Financial Samurai

Question: A reader shoots me an e-mail and asks, “Sam, how’s it going man? I just found your blog searching for diamond engagement rings and I want to thank you for your “Bling Bling” article. I’m wondering, what size rock do you think I should get for my woman? I ask because she makes literally 5X more than me, and is a Senior Vice President at one of the major retail companies.

She has over 100 people working for her in the marketing department, and I’ve seen her crack the whip on others before, and it’s scary! However, when she’s with me, she’s a completely different person. A jokester, goofy, and SO caring.

I love her to death, and I want to give her the best. But, I’m a middle school teacher, and only make $47,000 a year! I can maybe spend $10,000, but that’s going to be really tight for me, and basically wipe out my savings. We’re both in our mid 30′s and have been dating for over 5 years now. Thoughts?  Thanks! John”

Response: Hi John, thanks for your e-mail inquiry. Welcome to Financial Samurai! First of all, I want to commend you for being a school teacher. The state should be paying you guys the big bucks, and not Andrew Hall from Citigroup his $100,000,000 bonus! There are several ways to answer your question, so let me offer some suggestions. I asked your question to a number of my female friends today as well so I can give you a balanced answer. Read more…

QUESTION: Tim, a reader sends in an e-mail asking, “Sam, I have a friend who is notoriously cheap. Whenever we go out to eat with a group he disappears to the bathroom when the bill comes. Whenever we go out drinking, everybody buys a round of drinks except for him. What should I do? The last bill came out to $100 each from $70 because he and his wife disappeared! And why is it that every time we go out with clients together he never volunteers to put his corporate card out? He drives an expensive car, and always has expensive threads so why am I always stuck with the bill? It’s so frustrating!”

RESPONSE: Well Tim, I have to say that your friend is a 100% cheapskate, and you may want to stop inviting him out or doing anymore joint client events together. He is taking advantage of your kindness, and your willingness to let things slide. As far as I’m concerned, you can equate his lack of contribution to stealing. The next time he goes to the bathroom right before the check comes, just simply take your time and wait until he gets back to pay his fair share. Better yet, follow him to the bathroom, shake one out, and return together. He can’t escape! Read more…

By the time Baidu, the “Google of China” went public, Venture Capital firm Draper Fisher’s 28% stake was worth over $1 billion dollars by the end of the trading day. Not a bad return considering their likely sub-$50 million investment just years ago! In a world full of strikeouts, it just takes one home run to win a ball game.

The Financial Samurai reader is savvy enough to know that strong work ethnic and good morals are key pieces of the success puzzle. Sometimes you just need to be in the right place at the right time. When Venture Capital firms fund startups, they are looking to take equity stakes in companies in a robust industry, lead by visionaries who can execute towards enormous profit potential. The majority of investments go bust, and the successes often take years and tons of selfless involvement before returns are seen. Eventually, the exit strategy is for their investment to get acquired or IPO.

We have the opportunity to be our very own individual venture capitalists everyday. Many of us may take for granted the people we meet, but not you. After all, all it takes is one billionaire to give you one million dollars before you’re rich right? Receiving an opportunity is what it’s all about. You’re reading this post essentially because like me, you want to be financially independent sooner, rather than later. The ability to be financially independent by 40 is the reason why we work so hard now. If the deadline was 20 years longer, where’s the fun and challenge in that? Read more…

The latest development in the “Cash For Clunkers” legislation is that it may be extended for one more month until labor day. Under the program, buyers of new cars and trucks can get rebates of $3,500 to $4,500 by trading in older models that are then scrapped. Seriously though, is this multi-billion dollar government works program just money spent to appease the car lobbyists? Or is the goal really to get old cars off the streets and save the environment? The good thing is that these old cars are getting scrapped. Otherwise, if you trade in your gas guzzling SUV for a Honda Civic, you’ve NET ADDED to the world’s pollution because someone is still driving your old car, and the new Civic still emits waste!

This is what I’ve never understood about the “holier than thou” crowd who buys hybrids like the Prius. It’s great that you are driving an environmentally friendly car, but if you start looking down on non hybrid drivers with disdain, that’s hypocritical. Buying a new Toyota Prius simply adds to pollution if you don’t scrap your old car. The only way you’re going to really make a difference is if you scrap your old car and just take public transportation and ride a bike! Again, I’m absolutely for driving a nice low emissions car, but the fact of the matter is that these cars are expensive. I’m not spending $30,000, and if you look down on someone who can’t afford the $7-10,000 premium for hybrids then shame on you! Read more…

Yes, I know I’m being a tad bit facetious here, but not really. After getting US$45 billion in government aid, the US government and we the people of America own roughly 36% of Citigroup. The interesting debate is whether Citigroup employee, Andrew J Hall should be paid his $100 million bonus as described in his contract.

Most initial responses are with a vehement “HELL NO!” Who on earth deserves to get paid that much, people must think. However, what if Andrew Hall was responsible for bringing in $1 billion in revenue? Is it so egregious to pay the man responsible, a 10% cut? After all, $900,000,000 sure does employ and pay for many other Citigroup employee’s salaries! Should Citigroup risk not paying their star, and his team of employees for the overall sake of the firm and shareholders? As one colleague aptly put it, “RB, we live in America not North Korea!” Read more…

A funny thing happened yesterday when my wife and I were waiting for a space in the club parking lot. We were doing some stretches outside when an old man with a bamboo stick over his shoulder and too medium bags at each end came tiptoeing in. Where in the world was he going, we asked ourselves. Our eyes followed him to the back corner of the lot, which extends around and into the club. Like a ninja, he proceed to jump into the big recycling dumpster and start rummaging!

After about 5 minutes, he popped out, and those medium sized bags on each end morphed into bags the size of his own body. This time, he happily walked away and didn’t tiptoe around us. Cool, he’s decided to lessen the dumpster’s load and take some plastic bottles and cans for himself. Maybe the old guy can get some trade in value for his stash, although I can’t imagine very much.

The wife and I are still waiting for a spot 5 minutes later when ANOTHER man with bamboo stick and plastic bags on each end comes marching in. This fella was younger, perhaps in his 30′s and could literally have been the older man’s son. He didn’t do any tiptoeing, he just marched right in and climbed into the dumpster. After about 10 minutes, he threw himself out, and muttered in disgust, “Don’t people recycle anymore?!” and walked away.

Read more…