Mapgirl’s Fiscal Challenge

BostonGal says, “Seeing how many people are on the Millionaire in the Making list due in part to secure state, government, or military pension plans is becoming a bit of a downer for me. Should I try to start a second career as a state or government employee? Just so I can get guaranteed income and heath benefits in retirement?”

Some of her commenters take issue saying that benefits are not guaranteed and changeable with the economic tides especially at the state level. I agree. It’s a risk and it has a lot of pros and cons. Living in DC, I can see that every day. The CNN/Money series has generally profiled federal government employees and if you ask me, a lot of them have been active military and I’m not sure combat pay is a great way to build your wealth up.

Check Office of Personnel Management if you really have questions. OPM is your best resource for general questions or else the HR office of your potential agency.

In terms of benefits as a full-time employee, you get:

FEGLI - Group Life Insurance: But you have to sign up for it when you are hired. No changing your mind later because you can’t sign up. OPM only runs a sign up period every few years, ‘few’ meaning ‘decades’. You can check their site for the open enrollment dates, they are very, very far apart. When you’re young, you don’t think you need it, so you think you’re saving money. Then you turn 40, have two kids and you want insurance and now you have to go get it on your own. Something to think about if you enter a government career at 25.

FERS-Federal Employees Retirement System: A three-part system consisting of
1. Social Security - Yes, they really think they’re going to pay it in 20 years.
2. Basic Benefits/Annuity - Pension benefit, an annuity payment of a portion of your salary.
3. Thrift Savings Plan - Retirement investments, which on the whole, are very generic and probably don’t chase a lot of risk for high reward. But it’s a little hard to tell from the available literature. The other thing is that the maximum match is 5% of your salary, for a total of 10%. The other good thing is that you vest in 2 years and they automatically give you 1% even if you don’t save anything.

Health Insurance: Health insurance, for your whole family, dependent children, adopted/fostered children.

I’m sure all that sounds great, but you have to work for the government for 30 years unless you are in one of several categories, all of which have stipulations.

1. Military or Law Enforcement: 25 years of service or Age 50 and 20 years of service.
2. Voluntary Early Retirement: Special retirement packages offered agency by agency, dependent on a matrix of age and length of service, determined at the time the packages are offered which could be few and far between.
3. Part-Time Employees
4. Members of Congress/Congressional Employees
5. Military Reserve Technicians

Frankly, I don’t like the idea of working for 30 years for anybody. At that point, I might as well be a company man for some large corporation or something crazy like that.

The other thing is that BostonGal might not like her pay grade and step. I know she’s in IT but some federal IT jobs in the DC area don’t pay well and frankly, they can truly stink. (I knew a sysadmin who left our company for two weeks and came right back because his FAA IT job wasn’t what it was billed to be.) You’re better off being a contractor if you ask me, but the government does pay for a lot of training, so you might be able to move your grade up a lot faster with an internal promotion, new degree, or an agency change.

At any rate, if you want to work for the government, check out USAJobs.com. It’s OPM’s website for recruiting. It works like Monster.com where you can set up agents and bulletins for new listings. That’s key since there are closing dates on postings which are very important. However, several agencies subcontract out to AVUE, like DOJ, USDA Forest Service, and TSA. (Get used to acronyms, that’s what government life is all about!)

There is much more to consider but these are some basics. Things like COLA, ‘danger pay’, locality pay, etc are more esoteric but can really make a huge difference in your salary comparisons. (For instance DC area pay is 30+% higher than published tables.)

Here’s a few more thoughts on the matter.

#1: HC made a great point about waiting for your first paycheck to arrive. Sometimes, you get caught short for a month when you start work because you’re waiting for direct deposit to kick in, etc. I’m rethinking how I budget stuff due to changed pay cycles. I used to get paid every two weeks, which meant I got the fictitious ‘bonus’ check twice a year because you end up with three paychecks a month in two different months. (My stance is that it’s not a bonus. You worked 80 hours for it. It’s yours.) With my new job, I get paid twice a month. It’s taking me a while to get used to it since it’s a radical departure in how I manage my finances. I used to give myself an allowance on paycheck Fridays, but now that payday is a floating day, I have to pay closer attention to my cash flow, lest I run out of money in my checking account. (I generally keep very little in my day to day checking account.)

#2: Remapping the lunch plan. I work in a place with a plethora of food options. However, I have noticed the pricing on lunch is MUCH MORE expensive than before. Because I had access to in-building cafeterias at my old job, the pricing was rather low. Because they were self-serve buffets, I also could control my spending and my calories by dishing out exactly what I planned to eat with no waste. The new dining options pose a HUGE problem for me since I can no longer exercise stringent portion control. This doesn’t seem like a huge issue, but it is. Before I could eat a complete and balanced meal for $4. Now I usually spend about $7 and it’s too much food or else not very healthy. The guys at the office are conditioned to get $2.50 sandwich specials from the local supermarket, but I hate sandwiches and have a preference for hot food. Long term, this will be an issue. I will eat more and spend more. (And no, I will not be packing my lunch. My evening plans are often so variable that I cannot count on cooking anything to take to work the next day.)

#3: 401k plan. Because much of my company’s HR is self-serve, I’m having a devil of a time signing up for the 401k plan. I’m going to have to spend some time making phone calls to get that figured out. Annoying. This also means that instead of the 6% I initially planned to contribute, I have to bump it up so that I can average out 6% over the course of the year since there will be at least two checks with no contribution at all. Frustrating, but not insurmountable. I only mention it because it does represent a kink in my SMART goals.

#4: Public transportation is not reimbursable. I was hoping for this. Most Federal contractors in DC will provide Metrochecks so you can get Metrocards (farecards) as a tax-sheltered benefit. Apparently, that is variable at my company depending on the contract terms with the client. So at this time, I’m spending the equivalent of gas money in Metrocards at the increased fares that began in January 2008. Because of this, I’m thinking I might keep on driving to work as the parking garage fee is only $100 a month and that’s equivalent to Metro. I’ll have to crunch the numbers, but sadly, reducing my carbon footprint might still be a pipedream. (I don’t plan on taking my motorcycle to work in pantyhose. Are you nuts? My co-worker and I were talking about taking our bikes to work, but seriously, it’s a bad idea for me.)

#5: Medical FSA contribution problem. This year you can contribute $5100 a year. Going back to point #1 and the shift to semi-monthly paychecks from bi-weekly, I will now be contributing a lot more to FSA per paycheck. Instead of $192 a bi-weekly check, it’s more like $250+ semi-monthly. I get paid more overall, but since I only have 20 more paychecks left in 2008, I am going to have less cash per check than I initially budgeted.

#6 Medical FSA reimbursement problem. I already had my big surgery this year before my benefits card arrived. Now I have to send in forms. It’s going to be a while for a check to get sent to me. It’s annoying, but at least I am not suffering for the money right now. I could have delayed surgery further, but the timing was good to get it done early during my job transition while my project ramp up was delayed.

So that is all for right now. Sorry for the randomness of this entry, but I’ve been dwelling on these issues in the back of my mind the last few days without much chance to write them down. It’s half a post for you and half a TO DO List for me.

To elaborate a little more about my job and what I hope it will be:

1. I wanted to reduce my carbon footprint. I know it sounds cheesy, but I will be able to commute via public transport for my first engagement with this consulting firm. I find that pretty exciting to get a portion of my life back so I can read or knit while commuting. My corporate offices had moved in the last year and the new drive was killing me, especially when it takes two hours to drive past Tyson’s Corner at Christmastime. I wasn’t going to do that again next year. If you want to know more, listen to this Diane Rehm show episode about Happiness. The number one thing that destroys happiness is a long commute to work.

2. I hope that I can stay and grow with this firm for the next 5 to 10 years. I really loved my team at my old company, but to stay there for 5 years would have meant a transfer to the Midwest in a place where I would only have co-workers for friends at the start. (One of the reasons I spent so much on holiday presents for my teammates was because I knew I was leaving and I wanted to give them a token of my appreciation for their friendship over the last 4.5 years through the thick and thin times with our previous totally sh*tty employer to the awesome team we built at the new place.)

3. I am excited that there are great benefits with my new company. My old firm doesn’t even compare. Tuition, training, health insurance, 401k plan, corporate social clubs, everything. Discounts on cars, cell phones, computers, EVERYTHING. I bet I can join a warehouse club at a discount even. Hm. Must look into that.

4. The money is great. It’s a 6% raise over my total compensation from my last firm, but I know that I am more likely to become a 6-figure employee with the new employer. Whereas my old employer wouldn’t give my senior manager a 6-figure salary, though he deserved it, they’d never give me one as a technical minion. It’s actually more like a 16% raise over my base salary, and though I am losing my bonus money for 2007 and a tiny bit of 401k vesting, the present value of money on the checks between January 1 and bonus season payouts have more value. No, really. I can do the math on that since we were notified that we weren’t going to make our targets to get the full 10% bonus. So why should I have waited till bonus season.

That is all. Really, are there any other better reasons to change jobs? Someone asked me about changing jobs and the job hunt. Hang on. I’ll get to that later this week.

The tuition reimbursement came in last week. Very exciting stuff. I would turn it around to pay the credit card down, but there’s funky stuff going on with my dental bills. I’m holding on to most of it in savings for the moment, but using a chunk of it to pay off a dental expense that my insurance refuses to cover.

Due to some weird billing with the insurance, the very expensive surgery I had in March may not be fully covered. I have an appointment this week and I will be querying the surgeon’s office about it. The last time they looked, they said that they hadn’t attempted to get paid by the dental insurer.

Since my ‘emergency fund’ is down to the very last of the CD’s I’ve been holding, I socked away about $2K to build it back up. I will actually end up using that money to pay for the permanent crowns which are about $900 a piece, but at least I’ll make some interest in the mean time. They won’t go in for a few more months yet. (And I KNEW I would burn through my emergency fund if I didn’t lock some of it up in CD’s!)

I have to remember that I’m not suffering. I’m doing ok. Really. I am.

At least August is a three paycheck month. I’ll be able to throw some more money at my credit cards then. I hope.

Recently one of my readers IM’d me via the Meebo window on the left. She was asking me about job hunting and recruiters. I tried to answer her questions as best I could, because I’m really good at getting a new job. That’s not to say that I suck. In fact, I don’t think I’ve ever truly been sacked for a job because I was a lousy employee. Most of the time, I hated what I was doing and departed for greener pastures when I was younger and much more antsy.

Anyhow, I came across an article at Yahoo on Salary Mistakes and some of the advice I gave this reader was contained within it.

The main things for younger folks are these:

1) Don’t Fence Yourself In: Don’t enter the salary negotiation too early. Save it till you know you are a serious contender. Somewhere in there, the HR person or recruiter will tell you what the compensation might be. If it’s too low, hold on till you find out more before deciding to walk away. Or they might ask what your current compensation is. If they ask what you are currently making, tell them on what you would like to make to focus them on where you want to be.

2) Be Honest and Accurate: DO NOT LIE on your resume. It’s a very ugly thing to do. (My point is completely different from the article’s, but still good advice.) Many years ago people would lie and say they went to Harvard. BAD idea. My friend worked at Transamerica as a temp in the PR department when an executive’s bogus resume was uncovered. Let’s just say he and I went to a long lunch that day so he could avoid the flak flying on the executive floor. Bottom line. Be honest.

3) Look at the Big Picture/Focus on Career Goals: These are really the same thing and tie back to #1. Your compensation is not the only reason to take a job. Trust me. I’ve been there. I’ve taken jobs to learn new skills. I went from a $55K/yr job in equity research to a $17K/yr job as a IT helpdesk technician. Yes, that totally sucked. But in the end, I am now well compensated as an Oracle database monkey and I wouldn’t have gotten here without that first entry-level IT job. (And I was 26 at the time.)

I have also moved jobs to get out of hellholes and taking only a blip in salary increases just to get out and get out fast. Because I was not focused on a long-term career goal but only the money and escaping, I didn’t like that job very much either. So take the time to really figure out what job you want next.

4) Timing Is Crucial: While the article ties back to being honest throughout the process, I find that if you’re always a straight-shooter, this isn’t going to be a problem for you. But I also live by Veritas vos liberabit. “The truth will set you free.”

Another way that timing is crucial is that while the time is not right now, it might right in the future. When I first moved to California, I took a job at UC Berkeley. While I was there, I got a call from someone about a job working in the semiconductor industry. They had received my resume from a referral and wanted to interview me. As I had just taken the post at UCB, I wasn’t interested in another opportunity. A few months later, as the Dean of our School was resigning, my department was on thin ice without our champion, so I decided it might be a good time to go and take a job within San Francisco. (The $40-60 monthly commuting cost didn’t help either.) The lady who had called me months before was still looking for someone and called me a second time. This time, because circumstances had changed, I was open to talking with her. So timing is crucial. Keep that in mind when you are in the job hunt. You might still be a great fit at a later date.

I hope everyone out there who is looking for a job gets one soon! Graduation season is coming to a close and jobs are starting soon. Those student loan bills aren’t going to wait much longer. If I recall correctly, my first ones were due in November after my May graduation.

Good luck if you’re looking for a new gig!

Things are going great for me at my job. I got a raise earlier this year. (Per Frank, it’s a compression raise.) I got a bonus for last year’s good work and overall company performance. To cap it off, I got another raise of sorts.

I asked my boss last year if I could take an Oracle course and he agreed it would be a good idea since we’re getting a new server soon. Since our company wants to keep us brownies interested in work, our entire team was approved to take more coursework. The education benefit at work is for $3000.00 per person per year. That’s not too bad. It’s about going rate for most companies in the area. That’s the cost of one week-long Oracle course at most places that offer fancy Oracle classes. (However, it falls exceedingly short of a top-flight MBA program at Georgetown.)

So I have just effectively given myself a $3000.00 raise this month. I am mucho excited about this class. I am excited that my company is opening the valves and letting some money flow to the places we need it. This is going to be a great year for my team. It’s part of why I’ve been so busy lately with work.

I got a very interesting email from the CEO of my company this week. No, it wasn’t to congratulate me on a job well done. It was to tell me of a change in policy for 401k matching. They’re calling it the 401k True-Up.

Basically, if you are a front-loader on your 401k plan, i.e. you make contributions to your 401k, and you max out mid-year, you are actually losing some corporate matching funds during the last few months of the year. Your company matches say 50% of the first 5% you contribute, i.e. another 2.5%, but if you front-load your contributions, you will actually lose out on 2.5% on paychecks at the end of the year when you stop contributing. (A saw a comment about this somewhere, but I can’t find it.) EDIT: It was here at IRA!

My company will ‘true-up’ your account by making a lump-sum contribution to your account at the end of the year for the ‘lost’ matching funds if you have front-loaded your account. I think that’s rather nice of them. It’s good to contribute early and often, and it’s nice not to be penalized for putting in your $14K+ into your account in the first 10 months of the year.

Yeah, NO, I’m not contributing the max. But it’s very nice to know that my company is unveiling this new benefit. Sure it’s really for people who are socking away a ton of money, but I could see myself putting 20-23% of my check into my plan, then later stopping contributions when I hit the limit and taking all the extra cash as Christmas money!

Will your company true-up? Is this some crazy cool extra special benefit? Or is my company behind the 8-ball? I think it’s cool and I’m happy for it, even if I’m not going to be able to take advantage of it for a little while yet.

EasyChange asks:
Do you really think that you got what you deserved still? And beyond that, are you worried that there will be any retaliation as a result of your “playing hardball�? These are major concerns that I’ve had in the past with going for a counter-offer. I’ve always felt better with just leaving. And my feeling was usually that I was making all other points “except� money when I met with my boss regularly. If they weren’t doing it for me before, why would they do it now?

Did you feel the same way? Or did you feel like you didn’t have a forum to voice your concerns? And were they acted upon before your request for an internal raise?

The short answer is YES. I think I got what I deserved. Is it what I am actually worth on the open market? No, I don’t think so, I could still easily go out and make $10K more than than I got. But I was not willing to push it that far with my company and if you read further, you’ll see why. Therefore the answer is still a YES, I got what I deserved.

(more…)

Surprisingly, there were some good things in my budget.

On the income side, because I made an effort to save, I made ~$100.00 in interest by doing nothing but saving! I like that! I don’t think 2007 will see a comparable number unless people want ING referrals from me. The ones I got from 2006 were categorized as interest income. (Email me at mapgirlsfiscalchallenge at Google’s mail service.)

I saved money on my car insurance, and the savings is approximately the cost of my new homeowner’s policy I had written this year. I expect this savings to be eaten up by a rise in premiums next year.

I don’t know about you, but I plan out what I’m going to pay in credit card interest. For some reason, I paid ~$100.00 less than planned this year. I must be some kind of pessimist!

Though I splurged on a ridiculously expensive skirt this year, I was under budget by ~$900.00. I think Frumperella can reassess this figure completely for 2007.

My crack habit, er, excuse me, my YARN habit was under budget by ~$100.00. Thank god I quit my second job at the crack house, i.e. yarn shop. I spent most of my budget in two purchases during their annual clearance sale at the beginning of the year. I think I realized what I was doing and made sure not to buy anything else unless I REALLY needed it. Now I don’t feel so bad buying high quality kid mohair as a year-end gift to myself.

My gift budget looks like I was under ~$300.00, but that doesn’t seem right due to a weird little transaction I did with my sibling to buy wedding presents for my cousin. I was probably under by only ~$150.00. The other thing is that I tend to buy lunches and dinners for friends as treats for their birthday, and I put that all into my dining out category. Remarkably, I wasn’t ridiculously overbudget by dinging out, which is why it didn’t make the BAD list.

Before you chide me for dining out a lot. I was totally on budget with my spending AND I grossly over estimated my grocery budget by ~$1200.00. It’s not like I overspent on a generic category of ‘FOOD’. This also will have to be reassessed for next year, including another $250.00-$350.00 case of wine. My wine rack is empty and needs replenishment.

I don’t understand Quicken sometimes and I think this has to do with my screwy allocation for healthcare benefits from work, but I was under budget by ~$1800.00 for a generic ‘Insurance’ amount.

Surprisingly, my medical expenses were not way out of budget. I was under by ~$200.00. But I will have to carefully plan 2007 since I bumped up my Medical FSA and I still have a mountain of expenses to cover. My dentist was very clear on how much stuff will cost me for each item I’m having done which allowed me to change my FSA allocation. Make sure you ask yours for an outline of charges. They really should be able to give you one if you ask.

Last interesting category is my taxes. I got refunds from DC and VA, but only after overpaying VA due to their weird auditing practices. If you don’t include my property taxes on the car and condo, I actually over budgeted by ~$1000.00. I think this is primarily due to ramping up my pre-tax contributions and deductions.

How did I do? Not very well. I overspent on my budget by ~$3000.00.

I was about $1000.00 off on my income due to my budgeting healthcare benefit expenses off my old employer and not adjusting it to actual costs with my current employer.

Specific category notes:

The rising price of gas definitely shows on my budget. I spent ~$300.00 more than planned.

My car repairs were a budget killer at ~$4000.00, because I track that as a separate item from fuel expenses. This single budget item explains away the entire budget deficit.

Buying a motorcycle was *VERY* unplanned and it shows. I could blame this as the budget killer, but it cost me less that the deficit total.

My entertainment budget was over by ~$300.00, but almost that entire amount represents pre-paid tickets for 8 adults to the once in a lifetime Tutankhamen show in Philadelphia for 2007. I hope to recoup most of that from my friends next year when the show takes place.

The ‘household’ category was over by ~$250.00, which is about what I spent on a home warranty service. It sounds crazy, but I renewed it since it’s a one-stop service for household applicance repair. I actually ended up using it to replace my garbage disposal in 2005. I found the convenience to be a worthwhile expense. I sleep better at night knowing I have a number to call. (I was a total wreck during my first home repair crisis, which is a buyer’s remorse story. I know that am a panicker in a crisis, which is why I obsess about being prepared for stuff. I freak out less.)

I am not sure what to make of this one. I overspent on mortgage interest in 2006 by ~$900.00. But since I capped my HELOC to a fixed rate and I can take almost all of mortgage interest amount as a deduction, I can’t call this all horrible since I’ll actually get back some of this category when I file my taxes.

I grossly under estimated my property taxes by ~$500.00. That represents what I paid for my condo and for my car. In VA, there is personal property tax on your vehicle. Now that I know what a full year of taxes are upon my car, I should be able to budget this better. But due to annual real estate reassessment in VA, I might still be way off again. Since markets are flattening, I should be alright. (This may require another post to explain.)

I have the good stuff in another post. Though the overall budget picture was that I overspent, I did a lot better on a few things which surprised me. Stay tuned.