Author Topic: Thoughts on these two offers? - Working towards FIRE  (Read 2246 times)

Hello_Mr_FBI

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Thoughts on these two offers? - Working towards FIRE
« on: February 01, 2019, 01:37:14 PM »
I have two solid job offers on my plate right now, but I'm unsure of would be the better option; from a financial standpoint (looking to build towards FIRE). So I'd love some input!


My age: 25
Current Retirement Savings: $10,000 (in stock/ETF's)
Current liquid money: $10,000 (checking account)
Debt: $0 (no loans/mortgage)
Misc monthly expenses (rent, groceries, etc.): $1,750

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Offer/Company 1:
Company Background: Start-up esk, in the sense that they haven't been around long (2 ~years) and have about 10 employees. Company is in the premium home automation industry, but also has several subsidiary companies that are more or less R&D engineering custom projects.

Position: Embedded Systems Engineer

Salary: $85,000

Sign on Bonus/Moving Expense: $5,000

Vacation: 3 Weeks

Healthcare: Decent, and premiums are paid for by the company.

401K: Currently not offered (said they are working on it).

Location: Midwest Southern state (USA), relatively rural.

Company Bonus: Offered based on company/employee performance.



Offer/Company 2:
Company Background: Well established, multiple locations, hundreds if not thousands of employees. Company is in the industrial (electric) motor industry. Well defined niche of products and would clearly only be working on motors and anything related.

Position: Design/Components Engineer

Salary: $75,000

Sign on Bonus/Moving Expense: $5,000

Vacation: 2 Weeks

Healthcare: Again, decent; but I'd have to pay the premium of about ~$165

401K: Offered with employer match (description below), but only vest after being there for 2 years.

$1.00 for every dollar you contribute up to the first 1% of eligible compensation.

$0.50 for every dollar you contribute on the next 5% of eligible compensation.

Location: Northern Midwest state (USA), sizable population.

Company Bonus: Not Offered.


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From a FIRE perspective, what would be the better option? Does a 401K really add much to company 2's offer? As soon as I take on of these positions I will start maxing out a Roth IRA, but I'd of course need to catch up on my retirement savings, so I'm worried that company 1 not having a 401K would be very detrimental to that. Unless there's ways to offset this with the larger income.

Appreciate any input!




lexde

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #1 on: February 01, 2019, 01:41:51 PM »
Which one has better potential as a stepping stone? You’re only 25, so you probably won’t stay at thy job forever. Can you make more connections in the bigger city with the more established company?

Hello_Mr_FBI

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #2 on: February 01, 2019, 01:46:03 PM »
Which one has better potential as a stepping stone? You’re only 25, so you probably won’t stay at thy job forever. Can you make more connections in the bigger city with the more established company?

I'd say company 1, more so than company 2. Just due to all the travel and interconnecting of people within the industry needed. It's not as much of an insulated position as company 2 would be.
« Last Edit: February 01, 2019, 01:48:51 PM by Hello_Mr_FBI »

mathlete

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #3 on: February 01, 2019, 02:14:00 PM »
The offers are close enough that I would make this decision independent of what the FIRE implications are.

The advantages of company 2's 401k are the up front tax savings (say around 22% * $19,000 if you max out) plus the company match (3.5% * 75,000). This is probably pretty close to the additional (pre-tax) $10K that Company 1 provides. You can take the money you would have put into a 401k and put it in a personal brokerage account instead, or save up for other financial goals like buying a home if you're into that.

I would make the decision based on workplace culture, personal growth opportunities, where you would like to live, etc.

MrThatsDifferent

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #4 on: February 01, 2019, 08:43:01 PM »
They’re essentially the same, although I’d always be tempted by the extra vacation time if you used it. However, I’d visit the locations and see what it’s like living there. If a city or area is good, it can make up for work and as mentioned, you’re so young, you can always pivot however you want.

Zikoris

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #5 on: February 01, 2019, 11:35:39 PM »
Weirdo counterpoint, as an alternative to the sound and logical advice presented by the others.

I make most of my major life decisions around what sounds fun and interesting.

I would probably go with whichever one seemed more interesting, which looks like the first one to me, with my limited knowledge of what they both entail. Then I would fit the FIRE/financial stuff around that, because both options pay enough to easily FIRE within a relatively short time with a high savings rate (say, 70%+). I'm close enough to FIRE that I don't give a crap about career growth or anything along those lines, which is something to take into consideration depending on your own FIRE timeline.

I suppose it really depends whether you're more of a go-getter who wants to work hard, grow your career, and make lots of money, or a slacker like me who is more into taking it easy and accumulating wealth through low expenses rather than career/income growth. I don't think there's a right or wrong answer, it's just a question of how you want to do things.

SwitchActiveDWG

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #6 on: February 02, 2019, 05:55:49 AM »
Offer number 1 sounds you could potentially end up working more hours than you expect and may not be properly compensated for. Despite what they say at the beginning. Take that into account when deciding.

AlexMar

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #7 on: February 02, 2019, 06:04:24 AM »
Option 1 is my vote.  Smaller town usually means lower cost of living.  I would HEAVILY factor that in to the decision.  Housing cost and almost as important, how close you can live to your job.  Can you commute by bicycle?  Maybe there is good low cost housing a block away for all we know...

The 401k is NOT what I would make a decision on.  For one, it's not available until you have been there 2 years.  That's quite some time.  And two, the pay is $10k/yr less.  Even with the employer match, you are only making up $3k of that.  So, you would be better off putting that extra $10k in to maxing out an IRA and your general investment fund.  You'll come out ahead.  At your age, you don't need to put away $19k in a 401k.  The $6k, every year, for 10 - 15 years will be more than enough since you have 35 years of compounding until you would use it (age 60).  And if/when they do have a 401k, all the better.

But really, I would pick the job that fits you better but the cost of living/housing location would be a major factor.  Option 2 may have a higher cost of living, more commuting costs, and you make $10k/year less.  But who knows, maybe that job is way better...   Option 1, as another person pointed out, since it's so small, may also have more upward momentum too.  But nobody really has a clue about that other than you.

Dee18

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #8 on: February 02, 2019, 06:32:56 AM »
Think about what you want in your life besides the job.  You mention the first location is southern Midwest, rural.  Is that what you want?  It might be...could be a place with lakes and you love fishing.  As others have said, the offers are close enough so choose based on things other than salary.

Freedomin5

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #9 on: February 02, 2019, 07:50:34 AM »
As others have already done the math and decided that salary/benefits wise, the two jobs are approximately equal, if I were in your position, I’d look at:

1. Predicted monthly expenses
2. Predicted monthly savings
3. Quality of life
4. Potential to climb the corporate ladder (optional - if getting bigger roles is important to you)

From a money perspective, salary isn’t the most important factor. How much you can SAVE each month is more important than how much you make each month.
« Last Edit: February 02, 2019, 07:52:08 AM by Freedomin5 »

soccerluvof4

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #10 on: February 04, 2019, 06:40:58 AM »
The only thing I can think of since there pretty much the same is upper midwest is usually more expensive than southern midwest not knowing exactly what states you are talking about so consider that as well.

Linea_Norway

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Re: Thoughts on these two offers? - Working towards FIRE
« Reply #11 on: February 05, 2019, 06:33:02 AM »
Offer number 1 sounds you could potentially end up working more hours than you expect and may not be properly compensated for. Despite what they say at the beginning. Take that into account when deciding.

+1.

But still, the startup sounds more interesting. I wouldn't consider working in a company that only gives you 2 weeks of vacation. Offer 1 might also be a place where you can make career if they grow bigger in the future.