The first rule of financial independence is to not lose money. If you lose lots of money, you are ultimately losing valuable time. Losing time is the biggest financial mistake you can make because time is the most valuable asset.
Now let me introduce the second rule of financial independence: never expect your income to always go up. Expecting your income to always go up and to the right is the second biggest financial mistake you can ever make.
Life is not a straight line. Bad things happen all the time. If it's not a pandemic that crushes your income, it might be a bear market. And if it's not a bear market that leaves you jobless, it might be a health issue that prevents you from working.
The Biggest Financial Mistake Cost Me A Fortune
People over 40 don't need to be told that life is both wonderful and difficult. For all of you still relatively early on your financial journey, please take heed.
Do not extrapolate the good times too far out into the future. If you do, you will likely make financial mistakes you will regret. You may misallocate capital, get in liquidity crunches, and buy things you can't really afford.
Back in 2007, at the time, I made the most amount of money in my career. I had gotten recently gotten promoted to Vice President and thought I had finally arrived! In my spreadsheet, I estimated I would “conservatively” make 10% more annually for the next five years. It seemed reasonable in a bull market.
When you're flush with cash and have a promising career, why not reward yourself? So that's what I did. I bought a two-bedroom, two-bathroom vacation condo in Lake Tahoe for $715,000. I thought it was a good deal because similar condos had sold a year earlier for $810,000.
Then in 2008, Bear Stearns and Lehman Brothers went bankrupt. The S&P 500 crashed by 38.5% and the housing market collapsed. Within a couple of years, my condo's value plummeted to under $500,000. Neighbors were conducting short sales left and right, bringing everybody else down with them.
If only I had avoided the financial mistake of income extrapolation. I would be at least $300,000 richer today. Lesson learned.
Keep your income expectations conservative. If you do not, you may end up buying things beyond what you are capable of affording.
Feeling Like You Always Deserve More Income Is Dangerous
What I realized from The New York Times strike is there are two different worlds when it comes to income expectations.
The first world of income expectations is based on a meritocracy. The better you do your job, the more you tend to get paid. If you stink it up, then your pay will rightly be less. If you feel you aren't getting paid what you are worth, you leave.
The second world of income expectations is based on always getting paid more, no matter what. The economy may be in a recession, your company's stock price could be in the dumps, a nuclear bomb may have detonated, yet you still think you deserve to get paid more.
This second view of getting paid violates the second rule of financial independence. Having this entitlement mindset is dangerous.
Eliminate Entitlement Mentality If You Want To Get Richer
Here are examples of how having an entitlement mindset can hurt your wealth and happiness.
- You study for one hour for the final exam while your peers average studying for three hours. Your peers get A's and you get a B. You're pissed because colleges reject you, but not them. You start questioning why life isn't fair and end up a lonely, spiteful person. Screw the rich for having it so good!
- Three years out of college, you expect to go to the corner office. When you get passed over for a promotion, you start bad-mouthing your colleagues and undermining your boss. You think, do you know who I am?! You turn into a virus nobody likes. As a result, your career trajectory derails.
The New York Times workers went on strike for a guaranteed 5.25% annual pay increase for four consecutive years. Yes, I understand everybody wants more money for the work they do. It's always good to fight for what you think you deserve.
But maybe the strikers are misguided given they are working in the private sector where profits matter more than in the public sector.
The Demand To Make More In A Bear Market
2022 was the year of a recession and a bear market. With the way the Fed is raising rates, we will likely go into another recession by year-end 2023. More than a million jobs will likely be lost.
Wall Street strategists expected no gains in 2023 for the S&P 500 (even though S&P 500 ended up closing up 24%+). More importantly, The New York Times stock price (NYT) is at a three-year low!
How is expecting a guaranteed 5.25% annual pay increase in a struggling industry while inflation is heading down logical? Plenty of people in the media are losing their jobs. Instead of striking, perhaps it would be more rational to revert to 2019-level pay given NYT is back to 2019 levels.
After a couple rounds of layoffs in 2004, I dared not ask for my MBA tuition reimbursement one semester. Although it was a company benefit, to ask would have put my employment in jeopardy. So I sucked it up and paid the $12,500 out of pocket.
My cost-benefit analysis told me to think about the future. During bad times, survival is the most important thing.
I know I might sound cruel, but eliminating entitlement is really for everyone's own good. The sooner you can better align your expectations with the current realities, the sooner you can make optimal financial decisions.
Just because you are a certain race, work at a prestigious organization, or went to some elite university, doesn't mean you automatically deserve to make more. You deserve to make more when you do great work AND when the economic conditions are right.
What Happened Once I Abolished Entitlement Mentality
After making one of the biggest financial mistakes at age 30, I had to suffer for the next 15 years with the consequences of overpaying. The Lake Tahoe property was my albatross that made vacationing less pleasant every time I went up.
At least I learned to never again expect my income to always go up. Here's what else I did to help build more wealth:
- Most importantly, I developed a strong money mindset that nobody was going to save me. As soon as I stopped expecting to always get paid and promoted, I began doing everything I could to generate alternative income streams. Real estate became my salvation. I sucked up the pain of managing property because I knew it was my main way to get free from working forever.
- Began to model in Blue Sky, Realistic, and Dark Sky scenarios in my retirement planning model. By doing so, I forced myself to always be aware of downside risks. With such awareness, I maintained an elevated saving rate and ensured I had a risk-appropriate asset allocation.
- Held off on buying big ticket items I didn't need. For example, I kept my old $8,000 Land Rover Discovery II for 10 years and traded it in for a Honda Fit that I drove for three years. I used the $80,000 I wanted to spend on a car in 2005 and invested it in the S&P 500.
- Stayed consistent with Financial Samurai. Writing three posts a week for ten years is not easy. But Financial Samurai is an important financial buffer / insurance policy. If all my investments fail, at least I will have Financial Samurai spitting out pennies.
- Stand strong on the rules of FIRE and accept when you need to save and earn more. Face hardship straight on and do whatever you can to take care of your family.
Expect Nothing And Get Richer As A Result
The ideal situation is if you can negotiate guaranteed income raises and pretend like you have no safety net.
Do you know why millions of Americans didn't bother saving for retirement in the 1980s? Because they expected their company pensions to take care of them.
But then some companies went bankrupt and pensions disappeared or had shortfalls. As a result, many of these Americans ended up less wealthy than workers who never had a pension.
If you expect your 401(k) will be enough for retirement, you won't build a taxable portfolio to generate passive income. Even worse, if you expect Social Security to cover all your retirement needs, you might not end up saving and investing at all!
Please get in the habit of expecting little-to-nothing. If you expect nothing, then everything is upside. When everything is upside, you will feel happier and richer as a result.
Keep fighting for the pay and promotion you think you deserve. Just be aware of the current realities. If you can avoid the biggest financial mistakes, you will likely end up much wealthier than those who do not.
Invest In Real Estate To Grow Your Wealth
The best financial move you can make is to invest regularly over a long period of time. If you do, your chances of achieving financial independence greatly increase. One of the best ways to build wealth is to invest in real estate, a tangible asset that generates income, is less volatile than stocks, and provides utility.
To invest in real estate without all the hassle and unexpected costs, check out Fundrise. Fundrise offers funds that mainly invest in residential and industrial properties in the Sunbelt, where valuations are lower and yields are higher. The firm manages over $3.5 billion in assets for over 500,000 investors looking to diversify and earn more passive income.
Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside due to higher growth rates. You can build your own select real estate portfolio with Crowdstreet.
I've personally invested $954,000 in private real estate since 2016 to diversify my holdings, take advantage of demographic shifts toward lower-cost areas of the country, and earn more passive income. We're in a multi-decade trend of relocating to the Sunbelt region thanks to technology.
More Suggestions
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Don’t ask, don’t get – in my view, whether it makes sense or not. In an environment where promotions are dwarfed by downsizing, and offer packages are temporarily depressed due to a glut of candidates, bargaining is probably their best chance to survive government induced inflation during the government induced recession.
During the Carter era I learned quickly that depending on a JOB to secure my old age was a fallacy. As my colleagues spent their pay increase/bonuses/expense account payoffs on new vehicles/vacations etc, I maxed out my credit & free time buying properties, many of them owner holds. I became by default the office ‘slum landlord’.
I retired in ’98 at 49 to manage/maintain/keep buying & we never looked back. My wife was in private practice with too much office & too many staff so I convinced her in 2005 to downsize, eliminate W-2 staff for 1099’s & she saw patients stress free until 2016. Our 401(k)-solos are loaded with real estate investments.
Most of our colleagues/friends etc warned us about their real estate losses/bad tenants etc etc. But tenants are easier to get rid of than employees & any bad experiences are now distant, sometimes laughable memories. Need a raise, raise rents. We could write a book !!!
My wife made sure all of our kids had real estate portfolios, resulting in all graduating without student loans & their passive rental income(s) now pay their mortgages etc. In fact several years ago our youngest 26yr old single daughter qualified on ‘all income’ for a 2.75% mortgage on a $800k home with enough down to eliminate a PMI requirement.
Most of my retired colleagues have continued to work menial gigs to maintain their lifestyle. Case in point, my 70 yr old BIL, our biggest ‘you’ll lose everything’ critic of our real estate holdings, is returning to work. Apparently, (as intimated to us by his wife & son), most of his ‘investments’ had dismal to negative returns. He just had 3 major separate spine surgeries, suffers terrible RA, but needs to work. Yet he touts the ‘success’ of them ‘getting by’ on their Social Security.
Unbeknown to him my SIL has been investing with us for many years & now has a significant 6 figure nest egg. As an unrelenting control freak, he has never allowed her to have any form of a bank account or financial freedom. Because he audits her phone & has often go through her purse, she has her own Safe in our home.
Sadly we have met so many widowed, divorced older female tenants that have suffered the same financial limitations & demise, enforced by their boyfriends/husbands.
So in retrospect life has & continues to be a LOT of fun & hopefully many more years of great memories !!!
Hi Patrick, I hope the good times continue! I’m always waiting / preparing for something bad to happen, which probably drags down my happiness potential. Something to work on.
You SHOULD write a book! I’ve got a post on that coming. You’ll feel extremely satisfied once it’s written.
“But tenants are easier to get rid of than employees & any bad experiences are now distant, sometimes laughable memories.”
Never thought of that. I find it very difficult to raise rent, even by 2% a year. But I should after three years. Otherwise, the costs really start narrowing the profit gap over time.
Hi Patrick,
In what state do you own your rentals? I live outside of Chicago and I believe the taxes around here make rentals less profitable.
Do you own or prefer 3 flats. 12 flats. Single family homes, what kind of properties do you own.
And what inspired you to start real estate and do you handle repairs.
Thanks for your inspiring story.
Morning Sam. It is Monday morning and I have been up working on one of my two side hustles, my “x” factors.
But then it’s off to my private sector job. The one with a small salary and a bonus or commission plan, which I am very blessed to have for the benefits.
My pay there is performance based. My performance. If I don’t perform, I don’t eat.
I’m 34 years in sales in an industry where my salary was always low in comparison to what my friends were paid salary wise, and I figured out early on that the only way to hit big numbers was work my rear end off and rely on myself.
My dad raised us that no one was going to hand us anything and I have been self reliant my whole life. He helped us immensely because of that.
One other thought about being in sales, we are the last to go in a downturn.
If you are a self starter, and a hard worker, sales is the greatest career to have to set yourself up for financial independence.
Have a great day.
Great work Robert. Keep hustling! If things get really bad, you will have something to fall back on as you look for a new job. There is no downside, except the time and energy you spend pursuing your interests.
Holy moly. THANK YOU for sharing that story of paying $12.5k out of pocket. I have a bad case of optimizing everything and I thought I was the only one who kept these losses of paying things like that out of pocket even if I could’ve gotten someone else to foot the bill. I’m actually not even taking any vacation this year, even though I only took like 7 days this year so far.
I actually fully expect to get laid off next year. Until then, all I’m doing is putting my head down, not taking vacation, working weekends and nights, and never complaining. If I still get laid off after that, oh well. I tried my best.
The ones who even keep $80k jobs through this recession will fare better than the ones who lose their $300k jobs, I feel like.
Thanks for reading and you’re welcome! I go deeper into the story here. And yes, always optimizing for maximum returns may not be necessary.
Good luck with holding onto your job. Survival over the next 12 months is key.
Entitlement mentality is such an interesting concept. As a business owner (co-owner with others of a 80 mill/year rev engineering firm) I think it is fair for employees who perform at the level they are expected (aka “average”) to expect a raise of at least the inflation rate each year. This year we bumped the standard raise from 8 to 10% across the board to account for inflation. If the company can’t “afford” that, then the owners are failing on some level, either in running their business or greed, or a combination of those.
I have come across more and more workers (esp 35 and younger) who expect significantly more in raises for doing “average” work, and also expecting much more in side perks – such as more time off and working from home. I can’t tell if that is entitlement mentality or the rising up of the working class. Many, esp politicians and political nuts, seem to want to blame the government and various assistance programs on this new prevalent attitude. However, I don’t think this mentality is what I am seeing, as these young workers are mostly from middle to upper class families and grew up with solid family finances so were not used to “government handout.
“This year we bumped the standard raise from 8 to 10% across the board to account for inflation. If the company can’t “afford” that, then the owners are failing on some level, either in running their business or greed, or a combination of those.”
Well done. You must be running a highly profitable business. So many publicly-listed companies stocks cratered in 2022 b/c of the anticipation or real-time slowdown in revenue.
Well, Sam. Looks like you’re getting a lot of comments, but hardly anyone is answering your questions. LOL.
I don’t work in the private sector, but I have heard that you Wall Street types (I know you’re a FORMER Wall street type now) always received bonuses every year. Isn’t that an example of a private company paying it’s employees extra money every year?
As far as anyone feeling entitled. Who has displayed this ugly behavior lately more than Elizabeth Holmes and Sam Bankman-fried?
It doesn’t seem like there are many private sector jobs with guaranteed pay raises for years, unless it’s sports or if you job hoo and get a 1-2-year guarantee.
Bonuses are discretionary. They can be $0. It’s dependent on performance and company performance and the economy. Nobody in finance works only for the base salary. The bonus is supposed to incentivize performance.
How about you? What do you do and how is your comp structured?
I work in the public sector. There are certain government jobs that give you a small annual raise (usually in the 1-2% range). These are jobs like teachers, law enforcement, military, fire fighters, etc.., To get a significant pay increase, you have to get promoted to a position with more responsibility.
Gotcha. Yeah, I’ve excluded the public sector as that’s just the way the pay structure is.
It’s just interesting that there are certain private sector industries that have guaranteed pay increases forever as well. I never really realized this until the strikes. The idea is just different from the way. I’ve been paid since 1999.
It would be nice To have that stability. But I’m not sure this type of incentive structure leads to maximum Wealth generation potential. And that’s totally fine if that’s not want someone wants.
I couldn’t agree with you more, Sam. 95% of government workers get satisfied with the small, automatic raise. Therefore most spend 20+ years in the same position. It’s only the top 5% in public service that don’t get complacent and strive to move up the ladder by getting promotions or applying for higher-paying jobs.
Everything is rational. The great thing is, y’all get pensions!
Pension for a US federal employee is less than you may think. Say you retire now (Dec 2022) after 30 years as a GS-12 step 10 & “high-3” of $100k. Your annual retirement is $33k, plus social security of (maybe) $24k? I hope they have savings!
Yes, the changes to federal employee pensions has been quite dramatic. But dang, is the pension amount really that low after 30 years of service?!
Most Fortune 1000 companies rely on firms like Towers Perrin to perform their “salary” surveys and benchmark against others in the same Industry. I know, I did the Contract for ARAMCO. They have been performing these surveys for Saudi Aramco for decades and have 10,000 clients. So, what you get is based on the “curve” against the avg. raises in your Industry. Only the chosen few (top 5% -10%) get large raises and some promotions IMO.
PS – I don’t care anymore… I’m retired and took my two defined benefit lump sums plus my 401k and have been performing my own DIY investing since 4/2016. GLTA!
Biggest losses of my life all are rooted in a bad mindset. Totally agree.
“I know I might sound cruel, but eliminating entitlement is really for everyone’s own good. The sooner you can better align your expectations with the current realities, the sooner you can make optimal financial decisions.”
Just because you are a certain race, doesn’t mean you automatically deserve to make more. You deserve to make more when you do great work AND when the economic conditions are right.”
Unfortunately, certain politicians know that printing money and entitlement programs are one of the most powerful ways to secure votes in the most populated areas of the country. Selling the disenfranchised a bill of goods at a time when race relations (not to be confused with crimes against members of the same race) and opportunity for all have never been better in the history of the country (before all the contrived nonsense). So much damage has been done by politicians that never allow a crisis to go to waste. The contrived nonsense will all start to ramp up again about a year out from the election. BLM, ANTIFA, etc., will suddenly return right on cue in response to some isolated footage of some scumbag getting mistreated that will serve to get people all riled up about the injustices, etc., right in time to offer hope and social justice for all the disenfranchised who’s plight never seems to improve. It only seems to worsen in the highly populated cities despite all the entitlement programs. Some appear to finally be waking up to realize they are being manipulated for votes and power.
Yes, giving money and services is definitely a great way to secure votes.
I think about Argentina winning the World Cup. AMAZING! But the country faces 95% inflation and a 30%+ unemployment rate.
How long will the people be OK until the government is overthrown? Maybe 3 months, thanks to the World Cup buying time.
Entitlement is a big problem. It is terrible in the workplace, in schools, and in politics. I was listening to a podcast this week on a similar topic and how so many reality shows like the Kardashians has created such a warped sense of entitlement. Fomo and people believing they deserve so many things that they can’t afford is terrible for people’s finances and ultimately for our society.
“Wall Street strategists expect no gains in 2023 for the S&P 500.”
This has left me contemplating what to do with my leftover cash after taxes this year. I have watched my high-yield savings account rate go from .4 at the beginning of the year to 4% as of this morning.
I have $342k sitting in that account for a home purchase. My leftover money after taxes, living expenses for 2023, and maxing out my SEP at $61k will be $150k.
My question is, should I put the $150k in my high-yield savings to have $500k making guaranteed 4%? With Feds continuing to raise rates, I don’t find it inconceivable that the savings rate could jump to 5 or 6%. This would mean $20-$30k in interest annually.
The $61k in the SEP will be dollar cost averaged into my total stock market index fund over the course of 2023. My other options are $50k/$50k/$50k into equities, Fundrise, and FarmTogether.
What are your thoughts, Sam?
Don’t know your details. But I’ve been buying 1-year and shorter US Treasury bonds yielding 4.2% – 4.7% with 70% of my cash flow.
I like the Fixed Income fund with Fundrise yielding 8% net. I spoke to the CEO and he has 20% of the assets in CASH and is buying credit opportunities yielding 12% – 14% now, which will accrue to fund shareholders.
Evolution will let things play out as it should. Those who always expect more will feel disappointment as they will experience a rude awakening as that’s not the real world.
Those who expect nothing will end up grinding hard to ensure their growth and survival. I will gladly bet the latter will be wealthier and happier in the long run.
I totally agree. I’m 60 and have watched the scenario that you describe happen many times.
Things “playing out as it should” assumes there is no government interference in the process. Currently, it appears the government wishes to encourage this tendency in order to increase government dependence. Not a good look.
Buying votes, but also causing more dependency. In the process, pressuring those who are grinding.
With the Washington Post, CNN, and a bunch of other media companies, laying employees off, why do the 1100+ New York Times union members believe they deserve to get paid more?
Are they that oblivious to the bear market? If they don’t like the terms, they should just quit and find another job.
I’m sure there are plenty of other aspiring, journalists and editor, who would happily take their jobs.
Entitlement is a disease.
I’d assume they’re trying to give their employer a discount – instead of asking for a 20% increase to compensate for last two years of inflation and no raises, they’re asking for 4 rounds of 5% increases. They’ll be whole at the end and the employer gets more time to offset the cost increases with revenue.
The employees also are taking an risk by hoping inflation drops below 5% in the next year. It’s not an outlandish risk, but they’re definitely taking a downside risk.
I’m with Sam. Entitlement mindset sucks.
I’m still trying to figure out if commenter Jermin is being sarcastic or serious…
NYT richly deserves this pain; it has become a mere shadow of its former self, and is very much a victim of the desperation all the legacy media is feeling in the face of the juggernaut that is the internet. IMHO they should take this opportunity to “clean house” and start over. Do you know how many aspiring journalists would kill to work at the NYT?
Just an uninformed opinion here from a disinterested observer.
People especially SMB/entrepreneur owners think the good times will “always” be there with zero contingency plan in place!
“Expect nothing and get richer as a result”. Love it, I will tell this to my wife! ;)
Let me know how goes over with the wife! Thanks
“Wall Street strategists expect no gains in 2023 for the S&P 500.”
I’m curious what your personal prediction is for 2023.
Is there a tally out there somewhere on how accurate these strategists had been in their past predictions?
There is. I’ll upload it to the 2023 S&P 500 Forecasts post. Essentially, 95% of strategies were bullish.
I would love if you did a post-Sam about stock buybacks. Are they good for the executives and shareholders? Once again, great research in this article.
It depends. Management does buybacks when they think their stock is undervalued and they don’t see better use of funds.
Facebook management bought back billions of stock when the shares were over $300. The shares are now under $120.
I kind of agree with Chadnudj. I am a good person who went to a good school. I didn’t pay $45,000 a year in tuition to get treated poorly. I should get paid well and continued to get paid well even if my company isn’t doing well.
I’m not going to work harder than I need to, to get paid what I deserve. If a company doesn’t want to pay me fairly, then they won’t get any work from me!
Right on!
I wonder if my pickleball opponents today will let me win because I have straight black hair and a nice smile.
Going to win the Gold Cup for sure!
I’m not sure I’ve ever disagreed more with an article you’ve written than this one, in which you attack New York Times’ 1,100 unionized workers for requesting a reasonable pay raise as part of their legally protected collective bargaining rights, and seemingly encourage folks to voluntarily opt-out of contractual benefits their employers promised them.
You note that “More importantly, The New York Times stock price (NYT) is at a three-year low!” as if that has anything to do with properly paying a workforce for the labor they provide. The NYT spent $150 million on a stock buyback on February 2, 2022 — if they had $150 million then, why do they lack funds now when it’s time to pay the employees? They’ve also paid 34 cents per share (or roughly $57 million) in dividends just this year. You’re telling me they can afford to buyback stock and pay an (increasing) dividend at a cost of over $200 million per year, but get to plead poverty when it’s time to pay the actual people doing the work?
That $200 million+ spent on stock buybacks and dividends could have given every one of the 1,100 New York Times union employees $181,818! Why not cut the one-time, completely discretionary stock buyback to $100 million, and then spend the $50 million instead on raises over the next 5 year contract ($50 million=$45,454 per unionized NYT employee).
I’ll also add your analysis ignores the fact that the NYT’s workers’ wages were NOT increasing as the NYT saw its recent highwater marks in value/subscriptions, and haven’t been increasing with the recent inflation. They aren’t asking for a real pay raise — the future pay increases would help get them to where they would have been/should have been all along if NYT paid them properly/indexed wages to inflation.
Then there’s your confession that “After a couple rounds of layoffs in 2004, I dared not ask for my MBA tuition reimbursement one semester. Although it was a company benefit, to ask would have put my employment in jeopardy.”
Are you kidding me? You VOLUNTARILY gave up a contractually promised benefit from your employer and thought that was smart? I mean….that’s simply crazy to me. You weren’t working for a small mom-and-pop shop — you were working for a global investment bank! Which presumably wanted you to get that MBA because it made you more valuable to market to clients/increase the bank’s returns! The bank promised you that benefit, they had that amount built into their budget already, and I guarantee you when layoffs came around, they’re not looking retroactively at “well, Sam with his MBA cost us $12k more due to tuition reimbursement than Joe without his MBA, so even though that’s a sunk cost we already incurred and won’t matter at all going forward, Sam has to go.” You gave an investment bank license and permission to commit wage theft (or, I suppose, tuition reimbursement theft) from you.
Take your contractually guaranteed benefits. Ask for your fair wage (particularly when the employer is a publicly held company that would otherwise just spend the money on useless share buybacks). Companies should return shareholder value, but they also NEED to pay their workers fairly.
I love the passion in your comment. Thank you for sharing your thoughts.
Regarding me not filing the paperwork to send to my manager for tuition reimbursement during a time of layoffs, it was a a calculated decision. The bursting of the 2000 Dotcom bubble put all extraneous costs in focus. I had just arrived in 2001 with a guaranteed pay package. Immediately, I witnessed layoffs and share price declines.
There’s an old saying in investment banking employment, LAST IN, FIRST OUT. I was the last in, so I was most at risk of losing my job b/c I hadn’t built up enough political capital yet.
The way I saw it, I was still getting 80% of my MBA tuition paid for. Despite paying $12,500 out of pocket, it was a calculated gamble that may have paid off. I ended up not getting laid off, got promoted to VP two years after graduating, survived the 15+ rounds of layoffs during the GFC, and then engineered my layoff and received a severance that paid for 5+ years of normal living expenses.
I’d love to use your comment for a new post if you don’t mind. Based on your previous comments, you mentioned you are a lawyer. What type? Also, do you have guaranteed multi-year compensation package working at a private law firm? Maybe we can explore this topic as these sound like good jobs to pursue. Thanks
Feel free to use my comment as you wish in future posts — that’s why I provided it, in the hopes that you and/or your readership might think more completely about the issues involved in paying labor/returning value to shareholders.
I am a lawyer, practicing in complex civil litigation. I’ve practiced on both the plaintiffs’ and defense sides in my career, but currently am on the plaintiffs’ side. I have no guaranteed compensation package at my firm, but that’s largely because I’m not part of a unionized workforce. I have a salary, contractually provided/guaranteed benefits, and receive discretionary bonuses (basically when the firm wins cases). But, in my case, the pay does meet the market, so to speak, as it has to — I could always jump shop to another firm, or hang my own shingle, so to keep me (and others) the firm does its best to keep salaries/bonuses at a level commensurate with (or exceeding) the market.
That’s a lot different from the NYT, where unionized workers covered within the guild are part of a union, and cannot as easily jump to a competitor/open their own shop/find a salaried journalist (or photographer or editor or layout, etc.) job elsewhere. Different industries, different rationales, different approaches.
And while I understand your rationale for foregoing the tuition reimbursement at that time (and it seemingly worked out), I really think employees should expect and use the benefits they’ve been given as part of their employment contract, because otherwise we’re allowing our employers to get away with wage/benefit theft. (And, let’s also keep in mind some employers really are good companies/firms and WANT their employees to use these benefits in the hopes it will make them happier, more loyal employees.)
Indeed, I wonder if your rationale was flawed — why wouldn’t your employer think “hmmmm, Sam didn’t submit his tuition reimbursement for a semester, maybe he’s dragging out the MBA over a longer period, perhaps we could fire him now and save $12.5k on that month’s tuition reimbursement” vs. “well, that sunk cost for Sam’s tuition is paid, let’s recoup the benefit of his MBA education by keeping him”?
Thanks. I was thinking maybe you might be The Times union lawyer! :)
It’s always easier to analyze what someone else did wrong or what we did wrong after the fact. But during the time, we can only make the best choice with the information at hand.
I’ll explain in a follow up post.
I agree about the tuition reimbursement. I think it depends on one’s understanding of the situation and maybe what percentage of their salary the reimbursement represents. Working in investment banking, 13k may not be a whole lot overall. If it represents a good chunk of one’s salary, or the employer is may be more concerned about being able to recoup should they fire you, well…it can work in the opposite direction too lol
Here’s more color. Thanks for sharing your thoughts! It helped me feel even better about my decision actually.
I wonder if I can ask them retroactively to reimburse. Nah, it’s been too long.
https://www.financialsamurai.com/cost-benefit-analysis-before-making-any-financial-decision/
Businesses exist to enrich their owners/shareholders. I’m sure the shareholders appreciated the dividends / buyback, especially considering how poorly the stock has performed over the last two years. They are unionized and certainly have the right to aggressively negotiate. Management/the board has the right to attempt to hold down salary costs. Lately I’ve read a lot of outrage on the topic of stock buybacks. I think it is rather ridiculous. The owners of a business have the right to transfer the profits of the business back to themselves via dividends or stock buybacks. If you don’t like it, feel free to go establish your own business and do what you like. I’ve done that. It’s extremely hard work and entrepreneurs have far more at risk than typical employees do who can always go and find another job. The entrepreneur may have invested their entire life savings to launch a business with no guarantee of success. No one is owed a job.
The entrepreneur always has the fallback of finding a regular job too. A no wealthy entrepreneur has nothing more to lose than the average joe. He becomes an average joe again if he fails. Some people just thrive on risk and are better suited for her stress. They get smug over working 100 work weeks and feel lazy spending quality time with their kids. Others want to spend time with families and not be a part of the rat race.
No one is owed a job.. but a job also doesn’t define a human beings worth.
This is silly at best.
Also, sounds like you might just be getting rich off the people that work for you. OR you are another fake “rich” elite.
Let me guess, you made it yourself and your parents small loan of a million dollars didn’t do it for you.