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My Path to Financial Independence as a Software Engineer

software.rajivprab.com

201–210 of 583 posts

Re: My Path to Financial Independence as a Software Engineer

#201
Everything he says is right and I agree that when done correctly can lead to financial independence in ~10 years, but his models are very linear and this should be accounted for.

For example, finding roommates is a good way to save money, but you have to be careful about who you room with. Roommates can both increase social opportunities for a busy software developer, but can also damage career opportunities. I had a roommate that got a homeless boyfriend. I was apprehensive about it but supportive at first. My employment depends on me having minimal interactions with police and when I found out he was bringing drugs into the apartment, I had to end the lease and got my own living space. I now live alone and I lost a friend. This is more expensive but less risky. It will slow my financial independence, but less so than job loss.

Renting a cheap apartment sounds good on face value, but the problem with it is that the quality of people you’re around is lower. When you get dragged down, you enter a world where there is no respect or affirmation for your time or goals, everything is an emergency demanding your immediate and full attention, this is cancer for your attention. If you want to develop your skills as an engineer or learn a new technology on your own time, guess what you’re not going to do in that situation? One example, when my car was broken into at my cheap apartment, police assume that since you’re a victim of crime, you’ve got nothing better to do and you have plenty of time. Guess what I didn’t do that day? I didn’t go to work. I would say living in a more expensive area ultimately saves you time and lets you grow because it takes away a lot of the barriers living around poverty introduces.

Re: My Path to Financial Independence as a Software Engineer

#202

> 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.

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).

> good education

"Good" education alone is not a meaningful predictor of anything, in Europe at least.

So the guilt is about receiving the correct credentials to be granted further access to jobs and opportunities. It seems in UK/USA, "good education" is used as a euphemism for "received privilege".

Re: My Path to Financial Independence as a Software Engineer

#203
post #70

Mouahahahahahaahah. So the "path" to financial independance mainly involves getting a 100k/year from day one. I hope it will inspire and convince all these people who earn below the US median salary range of 47k/year. (and they range in all age categories, not 20 years old engineers). That guy is seriously delusional.

“How I bought a house: first I cut out my $5 Starbucks habit. That gave me the money, and more importantly the courage I needed to ask my parents to pay for my house. Which they did. Never underestimate what you can achieve!”

Re: My Path to Financial Independence as a Software Engineer

#204

> 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.

They somewhat address this:

>In a similar vein as above, I hear that it is almost impossible for talented software developers to earn similar amounts in any country besides USA. If early financial independence is a priority for you, strongly consider moving here. The easiest way to do this is probably to take a 1-year hiatus from work, and enroll in a Master’s degree in USA. Though I have also met others who moved here on a work-visa

Re: My Path to Financial Independence as a Software Engineer

#205
post #42

What can we European devs do to boost tech salaries in Europe? I love my five weeks of paid holiday, 14 weeks of paid paternity leave, and free healthcare. but I would still prefer early retirement instead of working till 65.

No post body was provided.

Re: My Path to Financial Independence as a Software Engineer

#207
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.

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.

Re: My Path to Financial Independence as a Software Engineer

#208
One common thread these kinds of stories seem to always share: a single, childless person earned an extremely high (and rare) level of income, hoarded it for several years, then ‘retired’.

The author earned the majority of their net worth in only a few years (five or six) via a high salary and stock options. There’s nothing wrong with that, but for most anyone—American or not—it’s an unrealistic, semi-mythical story that says more about a lopsided economic system than life.

And so, the main lesson of such stories (for me) is always “extraordinarily high incomes without significant life encumbrances make it easy to quickly hoard money and compound it”.

Re: My Path to Financial Independence as a Software Engineer

#209

Earlier quoted context omitted.

You know people in Belgium who make $600k a year as employed software engineers? Yea, sure... In Sweden you can incorporate and work as a consultant. That lets you accumulate capital on the corporate side of the tax barrier so to speak. But the tax authorities can show up at any time, claim that your one man company is “overcapitalized” and force you to pay income taxes on your earnings.

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 you’ll be doing the same kind of job endlessly.)

> You can't just work your way to wealth. You need to reinvest what you make into other assets and let them compound...

This however is where the real problem starts: there is no way to accumulate and reinvest capital (legally), without paying massive (70-80%) taxes.

Re: My Path to Financial Independence as a Software Engineer

#210
post #101

Earlier quoted context omitted.

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…

Agree that the stronger drag is the cost of childcare, but the poor don't earn 50k+ In fact, if you earn 50k as a single without dependants (or if you are a couple with 2x50k income) you're definitely richer than the majority of folks. Also, the UK tax system is incredibly generous to high income folks: 40k+ tax exempt pension contributions, 20k ISA allowance, 12k cgt allowance. It means that you can accumulate a goo…

My point is that if you start your career owning nothing and work hard, you pay an insane amount of tax on it. Even if you make 100000£ per annum, it will take 20 years to accumulate as much wealth as a guy who inherited a 60 square meter flat. In the meanwhile this other guy hasn’t paid a pound of tax and is maybe receiving some benefit.

I should have specified that the problem is the taxation of work-related income (the main source of income of the poor) compared to the taxation of wealth. On this respect I find particularly egregious the NI hike (an increase of the income tax or the introduction of a property tax would have been more appropriate).

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