December 4, 2009, 6:35 am

Making a 6 Figure Income by Working Less than 50 hours a week Part 2: a Look at What Your Job Has to Offer

by: The Financial Blogger    Category: Alternative Income,Business
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Last week, I had started my “making a 6 figure income” series with the main source of income for most of us: our employers. Getting rich or making 6 figures doesn’t happen overnight. It requires a lot of hard work and more importantly, a consistent effort. Getting a good job and looking for promotions on an annual basis is the first step to obtaining a higher salary (this is when you can get in the very fast lane, if I was able to get 3 promotions in 4 years, anybody can do it, trust me on this!) .

However, your employer can offer you much more than a considerable base salary. He can open the doors to many other sources of income that will help you achieve the “magical” 6 figures.

Before I continue on that path, I wanted to share how my sources of income were distributed to make a little bit more than $100,000 in 2009:

income source

As you can see, most of my income came from my base salary. However, there is also a big part from my bonus and other employee benefits. And this is the part I want to focus on today.

Selecting a position with Individual Performance Based Bonuses

The last 4 years, I had been working in a structure where our bonus was  company performance based or also known as “Team bonus”. What I don’t like about this structure is that your bonus is being decreased by people on your team who don’t work very hard. Unfortunately, there are always a few lazy people concentrated on finding a good deal on Expedia for their next vacation than on actually doing the job! This is the main reason why I decided to switch to a job with individual performance based bonuses.

Optimizing other employee benefits

Sure you can dabble with insurance and dental care. However, this becomes too complicated for me to consider so I don’t take them into consideration in my overall income. However, I want to concentrate on other employee benefits such as the deferred profit sharing plan.

This is a very interesting part as the employer tends to put money in it too. I actually put the maximum I am allowed in my company’s stock (which is 8% of my base salary) and they add an additional 2% (so 25% of my contribution). In order to not be over exposed in my portfolio, I cash in my shares once a year. I still get more than a thousand dollar in my pocket through this method.

Another very interesting point is the rebate I get on my mortgage and line of credit since I work for a bank. This would make my decision much tougher if I ever wanted to quit. Along with the money I save, it’s also come down to a psychological effect.

Without making much noise, those benefits represent slightly over 4% of my 6 figure income. So it is definitely worthwhile spending a few minutes on what your employer has to offer in term of marginal benefits 😉

I know that most of you read this series to know about my alternative source of income and how I manage it despite my busy routine. This is why I will spend more time on those aspect in the coming weeks 😉 Stay tuned next week for the next post on the series 😉

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Comments

The team based bonuses are a bit of a joke aren’t they. I receive a company wide based bonus ha; is there any incentive to go the extra mile? The only incentive I can see is keeping my job. An individual based bonus makes a ton of sense to encourage performance.

I am looking at making a major career move back into finance to go after that individual performance bonus. It’s nice to know there are finally jobs appearing where you can have a nice salary, bonus, and a great work life balance.

Nice pie chart TFB. Want to put the actual percetage figures in to make it easier for us old blind farts to see? 🙂

Good point about employee contribution and profit sharing. I’ve never included that in my pay, but maybe I should.. But, maybe i shouldn’t, since my net worth calculation is just based on cash in my bank.

sure, there you go!
Main Income 60,47%
Bonus 26,98%
Employer’s Benefit 4,19%
Company paid expenses 2,79%
Company extra income 5,58%

When I talk about the “company”, it is obviously mine, not my employer 😉

if you click on the pie chart, it gets bigger as well 😉

Very cool.I guess the goal is to grow your “company extra income”?

by: The Financial Blogger | December 5th, 2009 (8:35 am)

yup!

especially since my bonus was quite considerable this year. I want to make sure I grow my small sources of income to become more independent from my job 😉

Do you have a main income + bonus goal over the next 1, 3, 5, 10 years? At what level of income/bonus do things start capping out?

by: The Financial Blogger | December 5th, 2009 (2:53 pm)

There is still a lot of room in term of income (I could easily increase my current based income by 10K in the next 2 years).

Bonus will be hard to maintain at that level since I’ve reached 190% of my objective this year.

This is why I am better off increasing my company’s income 😉