if kids came into the picture during the last day 3-4 years it would increase his expenses, but he’d presumably also have another income, at least for a few years? I don’t disagree that for middle income earners kids are a huge expense, but when you’re making $350,000+ each year, $30,000 for childcare isn’t a dramatic expense. Same with all the incidentals.

The biggest expense is college, at least in the U.S. If you retire before they apply, you may want to be conservative and set aside the cost of the most expensive college. MIT is $77k/year [1]. For two kids, that's $616k. And it increases faster than inflation, estimate 6%/yr. If you have enough money in the bank that you're financially independent, they won't qualify for need based aid, you'll have to pay the sticke…

Not going to lie, but Americans paying 100% of their kids college is kinda weird as an immigrant.

My kid can take out loans and sure I’ll help, but hell no I’m not bank rolling multiple kids at full private school tuition.

At least where I grew up a solid public school college was not an impediment to a good career.

I’ve notice Americans tend to hyper-optimize - I love it when parents tell me they bought in Palo Alto because the public school was rated a 9.3/10 versus San Mateo at 9.1/10.

Re: My Path to Financial Independence as a Software Engineer

#228

Post by dogma1138 »

Sholmesy wrote: post #219
dogma1138 wrote: post #114

Earlier quoted context omitted.

What flat did you buy in Soho for 480K assuming that it was a 10% deposit, or a better question would be when…

I've said way too much PII already, but it's on HMRC/Land Registry if you want to look it up. Bought in 2019. Non-council.

For a 2019 purchase there is no way that’s more than a studio maybe maybe a tiny 1 bed, if I want to buy where I rent now (W2) I’m looking at 1M+ for any two bed that isn’t a 50sq/m lower ground closet, the non council is a given I don’t think there are any council properties in Soho…

The 2 bed flat I’m renting got recently evaluated at 1.7M it’s very nice and very large (for London)but the lease remaining on it is 68 years and the Victorian building it sits in would need a lot of work very very soon so the buyers are looking at 350-400K bill within a few years of buying the flat (leasehold renewal and building repairs) on top of that which also is why the current landlord is looking to sell.

As it stands now if you want to buy a property for £600K you are looking at £60K deposit, £20K stamp duty and probably another £20K for misc costs.

£600K is a below what an average new build in a Zone 3 would cost you these days outside of the few units they reserve for HTB. If you can save £3K a month you’re looking at 3 years of saving. Since most people / couples would struggle to save even £1K a month especially in their early careers they are probably looking at a decade of saving for a property or even more if the house prices keep on rising as fast as they are now.

Re: My Path to Financial Independence as a Software Engineer

#229

Post by dogma1138 »

Sholmesy wrote: post #216
dogma1138 wrote: post #163

Earlier quoted context omitted.

Not any more I’m on £150K base and total cash comp of around £200K with bonus, car allowance and some other perks. Whilst it’s true that I probably won’t find a pay like this outside of London it’s also quite hard to get it within London if I lose my job it’s more likely that I’ll have to take a pay cut than not. In fact once you get to 6 figures in the UK outside of contracting it’s not uncommon to essentially bounc…

That's really good comp for the UK. Well done! Do you mind me asking what industry you're in?

Data science, before that was finance.

Re: My Path to Financial Independence as a Software Engineer

#230

Post by lotsofpulp »

d23 wrote: post #207
lotsofpulp wrote: post #188

Earlier quoted context omitted.

If you are going to include the tax rate on the capital gains, then you should include the capital gains in the amount in your bank account. You should also hire a CPA or at least spend some time reading about strategies to minimize taxes if you are paying close to an effective 50% income tax on $500k of income.

Do you have any resources you can share? My understanding is it’s pretty difficult to lower your taxes meaningfully if all of it comes from wages.

Bogleheads forums or whitecoatinvestor. Even just 401k, HSA, 529, and megabackdoor roth should help bring down effective tax rate (for the $500k income being discussed).

You will not get as low as someone with their own business or S corp, but the tax advantaged savings account should help.

Post reply on HN