This is a more personal post that will act as a diary entry. I will return to it in some years and compare what I know now with what I will have learnt.
Having worked for several years in companies of different sizes, there were important life questions about financial growth and security in the long-term. Eventually this lead to me exploring new paths of entrepreneurship and freelancing.
Problem
As a software developer in Germany, I don’t earn even remotely as much as the colleagues in the Silicon Valley (SV). However, I imagine I earn still OK for Germany. My living costs are not as high either as in SV, but looking at my last 5 years of salary progression, this does not point a very bright picture. It would take me some 17 more years to get to 100k per year.
Sure, I could speed it up by switching companies and jobs, being better at negotiation or do things that I like less (e.g. office politics), but it feels that the stakes are too low to make a life-changing salary jump. By just being an engineer, I hardly know anyone who earns a seven digit figure in that job here.
As I had student debt, I was (and still am) living very frugally. By doing that, I was able to pay it back within two years and save a bit of money along the way, but I can’t say I am living a very nice life compared to my colleagues who don’t care about saving.
This is what was getting to me for a long time: I want to live a good life but also save up and retire not too late. With my current knowledge, it seems really to be impossible to do that while being an engineering employee (correct me if I am wrong).
Frugalism and Finanial Independence
In the first years after paying back my student loan I read a lot on financial independence. A lot of good stuff there, but in the end I don’t see how I can achieve it on my German salary and live a decent life especially if I have children, a car, savings and maybe even a house. I don’t have any of that right now, but would maybe like to have it in the future.
At my current salary that would mean that my savings rate would become about zilch every year.
Further, I wrote some thoughts on the long-term ETFs plan in my post. After looking at how my ETFs developed for some years, I came to the conclusion that this will never lead to any early retirement or nice life for me.
Ageism in IT
You may also wonder: Why does this guy want to retire early? What’s wrong with working till retirement age (apart from that my pension won’t be enough to live on)? I don’t have to retire. But I saw a lot of evidence on that there is no career path for engineers over a certain age. It doesn’t affect me now, but I saw cases where it made life very hard first hand and there is a lot literature and discussion going on (e.g 1, 2, 3).
I was always thinking why that may be the case and the best answers I could come up with are:
- If you can get two fresh college grads who just learned the newest fancy technologies, work long hours and overtime for free lunch, maybe the company thinks it is a better bet than hiring someone very experienced (in seemingly old stuff) and expensive.
As a offside, I also am not sure how to always keep up with new technology trends. Data Science for instance became hip at some time before I left college. As I did not have the chance over the last five years to do real proper high level machine learning projects, all that was left for me was to study those things in my free time after work. Businesses don’t really care what you want to learn but let you do what is needed.
And new high-paying fields are complex. Data Science includes statistics, stochastics, optimization, linear algebra, software development, infrastructure, data cleaning and visualization just to name some parts. Sure you don’t need to know all, but what I want to say is that it is quite impossible to keep up with such complex new trends if you don’t happen to be in a company that does this or happen to get on that project there.
- Companies want to display a fresh and young image. Everyone is young, everyone is hip. You are a modern company with fresh ideas and tons of innovation. After all, if some companies have policies to hire only people with Harvard degrees (at least in the series Suits) for marketing, why not apply the same to tech workers and just take young people?
Generally in engineering experience beyond a certain point is not really valued in my opinion (I would say around max 10 years). If you are a lawyer, doctor, politician, or C-level manager, age seems to be a good thing. But not here.
Ways forward
I have identified thee ways that may lead me out of this situation. There surely are more ways (e.g. becoming a manager), but these are which I feel I could take right now.
Become a professor at a university of applied sciences
In Germany, there is a distinction between universities (UNI) and universities of applied science (UAS). UNI are more research oriented and usually house career track academics who have never seen anything beyond academia. Having been to Oxford and Harvard, I had to discover that this path is not for me. I don’t think I can be obsessed enough over some niche problems that may interest maybe some ten other people in the world.
UAS are more practical. In order to get a professorship there you need to actually have five years of practical work experience. As the pay there is lower than at UNIs and would be lower than my current salary, I think it might be less competitive. But more research and talking is needed to test if this is true before embarking on such a mission. Also you don’t seem to do much research there anymore, so one has to find out how interesting the job really is.
The advantage is that you get tenure and can happily(?) live till retirement. The disadvantage is that I would have to get a PhD first.
Become a freelancer
Having collected as much work experience that I did not feel I was learning anything at my previous job. Proud to say, I have the skills to build applications and websites on all levels (architecture, infrastructure, back-end, front-end).
If I can get some good projects with a nice hourly rate, I could live quite comfortably.
However, I would need to develop new skill that I did not learn in school or at work how to network and get on such a project.
The disadvantage is that it still doesn’t scale: I only get money for showing up and there is a ceiling on how much I can earn.
Start a company
Entrepreneurship seems to be another possible way forward. There is a lot written on it, and it has the highest upward potential, but also the highest potential to fail. My still favourite book on that subject is The Millionaire Fastlane .
For me, it would also represent the highest learning curve because the activities there are so different from what I have been doing in the past.
Conclusion
After deliberate consideration (over probably some years all together), I decided that it is actually more risky (and boring) for me to stay in a “safe” engineering corporate job than go out and explore other paths.
While a PhD and professorship may be cool, they need at least five years of planning and execution (get PhD, publish, teach classes, try to get tenure). Further, PhDs are often only interesting for yourself. You solve a thing that keeps you motivated, but most of the other people in the world don’t care.
Being an engineer at heart, I want to do something with more immediate impact in the world.
Founding a company is the exact opposite: If you don’t solve many other people’s problems, your company will not work. I see therefore entrepreneurship as something noble: You help many other people. And the bigger impact you make in the world, the more successful you get.
Further, founding a company would lead to my personal highest out-of-comfort learning rate, which is great. And possibly to the most freedom, which I like.
Finally, to make my jump into entrepreneurship a bit less harsh, I will take on some freelance projects on the side as I enjoy helping other people too.
Now I have my plan for some of the foreseeable time. Let’s see where life brings me and what I can learn and experience. And who knows, maybe some years down the road I decide to return to good old corporate (as a manager with my new set of skills perhaps) or finally do a PhD.