Amy

Wow. That is powerful – thanks James and Ramit for giving us something to think about. Sometimes you have to invest in yourself to make more

Ben

Ramit & readers,

Not trying to brag here, just being honest. I make $90k a year now doing the whole computer shtick. How I can identify the next corresponding jump (say, doubling this)? My friends are going back to school for an MBA, a JD, etc, but I’d like to consider options that don’t put me back $300-400k in tuition, expenses, and opportunity cost.

What would you recommend just for exploring? Informational interviews? Career coaching? Particular books?

-Ben

Elijah M

I spent the bulk of my 20s chasing a livelihood as a musician, and realized that while my friends had been reaping the financial and creative rewards of the first Internet boom, I had developed one skill (musician) that actually cost me money to use, and another skill (waiting tables) that enabled me to subsist and nothing more, while slowly killing my soul. So at he age of 27, I got a job as an admin at Northeastern University. It didn’t pay well, but it allowed me to attend 12 classes a year at night, free of charge. Since I had taken on the equivalent of a full-time class schedule, I was eligible for Stafford loans, which complimented my decreased income (and payed off much of the debt I had incurred in my previous career). Five years later, I finished school and got a job that almost tripled my income.

Equally important: I enjoy that job as much as I enjoy playing music. I don’t know how relevant this was for James, but when I settled on a degree program at Northeastern, I didn’t think all that much about what I was going to earn when I was finished. I just chose the program that had the most interesting classes. I probably make less money than James, but I also find it really easy to supplement my income with an extra 10-20 hours of freelance work every week. I don’t think I could handle that if I didn’t love what I do.

Tina

AHHH, I love this post! I’m doing this with my life. I needed a push in that direction though and the push was that I got laid off from a job I loved but knew wouldn’t give me a lot of profit. Now I’m going back to school to gain skills where I will most likely make more money than my ex-job (I say this because it’s a proven statistic, I’m going from artsy field to health care specialized if I go for my master’s). I’m not only going for the money though as I’ve been interested in this other industry for a while now, but my point is that I know this is an opportunistic~ time in my young 20s to carve out time for school again and reap a higher income in the end.

mike

Beautifully written post! Four years ago, I moved overseas at the request of my employer. That move alone accelerated my salary level by at least a decade (ie – it would have taken me 10 years to get to where I am now, only 4 years after the move). As a side benefit, my wife, kids, and I are experiencing a different culture (way different!), traveling around parts of Asia we thought we’d never see, and putting away short-term and long-term savings at a much improved rate.

@ Ben (above comment) who asks what he can do now to make the next big “jump” in salary: If you’re already near the “ceiling” of your job’s salary scale, look for diversification in income streams. Keep your day job, but consider taking some of that $90k/year and investing in the stock market, real estate, or a start-up/business opportunity. In future years, the “passive” income stream may be enormous compared to your current $90k.

As a side note, passive income makes up about 4% of my current net income. In 5 years, I’d like to see it closer to 10% or more.

Big Al

I am in the same situation at the moment. I’m currently a tech lead for an advertising agency in downtown Chicago. I essentially almost trippled my salary from 38 to 90K/year by knowing the right people and switching jobs at the right time. I had 2 job jumps going from 38k after graduating from college to 65k after 7 months, then 68K to 90K after 1 year. It’s been 5 months at the new job and the checks are nice and heavy — netting $5,200 every month (with 5% 401k contribution as well). Financially, I can say I am doing fairly decent.

I have always been an entrepreneur and at this moment, I’m living debt-free — no car or mortgage (I’m renting at a super, uber low rate). Being single and skimpy, my expense is less than $1,500 a month. After paying all my debts last year, I’ve been building up a small cushion of cash and I am seriously thinking about take a plunge into my savings, pack my bags, and move back home (a much, much cheaper Asian country), then work my butt off on my web service for 6 months. I’m planning to stretch my savings as long as possible since the dollars go a long way outside the US.

However, as the economy slumps, and I know my job is secured (they can’t fire me, somebody still needs to do deployment every Sunday night, write up proposal for new functional discoveries, and actually implement new code for the web site), and with my level of income, I can really invest in real estate, rental properties specifically. If I stay and do what I’m doing now, I can get at least one properties every year or so. Condos are selling for 75K a pop 5 minutes away from my current place. Save, put 20% down payment ($15K, about 4 months worth of savings at my current saving rate), get the place, rent it out. Rinse and repeat. Essentially, I will be doing really okay 5, 10 years down the road automatically by just keep going ahead and invest smartly.

However, I’m really, really thinking about quitting my current job and go do what I dream about: working on my own web start up. I’ve been moonlighting for a while but working 12, 13 hours a day can only work for so long. Quitting gives me the freedom of not working, and moving to a much cheaper country gives me the financial power to stay free for longer. I’m thinking about getting ready to do it in May (I need to build up more cash for reservation, at least 20K in the bank to be on the safe side — after closing a 75K condo I’m buying). But quitting means that I may miss the opportunity to invest in such a bargain environment like now. Maybe I’m greedy, maybe I’m thinking too much, maybe I should just close my eyes and take the leap.

What would you do if you’re in my shoes? In short, I’m 24, single, web developer making 90K/year, ~ $1,500 of monthly expenses.
A) Keep working and moonlighting (e.g. having no life for a while), and wait till pay dirt; meanwhile keep investing.

Or

B) save up, pack my back, travel half the world to a much, much cheaper country where with my family is at to work on my start up for 6 months, then figure out what to do next?

Any comment or suggestion is more than welcome.

Are You Determined to Fail? | Peter Pays Paul

[...] pain, no gain” is the colloquial saying. It is true. Without discomfort we will not change from our current [...]

John

5 years ago I was making around $75k per year. Today, I’m making over $225k per year. Sure, the salary from my day job has increased a lot, but the huge surge has been from starting my own business, which my wife (who wanted to stay at home with our kids) and I run part-time. And it’s not slowing down.

This isn’t meant brag, but to inspire. Honestly, the idea wasn’t anything ground breaking. What made it work is persistance and a lot of hard work. I’ve actually tried to teach or partner with friends and family, and they usually give up because they can’t or don’t want to keep up with the work. This stuff isn’t easy. But I’d rather be working on growing my business, improving my job skills, etc… than watching TV.

Ramit would approve of this, we’re now saving most of the increase.

Su Prieta

It really is an inspiration to read these comments. I did everything in the reverse. I went to a top law school in my twenties and am not earning $100+K as a business consultant.

I went from lawyer, to consultant and am now looking out over the next five years of my life and am planning to phase out my corporate livlihood in favor of owning my own business and exploring other alternative income sources. My goal is to be untethered from an office by the time I have children (hopefully soon), while also being financially independent.

My only downfall is that while I am able to build savings and my 401(k) (12% of my salary), I am sitting on about $90k in school debt. So, the next five years is as much about debt reduction for me as financial independence.

If anyone is thinking of taking up university study… I strongly urge you to forgo loans… there is alot of grant money out there to take advantage of if you look hard enough.

Dee

John,
Teach me! I have been in my career for 22 years and while it has been good, I am looking for new challenges and would love to run my own business vs. work for someone else. I’m serious!

Dee

Thanks for answering so quickly! I love this site, thanks so much Ramit~
Could not agree more John, on the importance of doing things the right way….over the years I have had many ideas and not acted on them, only to watch others succeed while I plugged away. It is not that I am not successful, by most standards I am, it is just that I want more
Want to learn more, grow and contribute, because my current position is limiting in that way and I also want more freedom later in life for myself and my husband.
If Ramit does not want more discussion here, I totally understand, but I am all ears!

James

How I figured out what to go for:

I searched for job openings that excited me. Ones that made me think, “Wow, it would be so cool if I could do that.” I wrote the key hard and soft skills into a list.

I kept referring back to the list, to remind myself of where I wanted to go and the skills it would take to get there.

How I got there:

I put my key goals and thoughts in places where I would see them every day. I made sacrifices. I refused to give up.

The steps I took created opportunities. If they aligned with my goals, I took them. The opportunities were small at first, but I often said “yes” when no-one else would. My efforts helped me to cross paths with people who presented yet more opportunities.

Everything I did was with an eye toward increasing my market value, in line with my life values. The pool of people with my skill set became smaller and smaller. Eventually, I was presented opportunities to write books and teach others the skills I had developed.

What’s next:

I’m not yet where I want to be. I still gather “dream” job and life descriptions. I still have daily reminders of what’s important to me and the direction I want to head in.

I continually learn and practice the skills needed for my next steps. One of those is managing my money better, which is why I also read Ramit’s blog.

Chelsea

John, thank you so much for your post! I am in my mid-twenties and am just waiting for my great (or even simple) idea to come along. I constantly remind myself to note my complaints, and jot down “effectiveness/efficiency boosting” ideas.. I know that something will come to me one of these days, and then I will really have to get to work!