How much does 15k get you?
July 27, 2018 11:18 AM Subscribe
I’m looking at a job promotion of about 15k. There will be some significant life changes (different office and team), so basically starting new. Is it worth it? What’s the impact of 15k a year additional?
I do generally like where I’m at. The new team seems nice.
I do generally like where I’m at. The new team seems nice.
Best answer: 100% depends on current cost of living and current salary. That is, if you currently gross 30k/yr and have no margin for savings, this is immense. If you currently gross 150k/yr and save 75% of it, it's barely anything; it's just increasing already significant savings.
I would suggest changing nothing about your cost of living and saving it all but that's pretty boring. It's advice I probably wouldn't take ¯\_(ツ)_/¯
posted by supercres at 11:23 AM on July 27, 2018 [34 favorites]
I would suggest changing nothing about your cost of living and saving it all but that's pretty boring. It's advice I probably wouldn't take ¯\_(ツ)_/¯
posted by supercres at 11:23 AM on July 27, 2018 [34 favorites]
Best answer: Yep, it's all relative to what you're already making and how your COL and personal budget were before the raise. I agree that if you were making it before, save as much of the increase as you can, at least for now, and watch out for lifestyle creep. From your comment history, it looks like you're a relatively new parent, so increased emergency fund, retirement saving, and college savings are all good buckets to be channeling into if you can. (That said, also consider setting a bit aside for some extra baby-sitting, which you may have already discovered makes doing even the occasional normal adult-type outing hella expensive.)
Also: for any significant raise, check whether you may be making an unexpected tax bracket leap.
posted by LadyInWaiting at 11:32 AM on July 27, 2018 [2 favorites]
Also: for any significant raise, check whether you may be making an unexpected tax bracket leap.
posted by LadyInWaiting at 11:32 AM on July 27, 2018 [2 favorites]
This depends a lot on how old you are and how your life is set up now. If you rent, it could mean that you'd have enough for a down payment on a house. If you have debt, it could mean paying that debt off more quickly. If you have no savings, you could build an emergency fund pretty quickly.
If you're already financially stable, with a mortgage on a house you like, no non-mortgage debt, an emergency fund, and income that already exceeds expenses, the best thing you could possibly do with the extra income is put it towards retirement. You could max out your 401(k) or 403(b) contribution, and/or put money in a traditional or Roth IRA. Depending on your age you could take advantage of IRS rules that allow catch-up contributions to retirement plans that exceed the normal annual limits.
Other than that, it could easily pay for a vacation every year. There's a risk of having your monthly expenses creep up simply because you have more income to play with, so personally I'd have a specific set-aside in my monthly budget that goes to the vacation fund, and put the rest towards retirement (and the college fund, on preview), but I wouldn't do those things unless and until I had a six month emergency fund.
posted by fedward at 11:34 AM on July 27, 2018 [1 favorite]
If you're already financially stable, with a mortgage on a house you like, no non-mortgage debt, an emergency fund, and income that already exceeds expenses, the best thing you could possibly do with the extra income is put it towards retirement. You could max out your 401(k) or 403(b) contribution, and/or put money in a traditional or Roth IRA. Depending on your age you could take advantage of IRS rules that allow catch-up contributions to retirement plans that exceed the normal annual limits.
Other than that, it could easily pay for a vacation every year. There's a risk of having your monthly expenses creep up simply because you have more income to play with, so personally I'd have a specific set-aside in my monthly budget that goes to the vacation fund, and put the rest towards retirement (and the college fund, on preview), but I wouldn't do those things unless and until I had a six month emergency fund.
posted by fedward at 11:34 AM on July 27, 2018 [1 favorite]
Best answer: I agree with the previous posters that the impact depends largely on your current financial situation, including salary. For example, if you don't currently max out your 401k or IRA retirement savings and this would allow you to do so, it may not have a great impact on your day to day lifestyle, but could be beneficial long term.
If I were in your position, I'd probably try to think about a few things:
1. How would it be allocated, including whether I'd put some or all of it into retirement or whether it would be an increase to my paycheck. And 1a - If I expected to get some or all of it in my paycheck, how much of an increase would that be post-taxes. This requires some estimation, but there are probably online calculators that could help you. If you are or expect to be taxed all in (federal/state/local) at a 30% rate, that would be about $875 more per month. How would you use that extra amount?
2. Are there any hidden costs? You mention a new office, so is there a new/longer commute? Would the promotion require more formal or different work attire, etc? Would you be working longer hours and need more child care?
I'd also think longer term, because often salaries in new jobs have some relation to previous salaries, so this increase could have long-term effects.
posted by Caz721 at 11:34 AM on July 27, 2018 [1 favorite]
If I were in your position, I'd probably try to think about a few things:
1. How would it be allocated, including whether I'd put some or all of it into retirement or whether it would be an increase to my paycheck. And 1a - If I expected to get some or all of it in my paycheck, how much of an increase would that be post-taxes. This requires some estimation, but there are probably online calculators that could help you. If you are or expect to be taxed all in (federal/state/local) at a 30% rate, that would be about $875 more per month. How would you use that extra amount?
2. Are there any hidden costs? You mention a new office, so is there a new/longer commute? Would the promotion require more formal or different work attire, etc? Would you be working longer hours and need more child care?
I'd also think longer term, because often salaries in new jobs have some relation to previous salaries, so this increase could have long-term effects.
posted by Caz721 at 11:34 AM on July 27, 2018 [1 favorite]
I mean, save all of it for enough years and it'll pay for a college education.
There's also the question of whether it might help you earn even more at your next job, and so forth. (On preview, what Caz721 said.)
posted by trig at 11:48 AM on July 27, 2018
There's also the question of whether it might help you earn even more at your next job, and so forth. (On preview, what Caz721 said.)
posted by trig at 11:48 AM on July 27, 2018
Response by poster: Thanks all. I appreciate the suggestions of things to think about. That’s been very helpful. I’m fairly ok financially with where I’m at now, though I am a new mom so I’m sure more money will be good. I’m just also feeling super comfortable in my current role (people know me, I know the work, etc) and resisting change. Like, I guess I’ll make new work friends if the money impacts me significantly.
posted by inevitability at 11:49 AM on July 27, 2018
posted by inevitability at 11:49 AM on July 27, 2018
New parent + comfortable workplace culture would not make me just for just $15K (as mentioned, if I was earning sub $50 it might be a different calculation). Have you compared everything else? Vacation, benefits, sick time, ability to come late/leave early; kids Are little germ factories that can really affect your work. I would also figure out how much of that $15k stays in your pocket, after taxes it may not be the big jump in weekly pay that you expected.
posted by saucysault at 12:15 PM on July 27, 2018 [2 favorites]
posted by saucysault at 12:15 PM on July 27, 2018 [2 favorites]
If you google pay check calculator you will see what +$15k gets you per paycheck in your state after taxes and deductions
posted by charlielxxv at 12:45 PM on July 27, 2018 [2 favorites]
posted by charlielxxv at 12:45 PM on July 27, 2018 [2 favorites]
New mom? That money could be the kiddo's college fund.
posted by aimedwander at 12:53 PM on July 27, 2018 [5 favorites]
posted by aimedwander at 12:53 PM on July 27, 2018 [5 favorites]
The common wisdom is not to turn down a promotion at your work unless you're planning to leave. It can profoundly impact your career.
posted by vunder at 1:35 PM on July 27, 2018 [6 favorites]
posted by vunder at 1:35 PM on July 27, 2018 [6 favorites]
Best answer: As it happens, I just recently got a raise of exactly $15k. Unless you're already making like $200k/year, it makes a big difference. Spread over 26 paychecks (bi-weekly), that's around $500 more per week in your pocket after taxes.
If you're struggling to pay your bills now, that's a big help towards getting you more stable.
If you're already paying your bills but not much more, that's a lot of money to live more comfortably AND still save a bit.
If you're already living comfortably, that's a lot of money to save. As someone else pointed out, it can add up to a down payment on a house pretty quickly.
With a kid, you're always going to run into unforeseen expenses, so having the extra cash is nice.
Ultimately, though, it's a question of opportunity cost. How much is "generally liking where you're at" worth to you? But remember, it's not just $15k. It's $15k this year, and next year, and the year after that. You're probably throwing away six or even seven figures over the course of your career because you "like where you're at". Just my opinion, but I don't like anywhere that much.
posted by kevinbelt at 2:03 PM on July 27, 2018 [5 favorites]
If you're struggling to pay your bills now, that's a big help towards getting you more stable.
If you're already paying your bills but not much more, that's a lot of money to live more comfortably AND still save a bit.
If you're already living comfortably, that's a lot of money to save. As someone else pointed out, it can add up to a down payment on a house pretty quickly.
With a kid, you're always going to run into unforeseen expenses, so having the extra cash is nice.
Ultimately, though, it's a question of opportunity cost. How much is "generally liking where you're at" worth to you? But remember, it's not just $15k. It's $15k this year, and next year, and the year after that. You're probably throwing away six or even seven figures over the course of your career because you "like where you're at". Just my opinion, but I don't like anywhere that much.
posted by kevinbelt at 2:03 PM on July 27, 2018 [5 favorites]
Best answer: If you made $85K and now you might get to $100k, aside from the additional take home pay or immediate tax questions for now, what you get is that for your next job $115k-$120k does not seem like a huge outlandish jump - to you or a company that might hire you. I think it can be important and beneficial in bigger picture to get paid more in order to feel confident to ask for more for yourself over time. And if you’re in a state where it’s still unfortunately legal to ask about your current salary when you interview for a new role...
posted by sestaaak at 5:14 PM on July 27, 2018 [4 favorites]
posted by sestaaak at 5:14 PM on July 27, 2018 [4 favorites]
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posted by dbmcd at 11:22 AM on July 27, 2018 [2 favorites]