[icdxpresso]

How worried should an entry level developer who has been working only 6 months at his current company be? Due to an extremely high cost of living, paying all my bills and student loans and such, I have very little money actually saved up. If I lost my job I'd have to pack my bags and move out of Silicon Valley ASAP. And I really haven't accomplished that much at work during the past 6 months because I joined during holiday season and pretty much spent like 3 months training. I'd be really fucked if I got laid off now.

[dredmorbius]

Be concerned. Have a plan.

Consider attacking your living expenses. Request a rent reduction from your landlord -- you're a known entity, and they're more likely to offer this if you ask than if you don't, and them more they've heard that request. Look at roommate situations. Don't make any big purchases. Do put away an emergency stash.

One of the big problems the Bay Area faces right now is one that attacks its ongoing attractiveness as a tech hub: technical labour is losing its flexibility. Employment is contracting, slightly, but housing is so expensive that virtually nobody has any personal runtime if the paychecks stop. A considerable exodus from the area may make it less attractive in future. It's one thing to take a new job down the street, or even switch between San Jose and SF or SF and Oakland. It's another to shuttle back and forth, with household wares, from Cleveland to Palo Alto, every 6-18 months.

It's also an opportunity for a new low-cost hub to establish itself. One with what makes SV tick, but doesn't have its problems.

Unfortunately, most of the candidate destinations lack the legal environment, particularly labour law, which made SV so attractive. It's possible locations outside the US might emerge, though I'm not sure where that might be either.

I'm not calling the end of SV, that would be idiotic (until its not, at which point it will be inspired). But the hub is entering a period of distinct vulnerability.

[ghaff]

That's the big issue. Multiple $Ks/mo in rent, if you haven't already built up a nice nest egg, make it really hard to ride out a period of unemployment. (And, indeed, make it really risky to bet on something coming along if there's a general downturn.)

I'm less convinced of the uniqueness of SV and the role of labor laws. Places like Massachusetts are doing pretty well these day. (And, indeed, housing near the city isn't cheap either.) This in spite of EMC and certain other employers torpedoing anti-non-compete legislation. But, then, a lot of Boston-area employers don't necessarily put non-compete's in place even though they're more enforceable than in CA.

[dredmorbius]

Noncompetes and a great many issues, along with a general sense of disgust at the tech world, and a growing sentiment that it's not delivering on addressing Big Problems[1], all have me sitting out for now.

But the thought of dealing with any of a number of hassles, ranging from commutes to housing frustrations to highly uncertain employment to outright labour-hostile legal codes (and even in light of those, vastly worse employment contracts) has me reduced to essentially zero interest in even considering the game.

Massachussets, New York, Texas, and North Carolina have all done an exemplary job of eliminating themselves from any and all consideration. California's simply not affordable where there's work, and there's no work where it's affordable. Europe's a mess.

Altair IV is looking pretty good.

________________________________

Notes:

1. See for example, https://www.reddit.com/r/dredmorbius/comments/38skua/what_ar...

[krschultz]

Focus really hard on getting 3-6 months of living expenses saved up as an emergency fund. It's more important than paying back the student loans. Pay the minimums required until you have a safety net and then you can turn back to paying off debt. Interest rates are historically low, it's not worth racking up credit card debt if things go wrong.

[aianus]

This is only true if he can't get a personal line of credit or family loan at around the same interest rate as his student loans. Otherwise, it's better to pay off the debt.

Best case: he doesn't get laid off

Worst case: he gets laid off and puts the debt back on the LoC

[dmm]

If you're going to analyze the situation this way you have to take into account the risk of the credit not being available when you need it. Credit can disappear at any time and rates change. What if your parents lose their job at the same time and can no longer lend you the money? What if the credit card you were planning to use doubles its rate?

Money sitting in an insured account is as safe as anything in the world.

[aianus]

It depends on his personal appetite for risk and his family/friend situation, of course. But it almost certainly has a worse expected value to pay $100s in extra interest as insurance against somehow losing your LoC and job within months of each other.

[joncrocks]

Well indeed. You're going to need the money when you're unemployed.

People don't tend to like lending unemployed people money. Isn't that the first thing a bank's going to ask? "How is person going to pay me back?"

[aianus]

You open the LoC now, while you're employed.

In any case I've never had my bank ask for any income verification of any kind, they just take me at my word. I was surprised too.

[nilkn]

My personal advice:

Be moderately concerned. Live frugally and try to save money if at all possible.

Be more or less concerned based on specific details of your company that I don't know about. Does it have a revenue stream or does it depend completely on funding? Is it just a year old or has it already survived for a decade or more? Are your primary customers other startups (big risk), or do you primarily serve a different industry?

And start looking at jobs you think you might enjoy that are outside the Bay Area. Life is a lot less stressful if you're in a situation where you can save some money without worrying about every single purchase you make. Even a $50k-60k salary which many here might scoff at can take you far in a much cheaper area of the country.

[ryandrake]

> And start looking at jobs you think you might enjoy that are outside the Bay Area. Life is a lot less stressful if you're in a situation where you can save some money without worrying about every single purchase you make. Even a $50k-60k salary which many here might scoff at can take you far in a much cheaper area of the country.

Generally good advice, but here's the thing that often goes undiscussed when talking about cost of living: Many big expenses do not scale with the cost of living. If I have a $80K student loan. It's $80K no matter where in the country I am living. So I'd rather go for the high salary/high cost of living than the low salary/low const of living, in order to maximize the ability to pay for these fixed costs. Cars are the same way.

[sethhochberg]

I'm glad to see someone else making this kind of economic argument, I've often said similar things to friends questioning whether the salary gains in a place like NYC are worth the cost of living - housing costs are extremely variable nationally, but most consumer goods fall into a pretty narrow range.

Of course, I haven't ever actually done the math to confirm that this theory checks out when looked at as percentages of available income after dealing with the extreme costs like housing... but I'd guess it still holds.

[JoblessWonder]

Yeah... your last sentence is the important part. It comes down to doing the math.

Also, while living frugally can make a huge difference in your net available income if you live in a high salary/high cost of living city, it can also be very hard to commit to that lifestyle when your friends/co-workers don't.

[ryandrake]

Yea, for many people their student loan payment is by far their largest expense (even over rent), so it makes sense to maximize, maximize, maximize.

Not sure how your friends' or co-workers' lifestyles have any effect on your own, though. I have friends who work for Google and live what I see as pretty extravagant lifestyles, and overhear co-workers (who must make a shit-ton more than me) talk about their nanny, their maids and their kids' private schools, but it doesn't really have any bearing on my life. You have to live the lifestyle you can afford or you go broke.

[ghaff]

People probably put too much stock in percentages. What do the (after-tax) absolute numbers look like?

[saluki]

Probably depends how your company is doing. Don't worry about it too much it's mostly out of your control. But don't ask about possible layoffs how the company is doing just keep a positive attitude.

You can . . . focus at your job, learn what you can, take initiative, get things done, be a positive force on your team.

Save what you can, trim expenses, eating out, etc. Getting laid off always sucks do what you can to be ready just in case.

Polish up your resume and be ready to use it if needed. I expect you would get some severance to give you some time to bridge to a new job.

Good luck.

[cylinder]

Are the company's customers other startups or enterprise?

How much are they burning vs what they've raised? Are they a consumer startup? Do they make money at all?

Basically, imagine your company cannot raise another round of VC again. Will it survive?

Also, are your loans federal? You should put them on Income Based Repayment if you can. It's more important to save up a cushion before paying student loans that have flexible options like that.