454 | Salary Negotiation & Early Retirement | Financial Mechanic

24:30We want you to get your dream job. You can still negotiate. You can do all these things. You can put off talking salary, doing your research, knowing your worth, all these steps that we're going to get into. But it is really helpful to know, okay, it's not the end of the world. If I don't get this job, what will I do next? If I can't haggle for this banana, I can walk and go to a different market and find another banana. Maybe it won't be as ripe, but there are other bananas in the world that we can, that's kind of a silly example. You know what I mean? But like you said, that abundance mindset will really help you here because you won't be stuck on, oh no, if I don't get this job, it's the end of the world, which if it is, then yeah, it's going to be hard for you to negotiate.

25:14But if you have this open mindset, it will be a lot easier for you. Yeah. Yeah. I love that. So, right. There are alternatives. And I think that's, that's the most important thing again with this abundance mindset. So, all right. Thank you for indulging my little sidebar here. So let's move on to the next step. Yeah. So the next step is know your worth. This means making your resume, putting down a list of all the projects you've worked on, maybe money that you've saved the company and projects that have been really important to you. And remember that when you're taking this into your next job, that you're not just anybody applying for this job, you have the skills, you know, the qualifications, and you will provide value to this company.

25:54So make sure you know that when you're going in, because it really helps, you know, on their side, they want you because of all these skills that you have. And knowing that, being able to articulate what you've done and what you can accomplish, what you hope to accomplish, that really brings extra punch to this negotiation. Maybe punch isn't a good word. Extra handshake to this negotiation. Nice. I like that. And right. These are two sides. And if you're as good a candidate as you believe yourself to be and that you're approving, they're going to want you, right? Especially if you're showing, hey, like you just said, this is how I save money for the company.

26:34These are the projects that I've done. These are the skills that I have. You're showing that and you're making it. This is again, yet again, I sound like a broken record, but this, this win-win, right? And it's not just a, oh, please give me a job. It's, hey, I have a lot of options here. And here's why you would want me at this company. Here's what I can bring to the table. And here's how I'll make your life easier. Here's how whatever, you know, fill in the blank essentially, but know your worth. That's wonderful. Know your worth. And what you're talking about leads right into the next step, which is remember, you're not the only one negotiating.

27:09We talked about this a little, but the company has already invested time into you. They've screened you. They've contacted you. They've had to set up the meetings. They're taking time out of their employees days to interview you. or if it's a negotiation for a raise, the company has already invested training you, ramping you up to be productive. So there's all these ways that they've already invested into this process. And so you have to remember, it's a time-consuming process to find and hire a worthy candidate. If you reject their offer, they're gonna have to go through it over and over again.

27:42And they know that. So that's something to keep in mind. You have similar goals. You both want somebody to fill this role. You would hope it would be you. They also hope it would be you. And because of that, remembering you are not the only one negotiating will really help your case. Right. That's so interesting about if you're already an employee there. I mean, think about the friction for that employer, because if you walk ultimately, right, if you come in and you're collaborative, you say, hey, this is what I'm looking for salary-wise with my next raise or something like that. and they basically balk at it and say, that's ridiculous.

28:22Well, think of all the friction for them. They have to then find a new employee, actually find them, train them up, get them to know the ins and outs of the job. I mean, that's what a six to 12 month process maybe. I mean, so the opportunity cost for them is enormous in that case. But again, because so many of us are still stuck with that scarcity mindset, we think, oh no, I can't possibly rock the boat, which is why I keep saying this over and over again. And I wanted to come through is what you're doing is you're arming people with this psychological toolbox, basically, to win at this. And I think this is an important aspect of this is not you begging for something.

29:01You're providing an immense amount of value. And here's why. And here's what you deserve because you're worth it. Exactly. That's what negotiation is. You nailed it. Well, I've got a good teacher here. So let's be clear. This is not me and any kind of genius. this is all from you. So all right, let's move on to the next one. Well, the next step is actually negotiating. So all of these things that we've talked about are before the negotiation. It's a screening call, it's doing your research, knowing your worth, remembering that you're not the only one negotiating. And then the next step is actually negotiating, which I find it really helpful to have some kind of script.

29:37Some things you know, you can say, it really helps because otherwise you might think negotiation is I deserve a hundred thousand dollars uh please give it to me or else i will go you just feel very uncomfortable don't know what that looks like exactly so now that you've done all this research you can say you can start with the good right i am excited about this opportunity i loved hearing about this project i love what you're doing here with this kind of work and i know we can come and agree on a starting salary. Or like we talked about before, I know we can agree on a fair salary. We can work together.

30:18So that's the first one. I'm excited. Next, based on the market, the research, what others are earning in this industry, standard of living, other opportunities I've been looking at, even goals I've set for myself. These are all examples of filling in the blank based on this work that I've been doing to figure out how much I deserve to be paid. I would expect to be in this range. So knowing your worth here, knowing your research based on all these logical elements, this is what I've been expecting. And it helps to talk in ranges. And in this particular case, you want your range to be even higher than your lowest number.

31:00Okay. That's interesting. So let's say you're looking for$100 ,000, but you theoretically would take the job for, I don't know, 85 or 90 ,000. What would that range be that you would say in this beginning negotiation point? I love that because it goes back to this preparation. There's something in negotiation called the three W's. It's the wish, the want, and your walk numbers. So your wish might be, man, how awesome would it be to make$200 ,000 or 150. What I want in this case, we were saying is 100 ,000, maybe 85 ,000 to 100 ,000 that I'd be okay with that. And my walk number might be anything less than 85 ,000.

31:47I don't really want to work there. That's less than what I make, or that's less than what I've seen through my research. I don't want to go through this whole thing again. So I'm going to walk if they say 75 to 85 ,000. So right, got it. Wish, want, walk. So we're saying in this case, in my weird hypothetical, so the wish is 150, the want is somewhere between 85 and 100, and the walk is below 85. So where in that beginning, so I would expect to be at blank to blank range. Where would you start with that? Yeah, it helps maybe in percentages, maybe pick something from 10 to 15 % more than your want number.

32:26So if you would take 85 ,000, maybe start with 110 or 100. And sometimes it will feel so weird to ask for that much more because it feels like a really high number. I remember the first time I ever asked for 100 ,000 or a job that was more than 100 ,000 when I had been making maybe 50 to 60 ,000. And I felt like, who am I? Who am I to ask for this number? So just knowing that can be helpful. I knew going in, it was going to be really weird to ask for over$100 ,000 when I had never made that before. And all this context you've been doing might help, but also just know it might feel weird, but don't back down.

33:07Pick that number. If you would take 80, maybe say 90 to 100 or even more. And obviously, a lot of this depends on this research that you've been doing and how much the range is in your industry. So these numbers I'm throwing out might not be applicable to you, but pick something, you know, 10, 20 % more and then go from there. I love that. You have me ready to like run through a brick wall right now. This is awesome. Like it might feel weird, but don't back down. What a great quote, right? Like, yeah, it's going to feel weird. It's going to feel weird that first time. That's actually one of the main feedback I've gotten from people talking to me about their negotiation is telling me, oh, this feels horrible.

33:47What do I do when I have to wait for the response? Especially now that you've asked that question in this step of negotiating, the next part is feeling extremely uncomfortable because you might have to sit in silence. They might say, okay, we'll get back to you. And now you're wondering, oh no, did I just throw it? Are they going to rescind my offer? In my case, I'm used to negotiating. I was negotiating for a job overseas and I told my mom that I was waiting to hear back and she said, you negotiated for that much more? Are you sure? They might take it back. I don't know, financial mechanic, as my mom calls me.

34:25I don't know, mechanic, you should probably get back to them and just say, you'll take that offer. And so actually, she was feeling that discomfort that I had gotten used to feeling. And what she was telling me is something I would be telling myself in those first couple of negotiations that I ever did. And that's something to know is that discomfort will come, especially to start. And it's good to be prepared for that. And it's good to know, like we said before, one week, even 20 minutes of discomfort will save you average of$7 ,000. And it could be up to a million over time. And so when you're thinking about discomfort, maybe whisper to yourself, millions of dollars, millions of dollars, this is worth it, this discomfort, you will want to get out of it.

35:12We're talking about something that is very uncomfortable in society. This negotiation, like we mentioned, it's not really built into our culture. And so you will feel discomfort. And after asking as much as you can, meditate, breathe, remember that feeling this discomfort is normal. It will be worth it. And think about, again, your alternatives. If that happens, what are your worst case scenarios? We can handle it. We are good. And we have a lot of other opportunities on the table. So that's me just telling you, you will feel discomfort and you will breathe through it and you will come out the other side.

35:51Yeah, I think financial therapist, we might have to change your name to instead of financial mechanic, right? Because that's what this is. It's, hey, is it worth it to lean into that discomfort for, like you're saying, seven plus thousand dollars a year, which I think you said is somewhere maybe seven or eight years of potentially early retirement. that, okay, lean into a little bit of discomfort and know it. You know it's going to be uncomfortable. It is what it is. But again, as long as you understand there are other alternatives, this is not the only job for you. It lowers the volume on that crazy noise inside your head of, oh, you have to do what they want and you need to get this job.

36:30Well, what if you don't need this job? What if there are plenty of other jobs? Well, then the stress is a lot less, just dramatically So, all right, this is awesome. Let's I think we have just one or two more in your seven steps here. Yeah, the next step is negotiating is about more than salary. So we know you can negotiate bonuses, you can negotiate stock, we can negotiate relocation expenses, time off, education, even one of the most important and critical from the last episode, I remember is the sign on bonuses. And that's something especially in tech that you can ask for. And just by asking, I made over$10 ,000 just by saying, do you have a relocation bonus?

37:14The recruiter wasn't going to tell me about the sign-on bonus, but because I had had it in previous jobs, I knew, oh, is this something you do? And he said, oh yeah, we can throw in. Can you imagine how we can just throw in$10 ,000 just by asking? So knowing about what is important to you and maybe you can take a little bit less salary, but you have the ability to work from home three days a week or more, what is it to you that's important and that you might be able to make some non-traditional arrangements with your employer in exchange for salary, or maybe not in exchange for salary, maybe just as an extra benefit to you working this job.

37:51Yeah, right. Like, hey, I'm a whole lot more likely if I can work from home two or three days a week. Okay. That's part of it. Because yeah, I think so many people get caught up in just that number, just the top line salary number, and that's it. But as you're saying, this is multifactorial. There's so many different issues to consider. and it's all valuable. It's all potentially valuable. So, I mean, an extra week of vacation is absolutely wonderful, and there's a value to that. So, yeah, clearly, and I just love the fact that you asked for a sign-on bonus, and now here's 10 grand. Sure. So, do you recollect, did you ask for a relocation bonus or sign-on bonus?

38:30Because I know we're talking about scripts, right? So, these very particular words, when somebody goes in and they're like, oh, hey, do you have a sign-on bonus or relocation? How would you say it if you're advising? In this case, it was a sign-on bonus. So just to sign the contract. But in this case, it is important to mention I did have to stay a year to get the sign-on bonus. So that was something. And of course, it's just for that one year. And then the following years, I don't get to factor that 10 ,000 into my salary. So it's a nice perk, but it is something where I had to know or consider that I would have to stay at that job for that amount of time.

39:09I do have a couple of other examples too of negotiations like that. One is I had a friend who worked at this company and she had a bonus of 10%. I didn't know that I could have negotiated that bonus and I was at 7%. And now asking for 3 % more bonus might not feel like it's not really a big ask. If we're talking in percents, sometimes that's easier to ask for, oh, I'm aiming for about 5 % more doesn't seem as big, especially when you're talking about big numbers. So I wish and I regretted that I didn't negotiate that bonus once I learned that that was something you can do. So that's one example.

39:48Another example is I had a friend who loved going to tech conferences, he could learn about coding in different languages. And we had the budget for one a year. And he managed to negotiate going to three a year. And that included flights, staying in the hotel. And when he came back, he could share the lessons he learned from those conference with the rest of us. And it really actually enhanced the culture at the company to let him do that. So that was a great win-win for both parties in that scenario. Yeah. What a creative thing. I mean, again, we're talking about, we're literally recording an hour long podcast on negotiating and thinking outside the box.

40:24And I would have never thought of that as an option. Hey, I really want to go to an extra conference or two. Can we find room in the budget for that. And that's not just, hey, I want to go to Puerto Rico twice a year for a vacation. This is, hey, I think I can add value to the company by doing this. Can we find room in the budget for that? That's brilliant. So again, we're trying to expand our mind here with all of this. I think that's the most important thing. And that's what a great, great example that was. All right. So I think we're getting close to the end here. I know your sixth one is practice, which we've talked a bunch about throughout the entire episode here.

41:00So let's not get bogged down in that because I think everybody understands just how critical this is. You have to put in your reps. But what is the last of the seven here? The last of the seven is, are you going to accept this offer? Are you going to reject this offer? And there's nuance to this because you can accept, you can say, I'm really excited about this opportunity. But if you're also, if you're saying no, this is a good time to say, why and being really honest about why. Maybe the commute is too long or really the package doesn't add up to what you were hoping for. And being honest is a way, it doesn't have to be part of your negotiation, but it is a way to let that company know what it is they could do to keep you if they really want you at this stage.

41:48So being honest is critical because there might be things that they can do to keep you if you're totally honest. And also you might see this company again, you might interview with them again. So it's good to leave on a good note and say, I really appreciate this time and effort and that you interviewed me. Unfortunately, this time it won't be working out for whatever reasons. And I'm looking forward to potentially working with you in the future. Just leaving that whole interaction with grace is so important for your career in general, accepting because you're letting them know you're excited and then rejecting because you're letting them know, okay, it might not be the final rejection.

42:28So that's something to keep in mind. And you don't want to make up a reason, like you don't want to say it's a commute if it's really the offer, because you're not really letting them close the gap there. And they can just say, oh, well, if the salary is not enough, oh, well, and then you leave on peaceful terms. Or maybe they say, oh, if that's what it is, then we can do something else to make it happen. And this cycle of negotiation sometimes has a few going back and forth and it will feel like you're rejecting the offer for the final time and it might not be the final time. Yeah, that is critical.

43:00That's a really cool thing, right? So obviously, if you accept, you accept. But this rejecting with grace and honesty, and I think that is really been a through line of everything you've talked about here is because this is a win-win and it should go without saying that we want to be honest at all times in our interactions with people. But I think very often, like you just said, there are these little kind of white lies that a lot of us build into our lives sometimes. Like in this case, oh, it's the commute. The commute's too long. But it was actually that I really wanted$5 ,000 or$10 ,000 more.

43:35Well, it might feel a little uncomfortable, but say, hey, it's because I really needed and you could use whatever language you want. and I'm sure you have better language than I do, but I really needed$5 ,000 more. And they might come back and say, okay, well, we can do that. Because again, they've invested a lot of time in you already in this process. Like you said, this could be a multi-month thing just to get to that point. They've had their employees invest valuable time in chatting with you, probably touring you around the office, all this stuff. I mean, they've invested time and money in you.

44:06If it's just a couple thousand dollars, that's the actual difference and that's the honest difference. just be honest with them and you never know what happens. So that's cool that this is a circular thing that just because you got to that point doesn't mean it's the finish line. Exactly. I was imagining somebody who's practicing, who's actually happy at their job. And you don't want to say, oh, I was just practicing, but you might say I'm actually happy at my current employer right now. And please keep the door open for me in the future or something like that. again people know that people are interviewing and seeing what it looks like and at this time their offer just wasn't as attractive as your current job and that's okay too yeah it is okay this is great okay so what an absolute wonderful overview of just something that's really truly critical so thank you for spending so much time on this and and you said a couple times in there that you actually put this to practice on a job that you took abroad which i think was in the Netherlands, actually.

45:07So this could be like a perfect kind of segue to finish up the episode with, okay, what have you been up to for the last couple of years? Because your life has changed fairly dramatically since we talked to you three and a half years ago. Yes, three and a half years ago, when we talked, I was still on the journey to financial independence. I think it was just three years ago. And since then, I've almost doubled my net worth, thanks to a lot in part negotiating. And since then, I also moved abroad. I negotiated to move abroad. And then I decided it was time to retire early. And so last year at the ripe old age of 29, I managed to quit my job, travel the world.

45:51And now I'm back in Santa Barbara for now. And I'm writing about this experience on my blog, financialmechanic.com. Yeah. Sorry, I didn't mean to plug it. I know. I'm so glad you did. And yeah, we'll definitely put that in the show notes. Obviously, we'll also put, I know you just published a one year of early retirement blog post here where it looks like you did a month by month for the first six months of, hey, this was early retirement month one and I was in Copenhagen and whatnot. And then just your travels around the world. So So it's pretty neat to read up on where you've been. And then, so right, this has been about a year, but you said, so you're currently in Santa Barbara, California, which is funny because again, I went back and listened to episode 211 recently.

46:37And at the time, I think you might've been in upstate New York and you were gonna move to Santa Barbara. That's right. Yeah, I have been moving back and forth across the country. And then I decided I took two years to move to Amsterdam and the Netherlands, which everyone asked me why. And I will tell you, it's such a beautiful city with bikes galore. It's very fire-minded. Everyone is frugal, but also living their best life. So I highly recommend visiting there. And after two years, I decided to travel the world, see how much it would cost versus staying at home. And after six months of just a joy and delight of travel, I did decide I wanted to settle down for a little bit.

47:20And then I might go travel again. Who knows? but I did travel Southeast Asia. We did New Zealand and Japan and Thailand, and it was really living the life. And at the same time, when I go back and I think, what was it? This negotiation really helped. And investing in low cost index funds, you would imagine that after a year of retirement, if I spent 20 or 30 grand a year, which that's all I spend a year, that I would be down 30 ,000, but I'm actually up almost 100 ,000 since last year of retiring. So that just goes to show I'm trying to put it into practice. I knew it would be scary and uncomfortable, just like negotiating.

48:02But I do think that taking this time off will be worth it. And I'm interested in what is next, not just my nine to five, but having some kind of passions to pursue, where when you leave the rat race, you're leaving the rat race, you're not leaving interesting things to do and things to fill your time. I have found that most people, their response is, well, won't you be bored? I'm sure you've gotten that a lot, Brad. But of course, you're not bored, are you? There's so much to do and see. And I really do owe it all to fire and finding this movement in my early 20s so that when now I'm 30, I've spent 10 years accumulating and saving, and that's what it took.

48:44So I'm just really excited that you're here and you're spreading this message and that it doesn't have to just be early 20s people who are doing this. Of course, it helps a lot if you find it earlier. But no matter what age you're finding it, that this kind of thing is possible and negotiating might be one step to get there a little bit faster. Oh, that's so beautiful. I mean, that encapsulates the FI mentality and message in just a couple of minutes, right? Because you're talking about in this case, It's, okay, it's a big wide world. I can travel. I can do things. I don't need to be just locked in on this job.

49:19So many people wrap their identities up in their jobs and it's silly. There's so many things to do out there. And there's a quote from your article that I'm going to read here in a second. But before I get into that, it's, okay, index funds. In your case, yeah, you weren't working. You weren't bringing in income. And you obviously were spending somewhere in the 20 to 25,$30 ,000, which is obviously a very inexpensive life, but it's still 20 to$30 ,000 out of your net worth with$0 of income coming in. But over the last year, your net worth has still gone up a hundred thousand dollars net, even after taking that money out and spending it.

49:56And that's the beautiful thing of, Hey, I have this money invested and I have a significant nest egg. There are going to be years where it grows 10 to 20 % like this past year. And in your case, obviously, you know, big earn with sequence of return risk. I mean, things worked out pretty well for the beginning of your early retirement, which is wonderful, but it's not terribly atypical to have a year where it goes up 8, 10, 12, 15%. And if you're spending dramatically less than that, and certainly dramatically less than a 4 % safe withdrawal, that money, you're going to be shocked to see it just keep compounding.

50:31Oh, yeah. And when I retired, the next couple of months was that big crash that we had. So it actually went down almost$200 ,000 in the first few months after quitting my job and deciding to travel. And honestly, because of this podcast, Choose Fi, other resources and fire, I had this investment strategy where I knew that this is going to happen. And I could have been in my scarcity mindset and said, Oh, no, if I leave my job now, I will lose all my software skills, I'll probably be bored, I need more cushion. We're on the brink of everyone was saying it was a recession and that we were that it's very extremely risky.

51:13And I will tell you, it doesn't seem like there will ever be a good time to retire. And 29 does feel a little early. But that was all scarcity. And if I think an abundance mindset, 29 is not too early to quit your job and start working on something that you're passionate about. It's not too early to share with others that something crazy like this, it really does feel crazy, but it's possible. And it's possible using implementing these methods, negotiating for that extra 7 ,000 and ending up with a million in the end. Like these are real numbers. It feels abstract, but I feel like I'm living it and I want to tell other people that yes, sometimes it's uncomfortable.

51:54Sometimes it's scary. Sometimes other people will have more fear than you will. In my case, my mom with that job offer, but also many other people telling me it's too early to retire. And it is a lean life that I've been living. But I was sipping mango smoothies on Thai beaches, and I didn't really have to worry about those voices. And it did bounce back. And we'll see, you know, there's always risks involved, there might be some catastrophic thing that happens. And in that case, I'll just have to negotiate for a new job. Wow, I love it. And yeah, it's funny, because I just kind of assumed based on the timing, that everything was roses based on when you left and you're the stock markets gone up 20%.

52:36But I had it exactly wrong, your net worth dropped a couple hundred thousand dollars. And yet you stuck with the plan. And obviously, the market has come roaring back to the point where, again, net of all the money you've spent, you're still up a significant amount. So I mean, that is extraordinary. And yeah, just I think to close it out, I'm just going to read this paragraph from your article, which is, with a plane ticket booked, retirement wasn't just the lack of work. It was the addition of adventure. I didn't have to fret about who I was without a job title or worry that I wouldn't have anything to do.

53:09For anyone struggling with retiring, I recommend treating it like a sabbatical. Take six months to a year off without the pressure of it being permanent. If I wanted to go back to my work after my travels, I could. Do I want to? No. That is just absolutely brilliant. And I mean, that brings us to today, really. And you are living life. You've proven this out to yourself and to so many other people. And like you said, sure, it's easier if you get started at 20. But this is a mathematical equation. And this FI is valuable and pertinent to anybody, no matter when you're starting. It doesn't matter if it's 30, 40, 50.

53:46It doesn't matter. It's a mathematical equation and it's about taking action. And you took action and it's just extraordinary. So thank you so very much for coming back on the show. I think this is really going to help a lot of people. And yeah, like you said, financialmechanic.com. Is there anywhere else that we can send people to? My Twitter is Phi Mechanic, but my blog, financialmechanic.com, is definitely the best place. I'd love to hear anybody who uses these tips and tricks for negotiation. I'd love to hear what you're doing to build your best fire life. I love that. So I would love for people to copy me on that email too.

54:24So brad at choosefi.com. And do you have an email or just the contact form on your website? Yeah. Yeah, my email is fm at financialmechanic.com. And there's also a contact form on the website. Beautiful. Yeah, let us know how you took this information and took action on it. That is what it's all about. It's not just taking it in, sitting on the couch. You have to get up off the couch and take action. And the Financial Mechanic has just given you this incredible toolbox of skills to actually implement this in your life. So run with it. All right, again, thank you for being here. Yeah, thanks for having me.

54:57Thank you for listening to today's show and for being part of the Chooseify community. If you haven't already, the best ways to get involved are first, subscribe to the podcast. So you're listening to this on a podcast player and just hit subscribe and then subscribe to my weekly newsletter. I actually sit down every Monday and write this by hand and I send it out Tuesday morning. So just head over to chooseify.com slash subscribe. And it's really, really easy to get on the newsletter list right there. and I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox.

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