Please indulge me with today’s post a bit. I don’t know why this popped into my head, but I thought I would share it anyway. So here is the thought experiment. If you were at your job and they offered you 10 times or 20 times what you made up front would you work for them for the next 10 or 20 years for no money?
In other words, let’s say I make $75000 right now and my employer offered me $1.5 million tax free, maybe a little more, right now but I would have to work for them for the next 20 years with no salary would I take it?
My answer: Potentially.
Here is my reasoning. There would be a couple of caveats to this plotline. First, I would have them pay for my health insurance for the next 20 years or I would ask for a lot more money (e.g. $500,000 or whatever) to compensate for losing that benefit.
Second, I would ask if I could potentially earn extra money by doing extra duties. At my job I can teach an extra course if I want, get grants from the school, do extra advising during the summer, etc. If the answer was yes I would be tempted.
Some people wouldn’t even consider it and I get that, but I could potentially use that money to my advantage now.
What Would I Do With The Money?
First, I would pay off all of our debt. We would be debt free and have no more payments.
Second, I would work extra at my job for some income. Maybe not a lot, but some extra income is good.
Third, I would take whatever is left over and stick it into an investment portfolio. Using the dividends from that portfolio, plus whatever extra we earned at jobs, we could live pretty well.
I would go there because having that money up front would accelerate my compound interest. If I had that money up front it would be worth more than if I was just contributing via salary over a 20 year period. In fact, there would be a multi-million dollar difference. Plus, I like my job. I don’t mind. I might prefer the 10 year thought experiment (e.g. 10 years and $750,000) or whatever and I would still come out ahead.
What would you do?