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

231–240 of 583 posts

Re: My Path to Financial Independence as a Software Engineer

#231

Post by skybrian »

JCM9 wrote: post #181
tiagobraw wrote: post #138

> but as someone without children this is a huge factor that influences almost every other decision he listed there: - living with roommates or renting a cheap apartment - not wanting to buy an apartment - having the time to do side hustles - even changing career paths is challenging when you have a family to take care of - saving the majority of his annual compensation I don’t want to say his advices are bad, just k…

This is the fallacy with this approach IMHO. Yes you can save a ton my living on minimal spend with no kids. That’s also not a life many/most people desire to live. I’ll all for saving and do broadly follow a similar approach. With kids I won’t be retiring in my 30s or 40s but I’m investing in life now so that when I do retire it’s a much more well rounded and wholesome experience. To each their own, but most of the…

I think you are right except for calling it a fallacy. It's a choice that most people don't take.

Re: My Path to Financial Independence as a Software Engineer

#232

Post by vjeux »

lotsofpulp wrote: post #188
vjeux wrote: post #155

Earlier quoted context omitted.

Tech stock is taxed at around 50% when you get it and then 20% of the upswing. So $475k total comp is more like $250k in your bank account in practice.

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.

You are right, I should be more precise.

If you earn more than $523,600 and are single, then your tax rate is not 50% but 37%, which is still meaningful amount that is often not considered when looking at those big numbers. https://www.manafld.com/blog/2021/2/26/rsus-no-sell-tax

If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary surprise when it’s tax season. https://blog.myrawealth.com/insights/rsu-tax-rate

Re: My Path to Financial Independence as a Software Engineer

#233

Post by PUSH_AX »

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…

IR35 hasn't really affected that path, you can find contracts that are outside of the legislation and as long as your working practices are also outside you're fine, there are also insurances now for these things.

Re: My Path to Financial Independence as a Software Engineer

#234

Post by wk_end »

Gwypaas wrote: post #119
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.

With the effective marginal tax rate at 67% for regular income in Sweden, excluding VAT and other point taxes, the only real possible method is to start a company.

So just doing some cursory research - and I admit, I'm not Swedish - 67% seems to be on the high side as far as EMTR estimates go. So I think you'd need to make a pretty hefty amount of money in Sweden to pay that much. Wikipedia, for instance, claims that the EMTR for an income of over 675 000 SEK is only 60%; Glassdoor tells me the average software engineer in Stockholm makes ~500 000 SEK (though Glassdoor estimates can be questionable).

I bring this up because I don't think taxation has much to do with this. In NYC I was paying around 50% of my income towards taxes (federal, state, and local); when you factor in what I was paying towards things that the Swedish social system provides, I'm sure it amounted to very close to 60% (maybe even more!). But NYC is full of plenty of engineers or similarly well-paid professionals who've achieved financial independence. And, well, at least per Glassdoor (caveat emptor), the average software engineer gets paid literally twice as much in NYC than in Stockholm. IMO that probably has more to do with it.

Re: My Path to Financial Independence as a Software Engineer

#235

Post by bjornsing »

secondo wrote: post #217
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.

> There are no stories like this one where I live (in Sweden). Absolutely none. Swedish tax rates on income makes this two to three times as difficult (approaches 60% plus 30% social paid by the employer this includes RSUs as well, plus 25% VAT) but it’s nonsense to claim this doesn’t happen. I am Swedish and have made significantly more in tech than the author. So has many of my friends. With that said, the only rea…

> I am Swedish and have made significantly more in tech than the author. So has many of my friends.

I’m not saying there is no path to financial independence in Sweden, I’m just saying that the path the author has taken / is advocating is not one.

I too know people who’ve made significantly more than the author. I’ve come close myself. But that generally involves starting a company and having other people work for you.

Re: My Path to Financial Independence as a Software Engineer

#236

Post by DogLover_ »

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.

You can't "just move". It is quite difficult to get into the US

Re: My Path to Financial Independence as a Software Engineer

#237

Post by lotsofpulp »

vjeux wrote: post #232
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.

You are right, I should be more precise. If you earn more than $523,600 and are single, then your tax rate is not 50% but 37%, which is still meaningful amount that is often not considered when looking at those big numbers. https://www.manafld.com/blog/2021/2/26/rsus-no-sell-tax If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary sur…

> If you earn more than $523,600 and are single, then your tax rate is not 50% but 37%

The federal income tax rate only for income above $523k is 37%. Only for income above $523k.

> If you are in California, then your employer will not give you all your RSU but sell 40% and give you 60%. So you don’t have a big scary surprise when it’s tax season.

Withholding amounts seem irrelevant when discussing effective tax rates.

Re: My Path to Financial Independence as a Software Engineer

#238

Post by endisneigh »

deanmoriarty wrote: post #193

I do not understand why articles like these consistently score poorly on HN? Of course it’s all based on luck, but that doesn’t make it an uninteresting read. I admire the diligence of the author, and how well they played the lucky cards they were given. I am frequently in awe when reading technical articles on HN, with people advancing the state of the art in some technology. Those people also are incredibly lucky,…

> rather than simply admitting that they willingly chose a different path in life, but they could have chased my same opportunities with largely the same financial outcome.

Let’s suppose everyone did this, how do you see it turning out?

Who will do all of the other things?

Re: My Path to Financial Independence as a Software Engineer

#239

Post by refurb »

mmarq wrote: post #101
merrvk wrote: post #57

Earlier quoted context omitted.

Tax in the UK is absurd (for what most actually get out of it)

In the UK, the stronger drag on wealth accumulation for the poor is the absurd taxation on the middle incomes (50K+), especially given the very low level of service of public schools, healthcare system, childcare, etc…

Not making a judgement call on which is better (its all trade offs), but this is what Americans don’t get - all those social benefits have a cost and a good portion falls on the middle to upper middle class.

I think a lot of Americans envision finding a European style social safety net by only taxing billionaires.

Re: My Path to Financial Independence as a Software Engineer

#240

Post by throw_nbvc1234 »

onos wrote: post #169
CodeGlitch wrote: post #105

Earlier quoted context omitted.

The modern "progressive" thought-process is to feel guilty about having a good education. I went to private school in the UK and the only thing I feel is infinite gratitude to my parents for forking-out the money to send me there (they were not rich, they were both teachers).

There is a lot of encouragement of guilt in the USA today. In general, shouldn’t we embrace a value system that encourages good behavior? Eg honor those who do relatively well in life, given the circumstances they are born into? The immediate leap to discredit the success of others through assertion of privilege seems like it would discourage doing well. A better solution imho would be to celebrate success but to als…

I agree with you in general but a useful question to ask is: How easy is this to do outside of tech (and other competitive industries like finance)? Competitive industries have high upside but inherently have limited opportunities at the top.

You even see in this thread how people within tech but unable to pull FAANG salaries see this story as impossible. It's one viewpoint to think that it's possible for everyone to become skilled enough to work at a FAANG-like job (including passing the interview); probably correct so some degree. It's another (less rational) to think that every software engineer can work at FAANG-like jobs simultaneously; there just aren't enough positions.

This gets even more dire outside of tech. What job are you going to switch to every 3 years that nets you a 30% salary increase? If that kind of opportunity was wide-spread, there would be a lot less income inequality (or at least more social mobility).

Post reply on HN