“Golden” Handcuffs

NTF wrote a great post on unlocking golden handcuffs. But what do you do when you’re living below your means, you’ve mostly avoided lifestyle inflation, you don’t have a car payment or high student loans, your mortgage is well-affordable, you don’t spend your bonuses, and you don’t really rely on your bonuses?

I’ve been at my company for long enough now that I’m vested in the 401(k) matching, I have great amounts of vacation time accrued, I have lots of deferred compensation waiting for me (projected to be almost 50% of my total compensation for 2013), and I have a good amount of seniority. I’m in a good spot. But there’s part of me that looks at what other companies are doing and I see cool things that other companies around are doing. When a recruiter emails me, I ponder the idea of leaving. When I decided I wanted a change in the fall, I made a promise to myself that I would try another team within my company at the very least until the first RSU vest in 2013, but really until the end of the year. I have a strong suspicion that my next employer won’t have as hearty of bonuses and without them, paying down the mortgage is a much slower process. I also wonder if my deferred compensation won’t be quite as hearty as it will be this year going forward. Then again, my employer is smart and would probably try to avoid that happening to try to keep me for longer.

I’m not addicting to spending; I’m addicted to saving. In a way, it’s the same thing. I’m addicted to the large sums of money coming in. The large bonuses are awesome. I don’t spend my time spending it, but figuring out the best way to stash it in accounts.

I’m trying really hard (I swear!) to spend less time thinking about money. I’m finding projects around the condo and doing those. There are still plenty of those I’ve been avoiding. My theory is that if I think about money less, I’ll be less interested in staying for the bonuses that aren’t mine yet.

My “golden” handcuffs come in the form of Restricted Stock Units (RSUs). I received a grant with my initial contract and then I’ve received more grants every year since with my review. Basically, the grant spells out a schedule of dates on which I get certain numbers of shares of my company’s stock. I sell them all immediately (TFB has a great post on this) because I would never in a million years buy that many shares of my employer’s stock, let alone a single individual stock. Right now, I’m sitting on over six figures in unvested shares. That means that if I leave my company, I don’t see those shares, ever.

Is being addicted to saving my bonuses just as bad as being addicted to spending them? Almost, but not quite. It definitely encourages me to try to change jobs within my company instead of going somewhere else. But is that a good thing forever? I’m not sure. At this point, my plan is to stay at my current company in some role through the mid-2015 for a variety of reasons. I should collect quite a bit of shiny RSUs in that timeframe and who knows what will happen after that!

Readers, have you ever gotten addicted to saving? I have a feeling that a few of you have as well :)

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24 thoughts on ““Golden” Handcuffs

  1. This is definitely something I’m dealing with right now. And we have RSUs too. Such a great retention tool!

    First I would say you’ve done a great job of avoiding GHs in the traditional sense since you could totally afford a lower paying job.

    With respect to the saving, I’m working really hard at defining ‘enough’. It does no good to get to be 40 or 50 or 60 and have a ton of money in the bank but having spent the last years in a job you’re not excited about.

    While the pay might not be as good somewhere else, I’m guessing you’d still make enough to do early mortgage payments. And while you are clearly doing great in your current position, you might really shine in a new way in a job you are more excited about.

    So if I were you I’d think about enough and I’d start taking some of those recruiter calls. Ideally you’d find a job you were so excited about you were excited to make the numbers work and not as worried about the money.

    • Defining “enough” would be a good exercise. It is so hard to do. How are you doing with that?

      I did some calculations on how much I could save with a $90k gross income, no bonuses, last month. At my current spending levels, I could max out the 401(k) and Roth IRA (lower income!), and then save about another $583/month, which seems a bit on the low side to me. On the plus side, I would only see about $1,000 less per month on my direct deposit because I would be paying so much less in income tax! My savings rate would drop to ~40%, which still isn’t bad, except that it’s pretty much all being tied up in retirement accounts at that income level.

      I agree with you that I’m definitely in a position that I could take a lower paying job and be fine. I should probably start at least talking to the local recruiters, especially since I’m not convinced that I want to stay another two years at my current company and if so, not any longer. Changing teams was a stopgap solution for the fact that I’m just not as excited about the products they develop any more, which is super key to feeling motivated to go to work every day. I’m also stockpiling a few vacation days so that I have the time off to interview elsewhere if I so choose.

      • I’m working on it. I should do a post on it to help me finalize the numbers. However, I know a big part if it is getting our house paid off so I completely understand where you are coming from.

        I would definitely start talking to recruiters if I were you. It sometimes takes months to find the perfect position, and you may be able to find a job that pays even more than your current one. Or maybe it pays slightly less but has more upside. Either way, these are smart bets to can take given your strong financial footing!

        • I look forward to reading your post! It definitely took me months to find this new position within my same company and I think that it would take even longer looking outside. There are a few places locally that I’ve scoped out and would consider applying to, once I feel like I do want to go try something different.

  2. Not a bad problem to have. Congrats on working so hard that they are trying desperately to keep you! I have this conversation with coworkers sometimes. They claim that the benefits are too good to look anywhere else. I think its a free market and if you really are that valuable, another company will be happy to pay you even more. Have you been at your company 3 years now?

    • Yup, about three years. It is quite possible that the benefits could be just as good somewhere else. I haven’t really looked around in ages. I think that until this point, I probably wouldn’t have been able to get another company to match what my current company was paying me because they figure < 2 years out of college, the person is just a fresh college hire. I'm past that point now, so looking wouldn't be as big of a deal.

  3. My sister is having a hard time leaving her big industry job. They do keep promising to move her but that keeps getting pushed back, so she’s slowly working up her resume and talking to people outside the industry. But she would be taking a paycut if she moved industries (though getting a raise if she changed companies within the industry).

    I did encourage DH to stay at his job possibly too long because of the income, but he did quit a year before he could have. Mentally I cannot adjust to the idea of possibly not funding IRAs. Not super-funding my 403(b) is a little easier because I never saw that money to begin with. And not funding the 529s is also difficult. So we’ll probably cut back spending if we can. Or bring in more money. We’ll see what happens.

    Measured risks are good. I’m glad we have the savings that DH leaving his job is a question of do we super-fund savings rather than do we fund any savings or cut back spending to minimal levels etc. (And very glad he doesn’t have to stay at his job to fund needs instead of wants.)

    • It’s so hard and I definitely feel for your sister, though I’m not as unhappy as she sounds from your comments.

      It sounds like you guys have structured your finances so even if things are a bit tight, you still have lots of options when your DH quits his job. I like the phrase “super-funding” – it’s definitely applicable to me as well.

  4. Ironically, I was addicted to saving while I was in University, while simultaneously accumulating $XX,XXX in student loans. Twice a year, I would get a lump sum deposited into my account. A big chunk would go towards tuition, but I was still left with $3000 – $5000 just sitting there. I was also working 20 hours a week at a well paying job, sharing a house with 6 other people (therefore paying $300 or so a month in rent), had no car, and no credit card debt, so I actually had a lot of money in my savings account. Seeing that number grow was definitely an addiction, and one that I would like to get back one day :)

    I think as long as you are happy (or least content) with your position, or can move around in your company, you’re plan to stay makes the most sense.

    Best of luck :)

    • Well it sounds like you had a good addiction to savings in university because otherwise it would have been even harder to pay down your student debt :) It sounds like you’re making good progress with tracking your spending and figuring out where your money is going and that’s the first step!

      Agreed – I’ll stay so long as I’m content, but thankfully I spend little enough of my income that I could leave if I was no longer content. Plus I have enough in savings that I don’t need to worry if it takes a few months to find a job.

    • I paid about that much for rent in college and didn’t have a car and didn’t eat out as much/ate out cheaper than I do now. I definitely miss the cost of the rent, but not so much living with that many people!

      • Oh I know! I live alone now and I can’t imagine how I lived with 4 or 5 other women (and ofter their boyfriends) for 5 years!

        • Living alone is pretty much the best thing that post-college life has brought me. So amazing. And now I have two whole bedrooms and 1200 sqft all to myself!!! Haha, I lived with guys for most of college. Living with 3+ guys definitely teaches you life lessons, lol.

  5. I’d never heard it expressed this way before (i.e. “addicted to saving”), but perhaps I am also guilty of this. I have a job with excellent pay, decent bonus, and lots of healthcare benefits. The downside is boredom, little creativity, and no resume building at all. The classic corporate “deal with the devil”. I always say I’d take far less pay to do something exciting and rewarding, but I never do. The truth is that the cut in pay wouldn’t cut my lifestyle at all, but it would cut my savings, and so I suppose maybe I am addicted to the savings that the extra pay provides. Still mulling this one over…

    • Okay so maybe I don’t have it that bad. I have an interesting job that looks great on my resume and gives plenty of room for creativity.

      But yup exactly, a pay cut would cut my savings. And that would be sadness. How much longer do you really need to work to hit FI if your savings rate is so high?

      • I had a mental idea that the amount in dividends would be equivalent to DH’s salary on average. And my BOE was that that would be about a million dollars saved. (The “crossover” point.) However, we cut that cord before we got there.

        My second idea was that we’d be caught up with retirement savings as if we’d been working in graduate school rather than going to school and we’d be able to live on just my salary without too many cuts. We did get to that point.

  6. You’re earning almost two times more than I am, but I think I work less hours than you. I can also take time off whenever I want, and the work environment even with my customer is extremely lenient. This means I have more time to pursue what I want to. Some pursuits have actually allowed me to create semi-passive income sources. So my handcuffs aren’t quite golden (not sure what color they would be). I would be sacrificing more of my time if I moved to a higher paying job.

  7. Do you love your job? There is no amount of money that is worth spending so much of your life with people who wear you down or performing tasks that all feel like chores. What is your work frustration level?

    I love my job.

    • I don’t love my job anymore, but I don’t hate it either. I definitely love software, but I’ve been having some troubles lately finding the right group/role for me. My coworkers are friendly enough and I get along with them fairly well. I’m not really frustrated by work lately, but I’m not super motivated by it either. I’m working on that.

  8. As you know, I’m addicted to saving also. Nothing wrong with that, but it’s also not ideal to be thinking about money all the time unless you’re actually living from paycheck to paycheck. The point of making money at some point is to not have to “worry” about it. I think that comes with automating as much of the investings and savings process as possible, and don’t be like me where you obsessively track your networth every day. Regarding the golden handcuffs, I don’t fully understand the RSU situation, but I work for a startup where your stock options vest over 4 years. First of all, they are options, so you actually have to buy them at fair market value (even though you’re not allowed to sell them until a qualifying event) and then you have to wait at least a year to get any and vest monthly until you have all the shares you were offered on day one. You may get new grants later in your employment, but if the company is doing well the shares will cost more to exercise and you have to wait even longer until you vest. That’s the golden handcuffs of startup life, except that gold could very well prove to be pyrite in the long run! Clearly there is value in taking the risk for the potential reward (otherwise, less people would choose to work for an early startup), but it pains me to think that after investing tens of thousands of dollars to exercise my options (which was considered part of my compensation package), being tied by golden handcuffs of a vesting schedule, and having little control over the decisions made by the executive team towards the success of the company, at the end of it all they could ultimately be worth nothing. RSUs sound a bit more stable, so I can see why they’re even more like “golden handcuffs.”

    • Agreed and I think that I don’t really worry about it per se, but I definitely do think about it a lot, which is something that I am trying to reduce by automating more. I’ve now automated my cell phone, cable, and electricity bills. Insurance is automated, as are HOA dues and mortgage payment (unless I pay extra). I automate the property taxes once I get the bill for the year’s installments. Spending money less often makes me think of it less often as well. I’m also trying to only think about my spending throughout the month and not about my net worth.

      Wow, your company stock sounds far more complicated than mine. My RSUs are pretty stable. Like right now, I know I have X shares vesting at specific dates over the next two years. The only way to lose them is to quit or for my company’s stock price to go to $0.

  9. I like that line: you’re addicted to saving :) I didn’t know that you received bonuses in the form of company stock like a big shot haha Anyways look into NUA(net unrealized appreciation). I think it could benefit you to take on the risk of holding only one company since you are in such a high tax bracket you could make some good money with NUA. I have it on my article to do list but it doesn’t apply to very many people…

    • They’re pretty sweet bonuses because they’re worth more than what they were granted at :D

      NUA looks interesting. Maybe I shouldn’t be transferring my company stock in my 401(k) into VFINX instead… Hmmm “Employee may be subject to 10% penalty for premature distribution if under age 59 ½”. Maybe it’s not so helpful then? I’ll keep researching and avoid transferring my company stock to VFINX in the meantime. Bogleheads link: http://www.bogleheads.org/wiki/Net_Unrealized_Appreciation_-_NUA Thanks for the food for thought!

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