Short term pain, long term gain?

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Humility101
Posts: 7
Joined: Sat Jun 02, 2018 6:39 am

Short term pain, long term gain?

Post by Humility101 » Sun Aug 19, 2018 9:31 am

I have been offered a GS position in the DC area (GS 11-8) and will be relocating with my family. I used to live in that area making 130k so this will be a massive pay cut (appx. 40k). I am currently contracting in the Tampa area making 95k so this will still be a paycut even without factoring in the major cost of living adjustment. However, Federal contracting is not stable. My wife is making 36k/yr so our before tax income will be around 120k. Currently 1 kid.

I have to sell my house in Tampa, breaking even at best. Potentially buying a house in DC area at all time highs. (Price range 400-600k)

Our numbers are:

70k equity in Tampa house
Combined roth 120k
Vanguard international Taxable and reits 50k
Cash 60k

Only debt is 214k on Tampa house.

My questions: Am I committing financial suicide to pursue a career in federal service?
Will it pay off in the long run given the benefits to federal employees?
Should we buy or rent when first relocating?

sambb
Posts: 2164
Joined: Sun Mar 10, 2013 3:31 pm

Re: Short term pain, long term gain?

Post by sambb » Sun Aug 19, 2018 9:41 am

income is less important. It comes down to savings. If you cut income, you should cut expenses. Or choose the higher pay.

jminv
Posts: 586
Joined: Tue Jan 02, 2018 10:58 pm

Re: Short term pain, long term gain?

Post by jminv » Sun Aug 19, 2018 9:55 am

You are trading income in the present for job security and benefits. In the future, your income might end up being higher than it would have been otherwise, assuming you advance up the ladder. I don't think it's anything close to 'financial suicide'. It can be less stressful than the private sector and plenty of people on here have nice retirement savings, pensions, and health care from their service. You can always try to move up/stay there for awhile and then apply for transfers to somewhere else you'd rather live that perhaps has a lower cost of living.

I wouldn't buy something until after I felt I would stay with the job. You don't sound sure about federal service in general, so I would rent. Try to get something as close as possible to where you are working to avoid unpleasant commutes and near public transport if you won't be driving. I knew someone commuting 90 minutes each way for the majority of their career in DC area and would never do that myself. This was a case of trading 3 hours of their life a day for lower housing costs.

InvisibleAerobar
Posts: 200
Joined: Mon Jan 15, 2018 12:33 pm

Re: Short term pain, long term gain?

Post by InvisibleAerobar » Sun Aug 19, 2018 10:00 am

Humility101 wrote:
Sun Aug 19, 2018 9:31 am
I have been offered a GS position in the DC area (GS 11-8) and will be relocating with my family. I used to live in that area making 130k so this will be a massive pay cut (appx. 40k). I am currently contracting in the Tampa area making 95k so this will still be a paycut even without factoring in the major cost of living adjustment. However, Federal contracting is not stable. My wife is making 36k/yr so our before tax income will be around 120k. Currently 1 kid.

I have to sell my house in Tampa, breaking even at best. Potentially buying a house in DC area at all time highs. (Price range 400-600k)

Our numbers are:

70k equity in Tampa house
Combined roth 120k
Vanguard international Taxable and reits 50k
Cash 60k

Only debt is 214k on Tampa house.

My questions: Am I committing financial suicide to pursue a career in federal service?
Will it pay off in the long run given the benefits to federal employees?
Should we buy or rent when first relocating?
a lot will depend on the ceiling for this position and your opportunities after you hit that ceiling. If it maxes out at GS-12, and if the promotion is hard to obtain, it's probably not a good idea. Would your wife be able to get a higher paying position if you move?

Also, setting aside the political decisions that lead to change in # of contractor jobs, it's unlikely you'll see fed contracting jobs decrease before the current administration leaves office. Mostly disregard the previous sentence if your work is contracted from the Pentagon. Though longer term, who knows. Also be aware that they are proposing no COLA to your salary (with inflation at 3% during the latest quarter) and that they are thinking of doing away with FERS pension, whole sale.

KlangFool
Posts: 10426
Joined: Sat Oct 11, 2008 12:35 pm

Re: Short term pain, long term gain?

Post by KlangFool » Sun Aug 19, 2018 10:06 am

Humility101 wrote:
Sun Aug 19, 2018 9:31 am
I have been offered a GS position in the DC area (GS 11-8) and will be relocating with my family. I used to live in that area making 130k so this will be a massive pay cut (appx. 40k). I am currently contracting in the Tampa area making 95k so this will still be a paycut even without factoring in the major cost of living adjustment. However, Federal contracting is not stable. My wife is making 36k/yr so our before tax income will be around 120k. Currently 1 kid.

I have to sell my house in Tampa, breaking even at best. Potentially buying a house in DC area at all time highs. (Price range 400-600k)

Our numbers are:

70k equity in Tampa house
Combined roth 120k
Vanguard international Taxable and reits 50k
Cash 60k

Only debt is 214k on Tampa house.

My questions: Am I committing financial suicide to pursue a career in federal service?
Will it pay off in the long run given the benefits to federal employees?
Should we buy or rent when first relocating?
Humility101,

<<My questions: Am I committing financial suicide to pursue a career in federal service? >>

Yes. If you are not saving much money in a state with no state income tax and lower cost of living, how would you survive in DC with a lower income? Do you have any kids?

<<Will it pay off in the long run given the benefits to federal employees?>>

You have to survive long enough for this to matter.

<<Should we buy or rent when first relocating?>>

Rent first.

In summary, you could only make it if you spend much less than what you are spending now. It starts by not buying a house.

KlangFool

Humility101
Posts: 7
Joined: Sat Jun 02, 2018 6:39 am

Re: Short term pain, long term gain?

Post by Humility101 » Sun Aug 19, 2018 10:22 am

jminv wrote:
Sun Aug 19, 2018 9:55 am
You are trading income in the present for job security and benefits. In the future, your income might end up being higher than it would have been otherwise, assuming you advance up the ladder. I don't think it's anything close to 'financial suicide'. It can be less stressful than the private sector and plenty of people on here have nice retirement savings, pensions, and health care from their service. You can always try to move up/stay there for awhile and then apply for transfers to somewhere else you'd rather live that perhaps has a lower cost of living.

I wouldn't buy something until after I felt I would stay with the job. You don't sound sure about federal service in general, so I would rent. Try to get something as close as possible to where you are working to avoid unpleasant commutes and near public transport if you won't be driving. I knew someone commuting 90 minutes each way for the majority of their career in DC area and would never do that myself. This was a case of trading 3 hours of their life a day for lower housing costs.
I have been in the recruitment phase for literally 5 years which would explain my jadedness (bureaucratic delays). With that being said, I do plan on pursuing this as a career to the fullest extent possible. I know that nobody pursues a federal career to get rich (that's not my goal), but I also don't want to destroy my family's financial well being.

Beehave
Posts: 362
Joined: Mon Jun 19, 2017 12:46 pm

Re: Short term pain, long term gain?

Post by Beehave » Sun Aug 19, 2018 10:28 am

I'm familiar with both RE markets and areas. As you are obviously well-aware, you will be faced with a housing challenge in the DC area. Look carefully at the size and location of housing affordable to you the and quality of the schools where that housing is located. The "pain" you refer to in the title of your post will likely consist of some trade-off between your commute and your family's quality of life.

I know much more about the "Maryland" side of DC than Virginia. In Maryland, some school systems farther out from DC (commutable, but disagreeably so) are rapidly improving in quality. I'm pretty sure the same is true in VA. If you can, drive around the towns to get a feel for the vibe in the towns/cities and around the schools in areas you can afford to see if it seems to suit you. Also, if you can, try the commute as if you lived there (see what it takes to get to work and back at the hours that you need actually to go to work and back).

Regarding changing jobs - - if contracting in Tampa may be shaky in the future, is it possible that the same forces could affect DC area gov't jobs too? If the gov't job really is more secure, that is a major factor. If you can secure a job with a future pension and believe you can stick and grow, that would to me be a very strong reason to make the jump and try to find a way to make life work in the HCOL area. On the other hand, before you jump ship from the Tampa contracting firm, surely they're aware of possible future cutbacks or contract terminations. Are they branching out into anything new and exciting that you can play a part in?

To me - - the education of children and future job security and growth are worth making sacrifices for.

You need to carefully think this through and discuss thoroughly with your spouse - - carefully, so that you agree on what you want and what the best likely path towards what you want is.

Best wishes!

delamer
Posts: 6272
Joined: Tue Feb 08, 2011 6:13 pm

Re: Short term pain, long term gain?

Post by delamer » Sun Aug 19, 2018 11:26 am

InvisibleAerobar wrote:
Sun Aug 19, 2018 10:00 am
Humility101 wrote:
Sun Aug 19, 2018 9:31 am
I have been offered a GS position in the DC area (GS 11-8) and will be relocating with my family. I used to live in that area making 130k so this will be a massive pay cut (appx. 40k). I am currently contracting in the Tampa area making 95k so this will still be a paycut even without factoring in the major cost of living adjustment. However, Federal contracting is not stable. My wife is making 36k/yr so our before tax income will be around 120k. Currently 1 kid.

I have to sell my house in Tampa, breaking even at best. Potentially buying a house in DC area at all time highs. (Price range 400-600k)

Our numbers are:

70k equity in Tampa house
Combined roth 120k
Vanguard international Taxable and reits 50k
Cash 60k

Only debt is 214k on Tampa house.

My questions: Am I committing financial suicide to pursue a career in federal service?
Will it pay off in the long run given the benefits to federal employees?
Should we buy or rent when first relocating?
a lot will depend on the ceiling for this position and your opportunities after you hit that ceiling. If it maxes out at GS-12, and if the promotion is hard to obtain, it's probably not a good idea. Would your wife be able to get a higher paying position if you move?

Also, setting aside the political decisions that lead to change in # of contractor jobs, it's unlikely you'll see fed contracting jobs decrease before the current administration leaves office. Mostly disregard the previous sentence if your work is contracted from the Pentagon. Though longer term, who knows. Also be aware that they are proposing no COLA to your salary (with inflation at 3% during the latest quarter) and that they are thinking of doing away with FERS pension, whole sale.
Who is this “they” that are ”thinking” of doing away with FERS?

InvisibleAerobar
Posts: 200
Joined: Mon Jan 15, 2018 12:33 pm

Re: Short term pain, long term gain?

Post by InvisibleAerobar » Sun Aug 19, 2018 11:33 am

delamer wrote:
Sun Aug 19, 2018 11:26 am
InvisibleAerobar wrote:
Sun Aug 19, 2018 10:00 am
Humility101 wrote:
Sun Aug 19, 2018 9:31 am
I have been offered a GS position in the DC area (GS 11-8) and will be relocating with my family. I used to live in that area making 130k so this will be a massive pay cut (appx. 40k). I am currently contracting in the Tampa area making 95k so this will still be a paycut even without factoring in the major cost of living adjustment. However, Federal contracting is not stable. My wife is making 36k/yr so our before tax income will be around 120k. Currently 1 kid.

I have to sell my house in Tampa, breaking even at best. Potentially buying a house in DC area at all time highs. (Price range 400-600k)

Our numbers are:

70k equity in Tampa house
Combined roth 120k
Vanguard international Taxable and reits 50k
Cash 60k

Only debt is 214k on Tampa house.

My questions: Am I committing financial suicide to pursue a career in federal service?
Will it pay off in the long run given the benefits to federal employees?
Should we buy or rent when first relocating?
a lot will depend on the ceiling for this position and your opportunities after you hit that ceiling. If it maxes out at GS-12, and if the promotion is hard to obtain, it's probably not a good idea. Would your wife be able to get a higher paying position if you move?

Also, setting aside the political decisions that lead to change in # of contractor jobs, it's unlikely you'll see fed contracting jobs decrease before the current administration leaves office. Mostly disregard the previous sentence if your work is contracted from the Pentagon. Though longer term, who knows. Also be aware that they are proposing no COLA to your salary (with inflation at 3% during the latest quarter) and that they are thinking of doing away with FERS pension, whole sale.
Who is this “they” that are ”thinking” of doing away with FERS?
They, inter alia, include members of the current administration and outside think tanks

https://www.washingtonpost.com/news/pow ... 7f5b7ed6be

Key takeaways:
The plan repeats what it calls “compensation reforms” from last year’s proposal, some of which progressed in the House before falling by the wayside. These include:
  • -Requiring employees under the Federal Employees Retirement System — more than nine-tenths of the workforce — to contribute more toward their retirement benefits. This would be phased in as one percentage point increases, requiring most to eventually pay an additional 6 percent of salary into the system.
    -Eliminating cost-of-living adjustments on the civil service annuities of those retired under FERS while reducing the adjustment by a half-percentage point for those retired under the older Civil Service Retirement System.
there was an earlier proposal to do away with FERS completely. This most recent plan doesn't do it, but renders the benefits rather meaningless when you factor in the additional 6% hit on per annum income while employed and elimination of COLA during retirement.

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