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Making the Leap: Changing Jobs

I thought I would share my new experiences with changing jobs. I worked at my former employer for just over two and one-half years. Over that time, I had invested about $2,400 in a 401k. I am not sure if I am vested in the employer contribution (from what I have read I should be 20% vested, but the HR assistant thinks that I may have needed to wait until December 31st). Anyhow, that 20% would only be about $80.

One of the other financial factors of my old job is the pay. I was an hourly employee, but my hourly pay for 40 hours a week (I always worked a minimum of five hours of overtime a week) came out to about $20K less than the industry average for my qualifications (I am a network administrator with industry recognized certifications and plenty of practical experience). While I do not think I should have gotten paid $20K less than the average, I do not think I was quite worth the $20K more when I started (purely because of my personal confidence at the time). I think I should have been at least $10K more, when I started. My former employer had a 3.25% cap on raises; I would never get the rate that I deserved by staying there, unless they decided to change my title/responsibilities and give a raise.

I was not really making a huge effort at finding a new job. However, I would browse the classified ads in the paper and look at the job sites on the Internet. If I saw a job that looked like it would be a nice move, I would send my resume. I had several phone interviews and a couple of face-to-face interviews. There was one job that really seemed like a lateral move (I wanted to move into more of a managerial role, that was one of the reasons I was looking... that was not possible at my former employer), but the location and other aspects struck a chord. I received an email back from the poster, and he stated that he selected sixteen individuals to send questions via email. From these sixteen, he would select five or six to have phone interviews with. Now, the questions, while not crazy, could easily deter people from answering them (obviously they did). I received a phone call the day after I submitted my responses and he asked me to meet him for lunch. Apparently, only five or six of the original sixteen even replied. He skipped the phone interviews entirely. We had lunch and discussed the "soft skills" associated with the job (apparently, the last person was alright technically, but had no soft skills). He seemed extremely satisfied with my soft skills, but commented that we did not really discuss any technical topics. The next day we had a conversation on the phone about the technical aspects of the position. At the end of the conversation, he asked me to come to his office that afternoon. They made an offer right then. The offer was about 60% more than I previously made (putting me at or just above the industry average for my qualifications), and much better benefits.

Here is how the new 401k program works:
  • The employer matches the first 3% of my contributions by 100%.
  • The employer matches the next 2% of my contributions by 50%.
  • The employer contributes 8% of my pay, annually, into my 401k at the end of the year.
  • The employer's board of directors votes on an additional 2% contribution to put into my 401k at the end of the year (apparently they have always voted to do so).
So let's figure it all up. If I contribute just 5%, I will have a total contribution that is equivalent to 19% of my annual pay. Also, the vesting period is just two years; that is much better than the six year vesting schedule at my former employer. Another great thing is that I have a review for a potential raise after just six months.

Other benefits include a health insurance deductible that is $500 less, annually, than my former employer, and an HRA that has $1,600 (for my family; $800 for me, and $800 for the others) in it. Also, the other great thing is that if I do not use my $800 portion, it accumulates. I get to take it with me when I leave the company. Beyond that, they discourage overtime, as they believe taking 40 hours a week from your life is already excessive.

Here is the kicker about the company; it is a pseudo-not for profit. It is a corporation that is owned by several religious not for profits. Any profits get passed along to the owners and they use it for charitable purposes.

So what does this all mean for me? I get a nice pay raise; I will be contributing 5% to my 401k, rather than my previous 4%; I have a much better work environment; and I will effectively have my retirement covered in five years, rather than the ten years I had previously estimated.

My next step is to find a rollover IRA for my previous 401k. Why an IRA, rather than rolling over to my new 401k? Flexibility. As with any 401k, you are limited to the investments made available in the plan. With an IRA, you can invest in nearly anything you can imagine. Also, I cannot enroll in my new employer's plan until July 1 of next year, so I will have nine months where I could not make any contributions. I will be making contributions each month to the IRA. I plan on converting it to a Roth IRA, as well. When that happens, I can deduct my original principal after five years. That is important to me because I want a more liquid investment than is available from other retirement plans; I intend on being semi-retired by the time I am 35 (this does not mean I am lazy, I just want to be able to spend time with my kids and choose what I do each day... be it work, travel, or anything else). To make that happen, I plan on making many other investments, but I will have a ten year timer starting in a couple of months.

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