Swizec Teller - a geek with a hatswizec.com

    Pay yourself first

    Friend, I like to share financials to encourage others. It benefits everyone when we talk about these things at the small expense of bruising an ego or three. ✌️

    Here's my asset allocation after 6 years in Silicon Valley. I came here with about $4000 to my name after a few shorter stints digital nomad style. The landing was rough – lived on a mattress in the living room for the first two weeks.

    Asset allocation
    Asset allocation

    Going from broke to not-broke happens in 2 steps:

    1. Increase your cashflow
    2. Pay yourself first

    The famous fuck you money advice from Lucy Liu.

    Increase your cashflow

    This part is easy: You're an engineer.

    Software engineers are one of the most sought-after people in the world. It's the 2nd best job in USA in terms of prospects and ease of starting.

    There were 207,000 job openings for software engineers in December 2020. The market is hot hot hot.

    Here's advice I shared on why you aren't drowning in recruiters too and how to approach job hunting like an asset, not a beggar.

    Pay yourself first

    Ok you've got money coming in, now what?

    The traditional advice is to "save", but that sounds lame. If you skip the avocado toast you'll have $6000 in ten years.

    I enjoy avocado toast and $6 matcha lattes. What's the point of life, if you can't enjoy it?

    You should invest. Turn your cashflow into wealth.

    Pay yourself first is an idea from The Richest Man in Babylon and it finally clicked for me after reading Profit First.

    Profit is not what's left after expenses, expenses are what's left after profit.

    You pay yourself first, then fit your life into what's left. 🤨

    Here's how that shakes out:

    My average income in 2021 has been $18,380/mo. Most of it from the dayjob. The infoproducts business, which this newsletter is part of, has turned into more of an expensive hobby lately.

    Despite the $18,380 that comes in, my lifestyle fits into $5,200/mo. That covers everything I value.

    $18,380/mo -$3,670 for taxes -$600 for index funds -$200 for cash buffer -$920 for profit -$940 for retirement

    That leaves $12,000 for life and business. $5,200 goes for life in San Francisco. Rent, food, leisure, ... adds up fast not gonna lie 😅

    The rest – about $6,800 – is for high risk hopefully high reward bets. A large part goes into running the infoproducts side business.

    About $2,700 in monthly fixed costs right now. Making a loss and hoping for big things soon.

    Like I said, it's an expensive hobby right now 😇

    The other $4000-ish ebbs and flows. Sometimes I invest in myself and the business with expensive coaching, other times I dump it into RobinHood and play stocks.

    One time I made an angel investment and I wanna make more. They're fun!

    The barbel strategy

    The core of my approach is the barbel strategy that Nassim Taleb talks about in his books.

    Cap your downside, maximize your upside.

    Never invest more than you can afford to lose. That's why I focused on stability first. Creating a safety net.

    Swizec Teller published ServerlessHandbook.dev avatarSwizec Teller published ServerlessHandbook.dev@Swizec
    I like to share financials to encourage others. Here’s my asset allocation after 6 years in Silicon Valley.

    Came here with about $4000 to my name and focused on feeling secure first. “The immigrant work ethic” my girlfriend calls it.

    Now I’m learning how to make bigger bets ✌️
    Tweet media

    As long as I invest profits, not debt, the worst that could happen is that everything blows up and I go back home to Slovenia where my savings last 5 to 6 years with no income.

    Even a tech dayjob has the barbel strategy built in!

    Cushy salary caps your downside. Equity lets you partake in the upside.

    When you think about it, engineers are paid like athletes or movie stars. You get a 4 year agreement with a company. They pay you salary (caps downside) and give you equity that vests over 4 years (large potential upside).

    As a senior software engineer, my cash comp over 4 years comes out to about $700,000 right now. I'm not gonna starve.

    The equity? Oh that could be anywhere between $0 and $4,000,000, but never negative. We'll see 🤷‍♂️

    Yes, working at a FAANG has higher expected return. Do you want the predictability of a Toyota Corolla or the excitement of a Lamborghini?

    Once you've capped your downside, go for the big swing my friend. You deserve it.

    Cheers,
    ~Swizec

    PS: this is not financial advice and I am not a professional, do your own math before making moves

    Did you enjoy this article?

    Published on July 30th, 2021 in Mindset, Life, Career, Money

    Learned something new?
    Want to become an expert?

    Here's how it works 👇

    Leave your email and I'll send you thoughtfully written emails every week about React, JavaScript, and your career. Lessons learned over 20 years in the industry working with companies ranging from tiny startups to Fortune5 behemoths.

    Join Swizec's Newsletter

    And get thoughtful letters 💌 on mindsets, tactics, and technical skills for your career. Real lessons from building production software. No bullshit.

    "Man, love your simple writing! Yours is the only newsletter I open and only blog that I give a fuck to read & scroll till the end. And wow always take away lessons with me. Inspiring! And very relatable. 👌"

    ~ Ashish Kumar

    Join over 10,000 engineers just like you already improving their careers with my letters, workshops, courses, and talks. ✌️

    Have a burning question that you think I can answer? I don't have all of the answers, but I have some! Hit me up on twitter or book a 30min ama for in-depth help.

    Ready to Stop copy pasting D3 examples and create data visualizations of your own?  Learn how to build scalable dataviz components your whole team can understand with React for Data Visualization

    Curious about Serverless and the modern backend? Check out Serverless Handbook, modern backend for the frontend engineer.

    Ready to learn how it all fits together and build a modern webapp from scratch? Learn how to launch a webapp and make your first 💰 on the side with ServerlessReact.Dev

    Want to brush up on your modern JavaScript syntax? Check out my interactive cheatsheet: es6cheatsheet.com

    By the way, just in case no one has told you it yet today: I love and appreciate you for who you are ❤️

    Created bySwizecwith ❤️