Work and Salary History, Part II

Software Engineering Career

The Apprentice

These numbers for the first job are probably a bit off as I can't remember exactly.

Software Contracting / Programming - Part-time - equivalent of $18,000. However, I didn't get that amount each year, as I was only working like 12 hours a week. Maybe it was something like $12 or $13 an hour. I was working 7:30am to 3:00pm reaching each day, and then drive over to the software place and work there about 3 hours a couple days a week. After going to school for computers and then going to school for teaching, and then actually teaching for 1.5 years and 3 months of part-time programming, I realized that I definitely wanted to be an engineer long term and engineering and creating was what made me happy.

Software Engineering - Year 1 - 4 days a week. $24,000 a year. I quit teaching and proceeded to work 4 fulltime days a week for the first 6 months so I could finish my (now unneeded) Masters in Secondary Education. When that was done, I went fulltime programming and never looked back. In addition to the salary, I got a $2000 bonus and maybe $4000 to invest in a SEP-IRA.

Software Engineering - Year 2 - $30,000 a year. I was now fulltime and taking and handling projects on my own. And, learning lots of techniques and knowledge. Our projects were usually focused on real-time control and processing systems. Excellent experience. Additionally, $3000 bonus and $5000 in a SEP-IRA.

Software Engineering - Year 3 - $35,000 a year. $3500 bonus and $5000 in a SEP-IRA.

Software Engineering - Year 4 - $50,000 a year. Senior Engineer leading projects. I invested a little and owned 2 shares ($5000) of the privately held company (the investment never worked out - I lost $2000 on it). About $3000 bonus (company had a bad year) and $4000 in a SEP-IRA.

Software Engineering - Year 5 - $60,000 a year. Senior Engineer leading projects. Never saw the bonus or SEP-IRA investment that year as I decided to change jobs. I wanted to learn more (hard to learn when you've been there the longest and are mentoring all the new employees) and I wanted to learn a new domain (inside software of course). The internet boom was just starting to happen, so naturally, why not learn internet technologies (something I was very deficient in)...

The Dot.com ERA

Software Engineering - Year 1 - $77,500 a year. A typical Dot.com company. I was employee number 60. All the great worktime perks: at-desk massages, pet insurance, etc. It was great to be able to learn internet technologies since I was very deficient in them (I had been doing all real-time, multi-threaded, low-level C/C++ programming and designing). In my first review, I got no bonus - just stock options (which were ultimately worthless). Also, no extra retirement like the SEP-IRA I had been receiving at the previous job. Instead, we had a 401K and that could be donated into (included in the salary).

Software Engineering - Year 2 - $85,000 or $88,000 a year. The Dot.com company. We now had over 300 employees. I soon got a raise to 92,500. But, 6 months later, like all dot.coms (outside of google, yahoo, amazon, and ebay) the company was in the red. We started laying off hundreds. We operated with about 20 employees for a month. When it was all over, there were 7 of us left. I was one of those 7. We worked another month like that. When it was announced that we too would be out of a job in 2 weeks, I didn't really care.

The 7 of us had already been approached to continue developing the application for the asian market. The partner company that still had solid sales though. 4 (manager, 2 developer, DB/DBA) of us decided to go (for the money or the adventure?).

Japan

Small Startup - 10-15 employees. $100,000 + housing (about $25,000). I was paid as a contractor in American dollars for 6 months so I really only made $50,000 of it.

After the first 6 months I got a 3 year Engineering VISA to live in Japan and was converted into a fulltime employee and paid in yen - 12000000 yen per year. At the time the exchange rate was about 125 yen per dollar which would equal $96,400. But, I was also given some other perks commonly referred to as an ex-pat or ex-patriot package: $1000 moving expenses, free Business Class flight once a year, 100000yen per month for rent (equal to $800 a month which was nice but not sufficient considering the cost of aprtments in Japan).

It was decent but not the best ex-pat package I have ever heard of - the big banks know how to do that.

So, to sum it up I was making about $107,000 a year. But, if you were to take into account tax laws (my Japan yen income was only taxed at like 19%), I was getting the equivalent of $140,000 before taxes and $87,400 after taxes. Before you say that the equation is not that straightforward and is wrong, please actually know the ex-pat tax laws. Plus, I am account for everything (health insurance, etc) and am calculating based on final money deposited into my bank account each month.

I did that for one year and then they had to let us go (or cancel the contract depending how you say it).

I realized I liked Tokyo and decided to try to find another job.

The only way (not the only way but pretty much) to get a job in Tokyo is through introductions via friends or recruiters. I had a friend recommend me for a position at the Tokyo office of a small, but public multinational hardware/software computer listed on NASDAC. The pay was not that great but it enabled me to stay in Tokyo.

I think I'm turning Japanese: Yen Employee

Public Multinational Hardware/Software Company

Senior Engineer - Year 1 - I got 8000000 yen per year which was equivalent to about $66,000 at the exchange rate at the time. Looking back on it, I should not have accepted such a low salary. Oh well, I learned. The job was so easy though, I'm not sure if I could have contributed anything above $66,000 a year. The equivalent salary, after taxes and heathcare costs, etc would have been a American Salary of $90000.

Senior EngineerYear 2 - I got a small $1500 raise. As the yen-dollar exchange rate moved in my favor, I was making about $75000 a year. The equivalent salary, after taxes and heathcare costs, etc would have been a American Salary of $95000.

In addition to that I started doing consulting/contracting on the side for a small private company that needed help and made another $10000 a year.

Finance

Team Lead (of a team of 4)

Depsite the title, it's still mainly Software Devleopment - about 50% development, and 50% management and bureaucracy. I was not very challenged (aside from improving my Japanese) at the Software/Hardware company and there was nowhere in the company to go. I found a job at a huge, multinational bank and took it. I have been here about 7 months. 11000000 yen per month plus 25% of that is untaxed and goes towards housing costs. The equivalent $ rate of that is about $130,000 per year. The tax laws really do help me living here.

In addition to that I am still doing consulting/contracting on the side for a small private company that needs help. I make about $20000 a year from that.

So really, I am making like $150,000 a year, but I choose just to list the main job right now.

And, I still hate getting up in the morning.

Work and Salary History, Part I

The next biggest moneymaker is work. I work for an investment bank as a Team Lead / Software Engineer. Banks definitely pay better than other companies. As I joined less than a year ago I have yet to experience a bonus, but I have heard great things and am waiting patiently.

I also currently do a little contracting / consulting for another small business at night and weekends [and sometimes during the day at my main job - like I'm writing this during right now :) ]. That is another source of income at present (another 20% on top of what I already make in the main job). Basically, I am trying to live off of that, while saving everything that comes in from the main job.

I will now rundown my work and salary history in a 2-part post (some of the early numbers might not be exact as it's been a while and they are not written down anywhere but my brain). At the end a 3rd post wil summarize and graph all the numbers.

First Job

Age 12: Delivered newspapers for a school year (mornings before school). I have no idea what I was paid, but it was probbaly something like $300 for 6 months. I hated getting up in the morning.

High School Part-time jobs

High School: 9 months Burger King - $3.75 per hour inserting frozen patties into the burger machine. Quickly promoted and earning $4.25 an hour and and then $4.75 an hour handling money at the drive-through and counter registers.

High School: Bussed tables at a local restaurant for 2 nights before quitting: $30

High School: Self-Serve gas station convenience store. Start at about $5.00 an hour and by the end of high school 2 years later was making probbaly $6.00 an hour (I really can't remember though). I didn't save any of this money, just used it for food and going out with friends. It was dream job as I was alone in this store with hardly any customers. I could play music, do homework, study, read, watch TV, lots of free junk food - pretty much anything goes.

Choosing College

For choosing college and my future, I loved math and computers and was not sure whether I wanted to teach math or develop computer applications.
I went to school for Computer Science at one of the top 10 schools in Computer Science, but with the knowledge that I could still go into teaching if I wanted. When I graduated, I quickly decided I wanted to try teaching as well. I enrolled in another small, but well known college for a Masters in Education to teach Secondary Mathematics (High School / College math).

Freshman year of college - Christmas break worked a little at the gas station/mini mart / convenience store a couple times for a little more spending money.

First taste of money

First summer home from college - ~ $7.00 / hour. Painting and maintenance work at my Dad's office (who helped me to get the job). Best part was I was paid as a contracter so minimal taxes were removed. I was paid flat out for all the time I spent. Probably about $1500 in 2.5 months.

Responsiblity, Future Experience

Next 2 summers home from college - Camp counselorI wanted to get back to working with kids and gain experience doing so. I must have anticipated maybe going back to school for a teaching degree (after my undergrad was finished) and how my resume would look with the counseling experience on it. Or, maybe I just wanted "nice, fun summers playing with kids."

Summer between Sophomore and Junior Year: Counselor / Trip Coordinator for a sports camp. Managing kids daily getting them to and from their activites. Coordinating and managing huge amounts of kids on day trips away from the camp including places like NY City. When I think back, I can't imagine being responsible enough to handle all that - but I did. ~$1400, plus free room and board for about 10 weeks. In terms of an hourly rate, it was ungodly low since I was required to be on the campus 24 hours a day for 6 days a week. We had one day off a week to go home or do whatever.

Aside:

That's sort of like the hourly pay being in the army or military - they get next to nothing an hour since they are required to be onsite for so much of their time in the service. It's probbaly not good, but that's how I have come to think of jobs - how 24 hours - how much time you have to do whatever you want wherever = How long you have to work = How long you cannot do whatever you actually want.

Then take Total Salary received divided by "How long you cannot do whatever you actually want" and that is really your $ / hour. That means Transportation time is included because if you didn't have the job, you would be doing what you wanted, not driving to/from work. If you start to think about jobs this way, you will really see which ones are oppressive and which really pay you the best rate. You want to maximize your money and minimize your time.

Back to the jobs:

Summer between Junior and Senior Year: Senior Counselor for the sports camp. Managing kids all day long throughout their daily routines. It was a lot of work involved creating activites, skits, etc. But, it was really fun. ~$1800, plus free room and board for about 10 weeks.

Teaching Math

While enrolled in the Masters Program, I got my first real job teaching small classes in a vocational high school for about $9500 a year. Upon graduating college, I did not want to take a computer career immediately. I wanted to try for the teaching degree and teaching. I got accepted at a small, sort of elite (sort of snobby) liberal arts college to study for a Masters in Secondary Education. I would also be taking a state test for teaching certification. Since I was currently pursuing the degree and the certification, the school was allowed to employ me as a teacher. It was quite an honor to be selected over many other candidates and I was very lucky to have such a job. All of my other classmates who were studying in the same program had nothing close to what I had (in terms of resume-building and experience - not in terms of money).

In the summer, I was off and made some extra money ($3000?) teaching soccer at a pretty high-class soccer camp (due to a connection my aunt had). It was a great deal and I made $20 an hour. Plus, very little taxes due to be paid as a contracter again.

Teaching class in a vocational high school for about $12000 a year. Pretty good raise - especially in terms of percent (%26). After a year and a half of teaching and schooling (only needed 6 more months to graduate and teach fulltime), I realized I didn't want to be doing the same thing every year. I was prepared by the other senior teachers to graduate, find a good school district, create some lesson plans that would never change (as well as the fact that new math is never discovered - you teach the same concepts every year) and sit back and teach for 30 years, then retire. That was a bit scary, but mostly depressing. I wanted more.

About the same time, I found an ad for part time programming at a local software contracting firm...

(continued in Part II)

My House & Mortgage

I'll start describing each of my investments, largest to smallest. The first investment to discuss is my house and mortgage.

Synopsis

I bought a small house in the center of a large city in March 2000 for $100,000. I only put about 10% down, but did not have to pay PMI as my real estate agent did something funny with the numbers. I think the real price of the house I bid and was accepted at was like $95,000 but then he rolled PMI into the mortgage. I don't know what they did (I should have understood better), but looking back on it, it really didn't matter. It quickly doubled in value.

My initial mortgage for the $90,000 ($100,000 - $10,000 down) was at 8.5% !! That was normal at the time, but seems incredibly high right now. I was paying something like $940 a month ($745 for mortgage + PMI + insurance + property taxes).

Job Change and Moonlighting as a Landlord

I was making about $80,000 a year. I did that for about 2 years. I then got an offer to transfer to the Japan branch of the company I was working for - A nice raise (or just salary plus substantial relocation expenses - Tokyo is expensive!). I rented out the house to a friend and was collecting about $850 in rent a month. It was a slight loss but it was what the market would bear, I didn't have to spend any time finding a renter, I trusted the person renting it, and could get an extra $850 in my bank account to make interest off of (the security deposit).

The Housing Boom

A year went by and the house quickly went up in value soon after that due to the housing boom experienced in many large cities. Interest rates also quickly went down after that. I had it re-assessed at $150,000. I had magically gained like $50,000 in equity! At that time I owed $87,000 on the mortgage and had a house worth $150,000.

I tried to re-finance my mortgage at 6.00 % for 30 years. Problem is, I had trouble getting a new mortgage since I only had foreign income that could not be verfied!?!?! I was working for a Japanese compnay and being paid in Yen. I had $60,000 in collateral. Is this unheard of to American banks?!?!?!?! (I later found out the mortgage company I was dealing with was very inexperienced and not very professional.) It turned out to be the best thing that could have happened.

Home Equity Loan

My mom told me that my bank was offering Home Equity loans at better rates, less years, and approval was very simple. I just showed them the reassessed value of my house, they verified my credit (and didn't care about my Japanese income). I got a 20 year loan at 5.25% !!! I paid off another $10,000 as well when I applied for the loan. That comes to just $550 a month.

There are no management fees to deal with and the property taxes are quite reasonable at $1800 a year.

Looking back on the housing boom now, I wish I'd have bought something larger or 2 properties, but you can't look a gift horse in the mouth :) 2.5 times my value after only 6 years is something to smile at.

Summary

So, as it stands right now, I have a house worth about $250,000 (based on web studies, re-assessments, and comparable properties that have sold in the last year next to mine). I owe just $74,000. I pay $550 + $200 = $750 a month (property taxes and insurance pro-rated from the year). Furthermore, I am still renting it and can now get $975 a month for it (plus 2 month security deposit to make interest on!).

I get $225 a month income from renting the house with a minimum of hassle.

Strategy

Obviously, if you look at my numbers and accounts, I could pay off the house tommorrow if I wanted. I could just sell some of my mutual funds and pay off the entire $74,000 remaining on the mortgage. However, that would hurt me in multiple ways. I would not be able to deduct the interest paid on my mortgage from my taxes each year (about $2000). Although, right now, most of my income is foreign. However, the income from my house rental (and maybe capital gains from Money Market funds?) would be taxed if not for this extra $2000 I can write off. In the future, if I move back to the US and have my main source of income from there, that will $2000 less lost to taxes each year (of course, it is becoming smaller and smaller each year as I pay off the mortgage and at that time might be like $1500). I don't see any reason to pay off mortgages early, unless you are not able to recoup the tax savings from the deductions. I guess once the interest I am paying each year exceeds the amount I can deduct each year, then I am better served just paying it off all at once and saving on the interest paid that is lost from there on out.

Property Management

I have also been debating using a property management company to find me renter's. They could probably get me $1300 a month (minus a 10% fee) instead of the $975 I currently get. I will probably pursue this once my current renter moves out and it is time to find a new tenant (estimated in 2008).
Right now, I feel I should have a little more money invested in real estate and less in the stock market. Therefore...

Another Property

If I do move back to the US, I would like to continue renting this property and purchase another property where I would then live. Only problem with this, is I think I will have another hard a time getting a new mortgage since I will have no history of consistent income in the US when I move back. I am not sure if I could borrow off my current property's equity as collateral (currently about $175,000). Or, just get another home equity loan like I currently have (and based on my current house) and apply it to another property?