Job Change: Take Vacation or Cash Out Vacation?

Vacation on the BeachWhenever you change jobs, there’s always some vacation days left over that you can either take or cash out (some employers won’t give you an option, this is for those who do have a choice). For me, the choice has often been pretty clear: take the days off. You’ll be paid for both but by taking vacation you get a few more benefits.

The only argument I can think of in favor of cashing out vacation is one where you want to start work at your new job ASAP and you’ve signed some sort of non-compete agreement with your former company. In that scenario, you would be in violation of that agreement if you worked for your new employer while still on the payroll of the former one. Outside of that scenario, unless you all can think of one, that’s the only argument for cashing out vacation. (There is one more, if you have a lot of vacation and you want to be paid in the current pay cycle rather in the next one… but that’s even rarer than the first scenario)

Here are reasons to take the vacation:

Medical Insurance

If you take the vacation days, you still get medical coverage for the time you’re on vacation. If you get paid out for those days, your medical insurance ends on your final day. This may not be a big deal if you start your new job immediately. If you want a few days off in between employers, it pays to “take vacation” and have medical coverage.

One thing I never understood was why my medical insurance expired on the last day of employment yet I continued to pay, out of payroll deductions, for medical for the entire month.

Accrued Benefits

Depending on how your benefits math is calculated, you may want to schedule your final day during the beginning of a month. At my last employer, our vacation days were accrued on a monthly basis. When I left on February 28th, I didn’t get the vacation days I had accrued for the month of February (ouch). This may be the case for the accrual of other benefits as well, such as pensions, so you might want to take a few vacation days to pull you into the next month.


If you’re a few days away from a holiday, it’s better to take the vacation and get paid for those holidays (duh). I knew someone who switched jobs around Thanksgiving. Using his vacation from his first employer, he was able to stretch is last day past Thanksgiving. He also started at his new job on the Monday before Thanksgiving. End result was that he was paid by two employers for that nice two day holiday… very clever!

One thing to be aware of is whether you signed any sort of non-compete agreement (as mentioned earlier) while you were employed with your former company. In the case of my Thanksgiving friend, there was no non-compete agreement in place (not that the first employer knew) and so he could technically be employed at the two companies simultaneously so all was okay.

There you have it, some reasons why you should take your vacation rather than taking a straight payout. Of course, this requires some delicate discussion with your HR department or your direct manager. I’ve found that people are reasonable, will appreciate some forewarning, and won’t mind you taking vacation. If your HR or your manager doesn’t seem reasonable (and everyone who has an unreasonable HR and/or manager knows they’re unreasonable), give the least amount of notice possible. It’s all business.

(Photo by Storm Crypt)


Speed Up or Shift Up: Thinking About Your Income Path

Let’s play a game, draw the X and Y axis of a graph. On the horizontal X axis, label it “age.” On the vertical Y axis, label it “total income.” Now, draw a line of what your income path and growth rate would be if you had only a high school diploma. Now draw a line of what your income path and growth rate would be if you had a bachelor’s degree. Draw one for the industry and job title you are now, then draw one for the industry and job title you want to be in next, then one fanciful/dream job. Start drawing it for all the permutations you think you are, could’ve been, or could be.

Do you get something this? (with more lines, but this illustrates the point)

Salary Growth Curve

Let’s say you’re in the green line (B) today. It will take you 6 years to make the same annual as someone who is on the purple line (C) and has worked two years. According to the lines above, it takes someone on the blue line (A) to earn as much in a year as someone who works two years in the purple line (C) or seven years in the green line (B).

What’s my point? My point is that for most young (and aggressive) employees, regular, organic growth in your salary is not going to get you to where you want to be. 3-4% raises may keep you on pace or a little ahead of inflation. Waiting for your superiors to recognize your fine work will be effective for a small percentage. The key to increasing your income is to speed up or shift you income. Either demonstrate consistent and solid performance, itemizing out accomplishments and bringing them to the attention of your superiors, or demonstrate the accumulation of valuable skills, degrees, or certifications that can justify significant merit increases. Doing a good job is mandatory, but unfortunately it’s become as much of a discriminator as a college degree (almost required for many jobs and only gets you in the door).

(Incidentally, there is nothing wrong with wanting to be the blue line (A), because the blue line has a better chance of giving you more time with your family, more time with your kids, and more time with your friends than the other three – maybe :))

So, what should you be doing? The solution is to either shift your income path upwards or speed up your growth. What I discuss below isn’t meant to be treated as advice or anything like that, it’s merely my own thoughts on the matter and subject to the specifics of your situation. Please read it with that in mind, it’s designed just to get your brain juices flowing and not designed as an instruction manual.

Shifting Up Your Income Path

The key to shifting up your income path has a lot to do with education. If you don’t have a high school diploma, getting a GED will shift you up. If you have a high school diploma, a college degree will shift you up. If you have a bachelor’s degree, consider a master’s degree (hopefully with tuition reimbursement from your employer!). If you can augment your resume on the education bullets, you can negotiate higher salaries with your current or future employers.

Another key to shifting up your income stream has to do with job responsibilities. Promotions often, but not always, lead to shifts in income to keep your salary competitive with the market rates. If you’re an engineer, a promotion to a team lead should get you a raise above and beyond what you would’ve gotten if you stayed a non-technical lead. If you are promoted to a first line manager or above, you should shift to higher lines. If you aren’t, consider moving to a company that will reward you for taking leadership and management positions.

If you can’t shift (those aren’t the only two ways, but I think you see what I mean), or at least not now, try speeding it up.

Speed Up Your Income Path

A shift up is much harder than simply speeding up your path along the income lines. Whereas a shift up requires degrees or actual responsibilities, you can speed up your income line by simply increasing your value to the organization relative to your peers. If you learn new applicable skills that improve your productivity and show gains for your organization, they should reward you for it. If you don’t use Excel at all in your daily routine, going to an Excel class won’t help. If you do use Excel and can show productivity gains by going to a class, your improved performance, and your documentation of it, should lead to speeding up your income line so you get a little more than the standard raise everyone else is.

The second part, regarding performing better relative to your peers, is just as important as performing better. If you are surrounded by superstars and your department only has a set amount of money to dole out in raises, you might have to work your butt off just to keep up (it could explain why you may have a few bad raises!). If you are surrounded by a department of fools, it’ll be far easier for you to shine so you better take advantage of it. If you need ideas, it doesn’t hurt to ask around.

Build A Case

One crucial point that is applicable to both ideas is communication with your management and company leadership. I know a lot of people who, upon attaining master’s degrees, weren’t properly compensated for their efforts after the degree was awarded. Part of that was institutional (the company simply didn’t see why they should, so people went to other more enlightened firms) but part of it was communication. You have to build a case for yourself before anyone else will. Your manager has a job to do too and it’s not priority number one to ensure you get what you deserve… that’s your priority number one. So remember to build a case for yourself, don’t just assume people will recognize what you’ve done and compensate you for it.

 Personal Finance 

Talking About Salary with Friends

This past weekend I was in a New York Times story about young professionals sharing their salaries with their friends. In it, I was quoted about how I knew the salaries of my friends within a $10,000 spread (I had said about $5k either way) and that we openly discussed our salaries, raises, and other financial details. I was glad the article captured the most important point I was trying to make, not focusing on the fact that we were disclosing a taboo number, which was that sharing information helps everyone involved. The point of knowing my friends’ salaries wasn’t so that we could compare bank accounts, it was so that we would be armed with the most and best information possible to make decisions.

There is only one reason why we all would discuss our salaries and it’s the same exactly reason why people turn to We want to know if we’re getting paid a fair sum for the work we are doing. I knew what my engineering friends earned in a year and I knew the differentials for level of education and area of expertise and the point of knowing was so I could be better educated about my potential value in the workforce. When my friends left, they would disclose the raises they’d be getting to go to another firm. I disclosed how much more I was being paid. For me, it was about learning, with real life data points, what was out there and how I could use it to my advantage.

It’s important to note that we were all in the same field, working for the same employer. There wasn’t a situation of high school friends where life decisions led one to a more lucrative profession or another to a less lucrative one. I don’t see the point in a lawyer sharing a salary with an engineer or a financial analyst sharing her salary with an administrative assistant. Since you’re not in the same industry, that’s not information you can use. In fact, I don’t discuss salaries with my high school friends, or friends in other industries, because it provides no added value (and because it never comes up).

“This is a generation that is much more attuned to teamwork, collaboration and sharing information.” – that’s a quote from the article and one that I feel captures what my friends were trying to do. One prime example of this was that every single year, management would tell employees that “raises weren’t going to be good this year.” By sharing information, we could figure out whether management was feeding us a line or if raises were really not good (it was a defense contractor and we’re spending billions upon billions on defense, plus executives are getting ridiculous bonuses… not everyone’s raise is bad!).

Lastly, one surprising thing I learned in reading the article was that it is/was taboo to talk about how much someone paid for their house. I find that surprising because that is a matter of public record (all home sales and tax records are public), I consider it a much bigger affront to surreptitiously research someone on the internet than it is to come out and ask them. I paid $295,000 for my house. I know roughly (it’s not like I write it down so my memory fades) how much my friends have paid for their homes. It’s not a big deal. I suppose we never learned that talking about that was taboo, but then again the spread of information is valuable.

What do you all think? Salary talk is always taboo? Never taboo? Or are you like me, talking salaries isn’t taboo if there is information to be learned but taboo if it provides no such informational value?


Three Morale-Boosting Tips for Job Seekers

Nearly two years ago my then beautiful girlfriend, now my gorgeous wife, quit her job and moved to Maryland. Over the next month, she faced an adversity some are now facing, the seemingly endless futility of searching for a new job. She was jobless for quite a while, sending out dozens of resumes and cover letters a day, and falling deeper into the pit of futility with each passing day. While she didn’t feel actual financial pain, she was feeling the pressure of not earning money but still spending it, on rent, groceries, etc. It was that pressure and her ingenuity that resulted in these three morale boosting tips we discussed over dinner the other night.

The key behind each of these tips is that they’re designed with a single aim in mind: boosting your morale. Sometimes it’ll feel like finding a job is a numbers game, where you send out hundreds of resumes in return for a handful of callbacks and an even fewer number of actual interviews. That’s because it is a numbers game and it is just as important to keep your chin up as it is to keep sending out your resume.

Aside: On Being Fired

Let me briefly tackle an aside for a moment. If you were let go from a company, don’t feel bad. Despite what the numbers may indicate or what the pundits may say, we’re in an economic slowdown that has companies letting people go. If you were fired in a time of prosperity, perhaps you might feel bad about yourself. However, given the economic climate today, it’s just as likely mismanagement on the part of your company (in planning, projecting, etc) has as much to do with your departure as you do. Either way, being fired is not the worst thing in the world and to think that is counter-productive. Perhaps this is the opportunity you’ve always wanted, a chance to look inside yourself and figure out what it is you actually want to do. Don’t squander it by going down a dead-end path for the sake of money.

Onto the three morale-boosting tips…

Track Your Progress

The first step in her job search was to build a spreadsheet of all the companies she was interested in. The next step was the track what she did with each of those companies, whether it’s calling them up, visiting their offices, or sending a cover letter and resume. This lets you accurately track your progress and builds structure into your work.You have zero control over whether the company responds but you have control over your level of effort. You alone control how many resumes, cover letters, and emails you send out. If you don’t track your own progress, all you’ll focus on is the fact that no one has responded and it will disenchant you.

Hand in hand with tracking your progress is setting achievable goals for yourself such as number of resumes sent, or number of companies contacted, or number of companies identified to contact in the future. You have to feel success in the things you can control, effort, because you can’t control anything else.

Do Something Else

You can only job search for so long before you start feeling burned out, so do something else. If you have a choice, pick up something that gives you a sense of accomplishment or improves your skills. If you’re a software developer, perhaps you can use this time to brush up on your programming skills by building side projects. If the prospect of something that close to your real work is discouraging, pick up an entirely different hobby like gardening or running.

What you want to do is get that feeling of accomplishment and success because it’ll give you a strong moral boost. You want to be able to look back on your day and say: “I sent out five resumes and I planted a bed of roses, that’s a pretty good day.” or “I set up my company tracking spreadsheet, hit the gym for an hour, and cooked up a nice little dinner.” Honestly, those two examples are probably more productive than most people are in 8 hours at work. 🙂

Read What Color Is Your Parachute

I haven’t personally read this book but my wife said it was great when she was looking for a job. What Color Is Your Parachute by Richard Bolles has been lauded in many places and I would take a trip to the library to check it out. My wife said that the most poignant part of the book, for her, was the section that explained how this should be an exciting time in your life. It’s one of the few times that you can honestly give yourself an assessment and decide what you really want to do with your life.

If you left or were laid off from a job in the financial services industry, now is a great chance for your see if you want to try something else entirely. Maybe you went into a career for the money but not because you loved it, now is your chance to try something you truly enjoy. I’m sure there is more to the book than that concept but that’s certainly a good point.

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