Kicking Financial Ass

by Paul Christopher Dumont

  How to Negotiate Your Salary

  Noel Smith-Wenkle was a job headhunter in the 1980s and developed the following method, which has proven successful for salary negotiations.45 In practice, his technique involves 4 steps:

  1.If the company asks for a number on the application, leave it blank.

  2.When the company verbally asks how much you will take, say, “I’m much more interested in doing [type of work] at [name of company] than I am in the size of the initial offer.” Smith-Wenkle says this will suffice about 40% of the time.

  3.If the company asks a second time, your answer should be, “I will consider any reasonable offer.” Smith-Wenkle says this polite stalling tactic will work another 30% of the time.

  4.About 30% of the time, you will reach this final step. Again, your response will be a polite refusal to answer the question, “You’re in a much better position to know how much I’m worth to you than I am.” This is your final answer, no matter how many times the company tries to get you to go first.

  The purpose of this method is to make the company name a number first. Once the company makes an offer, repeat the number, and then stop talking. Jack Chapman in his book Negotiating Your Salary: How to Make $1,000 a Minute calls this “the flinch.” “The most likely outcome of this silence is a raise,” he says. This technique will buy you time while putting pressure on the employer. Often, they will come back with a higher offer thinking that they gave too low of a salary. Using silence is more effective than tears, anger, or aggression. Silence is golden.

  Counter with a Researched Response

  Base your counteroffer on what you know about yourself, the value you can bring to the company, the market, and what competitors pay. It is crucial to do your research beforehand. Tie your work to the company’s strategic goals, and show how you will make the manager look good. If you are just out of school and do not have much work experience, focus on your strong work ethic and positive attitude. Ask for at least 10% more than what the offer is and see what they say.

  Be persistent. In many cases, the employer will reject your first request for a higher offer. Gently push back, justifying your reasoning again. It is essential to show the value you are providing the company, whether your work experience can save them time or make them money. Without demonstrating how you can achieve either, it is unlikely they will raise their offer.

  Have a Second Job Offer

  Another technique is to have a second job offer. When an employer knows that they have competition for you, it increases your value. So, interview at multiple places at the same time. In addition, see which company you would be happier at because money is not everything. Do not say the name of the company you have the second offer from. You do not want any side channel conversations between the firms.

  Accepting the Offer

  Once a company makes an offer, you have two options. If the offer is above your minimum salary expectations, take the job, assuming the complete compensation package is satisfactory. If it is below your minimum, tell them it is too low, but do not say by how much. Consider more than just the salary if your employer offers the following:

  •Health insurance

  •Life / Disability insurance

  •Matching retirement contributions

  •Vacation days

  Be flexible, too. If the company will not budge on salary, negotiate other perks. Ask for things like an extra week of vacation, a different title, a private office, or a flexible schedule. If they say no at this point, it is acceptable to stop negotiating. You do not want to seem greedy and create bad will.

  RAISES

  Your career is your biggest financial asset. If you take your annual salary, say you start at $50,000 per year, and earn 3% average annual pay increases, you will make $4.6 million over a 45-year career. And, it does not take much additional earnings to make a huge difference. Landing 4% raises instead of 3% earns you almost $1.4 million more. If you think you deserve a raise, try these approaches:

  Ensure Your Performance Deserves a Raise Before You Ask

  If you are going to negotiate for an increase in salary, you must show that you deserve it. So, keep track of your worth to the company by monitoring what you do over time. One of the biggest mistakes in a job is not having proof that you are indispensable. If you know your performance is average or sub-par, do not ask for a raise. However, if you have been showing up to work on time, putting in 110%, and going above and beyond your job description, you will have more leverage when you ask.

  It Is Not You vs. Them

  Sometimes, it is easy to fall into the trap of thinking that negotiation is a zero-sum game—for you to win, the company must lose and vice versa. Changing this mindset is crucial to improving your chances for a successful outcome. Instead, view the negotiation as a discussion and partnership. Focus on your successes, what you have been doing, and what you will continue to do for the company.

  Do Your Homework

  The first rule when asking for a raise is knowing what your job pays. Look online to see if you are underpaid for your position using websites like Salary.com, PayScale.com, and GlassDoor.com. LinkedIn is another excellent resource.

  Do Not Compare Yourself to Colleagues

  If, during your research, you find out a colleague is making more than you for the same position, never mention them by name when asking for a raise. It makes you look petty, and perhaps there are legitimate reasons why your colleague is making more than you. Alternatively, focus on the value you bring to the firm.

  Timing Is Everything

  When it comes to asking for a raise, timing is everything. Wait until you and/or the business share a success before approaching your supervisor. Maybe you just completed a large project or initiative for the company or attracted new business. Whatever it may be, make sure your success is still fresh in your manager’s mind.

  Another good time to talk about a raise is during your performance review, if you receive a good assessment. It would naturally lead to compensation talks, assuming you did your homework and concluded that based on market data you are worth a raise.

  If your employer says no, do not get angry. Keep in mind you are not entitled to a raise. The last thing you want to do is create animosity by using hardball tactics with a raise negotiation. Gently push back by focusing on the value your accomplishments have created for the firm or switch to asking about other benefits like professional development opportunities.

  If they still say no, ask what else you can do in the future to show your worth. This is a natural way to bring up negotiations again at a future date when you can prove to them you did as suggested.

  Practice

  Practice what you are going to say with a friend or in front of a mirror. This will ease your nerves and boost your confidence.

  Another suggestion is to negotiate in real-world scenarios, such as with your insurance company, internet provider, or credit card company, to gain valuable experience.

  Do Not Name a Number

  Just like with salary negotiations, do your research ahead of time and do not name a number. The question will likely pop up. Say that you would be happy with a number they think you deserve. If they come back with a number that is not satisfactory, you now know you have some wiggle room to negotiate higher. Be willing to compromise. For example, if they come back with a 3% raise, ask for 5%, and you may settle at 4%.

  Consider More Than Money

  Sometimes, your company may not be able to give you a raise. So, you may find that asking for non-monetary perks or extended benefits ends up being more valuable to you and your lifestyle. Professional development opportunities, a flexible work environment, fitness memberships, vacation days, or whatever you value beyond money makes excellent compensation.

  SUMMARY

  •Your career is your number one financial asset. So, negotiating your salary when receiving a job offer and negotiating raises with your current job are great ways to achieve your financial goals. Remember t
he following:

  •Do your research on what the position pays, whether through online websites, like GlassDoor.com or PayScale.com, or through colleagues at the company where you are interviewing. This is critical.

  •Wait until you receive a job offer before negotiating your salary. Bringing up salary talks too early in the interview process can have a negative effect on your ability to receive an offer.

  •Always focus on the value you can bring the firm when negotiating an offer, or if you are negotiating a raise, on the value you have brought and will continue to bring.

  •Negotiate for things other than salary if the company is not willing to increase their offer. Vacation days, titles, and other benefits are possibilities.

  •Always have the employer be the first to mention a number, and negotiate from there.

  •With raise negotiations, timing is everything. Wait until your annual review or when you and/or the company has had recent success. You must prove that you performed more than your job description or else you risk creating bad will with your company.

  •Practice. Doing a mock negotiation with a friend or parent is a good step.

  CHAPTER NINE

  HAVE A SIDE HUSTLE

  ANYONE CAN MAKE EXTRA INCOME

  A limit exists on how much you can save, but there is no limit to how much you can earn. If you want to retire faster, increase your income while saving more. If you make an extra $100 a month and invest it in index funds, it will be worth over $200,000 in 30 years. I believe everyone should have a side income. Even if you love your job, having multiple sources of income reduces the burden of having to earn everything with your day job. In Chris Guillebeau’s book Side Hustle, he describes steps to bringing in side income in less than a month, while requiring less than an hour a day. The best part? You do not need a business degree to do it.

  My first experience having a side hustle was in 1996. I was sipping hot chocolate while waiting for my younger brother to finish his hockey game when an idea occurred to me. If people were willing to buy hot chocolate for $3 at the rink, would they be ready to purchase hot chocolate from an 11-year-old boy? Suddenly, ideas of video games and wandering down the toy aisle filled my head. I pitched the idea to my mom, and after some thought, I decided to go for it.

  At the next hockey game, I set up shop outside the rink, selling hot chocolate before and after the event for $1 a cup. As an extra incentive, I hand drew comics from a comic book I was reading at the time for the adults to have a chuckle. Let me tell you, handing over those cups of hot chocolate felt like grueling work during those early mornings outside in the bitter cold. Finally, with the hockey game over, and everyone on their way home, I peeked into my jar and knew I could afford another Super Nintendo game. This opened an entirely new world of possibilities to earn extra income and a lesson I continue to apply to this day.

  Years later at Toys “R” Us, I found a sale on a video game. When I looked up the price on eBay, I found that I could make a lot of money. So, I bought all the copies and proceeded to convince every electronics store in the city to price match them. All in all, I bought 50 copies of the game, making over $20 per game after reselling them.

  Another example was a night in November 2006. I camped outside Walmart for 8 hours waiting for the release of the Play-Station 3 to resell it and make a $400 profit. $50 per hour, not bad I told myself as I was shivering in the cold, making small talk with the other overnighters.

  The most extreme example of my eBay side hustle was back in university during the launch of the iPhone 4. I called every store in the city multiple times per day to see when the next shipment would arrive. If they had any in stock, I dropped everything I was doing to buy as many as I could. Each phone made me $250 profit, and I managed to snag 20 of them before supply caught up with demand. Ultimately, I paid for my semester’s tuition with that gig.

  Guillebeau explains in his book that the secret to having a side hustle is not having classroom knowledge, but going out there and doing. Real-world knowledge is far more applicable than what you can find in a textbook. His book helps break down the complete process of planning and action, condensed into a 27-day timeline.

  Guillebeau says you first want to create goals for yourself when you start a side hustle. Three common objectives are:

  1.Make extra cash for a specific purpose, like paying off a loan, saving up for a big-ticket item, taking a vacation, or building up your emergency fund.

  2.Create a sustainable and ongoing source of income that makes a difference in your quality of life.

  3.Replace or exceed the income from your current job.

  No one goal is better than the next. It depends on your individual circumstances, and these can change over time. I recommend investing at least a portion of what you make with your side hustle in index funds, which I discuss in detail in Chapter 10: Invest in the Index. If you can invest it, then all even better.

  Feasible, Profitable, Appealable

  Finding an idea that works is not always easy. When starting a side income, some ideas are better than others. The three criteria to use are: Feasibility, profitability, and appealability.

  Feasibility: A feasible idea is one that you can start right now using the skills, time, and resources you already have. The more viable the idea, the better chances you can act on it right now without overthinking it.

  Profitability: Your idea must have the potential to make money. If it is too elaborate, it will require too much work and effort to get it off the ground. A quick test is to see if you can describe the concept in a sentence or two. If not, then it will require too much work to be profitable.

  Appealability: If you were a customer of your product or service would you buy it? Would your friends purchase it if they were not your friends? This is key to any idea that can make money.

  Focus on High-Potential Ideas

  Ideas that are not good right away usually have the following characteristics:

  •The idea is too involved, meaning it will take too much time and effort to set up.

  •The idea is something you have no idea how to make or do not currently have the skills to make it happen.

  •The idea is too vague.

  •The idea is something that takes a lot of time to produce or takes a lot of your time to maintain.

  Ideas that have potential usually have the following characteristics:

  •Simple and easy to execute.

  •Easily describable in one sentence.

  •Solves a problem or improves someone’s life, and they are willing to spend money on it. If it solves a problem you have, all the better. Tim Ferriss calls this scratching your own itch.

  •Does not take a lot of time to maintain.

  •Will bring in money continuously.

  How do you come up with ideas?

  CREATE A LIST OF IDEAS

  Side hustle opportunities are all around you. Narrowing down the options is not be about what gig you should do but what you do not want to do. If you are going to be doing something on the side, it may as well be something you enjoy. The first step then is to create a list of ideas, both yours and borrowed.

  When coming up with ideas, keep in mind that you are not looking for a part-time job. You are looking for something that makes your life easier while making you money. Ask yourself what do people need or want? This is referred to as creating value. Value is created when someone makes something useful and shares it with the world. When thinking of ideas, focus on scratching your own itch. What hobbies, skills, or passions can you make money with? Find a market, define your customers, and develop a product or service for them. Solving your own need is a great way to start. Chances are other people will have the same need and pay money for it. Ideas usually fall under one of three categories:

  1.Products

  2.Services

  3.Being a middleman

  Come up with 3 qualified ideas and ask yourself these questions about each:

  •What do you
need to get started, and what are the costs involved? Your idea becomes more realistic if you can jot down your requirements and focus on your priorities one at a time.

  •What are the potential barriers to you starting your idea? Is it fear or money?

  •Has anyone done this before? If so, how can you make your idea different or better? The main benefit should be explainable in one sentence or phrase. Most ideas have been done before. It all comes down to how you execute, which leads back to how do you make your idea better or different.

  •What is the best-case scenario? This is hard to quantify. We all want to make millions of dollars, but keep this goal realistic. It is important that the success of your idea is not dependent on how much money you make but what you learn along the way. Your first side hustle could be a total failure, but if you learn something useful, you can apply it to a future endeavor.

  •What is the worst-case scenario? You want to cap your downside risk by starting small. Whether your budget is $100 or $1,000, pick a number that you are comfortable risking.

  MAKING MONEY WITH PRODUCTS

  When creating an income using products, do it using one of the following ways according to Tim Ferriss in the 4-Hour Workweek:

  Option 1: Resell a Product

  This is the easiest way to sell a product but also the least profitable due to the lack of differentiation and competition among other retailers. To get started, you usually contact the manufacturer and request a wholesale price list, generally 40% off retail, and terms. Then, you try to sell the product, either at your own brick-and-mortar location or set up your own online store.