A change of location always makes a difference. My third week was spent in California as I tend to my business venture here, which my wife and I are building up to hopefully have positive cash flow in the next few months. I can’t say enough of how important it is to have a partner who is willing to roll up their sleeves and get their hands dirty when you need them. Rather than the typical sitting around and searching for jobs for a few hours a day, getting tired and taking time to relax, I have been working at such a frenetic pace that my wife and business partner have actually had to tell me to slow down and take a day off.
It’s difficult though, I am aware that I have a fantastic opportunity right now. I am getting a severance for 9 months, more than enough time to build up a business that will hopefully yield me some extra income either before or not long after I get another corporate job (assuming that happens, the possibilities are still wide open). I also was paid a bonus for my efforts for the last fiscal year, although it wasn’t what I expected in terms of my total compensation, I still can’t complain. I was feeling quite secure the last two weeks, knowing that my bonus and first severance payment would come on May 15th. Boy was I in for a shock.
Taxes: Kicking You When You’re Down
Not having ever received severance, I made some bone headed assumptions when it comes to taxes. I assumed that I could count on relatively the same take home pay that I was receiving before, minus some of the pretax items such as insurance and commuter allowances I was making. Boy was I wrong. Below, I found an excerpt from a legal site on how taxes are calculated for severance. Basically I am being taxed for every check like it was a bonus. Granted, if I don’t find a job this year, I can get those taxes back next year but that doesn’t exactly help my situation right now.
If supplemental wages are less than $1 million, the employer may generally choose to use either:
– the optional (25 percent) flat rate; or
– the aggregate method.
The optional 25 percent flat rate method may not be used, however, unless income tax has been withheld from the employee’s regular wages during the calendar year of the payment of the supplemental wages or the preceding calendar year, and the supplemental wages are separately stated from regular wages (in addition to being less than $1 million).
If all the requirements for the optional 25 percent flat rate method are not met, then the aggregate method must be used. To calculate the aggregate method, supplemental wages are added to regular wages for the most recent payroll period this year as if they were a single payment. The tax is then determined on the single payment based on the tax tables for the appropriate payroll period and using the employee’s IRS Form W-4. The tax already withheld from the regular wages is then subtracted, and the remaining tax is subtracted from the supplemental wages. The IRS has advised that when there are no regular wages and supplemental wages must be paid using the aggregate method, the daily/miscellaneous table should be used when there are no other regular wages paid in the same year. This is common, for example, when back pay is paid to a former employee in settlement of litigation.
Well let’s just say I wasn’t in that 25% camp. When I realized I was getting approximately 54% of my gross income, I got extremely worried. My business income had not kicked in yet and I had entered into an expensive rental agreement to be near my office that I had another year of payments left on. I did not have enough in terms of monthly income to pay all of my bills and take care of my family. I wasn’t completely screwed because I had savings from years past that I could use, but when you have worked so hard for it, it pains me to watch my savings dwindle every month, especially when that is money you always considered never wanting to touch.
Losing the High Minded Notion of Where I Want to Work
I had a lot of decisions to make; should I try to get out of my lease? Should I double down and work even harder on my business? Should I go out and look for any job I can get?
Initially I took the position of the latter. I contacted a bunch of head hunters whose information I received as a reference from a former colleague and started emailing, calling and getting my resume into their hands as quick as I could. I even contemplated going to a direct competitor of the bank I left even though I hated the work culture there and I was sure the competitor would be little different.
I then applied for remote jobs and what I like to call “place holder” jobs that I could make some money with, until I found a “real” career job. I quickly found a lead at another bank, and was able to connect with the hiring manager only to learn that they were looking for someone who had a different background than I did.
I was really starting to feel the pressure at this point, my savings were falling, I needed new income and I had a looming stack of bills. I started to contemplate how extreme I wanted to go to be able to get a job quickly.
I reached out to a friend of mine that had a successful business and was in the middle of expanding to China. He had mentioned a work from hoem sales job, and although it wasn’t ideal, it seemed better than nothing. When I got ahold of him, he said the job was probably not ideal for me and that he had a different one in mind for me, being the head of his new office in China. He said the job offered much higher upside but I would have to spend the next few years in China.
I said I may be interested but that I needed to speak about it with my wife first. He also needed to speak with his business partner and we agreed to touch base again when we had all come to a decision before we proceed.
Needless to say (and nothing against China or Chinese) the prospect of randomly relocating to a polluted, crowded city where we didn’t speak a lick of the local language, in addition to upending my son and his life to move there did not go down too well with my significant other. The idea is still there but at this point the desperation for a job is not at a level yet where I am willing to risk my relationship and family for a job, even if there is a potential for a high six figure (or even 7 in a few years) income.
Realizing It’s Not All That Bad
With the help of my wife, I had to step back and take a breath. The condo we rent has an individual landlord, he is much more reasonable than a big corporation. He was willing to let us out of the lease if we forgo our deposit, which was a no brainer considering that after a month we would have made the money we lost back.
I am still early in my job search and I can’t expect everything to pan out quickly unless I am extremely lucky. I can continue to tap into my network in New York, California and worldwide and be patient as I bide my time looking.
In addition I have a great opportunity to build up my side income quicker than I ever could have while working 3000 miles away. My wife has been understanding and supportive enough to follow me here and has been a huge help in terms of ideas and our marketing efforts.
In addition, with the burden of the apartment gone and the business on the cusp of providing us even more income we may be on the verge of an envious situation of me making even more take home pay than I was before for a period of time without the burden of having to sit at a desk every day. As soon as I realized this I started researching bungalows to stay in, in Central America while I search for a job, spending the day, cooking, writing, exercising and spending time with my family, while we live for a fraction of the cost of what we would have to in New York.
The reality is, I may not be happy doing that forever either, I am a driven person and the allure of achieving big things may call me back to the corporate world, but for the time being I am going to pace myself, tell myself we will be ok and see where life takes my family and I next.
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