Saturday, June 19, 2021

A Place for My Money, A Place for My Time

Here's a little story about principal and interest, and the economy of time.

Chapter I: The Past 

The company I work for IRL used to offer a traditional benefit of paid vacation and sick days. An employee of less than five years' tenure (like me) would accrue 10 vacation days and six sick days per annum. Sick days were "use it or lose it," but vacation days rolled over to the next year if you didn't use them all. If you left the company, any unused vacation would be paid out to you in cash. Pretty standard stuff in the U.S.

If you stuck around the company for a few decades, you would eventually accrue something like six weeks of vacation a year, most of which you were probably too "indispensable" at work to use. (In other words, if you hopped on a conference call while you were "on vacation," that day magically became work time instead of vacation time. Tenure has its perks.) And under this system, there was no upper limit to the amount of vacation time you could accrue. And so the company routinely saw people retire after 20 or 30 years of service with literally months of unused vacation hours saved up, which they received in a lump sum on their last day. That time was paid out at their most recent pay rate, by the way, even if they'd accrued it when their salary was considerably lower. Quite a tidy payout.

For readers outside the U.S.: Yes, I know this model is inconceivable to you. Yes, our paid time off is pathetic compared to what your country provides. Yes, I know your government mandates a certain level of paid time off and doesn't leave it up to the whims of individual companies. I have the internet. Thank you for your concern.

Chapter II: Accounting

Fun Fact - Accrued vacation time is considered a financial liability. It's a debt on the company books. Large companies (and at least one bloated former POTUS) may routinely operate from a position of indebtedness, leveraging it in ways I don't really understand nor care to, because business is stupid. But to a smaller, privately held company like my employer, that kind of debt may not be useful or attractive, and there are also tax implications that again I don't give a flip about but they do.

The upshot is that as my company grew, its liabilities grew. And as it has always prided itself on cultivating long-term employees, it had to find a way to manage a potential debt of millions of dollars of unpaid vacation time.   

Therefore, a policy change was made.

Chapter III: The Present

Last year my company went to a PTO system. Instead of accruing a little annual sick time that expired and a little vacation time that didn't, we now get a "bucket" of time off that can be used to cover vacation, illness, doctor's appointments, bugging out early on Friday, etc. For me, that amount is currently 160 hours, or four weeks a year. 

It's twice as much time as I was getting under the old system, which basically means twice as much time that I rarely get to use because every hour of vacation means an hour of playing catchup when I return. Being indispensable has its downside. Unfortunately, the days of stockpiling months of time (or salary) are now gone. Under the new system, only 120 hours of unused PTO roll over from year to year. No matter how long we work there, no one will ever accrue more than three weeks of paid time off. So much for saving up time for a three-month backpacking tour of Europe. And for younger employees, so much for an extended paid maternity or paternity leave. 

Like most American companies, when my employers say "benefit," it means there's a benefit to them. 

On the other hand, if I end up with more than 120 hours of PTO at the end of the year, the excess time doesn't just go away. I get it in cash, just like the old system, except I don't have to leave the company to earn the payout, and it's never going to be a windfall of months' worth of salary. Fair enough.

Or, in my case, more than fair, if I play my cards right.

Chapter IV: The Goal

This past week I reached an important milestone at my place of employment: I achieved a stockpile of 120 hours of PTO. I started accruing time mid-2020, when the new system began. There wasn't enough calendar time to reach 120 hours, so it all rolled over. I've also taken a couple of random days off in 2021. Now, with just over six months left in the year, I've reached the point where every hour of earned PTO represents a potential cash payout.

In other words, those 120 accrued hours are now principal, and they're simply earning interest until the end of 2021.

I'll accrue another 80 hours of PTO between now and December. If I don't take any more time off, I'll get it back in cash at the end of the year. That's assuming I don't need to take sick days, of course, which I can't totally control. But I'm more than willing to forego any voluntary time off for the rest of this year. Even if I end up being sick for a full week at some point, that still leaves me a payout of 40 hours to look forward to. And I'll go into next year with the same 120 PTO hours in the vault.

I don't plan on touching my 120 hours of principal. Ever.

Chapter V: The Future

Starting in 2022, I'll earn 160 hours of PTO over and above my banked time. That means I can take a full two weeks off and still get a cash payout of two weeks' salary at the end of the year. After I've been with the company for five years, I'll get an extra week of PTO, which means either an extra week of time or an extra week of pay every year. I'm guessing I'll choose the money most years, and here's why.

You guys, barring a lottery win, I plan to retire in 14 years. I'm in nest-feathering mode. I'm not planning any long vacations or sabbaticals, because my focus is on trying to make up for the years when I was married and wasn't able to save. Five years ago I exited my marriage without a dime to my name. Right now my net worth just scrapes six figures. That's not very much for where I am in my lifespan. I don't expect to live to a ripe old age, but I would like to have a few years of comfortable retirement with my darling Drummer Boy and a little nest egg to leave to Precocious Daughter.

Thanks to my employer's PTO policy, and my admitted lack of a life, I can give myself a 4% bonus every year provided I stay healthy and employed. I can invest it and make even more. I can't dwell on where I'd be now if I'd been able to do this in my 30s instead of in my 50s. This is all about the path I'm on, not the ditch I've had to crawl out of.


There's every chance that my plan won't pan out the way I've envisioned it. The economy could tank, my employers could change their policy to close the loophole I'm counting on, or the trickster god could throw any number of flies into my ointment. That's life. 

But hell, I'm going for it while I can.

1 comment:

  1. I find the concept of measuring time off in hours rather than days hard to comprehend already :-/


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