Given 33% of you in my poll said I should go back to work full-time, I decided to rev up the rusty job search engine after 3.5 years of inactivity. And boy, what a waste of time and money it has been! Thanks for nothing everyone! If the percentage of you saying “yes” was 25% or less, I wouldn’t have bothered. See how much y’all mean to me?
Let me share with you how much job hunting cost me with this one firm. It’s a fintech company in the robust personal lending space where SoFi and their recent $1 billion in funding from Softbank is dominant. I’ve already exhausted my learning curve in the the digital wealth management space so I thought it would be a good idea to expand my understanding in the payment or consumer lending niche.
JOB HUNTING EXPENSES
The company is currently situated roughly 30 miles south of San Francisco in San Carlos.
Cost for day one:
- 60 miles roundtrip at $3/gallon getting 30 miles a gallon = $6 + $12 in wear and tear.
- Two hours interviewing where I value my time based on my average $600/hour consulting rate = $1,200. Interviewing is like real work.
- One hour worth of preparation before the interviews = $600
- Cost: $1,818
Cost for day two:
- 60 miles roundtrip at $3/gallon getting 30 miles a gallon = $6 + $12 in wear and tear.
- Six hours of interviews followed by one hour of dinner = $3,600
- During my interviews, I provided a lot of guidance on SEO, content marketing strategy, the affiliate business, growth advice, branding, and the market landscape. They were basically extracting as much information from me as possible.
- Cost: $3,618
- One hour spent with the recruiter on the phone. $600
- One hour spent on the phone and e-mail correspondence with the employer. $600
- Cost: $1,200
Total Cost: $6,636
Time is money and I’m not going to get any of that wasted time back. It would have been one thing if the firm reimbursed me for my time or offered up a part-time consulting contract. But I got nothing.
The opportunity didn’t work out because the compensation was too low. They were offering around ~$120,000 + options, which is what 29 year old MBAs with zero experience get at startups nowadays. Furthermore, the scope of the work didn’t seem large enough for my background.
I didn’t mind the first trip down as I’m always looking for new business development partnerships. It was the second trip where I was trapped in a room for six hours and then had to go back and forth fielding more questions for another week that irked me.
With this latest experience I plan to never look for a full-time job again. If someone wants to hire me, they’ll have to make the effort. It’s incredibly difficult to convince anybody that I’d ever want to work full-time again given my current financial situation. While some people are job hopping every 1-3 years anyway, and I have a track record of loyalty with 11 years at my previous firm and almost seven years here at Financial Samurai.
WHAT JOB HUNTING EXPENSES CAN I DEDUCT?
According to the IRS, here are the requirements you must meet before deducting your job hunting expenses. Words in blue are my comments.
- To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation. -> Seems like a gray area to me given a lot of job occupations are multi-function.
- You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you received in your gross income, up to the amount of your tax benefit in the earlier year. -> I didn’t pay a head hunter. They just reached out to me over LinkedIn.
- You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation. -> Everything is done online now. But I did have to print out 10 resumes to bring with me to the interviews, just in case.
- If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you travelled. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job. -> Time to expense my gas and wear and tear!
- You cannot deduct your job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one. -> What is the definition of “substantial break” IRS? Good thing I’m always looking for a job opportunity, and so should everyone else.
- You cannot deduct job search expenses if you are looking for a job for the first time. -> No virgins allowed!
- In order to be deductible, the amount that you spend for job search expenses, combined with other miscellaneous expenses, must exceed a certain threshold. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and include:employment and outplacement agency fees, resume services, printing and mailing costs of search letters, want-ad placement fees, telephone calls, and travel expenses. The amount of your miscellaneous deduction that exceeds two percent of your adjusted gross income is deductible. -> 2% of your adjusted gross income is a good amount. The way I see it, the IRS encourages people to spend lots on a job hunt in order to deduct e.g. $2,000+ in job hunting for a $100,000 job. Those hotels, airplane tickets, and meals are expensive!
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on IRS.gov or by calling 800-829-3676.
Related: Examples Of Great Resumes That Get Jobs
DEDUCT WHAT IT TAKES TO FIND A JOB
Notice the one thing we can’t deduct according to the IRS is the value of our time. Of course, the value of our time is incredibly subjective. But wouldn’t you agree that time is the most valuable item of them all?
If each job listing described the estimated amount of time to land a job followed by a certain percentage chance of getting the job, surely this would deter people from applying e.g. 10-15 hours of time interviewing for a 5% chance of getting the position.
Before spending too much time with a perspective employer, it’s important to do as much due diligence on them as possible. Have the employer set the expectations up front for what is required of you and don’t let them keep changing the scope of your work. Be greedy for yourself just like the employer is greedy for themselves.
My mistake was being too flexible and not feigning enough interest. I was very candid with my thoughts, which is what tends to happen when you are financial free. Your ability to bullshit about how much you love the company, the product, and the mission weakens considerably when you can book a flight to Hawaii any time.
Let’s be honest, unless you are eradicating diseases or saving starving children, there is no job out there that’s truly amazing. The founder who shared about how he found his passion to start a credit card comparison product after getting fired from his hedge fund job during the depths of the financial crisis is total crap.
Few employers will compensate you for your interview time. Therefore, you must be very judicious with your time the more you value your freedom. What this employer did was give me the motivation to not let my time with them go to waste by developing a stronger relationship with their primary consumer lending competitor. Close to $6,000 worth of my time was lost, so I plan to make much more than that back over the next 12 months!
Finally, the one thing I consistently desire is the motivation to write more articles based on my good and bad experiences. So in this regard, I’m thankful that not all is lost.
Recommendation For Leaving A Job
If you want to leave a job you no longer enjoy, I recommend negotiating a severance instead of quitting. If you negotiate a severance like I did back in 2012, you not only get a severance check, but potentially subsidized healthcare, deferred compensation, and worker training. Since you got laid off, you’re also eligible for up to 26 weeks of unemployment benefits. Having a financial runway is huge during your transition period.
Conversely, if you quit your job you get nothing. Check out, How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye, on how to negotiate a severance. I first published the book in 2012 and have since expanded it to 180 pages from 100 pages in the 3rd edition thanks to tremendous reader feedback and successful case studies.
Start Your Own Website, Be Your Own Boss: There’s nothing better than starting your own website to own your brand online and earn extra income on the side. Why should LinkedIn, FB, and Twitter pop up when someone Google’s your name? With your own website you can connect with potentially millions of people online, sell a product, sell some else’s product, make passive income and find a lot of new consulting and FT work opportunities.
Every year since 2012, I’ve found a new six-figure consulting opportunity thanks to employers finding Financial Samurai online. Start your own WordPress website with Bluehost today. You never know where the journey will take you!
Updated for 2020 and beyond. Not a day goes by where I’m not thankful for starting FS in 2009. Now that I have a son, I cherish every day I get to spend at home taking care of him rather than commuting through hellish traffic to sit in an office for 12 hours a day dealing with politics!