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Podcast 21: Student Saving Tips and How to Survive on a Teacher’s Salary

by Flexo on September 13, 2009

in Podcast

In today’s Consumerism Commentary Podcast, I offer a number of suggestions for students heading back to school, particularly for new college freshmen. Tom Dziubek and I discuss tips that will help students take small steps now to ensure they will start the rest of their lives on a sound footing.

After the discussion for students, we offer tips for teachers with our guest, Danny Kofke. He is the author of How to Survive (and Perhaps Thrive) on a Teacher’s Salary.

 

To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.

[00:00] Introduction from Flexo
[00:43] Interview with Flexo about money saving tips for new college students
– [01:45] What new students should be thinking of
– [02:21] Budget planning
– [04:05] Savings and checking accounts
– [06:34] Using a Roth IRA
– [08:36] Acquiring college textbooks
– [16:44] Online budget resources
[18:39] Interview with Danny Kofke, author of “How to Survive (and perhaps thrive) on a Teacher’s Salary”
– [18:53] Danny’s teaching experience
– [19:16] Starting salaries
– [22:09] Ways for teachers to reduce expenses
– [23:32] Danny’s tips from his book
– [25:58] How teachers can increase income
– [26:41] Danny’s experiences teaching special education students
– [28:12] Career recommendations for new teachers
[34:53] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

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Podcast 19: Giving Yourself a Raise

by Flexo on August 30, 2009

in Podcast

Our guest today is Matt Jabs, blogger and founder of Debt Free Adventure, a blog designed to help the author stay accountable for getting out of debt. Debt Free Adventure is one of my favorites among new personal finance blogs.

Today’s discussion focuses on the concept of giving yourself a raise, an important way to improve your financial condition, particularly in an economic environment that is supporting fewer raises from your employer. Tom Dziubek and I explore this concept with Matt Jabs and discover a number of ways you can give yourself a raise today.

 

To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.

[00:00] Introduction from Tom Dziubek
[00:33] Interview with Matt Jabs of Debt Free Adventure
– [01:10] Matt’s inspiration for writing about personal finance
– [02:57] Giving yourself a raise at home
– [04:26] How to give yourself a raise
– [08:41] Creating a personal trigger to change your mindset
– [10:24] Living outside the box
– [12:16] Finding and following your passions
– [14:29] The journey is as important as reaching the goal itself
– [15:59] Dealing with customer service reps
– [21:39] Do it yourself
– [25:17] How it adds up
[28:04] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

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Top Ten Highest Paid CEOs: What Would You Do?

by Flexo on August 17, 2009

in Career and Work

Are you on this list? Chances are the following list of the highest paid CEOs does not include you, Don’t feel bad; I am not included either. In 2008, these ten individuals accounted for $2.2 billion in compensation in aggregate.

Whether or not CEOs deserve compensation at levels 17,000 times higher than the average worker in the United States or 50,000 times higher than the average worker across the globe is still up for discussion, particularly if compensation is not based on results. But for whatever reason, here are the amounts of total compensation for the ten highest paid CEOs of American companies.

  1. Stephen Schwarzman, Blackstone Group: $702,440,573
  2. Lawrence Ellison, Oracle Corp.: $556,976,600
  3. Ray Irani, Occidental Petroleum Corp.: $222,639,705
  4. John Hess, Hess Corp.: $159,566,940
  5. Michael Watford, Ultra Petroleum Corp.: $116,929,392
  6. Aubrey McClendon, Chesapeake Energy Corp.: $114,286,867
  7. Bob Simpson, XTO Energy Inc.: $103,485,972
  8. Mark Papa, EOG Resources, Inc.: $90,471,784
  9. Eugene Isenberg, Nabors Industries Ltd.: $79,333,079
  10. Michael Jeffries, Abercrombie & Fitch Co.: $71,795,744

According to the report from The Corporate Library, the organization that reported these figures, Schwarzman’s compensation amount includes the vestment of equity shares in the company he was granted when taking the company public. Only twenty-five percent of his total grant vested in 2007, and another twenty-five percent will vest each year until complete. That will keep him on top of the list for a few more years.

What would you do with $702 million — let’s say $350 million after tax? That would leave me with more than enough to start a foundation with an endowment and still have some left over to invest conservatively and provide myself a nice income for the rest of my life.

The top 10 highest paid CEOs are…, David Goldman, CNN Money, August 14, 2009.

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4 Important Tips for Graduates Beginning a First Real Full-Time Job

by Flexo on June 29, 2009

in Career and Work

The summer following graduation is an interesting time for recently-former students. The newly-commenced young men and women, those not opting to pursue an additional number of years in an institution of higher learning, spend their time amongst activities such as attending backyard barbecues in celebration of their achievements, traveling to distant lands with newfound free time, and possibly beginning the first real job on their career path.

Not every job is the same, but for the most part there are a number of things in common.

  • You need to make a positive impression on people you are meeting for the first time.
  • How you perform on your first job sets the stage for your work ethic.
  • If you stay in the same career throughout your life, your initial salary will be your most important negotiation.

Here are more specific tips for making the most of your first job.

1. Look the part. As much as it is superficial and stupid, people will judge you by your appearance. You need to dress and carry yourself in a manner that is expected and accepted by the people who work in your field. What is acceptable varies. If you work in banking in New York City, it’s almost guaranteed you will be expected to show up in a suit every day. If you work in the graphic arts, more liberal clothing might be acceptable. Find out what your manager or supervisor wears and emulate.

If you have not been accumulating attire during college, you may find the need to buy a variety of clothing at the last minute. This is one reason it may make sense to accept a controllable level of debt. Attire is a start-up cost associated with accepting a first job, and if you are required to dress well, your salary should cover these costs before long.

2. Negotiate. Graduates may be experiencing a “sellers’ market” while starting new careers this summer. With stories of the difficulty of finding a great job in the right field, it may be tempting to jump at the first offer. It is true that times like this call for adjusted expectations, but the dance of negotiation is an important and expected part of every job offer.

Not every job has this flexibility. For example, if you start as a teacher in New York City, your salary and benefits are determined by the union contract and you have no room for negotiation. If your first job is with a cash-strapped non-profit organization, you may face resistance. But the first salary offer you receive is almost always lower than the company’s true ability to pay.

The best suggestion is to be prepared to support your desire for a higher salary by researching your peers’ compensation and by explaining well the skills you can bring to the table above other candidates. As you may not have much experience in your field when you start your first job, you may not have a list of accomplishments, so be creative while being honest.

Here are tips for dealing with a low salary offer. Remember to look at the total compensation, not just the salary. You may have more wiggle room if you ask for more vacation days or for quicker establishment of your retirement benefits.

3. Enroll in your company’s retirement plan. When I started at the company where I currently work, I qualified for the company’s 401(k) on the day I began. Although a portion of my company’s matching contributions wouldn’t vest (become officially mine) until I had been working there for three years, my first paycheck included a deduction for my 401(k) and a matching contribution from the company. While enrollment is often automatic, some companies don’t start helping you put aside money for retirement until you tell them how much you want taken out of your paycheck.

Young adults with their first job often do not think about retirement, an event likely to be more than forty years in the future. Not enrolling in a 401(k) with matching contributions is the same as throwing away money. I understand that people who are just establishing themselves at work and in life have expenses, and retirement savings cuts into income. But putting aside two or four percent of your income — or up to the maximum matched by your employer — should not be a stretch.

4. Open an IRA. Your 401(k) contributions are taken right from your paycheck, so you might not even notice your money is being transferred to your future self. It may be more painful to your wallet to open an IRA, but if there is no pain, there is no gain. So open an IRA at a low-cost brokerage like Vanguard. When I started my IRA, I didn’t have the $3,000 minimum, so I jumped right in with TIAA Cref. I suggest saving money periodically in a special bank account until you have the $3,000 necessary to open an account at Vanguard because I have encountered some problems with TIAA-Cref.

If you already have a 401(k), open a Roth IRA. These two types of accounts have different tax treatment, and it’s good to diversify. If your company does not offer a 401(k) or its non-profit cousin the 403(b), split your money between a Traditional and Roth IRAs, if you can, to get the same tax diversification.

Your career and the skills and tools you use to thrive in that career are your biggest assets, even though you won’t see them measured on any balance sheet. Protect, refine, and showcase your self and your skills when you can. If your career is important to you, go above and beyond the call of duty.

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Citigroup Employees to Receive 50% Pay Raise

by Flexo on June 24, 2009

in Career and Work

After receive bailouts from the government on two separate occasions, Citigroup has announced that it will be increasing its expense for the salaries of the company’s rank-and-file employees, not upper management, by 50 percent. This will be a nice benefit, designed to compensate employees for smaller bonuses and raises last year.

The government’s new “pay czar,” Kenneth Feinberg, has the authority to only oversee the compensation of the top 100 employees of companies on government assistance.

Of all the wackiness involved with Wall Street compensation, this is not a big deal. I don’t see any valid reason to start breaking out the pitch forks and marching on Citigroup headquarters. The rank-and-file employees who stayed with the failing company deserve recognition. The executives who oversaw the bank as it buried itself and made the decision that led to the demise should be thankful these employees stayed with the company (even if the reason for doing so was the lack of a job market).

Unfortunately, it seems the employees will also receive a company stock benefit. There’s a chance that could pay off nicely, but it seems like a risky proposition right now, considering the ambiguity of Citigroup’s future.

How do you feel about Citigroup’s employees, as a group, receiving a 50% pay raise? Some will earn more, some less, but it looks like the bank is investing in their employees here.

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British Airways Wants Staff to Work for Free

by Flexo on June 18, 2009

in Career and Work

Would you work for free? I used to work for a non-profit organization whose business model was not exactly built around the concept of making money. Before I joined the organization, there were times of low or negative cash flow during which the staff were asked to accept a delay in paychecks for a month or two while the company managed to bring in some income.

The management of British Airways is now asking its staff to go without pay for a period of time between a week and a month. Rather than a delayed paycheck, these employees would not be paid for the time they work or they could take an unpaid leave of absence. The executives would join the employees

Is this a better option for employees than asking them to take a pay cut? A salary reduction might negatively affect future salary growth, while a break in pay might cause household cash flow problems. This is the danger of the employers’ market when compared to an employees’ market. Companies can get away with asking employees to make sacrifices they might not normally take if they believed it would not be difficult to find a job elsewhere.

Have you ever been asked to make a significant sacrifice in pay like the employees of British Airways, other benefits, or your sanity for the good of your company? If you have been asked, did you agree to make the sacrifice? And why?

British Airways

Photo credit: lrargerich
British Airways asks staff to work for nothing, Reuters, June 16, 2009

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Five Jobs For People Who Like Money and Five Jobs For People Who Don’t

by Flexo on May 12, 2009

in Career and Work

There are many people who believe that the when choosing a career path and life direction, one should steer towards the highest paying career for which they could possibly qualify after several years of education, training, and 80-hour work weeks. To demonstrate, there is never a shortage of investment bankers looking for work. I have an alternate point of view: self-fulfillment usually has little to do with career choice or money earned, but having money (that is, not spending money) opens doors for more choices (for spending money among other things).

Did potential earning power play a role in your decision to pursue a career path? Let us know in the comments.

While I cite investment banking as a high-earning job, it’s not the highest according to data compiled by the government’s Occupational Employment and Wage Estimates from 2008 and published recently. If you are in search of the almighty dollar, it pays to go to medical school.

Surgeons top the list with an average annual salary of $206,770, up 8% since last year. Following surgeons, the next highest earners on average are anesthesiologists with $197,570 each year. Third on the list are orthodontists, who earn an annual $194,930 on average. Obstetrician and gynecologists earn $192,780. Oral and maxillofacial surgeons round out the list with an average annual income of $190,420.

I would have expected higher salaries for these jobs on the coasts, as many cost-of-living calculators adjust for high salaries in New York and Los Angeles. According to the survey, however, if you want to earn more money in these jobs it pays to move to the mid-west. Surgeons and obstetrician and gynecologists earn more in Wisconsin than in any other state. New Hampshire, the lone east coast representative, is lucrative for orthodontists, and oral surgeons do best in Michigan.

On the other side of the spectrum are the jobs that do not command high salaries. In fact, these jobs usually feature hourly wages and are often not full-time. They probably should not be compared with the other careers since they are in a class of their own.

The lowest earning job is the combination of food preparer and server, including the fast food industry. A worker in this job will expect to earn on average $17,400. Fast food cooks do slightly better with $17,620. The next rung on the income ladder contains dishwashers (of the human, not machine, sort) who earn an annual $17,750. If you are a dining room or cafeteria attendant or a bartender helper, your income averages $18,140. Shampooers deserve bragging rights among the low-paid with their annual pay of $18,300.

Of these top worst-paying jobs, you’ll do better by moving to Washington, D.C. Shampooers, fast food workers, and food preparers and servers earn the most there. Dishwashers earn more in Nevada, and dining room or cafeteria attendants, or bartender helpers maximize their income in Hawaii.

Did potential earning power play a role in your decision to pursue a career path?

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The Recession Finally Hits My House

by Smithee on April 3, 2009

in Career and Work

I work for a small Interactive Agency of twenty-four people. This is a company that managed to survive the dot-com bust and, like any company, has good times and bad times. Our president always makes every effort to keep great people, even if it means cutting her own salary. I consider myself lucky to have found a place there, not only because I love my work, but for the atmosphere and common sense of purpose.

Now, I consider myself even luckier. Yesterday, instead of twenty-four people, there were twenty-six. We simply don’t have enough work in process to keep going the way we were, so the management team had to find $60,000 a month to cut out of our operating costs. We had to let go of two project coordinators, ’cause we simply didn’t have enough to keep them busy.

Less drastic, but more personal, is the 10% salary cut that will affect everyone else for the foreseeable future. This will bring my before-tax salary of $80k to around $72k. I’m not going to complain about this. $72,000 a year is a lot of money, especially considering I don’t work under hazardous conditions, or with unruly children, and I don’t have to take steroids to stay competitive.

However, this will require my wife and I to tweak our budget somewhat. $72,000 is a huge salary for someone with no debts; unfortunately I am not that someone. It was that extra $8,000 that was enabling me to make so much progress toward finally erasing my credit card debt that began in 1997. As of today, the balance is down to $3,522. My first instinct for modifying the budget is to say, “Okay, let’s just ignore that credit card until things get better.” I know that’s not wise. The last finance charge on the card was about $37, and if I start making just the minimum payments each month, that number will just get bigger and bigger. It’s a complete waste of money.

But there are other considerations, too. My wife and I have things we want to do this year. In fact, we’ve already paid more than $1,000 to go to a conference in California, but we haven’t arranged any plane tickets or figured out where we’re going to stay for the vacation days when we’re not at the conference itself. And then there’s the pet sitter, the meals in nice restaurants, etc.

Or maybe this is the kick in the pants that I need in order to spend more time working on my freelance work. Given the different ways that a salary and freelance work are taxed, in order to make up the difference, I’d need to earn about $1,000 a month (putting half away for taxes the next April). I don’t imagine that’s going to happen anytime soon, but it does give me something to work toward. Flexo is always happy to have me write more for this site, and there’s a side business in Web Analytics that I’ve been flirting with. My two pro bono clients (I wanted to practice) have been thrilled with my work so far, so maybe it’s time I start courting paying clients.

As I said, I can’t really complain about my cut in salary. If it weren’t for the two car loans from 2006 and my history of dumb materialism, my wife and I would have quite a bit saved up. I have faith we’ll get to a point of having a three-month buffer, but it won’t be this year.

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