Quick and Dirty Rule of Thumb - Calculating Your Hourly Rate

Knowing what your time is worth is crucial when you are strapped for time and you are trying to determine if an activity is worth your effort. As they say in the working world...Time is Money.

According to Tim Ferris, author of The Four Hour Work Week there is a quick and easy way to calculate what your time is worth. I will use myself as an example.

1. Take your annual salary ($75,000)

2. Remove the last three zeros ($75).

3. Divide that number in half ($37.50).

Unless you are "making" or "saving" that much with the given activity then it may not be worth your time.

If you are interested in drilling down deeper to get a more detailed look at what your "true hourly rate" is, then take a look at Trent's post (here) on the subject.

Don't get me wrong, doing things simply because they aren't financially worth your time isn't the only consideration. I know the time that I spend consuming media like MSNBC.com, ABC News in the morning before work, and the 50+ blogs I read on a daily basis (about 1.5 hours) may not be the best financial use of my time. However, I accept this because I subscribe to a maxim that people should learn something new everyday. As such, I see this as time well spent.

Cheers,
TMac

[Photo Credit]

My Move to the Big Apple in a New York Minute!

Professionally Speaking...

It was a long time coming.

I had been unhappy in DC and at my company for a while. I started looking for an apartment and job in NY right after the Thanksgiving holiday. I just wasn't happy with all the BS that I had to put up with in the old job. I was stressed out with the crappy assignments I was put on. I was on my out of the consulting world.
In January, I interviewed with one of the largest financial services firms on Wall Street. I received a very good offer ($19K more than I was making in DC) and I accepted for a mid February start date.

All said and done I am happy that I made the move (sans the moving expenses). I like the people I now work with and the pace isn't breakneck like at the previous job. Normally I am in the office by 8:15 and out by 4:50pm. The one thing I am having a hard time getting used to is waking up early in the morning. Normally I wake up between 5:00 and 5:30am to be at work by 8:30. I am beginning to notice that most people in NY have very long commutes - normally 1.5 - 2 hours. I am usually pretty wiped out at the end of the day (sometimes I have a hard time staying up to watch LOST!).

Financially Speaking...

On the financial front I am in a good situation in living with my girlfriend. We live in a basement apartment outside the city. We got a 3 bedroom apartment with all utilities included for $1100. Not bad considering I was in Virginia paying $1065/month PLUS utilities. I will outline our saving and spending arrangement in a later post.

Luckily I got a large pay increase when I moved to the new position. I was being paid $56,500 in DC. If I were making an equivalent in the NY Metro I would be at $62,000. However the offer came in at $75,000. That means that I garnered a $13,000 pay increase by switching jobs. Not bad for a few stressful months!

It is amazing to look back and compare my earnings level to where I was after graduating from college ($32,000) to where I am now ($75,000).

Cheers,
TMac

[Photo Credit]

I Got a Raise

That's right the once a year review cycle has finally finished and I hear how much my annual increase will be.

I started with the firm at $52,000 last July. After one very long year my annual increase came out to be 8.65%. Quick....do the math! OK, I will do it for you, it comes out to $56,500 per annum. I should see the results of this raise in my next paycheck on the 15th. Before taxes that should amount to an extra $187.50 on a Bi-Monthly pay cycle.

Am I happy? Should I be happy? Well the answer to the latter from most people working in industry is that I should be happy with 8.65% when they are getting just over cost of living increases. Am I happy is another question and quite a loaded one at that. I am not. To be completely honest I was expecting 10%. Historically, in the DC Metro market for my company and practice 10% (for what I was rated) is standard. Also, after asking around of some colleagues in Charlotte I was informed that the people rated the same got 12% and Charlotte certainly does not have the cost of living woes that DC Metro does.

I don't know what I am going to do. I think I can go work somewhere else (another consulting firm or other Big 4) and command at least $60K if not $65. Should I do it? Auditing is sucking the life out of me and I hate the consulting lifestyle. Sometimes I wish I had an industry job with low stress and good hours so I could have an opportunity to enjoy my life. I know auditing isn't something I want to stay with, but do I suck it up now just to pay the bills? Certainly any career change I make, I would have to take a pay cut.

I am still marinating on this one.

[Photo Credit]

Payscale.com - Negotiating a Raise Just Got a Little Easier

One of the more tricky situations in the workplace comes when it is time for your year-end review. Undoubtedly, the process discusses your performance over the past year as well as any salary adjustments that will be made to your salary. It is important to plan for this because it directly impacts several aspects of your financial life like…

• Future salary raises
• Bonuses
• Ability to plan for life events
• Ability to save and/or pay down additional debt

The Dual Income No Kids blog posted about how raises make all the difference. They say that the effect of a higher income now has dramatic effects over your overall lifetime earnings. Check out the post!

My roommate recently pointed out an interesting article in Business 2.0 about a new company called Payscale. Payscale is a company that collects pay information on a variety of jobs and industries and is completely free to the people that use their site. Finally there is a way to gain some anonymous visibility into the pay/compensation game at work.

Here is how it works:

• You log onto Payscale.com and create a profile. You never enter your name or other personally identifiable information.
• The site will ask you to describe your job, size of the company, any relevant certifications that you hold, how much experience you have, where you went to school, etc.
• Finally you enter your salary, bonuses, benefits, profit sharing, etc.
• The site will spit you out a comparison report of where you fall based on the other reports of people that have your job in your area. Check out mine below as an example of what you will get.

The beauty of a site like this is that with the more people that enter their information, the more valuable the results are. I am happy to say that I am getting paid fairly for the work I do. Actually, it is near the high end of those that have reported. However, when it comes to bonuses, I actually made far less than the average (report not shown).

So go onto Payscale and enter your info and see how you are being paid. I am actually trying to figure out a way to push this site amongst my colleagues so we will all have better data come performance review time.