Here's the latest in my series of six figure interviews, discussions with everyday people who have grown their incomes to at least $100,000 annually.
My questions are in bold italics and their responses follow in black.
Let's get started...
Tell us a bit about yourself.
My wife and I are both 33 and we have two kids (6 and 2). We live in northern New Jersey and have been in the New York metro area our entire lives.
What do you do for a living?
I'm a software engineer, and have been for all of my professional life. My wife has been staying at home to raise our kids but will likely go back to work in advertising once the younger one is in school.
How much do you earn annually?
It fluctuates widely year to year. Over 2009-2012 my W2 has read $153k, $221k, $325k, and $514k in successive years. 2012 was a large year due to selling stock options, however 2013 is on track for about $476k. The successive annual growth is from early RSU grants vesting and continuing to earn new stock.
How does this amount break down (salary, bonuses, etc.)?
The breakdown for 2013 is $200k in base pay, $60k in bonus, and the rest is the vesting of RSUs.
Do you receive any additional compensation/benefits from your employer (401k match, stock options, etc)?
My company matches 50% of whatever I put into my pre-tax 401(k), so I always get an extra $8,750 from them. We don't have stock options, just RSUs which are given out as sign-on incentive and are often given out to high performers with a five year vesting period, as a set of golden handcuffs.
How long have you been working?
I started working right out of college in 2002.
How long have you earned at least six figures?
In 2005 I had my first $100k+ year doing some independent consulting and my wife was making $40k. Since then our family income has always been over $100k (despite me personally dropping to $80k in 2006 for one year).
What have been the key steps you have taken that have allowed you to earn this level of income?
Well, working as a software engineer doesn't hurt. After getting my B.S. in Computer Science I continued on for my M.S. while working my first job, which was paid 100% by my employer at the time. I've only worked at three companies over twelve years. The first transition was a major upgrade in salary but a downgrade in benefits (they didn't even have a 401(k) plan, never mind matching), while the second transition was a salary/bonus bump with significantly better benefits.
Which of the following career advancing strategies did you employ (if any) and which were most effective: a. Doing well within your current company and being promoted. b. Jumping around from company to company always seeking a higher salary & responsibility. c. Entirely changing your career path from a lower earning field to a higher earning field (going back to school, etc).
My primary focus has been honing my expertise in my field. At my first two companies I focused on learning as much as I could about software engineering until I felt I couldn't learn anymore from those I worked with so I decided to move on. Where I am now I'm constantly being challenged but also finding opportunities to teach and lead.
What are you doing now to keep your income growing?
I've always felt that performing well at work would get me where I wanted to go. I've reached a reasonably senior position in my company and staying on the top of my game at work should continue to pay dividends.
What are your future career plans?
Short term: continue doing what I'm doing.
Medium term: continue doing what I'm doing, but possibly start managing a team of engineers.
Long term: I've set a net worth number in my head for when "enough is enough" in this industry. It's not that I particularly dislike what I do, but I'm expecting (or maybe hoping) that I'll be able to reach this goal before I'm 40. After I have that socked away in retirement and taxable accounts I plan on using the 4% withdrawal rule (likely less) to use as supplemental income for the family while my wife and I explore other work and life experiences.
Have you been able to turn your income into a decent net worth?
Over the last four years our net cash flow has been increasing, the trailing 12-month average has been up between $200-250k over the last year or so. When I checked last month we just crossed over to $1,028,113.
Why or why not?
Primarily having a very high income along with not spending a lot of it. We don't take lavish vacations or drive fancy cars (we have a somewhat beat-up 2005 car and a newer minivan, both purchased < $30k). In September of last year we'd paid off our mortgage which took a lot of our cash flow for a few years.
What advice do you have for people wanting to grow their incomes?
First, find something you enjoy doing otherwise it's going to burn you out. I probably could have taken a job earlier in my career in finance, but I don't think I would have done well, and the hours would have drained me. Make sure you're always being challenged at your job, either a W2 job or independent gigs. Each challenge brings experiences and learnings that you can add to your tool belt to make you more valuable to your current or future employer.