Associate Salary Post MBA: $100,000 (30% tax)...$70,000
Signing Bonus (50% Fed+State/Local): $50,000...$18,000
Revenue: $88,000
Apartment in New York City: (2,000x12+Utilities): 30,000
Paying off your Bschool Interest and 10% Principal: 20,000
Coffee, Eating Lunch, Drinking, Prozac due to your Neurotic VP: 15,000
Drycleaning: 1,000
1 week vacation: 2,000
Net Revenue Per Hour: $22/hr (Equivalent Career: Gaming supervisor, Subway operator, Urban Planner)
Net Profit Assuming Modest Lifestyle: $20,000
Net Profit Per Hour ($4.90) ...
Having Pursued that Princeton BA, Harvard MBA, and getting shat on by your Greenwich commuting MD at 2am for a misplaced comma: Priceless
end of the year bonus?
LOLOLOOLOLOLOLOO PPIPER CHANG LOLLLLL FINANCIAL TECHNOLOGY CHANNGGG LOLLLL JAFFARIESSSSSSS
wait... are bonuses really taxed 50%+?? is this both signing and end of year?
Its more liek 40% but yeah pretty high
The same analysis in excel with a DCF:
http://www.google.com/search?q=Project%3A+Get+a+Life+%E2%80%94+Intrinsi…
Watchout, there is a mistake in the TV.
the 50% federal figure was an assumption if the proposed VT legislation gets passed...obviously a bit exaggerated, but illustrative of what may happen under the new tax regime. Didn't factor in the stub bonus, but in bear markets like last year, GS paid as low as 5-10K, so it may not be a good assumption to add in the 40 or so expected this year...anyhow, if you add the 40 and tax it at the 50 federal, the numbers do change, but the oppty cost (hours worked, not having command of your schedule, lack of exit opps as an associate relative to analysts, etc) needs to be incorporated as well...
Your general point is correct, but your numbers are wildly off base.
Like many on this board, a basic understanding of marginal tax rates, federal, state, and local is what any bonus--unless this bill which won't pass--is what any additional income will be taxed at. http://en.wikipedia.org/wiki/Tax_rate I'm surprised that so many people equivocate withholding and taxation.
Your costs at New York are way too low unless you live in a real crap hole and drink Jaegermeister. It doesn't happen.
You're assuming some pretty high B-loans. Most associates come out with about 110k in student loans and amortize it over 20 years so they can blow more money on expensive shoes.
I have said it many times: find me a banker (outside of trading) under 30 with a modest net worth for their age (e.g. 700k+) who didn't get handouts from mommy. All my banker buddies from my cohort and college don't have much, and the ones that do, didn't earn it.
Start your own business after your time as an analyst. The training is good but the compensation is weak.
I'd say you should build in the bonus, but truth is, in this market, no one should be counting on any sort of bonus for liquidity.
I'd love to see 1st year Associate (full year) bonuses come out at $150K-$200K or better (i.e. 2006-2007 levels), but let's be honest, this year's bonus pool is going to have significantly more stock than the past.
So, even a $150K bonus might only net $45K in cash after taxes ($150K x (1-Taxes) = $90K x 50% cash component = $45K. That's real $, but that's not going to make a huge dent on student loans.
Banana Stand:
If put 2/3 of your 45K real cash bonus towards paying off student loans, your debt load will be 30k lighter, which is pretty significant.
if you have say, 100k in loans, and pay down the principal by 30k, you are already down to 70k. At this rate, in two more years you'll be debt free. you just have to live at or below your means for 3 years i suppose.
unless you get laid off. then you are f****ckd
You make it sound as if 3 years of banking is a trivial amount of time...1 year of banking ages a person by 3-4 years...remember the oppty cost
you're comparing post-tax hourly banking revenue to pre-tax revenue in other industries. The situation is not as dire as you make it out to be. (But it still sucks).
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