by Scott | Jan 8, 2017 | Careers
Negotiate Salary With Confidence
The most sensitive topic of the job interview process is how to negotiate salary. What if they aren’t expecting to pay as much as I want or need? What if they are looking for someone to work 50 hours per week on a 40 hour salary? These questions must be answered before you start, otherwise you may be in for a rude awakening. Work out salary requirements during the final interview prior to the offer. If you have a salary expectation, you must make them aware of it before they extend an offer.
Know Your Worth
Research salaries and know your worth before you even apply for the job. When you are interviewing for a job, you are selling yourself. Just like you research the value of your car before you sell or trade it in, you need to know exactly what the job should pay given the job description. If the company is offering less than the industry median salary, there may be any number of reasons. In my experience, it usually means the company is experiencing cash flow problems, so I would look elsewhere before accepting a job with a lower-than-average salary. But if you are willing to work for less, request additional vacation time or incentive pay.
Incentive Pay
As a contractor, all earnings are incentive pay. But when you’re working a salary job, you are paid the same amount regardless of how fast or efficient you work. There may be performance metrics related to your job that you must meet, otherwise you work 40 hours a week and collect a paycheck. As an employee, it is important to negotiate incentive pay, such as an annual bonus. Make sure the requirements for any incentive are clearly described and reviewed periodically throughout the year. There should be no reason you are denied any incentive if you follow the guidelines.
Include Benefits
If you have vacation requirements, let them know that too. I always recommend asking for at least 4 weeks of paid vacation , matching 401k contributions, full health benefits, and at least the industry median salary. If you have the experience and education to back up your request, the company should have no problem providing it. Any company that seeks to pay you less than the industry average without providing additional benefits is no place you should be working.
A note on health benefits: Health benefits vary widely in pricing, and families are often left paying thousands of dollars a year. If you have a family, get to know the company’s benefits package before you negotiate salary requirements. If the offerings are not sufficient for your family’s needs, consider looking for a job elsewhere.
You Are ‘At-Will’
Having a job means you are working for someone else, plain and simple. While it makes for a consistent paycheck and helps pay the bills regularly, you are likely in an ‘at-will’ environment which means you can be terminated for any reason, without notice and without cause. This alone should be cause enough for you to review other job opportunities annually, even if you absolutely love your job. If the company isn’t providing you generous retirement contributions, more than 4 weeks of vacation time, and regular raises, you’re not getting what you deserve. You job search goals should always include more vacation time, greater salary and at minimum, match your 401k contributions.
Sealing the Deal
Now that you know what you’re worth, including time off and retirement contributions, it’s time to negotiate salary. This is where you lay it all out on the table. Confidently state your salary range and use the benefits as your negotiating chips. Start with a salary range that’s average to 20% over the industry average, so you can gauge their interest. They may not offer retirement contribution, so you may receive 10% over average instead. When you can agree on a total package, have the offer drawn up in writing, and give yourself an evening to review it. I recommend sending the accept letter before 10 the following morning.
A Final Note: Helping Your Career
People say you shouldn’t jump around. They say you should work at the same place for a few years before you move on, and when you do, leave gracefully. This is all great advice for people working in the 1950s, but today that just isn’t the case. The best way to help your career is to work with people that are better than you. That part is never guaranteed, but you can seek out teams that excel, and people that exude knowledge. It’s like playing tennis – you always want a partner better than you to improve your game. If the people you work with are weak, chances are you’re going to pick up the slack. Don’t do everyone else’s job and get paid for only your own, get out there and find a job where you are either well compensated for your additional efforts or given hiring/firing decisions so that any incompetence will be your own fault.
by Scott | Jan 2, 2017 | Trimming Expenses
Buying a New or Used Car
A new or used car is one of the largest purchases a person makes in their lifetime. A new car can cost upwards of $20,000, and luxury cars are double that. They come with shiny new paint, a bumper-to-bumper warranty, and a smell that can’t be replenished with a jar. But those luxuries aren’t reserved for new cars anymore. Many used and certified vehicles are so close to new that you would be hard-pressed to tell the difference. Consider buying a pre-owned car if it meets your requirements.
Used vs. Certified
A used car comes with its own set of concerns: did the previous owner take care of the car? Was it abused. Did they have kids, pets, or use it as an Uber vehicle? These are tough questions to answer today, because the industry doesn’t regulate that deeply. The only way to know whether the used car you’re looking at is a quality vehicle is by inspecting it yourself. Always ask the salesperson to have the car lifted so you can inspect underneath. Look in the glovebox for trash or other debris that should suggest it wasn’t clean. Look under the driver and passenger seats for dirt that couldn’t be vacuumed. Check out the trunk for damage to the pillars or floor. If you see damage or dirt in any of these areas, it probably wasn’t your grandmother’s errand car.
Certified vehicles are a much better bet, but they are used cars just the same. You’ll have to inspect the cars with the same vigor as you did a regular used car, but at least you’ll have piece of mind knowing the drivetrain will be warrantied for some time to come. All used vehicles should come with a safety inspection from a mechanic, but certified vehicles are required to provide one. Always request a CarFax report as well. You never know what kind of damage is lurking behind a repainted panel or under the trunk carpeting.
New Warranty vs. Extended Warranty
New vehicle warranties are great – they’re generally bumper-to-bumper and cover problems without a deductible. The only problem is new vehicles cost 20% more than their identical used counterparts. So buying a brand new car with 15 miles costs 20% more than a used one with 1500 miles. It would seem like everyone should buy a used vehicle with 1500 miles, but there definitely is not enough supply to provide that. But as I’ve stated in previous articles, buying certified pre-owned is always the best bet, which usually come with a balance of the new car warranty on top of an extended warranty. You can always buy an extended warranty on a new car and most used cars, but is it worth it? The answer is in which vehicle you purchased and how much you plan to drive it. I recommend eyeing the consumer reports new or used car lists, which will show you the amount of repairs each model/make required. If you’re buying a car because you like the way it looks, but it gets a poor rating in consumer reports, buy the extended warranty. You won’t be sorry.
What Could Go Wrong?
The worst thing you could have happen is your new or used car breaks down while you’re still making payments. If you’re making $200/month payments on a car that doesn’t run, it puts you in a very difficult situation. Always carry a warranty as long as you are making payments. You never want to be caught in a situation where you’re unable to fix the car and make the payments at the same time.
by Scott | Dec 28, 2016 | Careers
Job Interview Prep
Prepping for an interview is more important than landing the job itself. If you are not prepared, you are not going to land the job. Start by researching the company you are visiting and try to find out some things about the people who work there. Linked-In is a great place to find out who works where in the company, and what kind of backgrounds they have. This will lead you in the direction of their questioning, as well as help you strike up conversation. Don’t go overboard on details – no one wants to hire a stalker.
Know Your Material
If you’re interviewing for a business-level position, know that position very well. Make sure you have extensive knowledge on the material, competition, and challenges facing that industry. When you know your stuff, hiring managers eagerly give you an offer. Be on your game during the job interview and impress your hiring manager.
Dress for the job
It used to be common to see interviewees arriving in a freshly pressed suit and a nice tie. Sure, it would be nice if we lived in the 1920s when it comes to dress code, but we don’t. Dressing for the job shows you understand what the position is like and also presents a more accurate version of yourself. Wear the power suit if you’re going for a high-level consulting job, because you’ll likely wear that suit out on the job. Otherwise, dress business casual if you anticipate the office dresses that way. If you’re going for a development position and everyone is required to wear a suit, it’s probably not the environment you are eager to join.
Body Language & Confidence
Body language is very important during a job interview. Try to avoid bouncing or otherwise displaying nervous energy. Confidence plays a key role in body language. By properly prepping for your interview, you can arrive with confidence that you know the material and have plenty to talk about. When you’re seated with an interviewer, try to present a relaxed but focused disposition.
by Scott | Dec 22, 2016 | College
Student Loans
One of the most controversial topics in finance today is student loans. The ease of getting them, their limitations in bankruptcy, and the stress they cause families is beyond reason. I know people who graduated with 4 years degrees that have over $100k in student debt. These equate to $1000/month payments for 20 years. It’s hard to believe that a young college graduate would be saddled with $1000/month payments until they’re in their 40s. This is just unacceptable, but who is to blame?
Parents, blame the parents – when you’re 18, you probably know a thing or two about money. You know how much it costs to fuel a car, how much it costs to buy a movie ticket and how much a paycheck usually is at that age. What you don’t know is how valuable $100k is to you at that age. It’s critical that parents educate their children on the difficulty of paying off loans that size. It’s also important that parents understand the value of local colleges, community colleges and commuting to school.
Cost of Living on a Loan
The worst part about student loans is they aren’t entirely for tuition. You can take student loans out to cover the cost of living, apartment rent, utilities, books and more. All of these expenses have zero return-on-investment for the student, and saddle them with those costs far into adulthood. Add interest on top of the borrowed money and you’re paying 2x the rent back over the course of the loan.
Start local, then go big – the best way to finance a college education is to start local at the community college. Most tuition rates at community colleges are under $2000/semester, and some are far less than that. But that means you can get the first 2 years of college for under $10,000. That’s a remarkable bargain compared to going away to school, which will run at minimum $20,000/year. You’re saving 75% or more by staying local. Of course, that does not include the cost of a car and commuting expenses, but even if you add those, you’re looking at saving at least 50% and you have a car.
Scholarships
We all wish we were smart enough, talented enough or lucky enough to get free money for college. But free money isn’t just for those people. Actually, there is scholarship money available to almost every college student, you just need to apply for it. Do you research ahead of time, and make sure you apply for all the possible scholarships available. Sometimes, a college will offer a year of tuition or a steep discount. Make sure you count all the expenses before you make a decision. Even free tuition at a school 1000 miles away will cost $10k in living expenses annually. Don’t saddle yourself with unnecessary debt just because a college is giving away tuition.
What Is Too Much Debt?
This is an interesting question, because in my opinion, any debt is too much debt. If you plan carefully, you should be able to get through college with no debt. This would require that you work during your college years, and use that money for tuition, books and other expenses. It helps to have additional funding from parents, grandparents or other family and friends to keep costs low, but if you can avoid loans, by all means do so. If not, try to limit your loans to federal student loans. Sure, you cannot get out of paying them for almost any reason, but they’re usually the lowest rates, and they are the most flexible in terms of paying back. If you do limit your loans to federal only, you’ll be looking at about $125-150/month for every $10,000 you borrow, which is a more manageable figure.
by Scott | Dec 16, 2016 | Paying Down Debt
Debt Traps
There are many debt traps with long-lasting effects, some that could take years to recover. Here are a few often overlooked debt traps that you should always avoid:
Credit Cards
Paying off credit cards is a topic widely covered on the Internet, as well as thousands of self-help books, online courses, credit repair and debt counseling services. Everyone has advice on how to pay off credit cards, and they all start with the same concept – pay off higher rate cards first, then lower cards. However, the issue is not the order in which they should be paid, but the reason they were overused. Before you come up with a plan to pay down your debt, look introspectively into why you got into debt, and how you’ll avoid debt in the future. I’ve seen many people celebrate going debt-free only to find themselves in just as much debt or more 5 years later. It’s often because life events and unexpected expenses took over.
Payday Loans
While payday loans can be a lifesaver for some families, they come with some of the highest rates. You could end up paying 20% or more per month on the loan, which will add up very fast.
Overbuying House/Car
A brand new shiny black convertible sounds like a car we’d all love to have. That convertible you want might cost $40,000, and even if you put down 20%, you’ll be looking at a $600/month car payment. If you decide to sell or trade it in just a few years, it won’t be worth $20,000, so be careful spending big money on cars. Quality transportation can be found for $10-12k, and brand new quality cars can be bought for under $20,000. Until you can pay cash for that $40,000 convertible, buy a lower priced car and save $300/month on car payments.
The advice my grandparents gave my father was to buy the most house you could afford, because it will be easier to pay it off over time. While that may have been true in the 1970s, today’s housing market is not consistent enough to use as a long-term investment. For example, if you make $60,000 and your affordability is $250,000, don’t spend it all. Buy a home that’s 70-80% of your affordability, about $200k, so that you can afford all that life has to throw your way. The extra $250/month you’ll save will go a long way. If you don’t need it, you can save the extra $3000/year.
Student Loans
Student loans is a topic that cannot be covered in a single paragraph, but the most important rule is: never take out student loans to cover living expenses. You will end up spending twice as much over the loan for things like rent and food, of which have no return on investment. These costs can be avoided by attending schools within commutable range for at least the first two years. As long as you finish your degree at a university, the first couple of years aren’t nearly as important.
Co-signing
Of all the debt traps, this is the worst of them all. Grandma co-signs her grandson’s new car loan and he only makes the first couple of payments. Mom and dad bail out a newly divorced parent with an apartment they cannot afford. These situations arise out of love and empathy but end in fear and frustration. Debt collectors are as friendly as a lion and have heard every story you could imagine. Never, ever co-sign a loan. As long as you live by that rule, you’ll never have to deal with the frustration.
People say you shouldn’t jump around. They say you should work at the same place for a few years before you move on, and when you do, leave gracefully. This is all great advice for people working in the 1950s, but today that just isn’t the case. The best way to help your career is to work with people that are better than you. That part is never guaranteed, but you can seek out teams that excel, and people that exude knowledge. It’s like playing tennis – you always want a partner better than you to improve your game. If the people you work with are weak, chances are you’re going to pick up the slack. Don’t do everyone else’s job and get paid for only your own, get out there and find a job where you are either well compensated for your additional efforts or given hiring/firing decisions so that any incompetence will be your own fault.
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