An icy wind whipped through the Chicago loop. I hid behind buildings and skittered across streets, hoping to make it home before ice overtook the edges of my lips, or the three fingers that peeked out of my coat sleeve to clutch my paper shopping bag.
Inside the bag were three small jars of honey; an impulse buy I had made upon seeing the cheerful fairy lights above the Christmas market. An attempt to console my inner child, who felt so out of place in that harshly adultish law office I had just left behind. A distraction from the dread that crept down my spine about my future.
“You should be happy,” those honey jars said to me. “You are privileged to even have the opportunity to experience this dread.”
I had just closed on a home.
Apparently today, Twitter’s main character is some former Meta employee who bought a $1.5 million dollar home in Seattle, got laid off, and can’t pay the mortgage. As usual, Twitter flattened what COULD be a useful dialogue into “should you make fun of this man.”
I hate watching Twitter seize on these microcosms that characterize our world and our industry. Each story deserves a skilled treatment—its own Heironymous Bosch melange of nuance and chaos. The tech Twitterati instead toss a napkin sketch across the table and lean back smugly, like they’ve just handed you The Next Big Idea and not the thing that most napkin sketches are: an illegible, unattractive piece of shit.
This is my blog. Here, I can treat the topic however I want.
Let’s talk about tech money.
If you’re an American millenial born between 1980 and 1995, people your parents’ age could expect to graduate college with a job, purchase a home, and start a family within the next year or two.
That hasn’t been the case for a long time. Housing prices and costs of living have skyrocketed; meanwhile, wages have remained stagnant and jobs have lost benefits. If I were a betting man, I’d put money on this Meta engineer having been out of college for at least ten years. That’s the kind of time it takes millenials in lucrative professions1 to independently assemble the down payment for a home these days. And that’s the lucrative professions. The ones that give individual people a prayer of doing it at all.
It’s especially true in a place like Seattle, where the median price for a house is above a million. I went on Zillow and screenshat four photos of homes listed for $1.4-1.6 million in Seattle. They look like this:
When I chose these photos, I didn’t know that houses in Seattle aren’t selling for the listing price. The listing price serves as a starting bid in a frothy auction that usually ends significantly above the initial listed price, and often with inspections waived and other buyer protections eliminated. Each of these homes can expect to go for more like $1.8-2 million; significantly more than the Meta engineer paid for his.
Don’t get me wrong; these houses are cute. But let’s not pretend this dude dropped a mint on a mansion. A regular house—in many cases a much more modest one than millenials grew up in—is a seven figure investment. Real estate agents work hard to get their hands on people who will buy those expensive homes and earn them a sweet, sweet commission.
The unique thing about tech—we’ve talked about this before—is that it’s an exception among lucrative professions for its low financial barrier to entry. To be a doctor, you have to pay a medical school hundreds of thousands for an education, then work as a resident for 20% of a full doctor’s salary for several years. At least after that, your job is sort of secure. To be a lawyer, you have to hand a law school hundreds of thousands for an education. Some job security here, but less. In order to undertake these investments, people either need to be already rich (that’s 76% of American doctors, for example), or take out enormous loans and live much more ascetically among rich colleagues for a decade before you join them in day-to-day spending power.
In tech, a boot camp and a few years’ experience will get you into the six figures. So folks who did not grow up rich get into it and mix fairly quickly, and get marketed the same products, as people who did.
I moved to Chicago in 2014 to become a software engineer, with zero capital.
I was one of the lucky ones; after a startup laid me off, I asked the CTO there for a pity recommendation on a resource to learn to code. He introduced me to a friend of his, who tutored me. The friend thought I had potential and offered me a spot when he founded his night-and-weekend bootcamp. The schedule of the classes allowed me to hold down a day job and continue to earn a meager income while I studied. But critically, the friend also waived tuition for me in exchange for me tutoring the rest of the class with my little head start. I also added diversity to the mix; even with the pains he took to make the bootcamp an equitable opportunity, he was exclusively seeing applications from, well, men.
I moved from the basement of a slumlord manor in D.C. to the back upstairs room of a six bedroom house in the West Town neighborhood of Chicago, rented out by the owners who lived in the garden apartment downstairs. All of the residents of that house used the same kitchen. One refrigerator is an insufficient number of refrigerators for six people, four of whom have live-in partners at any given time. That room cost me $750 per month.
I was forced to leave that house when the house manager’s partner wanted to move in and the manager wanted my room. So I moved up the street to a three bedroom apartment, which I AirBNB’d on the low to make rent. I spent most nights an unlocked door away from literally whomever. It worked until my landlord figured me out. Around this time I had the extreme luck of another software engineer falling in love with me; I was too gay and anyway not good enough for this guy, but he moved in with me and insisted on splitting the rent, not evenly, but based on our relative salaries. He paid 40% more than I did as a result. That’s what it took for me to live in this kinda rickety apartment and also save. When that lease ended, we moved together to a nicer place, for which he took a bigger financial hit than I did.
When that relationship changed, I moved into a studio apartment. I stayed in studio apartments working multiple jobs—one of which was always software engineering and the others of which were usually freelance coding or teaching—for six years before I closed on a home.
Why studios? Why multiple jobs? Why wait so long? Look: I’m not a betting man. I have anthropomorphized my anxiety; I picture him as a giant, terrified blue dragon named Steven. Steven noticed how software engineers enjoy nice salaries but much less job security than doctors or lawyers.
Steven also recognized where I came from. Despite the fact that engineers on Blind or StackOverflow or Twitter don’t distinguish themselves based on congenital wealth, that difference is there. It’s there in who can pay for a CS degree. And its there in who can work for FAANGs—an acronym that represents an echelon of especially high-paying tech companies. These companies’ interviews, and those of companies that try to mimic them, include algorithm recitations that more or less proxy the question “do you have a CS degree?” They’re billed as critical thinking questions, but they function as memorization questions for students whose teachers have shown them this exact problem before. The way around that is to take time away from being employed (see: paid) to study for those interviews, or to already enjoy enough privilege to be assumed working while studying on work hours. Tech stratifies along “who could still be in it if it did follow an expensive licensure process.” And I, dear reader, would be out.
Real estate agents base how much house you can buy on your income.
They tell you something like “three times your annual income.” So, for a software engineer with a few years’ experience, between $300k and $600k at a regular company, and like $1.5-$3 million for someone at a FAANG (that includes Meta, by the way; Meta, formerly known as Facebook, is the “F” in FAANG).
What those real estate agents don’t say is that those numbers only work with a pretty zaftig emergency plan. For people on those home buying TV shows and programmers with pedigree CS degrees, the emergency plan, in case of layoff, is usually Daddy Has Money.
Tech has high earners for whom that’s not true (hi), and that completely doesn’t come through in a discussion of choices like these.
The congenitally rich are still at an advantage over high earners who aren’t congenitally rich because their parents help them hang onto their shit when the market turns sour.
Let’s be honest: a real estate company and a mortgage broker, at a minimum, both profited off this Meta engineer’s choice, and they will be fine regardless of what happens to the Meta engineer.
Why is tech so volatile? If code is the future, then why don’t we enjoy the job security of doctors or lawyers? This is a complicated question because we see job loss sobstories emerge even as open programming positions outnumber capable programmer candidates by more every year. Demand for us is increasing overall—just not at the highest salary points.
That’s because FAANG-and-imitator tech salaries are rarely based on actual revenue. Twitter, for example, has never made money. Netflix has made a lot less money than it’s astronomical tech salaries would suggest. Companies can do this when their CEO has access to venture capital. They have this access because they know or are trusted by, usually, people who got lucky in the ’90s tech boom and want to do it again with all their spare cash. Venture capitalists usually have no actual idea how to identify the next big thing—I’ve written about why—but they think they do. And to the extent that a CEO can convince them “Oh yeah, you do buddy, and it’s me,” they secure the company they lead a line of credit that allows them to bid like horse traders on a pool of ten thousand engineers.
But those credit lines are coming due now, and companies are being asked to show profits. Or in the case of Google, bigger profits. Out of the FAANG right now, two bring in the sort of revenue that makes their tech salaries, not necessarily justifiable, but at least sustainable. One of ’em does it by being evil, and the other does it by establishing a monopoly and paying the least of the FAANG. The rest—and, again, their imitators—have done large layoffs in the past twelve months. (UPDATE April 27, 2023: large layoff at the evil one, also).
“You never told us the balance on this additional account.”
My would-be mortgage broker scolded me on the phone for failing to include my savings account in my self-prostration of my financials for their review.
“That’s not a rogue account,” I explained. “It’s for the down payment. I have been the only one paying into that account since I created it seven years ago.”
“Well, we need to know all the money you have so that we can accurately calculate the amount we’re approving you for.”
“Right. And I don’t want that amount included, because the moment I buy the place you’re giving me a loan for, that money is gone.”
“Do you understand that we cannot approve you for a larger amount if you exclude that? I am required to disclose this to you.”
“Yeah bro; I get how it works. I got braincells. Will including that give me access to a lower mortgage rate?”
“Oh, of course not. That’s based on the market.”
“Right. That’s based on what you can squeeze out of someone else on the market. Well, I don’t care to pay it on a higher amount, so please only approve me based on the accounts I have shared with you because those are the only ones I’m willing to put on the line for this loan.”
I have drastically abbreviated this telephone conversation for your consumption. The real thing? An absolute carousel of frustration. It spun methodically, surfacing and resurfacing the same saccharine, vaguely grotesque arguments. “Oh, but we can approve you for more!” “Oh, but it proves you’re more creditworthy!” The conversation also included the implication that I might not get approved at all if I failed to allow the broker to see all my accounts, but I salted this particular slug by pinning them on it and asking point blank if it was the case.
I do an absurd amount of research before I enter even the mildest of adversarial conversations. I also don’t mind some suit thinking I’m an absolute bitch. If you don’t have those two things? Expect to get predatorially approved by a mortgage broker for an amount way above what a HENRY (high earning, not rich yet) should commit to pay for a place. Do we include this in financial education anywhere? No; we don’t. That would be very much not in the best interests of the mortgage brokers, real estate companies, or any of the other folks who profit off of high earners making big purchases.
Suppose this Meta engineer did not buy and instead rented.
So he passes on his income to developers and management companies instead of real estate agents and mortgage brokers. This is what lots of people in my Twitter replies insisted he should have done. This was, in their view, the smart decision.
OK. So where does he put the rest? In an index fund? Where the S&P 500 gets it and he loses it when that goes down? We’re not talking about old money here. Not the kind of money that congenitally rich turtles sock away in some offshore vault or nurse with insider trading or any of the other objectionable things the tech Twitterati seem to have no idea the congenitally rich do with regularity.
For an individual with any cash, all of the encouraged financial choices—rent, buy, save, spend, invest but in the stock market, dweeb, not small businesses or your community—just HAPPENS to involve transferring most of that money to much richer parties.
Leaving the individual fucked if those richer parties squander it.
The working class is not just “people under $X income.”
The working class is anyone forced to work in order to survive.
It excludes the congenitally rich, but it includes high income professions until the people reach congenitally rich.
And The System would like us to forget that because then high income individuals don’t see the point in union contracts, worker solidarity, community support efforts, or mutual aid. They don’t see the point in investing locally, and they’re systemically encouraged to hand that cash to exploitative institutions that wine and dine and curry favor with the members of the sham “favorite class” they’ve created to protect the system itself.
This has a lot of historical precedent: plantation owners in the antebellum south had “house slaves” that they placed on a pedestal before their argricultural forced labor. Upon partial abolition in the U.S., local governments created police forces that made townsfolk responsible for protecting the belongings of the rich from their newly freed former captives.
So you’re welcome to keep feeding into this whole “it’s us against the people who make a 5x more/5x less than us” thing. SO welcome. It’s exactly what the system wants. They want you to forget about the top dogs who get 95% of what bothay’all “make” in the end.
My therapist knows about Steven.
We discuss his advice a lot. Steven is great at fear, and he’s also great at plans.
I spent most of 2022 traveling back and forth to Chattanooga to help my mom, who was undergoing cancer treatments. At some point during that period, Steven stopped talking. He just…got overwhelmed I think. Missing in action. I went nihilist for a while.
I recognized that, if I wanted to buy a place, I needed to do it before Steven finished processing that event. Because when he got done with that, I suspected he was gonna declare a moratorium on large decisions for—I didn’t know how long, but I suspected “years” to be a possibility.
Home prices were rising. I could wait and see if they dropped, of course. Then again…what if they didn’t? They had been rising for years. Right now might be the last time it would even be possible—painful, stressful, but possible—for someone of my risk profile and income to purchase a home by herself in Chicago. I could miss my window by sitting on my hands. When the apartment building where I rented my studio proudly declared the pandemic over and announced a $400 rent hike, I started looking in earnest. I didn’t do it because home buying is safe. I did it because the alternatives aren’t safer. Growing up sadly includes the sobering discovery that there is no such thing as “safe.”
The “safety net” for buying and maintaining a $1.5 million dollar home like the one the Meta engineer bought—a home with an $8500/month mortgage and maintenance costs—ranges from $120,000 to a quarter million dollars, depending on your risk profile. It takes years to scrape that together—even for a tech worker, who is immensely privileged to be able to do it at all. So when the tech Twitterati are like “why didn’t this dude SAVE?” I suspect they’re picturing a five year old’s piggy bank relative to what it would take to definitively save this guy from the situation he finds himself in now.
Also, suppose you had devoted the years from 2018-2021 to scraping that safety net together instead of going ahead and buying. By the time you finished, homes were costing hundreds of thousands of dollars more. The treadmill sped up. Now you need to keep saving, or hold your nose and adopt a riskier risk profile.
The trick to getting rich off buying a home is 20% all the crap that the internet and your real estate agent tells you, and 80% the lucky timing that they more or less elide.
After the down payment, I got a mortgage for about $350k less than I probably could have been approved for. The monthly payment is still terrifying. In order to reassure myself that I can manage it, I:
- Have three active income streams: software engineering for my employer, teaching, and workshops
- Am working on growing the proportion of the workshop stream that is independently managed as opposed to through platforms
- Occasionally pay a little extra down on my mortgage principal, very much against the advice of my brokers, so my mortgage payment ends up being principal in larger proportion over time and I pay less in interest
- Am currently seeking out friends with whom I am confident I could happily cohabit to occupy the areas of my home that I don’t need right now, short term and long term
- Have a savings account for home maintenance that ideally also includes a few months’ mortgage payment in it, so I’d have runway if I lost my job
- A couple hiring managers on speed dial; I don’t precisely want to work at all the places they’d hire me, but I think they’d hire me fast if I lost my job
- have calculated that, if I can’t replace my job before my runway runs out and I sell my entire investment account and put it all toward my mortgage principal, my mortgage payment + taxes falls into the “renting a studio” price zone
To free myself of this, my hope is to pay the place off in as few years as possible. I had an idea when I bought of how many years that was. Now, having embarked on a renovation that has depleted the savings account by significantly more than I was quoted for the job, I’m expecting it to be a larger number of years than I was before.
The point here isn’t “the Meta engineer should be doing all this.” The point is, a person who has been exceedingly careful and thoughtful about this decision still feels trapped by it.
I am not asking for sympathy.
I don’t expect it, and to be honest? I don’t want your sympathy. People sympathied me near to death while my mom was sick: it didn’t make her better, and it didn’t make me better either. If I have to hear “let me know if there’s anything I can do” from one more person who absolutely does not plan on doing anything, I just might snap. I’m a grownup and I’ve made my bed. Leave me alone.
But I do want you to see is that the financial system we’re in—the one that drags its feet on rent control and universal basic income, the one that allows union busting and ties health insurance to employment, the one that not only markets “give all your money to this richer guy” as the preferred option, but goes so far as to make that all the options—it’s not working in the favor of high income people, either. It’s telling them—telling us—that it is, but it isn’t. Our spending power is more or less the whooshing sound made by the wealth on its way through us to the congenitally rich.
And everything we can do about that happens, not individually, but collectively.
We don’t have power as individuals to fix it. I used to think we did. I was young and oblivious and wrong about that. No one is going to stop the squeeze until it is at the exact point past which even another microsqueeze completely collapses society. Getting to that point requires ongoing, sustained, community-based collective action in which we trust our peers, our communities, and our relationships more than we trust the institutions telling us what’s good for us. And friends? We super, duper don’t get there by having rhetorical cage matches on Twitter about whether or not to make fun of each other.
Let’s hope that, from this, some Meta engineer who bought it when Zuck told him he was better than everybody else has learned that Zuck lied.
Let’s hope that all of tech does. Because tech, collectively? Could maybe make a difference if we worked together with our communities on alternatives to this drek. As one person put it so well when they replied to me on Twitter about this topic: “If you have to work, you’re labor, and we’d all be better off if you acted like it.”
- I’m excluding lottery professions here like sports stars, Hollywood actors, or famous rappers—although, it should be said, a lot of folks in these categories are also congenitally wealthy.
Oh you liked that, didja?
Fine. Help me pay down my mortgage by buying my self-paced workshop on tech debt. You just might learn yet another thing from me.
Or go see what else I said about tech money.
Or this thing about why founding tech companies isn’t the same as “printing free money” anymore.
Great post, thank you. I still think you should be president.
It is sobering to read your account. It wasn’t that long ago, 2007, when I bought a very modest house with no money down (thanks to excellent credit), and the mortgage payment was less than $1,000 a month. Today Zillow thinks that house is worth more than twice what I paid for it in 2007, and the least you can get away with putting down is 10%. Even on a tech worker’s salary, given living expenses, it would take several years to save up that 10% for that house.
My kids are all in their 20s and early 30s. None of them make tech-worker money. I don’t know how they will ever own a home. A couple of them still live with us because given their wages they couldn’t even make the rent in a non-scary part of town.