Financial Samurai

There have been a number of data points recently that have caught me off guard.  Apparently, there are people in this world who actually work 40 hours a week or less and complain why they can’t get ahead!  I understand if you are retired, a student, handicapped, or under-employed how you might not work 40 hours a week.  But, I’ve only heard about places like France where people work less than 40 hours a week and start going on strike if they have to work more!

Working 40 hours a week or less is fantastic if you are happy with your income and career, not bored out of your mind, and can get away with it.  Unfortunately, I am neither skilled enough to do what I want with that little amount of time, nor do I have the courage to work so little for what I am being compensated for.  I think I would probably get fired if I worked that little.  Besides, I have about 80-90 hours of work energy in me a week now, might as well utilize it before it fades.  How about you?

Data point #1: Two women on the bus were chatting next to me and explaining what a long day at work they had.  It was 6:30pm and one woman said, “Thank goodness the day is over!  I got in an hour early at 8:30am and am absolutely exhausted!”  She’s exhausted for being in the office for 10 hours with an hour long lunch break.  Really?

Data point #2: For some reason, my article “How Much Do The Top Income Earners Make By Percentage?” continues to get random commenters (200 now) who turn the simple question into a political and social debate about why the rich should be paying more taxes, and the lower 50% should be paying even less taxes.  One commenter says I’m out of touch with reality when I explain that anybody who really wants to be in the Top 50% of income earners ($33,000) can do so if they wanted to.  All you have to do is work 63 hours a week at $10 to make $33,000 a year!  He says that’s ridiculous as he can’t make that working 40 hours a week (no kidding math genius), and I question what world he lives in.

Data point #3: My friend in HR said her firm is implementing overtime compensation for certain level of workers who work more than 40 hours a week.  I asked her why her firm was rewarding their workers for working hours they’re supposed to anyway?  That’s like rewarding the cable guy who comes within the allotted window!  She giggled and shrugged.  If I am the CEO, and you command overtime compensation for working more than 40 hours a week, I will do my best to refer you to my competitor to blow them up.

Data point #4: A blogger who moved to a foreign country to experience location independence, swims for hours a day, “works” about 30 hours a week and says he’s burned out. He’s upset that he’s not making more than $1,000-$2,000 a month with his infoproducts and online job opportunities.  He’s so burned out that he took a week off to re-charge his batteries.  In other words, he took a vacation from his vacation.   You’d think as a full-time blogger working 3-5 hours a day that you’d probably post every day and never burn out.  But, he only posts 2 to 3X a week and writes that he’s frustrated nobody has given him a book deal.   Come on now. $1,000-$2,000 ain’t too shabby for kicking back!

BE SERIOUS WITH ME PLEASE Read more…

One of my favorite income streams is rental property.  I’ve bought several apartments over the past decade and plan to continue buying more.  A particularly popular rental I have is a two bedroom, two bathroom condo with parking and a view of the park.  It’s not fancy, but the location is fantastic and it has everything one needs to live a good life in one of the best areas of San Francisco.

My first tenants lived there for 5 years and actually got married after their second year.  Incidentally, my second tenants also married after two years of living there and now want to extend for a third year.   Perhaps the apartment is just blessed with love and good feng shui.  Whatever the case may be, I’m putting the two marriages in my marketing material if I ever sell!

What I do know for sure is that owning rental property is like running a business.  The goal is to maximize revenue, reduce turnover, and control expenses.  Landlords aren’t evil and aren’t always rich as some tenants might believe.  Instead, most landlords are just trying to build their own retirement portfolios with the best product offering possible.  Raising rent is nothing personal.  It’s just business between two willing parties.

RENTAL PRICE THEN VS. NOW – EVERYTHING TURNS TO GRAVY Read more…

For the first time in a while, I attended our regular Friday home game last night from 9pm to 2:30am.  I used to love going all the time until I started this site actually.  Now, the thrill of writing and interacting has taken over.  Furthermore, I realize how hard it is to make a decent buck online.  To lose a couple hundred in one hand when you play well, yet get runner runnered is a horrible feeling!

No longer are my poker outcomes compared to my normal salary.  They are now compared to my online income which makes things that much more painful when I lose since my online income is so much smaller.  In fact, I use my online income as the barometer whenever I’m thinking of spending frivolously to help keep me in check.

A lot of us poker players like to justify our habits by saying that poker isn’t gambling and that it’s skill.  Although I believe poker is 60% skill, that still leaves 40% left to chance.  Would you bet someone $500,000 if you had a 60% chance of winning and a 40% chance of having your hand chopped off?  I wouldn’t, but some would!

THE ADDICTION RETURNS TEMPORARILY Read more…

When you incorporate a business, it’s like you have created a person out of thin air. That business is considered a separate legal entity from the shareholders who own the business. In the case of a small business, it’s usually one or two business partners. In the eyes of the government, a business is separated from the owners who run that business. This is different from a sole proprietorship, where you and the business are one and the same. There is no legal separation in a sole proprietorship.

It is not only legally separate, but also taxed separate. At the end of the year, you must also file taxes for personally, but also your business. When you incorporate your business, you’ll get what’s called an Employer Identification Number (EIN) number. This EIN number is similar to your Social Security number. It is what identifies you company with the IRS. So if any customer asks for a 1099 form, you would given them your EIN number, instead of your Social Security.

This separate legal entity is great. If it did not exist, any issues related to your company would be directly the owner’s responsibility. But all is not perfect, since someone uneducated about owning a business might mix their personal, and business transactions. This is a big no no! Intermingling the two can lead to legal, and tax disasters. This is what is known as “piercing the corporate veil”.

PIERCING THE CORPORATE VEIL WITHOUT EVEN KNOWING IT Read more…

It’s not funny to joke about earthquakes, especially since we never know when one will hit.  Yes, California always get a bad rap and the big one will come eventually.  However, you got to admit there have been some peculiarities about a 5.9 magnitude earthquake that caused people all along the eastern seaboard to run out of their buildings and panic.

For goodness sakes, you live on the East Coast, where it’s hot and muggy as hell during the summer, and cold as Antarctica during the winter.  If you guys can stand to suffer for 10 months out of the year, what’s a little shake and bake?  Nothing at all!

Living on the East Coast is like choosing the red door which has a hairy masochist in a gimp suit waiting to smash your pinky finger with a sledgehammer everyday.  Just when the bleeding starts to coagulate, you get another bash!  Since it’s a free country, you could easily choose to walk through the West Coast blue door where there lies a super model waiting to give you a rub down every afternoon.  Haven’t you seen Katy Perry’s California Girls video where everybody is all sexy with lollipops?  Because of the freedom of choice, I admire my brothers and sisters on the East Coast so much for their strength!  After 10 years there, I had to get out and now I’m a soft mound of dough relaxing out West.

We’ve had this debate before about East Coast vs. West Coast, and the conclusion is hands down that the West Coast provides a far superior quality of life than the East Coast.  Don’t believe me?  Click on both articles and read the 200 comments to see the light! The only people to object to this tautology are those who’ve never spent more than a month living on the West Coast, or who have never even been to the West Coast in the first place!

As the optimist that I am, the good thing about the Virginia earthquake is that East Coasters will stop making fun of those who live in California.  It’s like you guys think we have devastating earthquakes everyday or something.  The amount of hurricanes and tornadoes that rip through the East Coast every year causes multiple times more damage than the average blue moon earthquake here.

The other great thing about living on the East Coast is that things can’t get much worse.  Wherever you go travel or decide to retire, life will be that much better!  For those who live in Hawaii or California, it’s going to be a little rough retiring elsewhere. That’s why we never leave.  However, on the upside, think about how much money you’ll save on housing and watermelons!

So let us all pray that the big one never hits either of our coasts and come to the acceptance that the West Coast is the best coast.   Glad everyone is OK and if you’re from the East Coast, I’m just playing with you.  The two months of the year in Fall really are spectacular!  Stay safe America!

Readers, where were you when the Big Virginia quake hit? I was getting a massage from my super model masseuse when I got a Tweet notification of mass pandemonium of flight cancellations and building evacuations.

Best,

Sam

Here’s a helpful post on how to and what to prepare for a disaster at your home and office.

Two realizations have come to us recently: 1) There is a big time disconnect between reported unemployment of 9%, and the 1-2% unemployment levels among the tens of thousands of people we know in person and who read this site and 2) Only ~30-35% of Americans over 25 have their associate’s and/or college degrees.  No wonder there is such a big disconnect!

I grew up in an environment where if I didn’t study in high school, I was heavily disciplined for my lack of effort.  It became very clear to me at 14 that if I slacked off in high school, I was screwed because grades averaged over four years for college admissions to see.  It was embedded in my brain that college was the only way to get a job and make it on my own.  We know this is not as true now, thanks to the internet and the relative ease to reach many more customers.  But, back then, that was all I knew and I venture to guess it was similar for many of you too.

Never once did I consider not going to college or dropping out.  Failure was not an option, partly because I didn’t want to return to McDonald’s making egg McMuffins at 6:30am, and face a manager who made us staff feel like shit everyday.  We’d rebel by eating all the apple pies we could and slip an extra burger into friendly customer’s bags.  Even then, $3.15 an hour felt like crappy pay.  The other reason why I wanted to do well was because I wanted to be rich!

BASHING A COLLEGE EDUCATION IS LIKE BASHING IN YOUR OWN BRAINS Read more…

On Yakezie.com, I write a post about what I’d do if I got laid off tomorrow.  Go check it out.  I am the perennial optimist and try to see the good in everything.  However, black clouds are coming, and they are going to start throwing lightning bolts very soon!  I’ve seen this movie before in 1997-1998, 2000-2005, 2008-2009, and now 2011-X.  Things never end well in booms and busts.

On the flip side, I interview my friend Jun Loayza from RewardMe on Untemplater.com to understand the joys and tribulations of entrepreneurship.  He quit his six-figure job in the social media space to go launch a start-up in Silicon Valley.  He was kind enough to answer a ton of questions such as how he got the courage to quit, whether to raise money or bootstrap, and how one should balance profitability and market share.  Its a 2,400 word interview so I’ve broken it up into two posts.

From both posts, I find an interesting introspection.  On the one hand, I’m bracing for potential employment and income pain.  On the other hand, I realize that there are plenty of other things to do to make money and spend one’s time on.  If the decision is made for me, then so be it as clearly I was not good enough for the job.  The transition will just lead me straight towards becoming a full-time entrepreneur.

We really don’t need that much to survive if you think about it.  And since we don’t need much to survive, the hurdle rate to replace that income is quite low.  A couple with or without a kid can get by on $60,000 of income combined in San Francisco.  If the couple were to move to any other city in America besides New York City, they’d probably lead a pretty comfortable life as $60k in SF is like $45k elsewhere. I could live off $30,000 gross a year in SF ($15-20K elsewhere) for at least a couple years as I go find a roomie to shack up with and cut costs.  $1,600/month in unemployment for 99 weeks + some a cash job teaching tennis would do it!

See you guys over at Untemplater.com and Yakezie.com!  I’ll be responding to comments there.

Best,

Sam

Despite some serious cracks in economy and roughly 9% reported unemployment in America, I’m hard pressed to find anywhere close to 9% of the people I know who are unemployed.  If you listen to the media, you’d think the world was coming to an end again, with the Euro debt crisis, US political upheaval, and markets tanking. But, if you go to any public setting on any day of the week, things are vibrant as can be.

Off the top of my head, there are two acquaintances I know who aren’t working.  One guy is well-off and voluntarily quit his job last year to relocate back to his home country.  The other guy got let go two years ago after a hedge fund he was working at blew up.  He can find work if he wants, but he decided to travel the world for a couple years instead.  Are they considered unemployed?  Hard to say.

With 9% unemployment, there should logically be about 27 people I know out of 300 who are unemployed.  If you believe the media’s “underemployment” figure of 15-20%, then some 45-60 people of the 300 should be under employed or jobless.  I looked on Facebook and LinkedIn to dig a little deeper, and I found only three more people who are currently in transition.  If you count the 2 above, which I don’t because they can find work if they want to, the unemployment rate I know is 1.7% (5 out of ~300).  Is unemployment really that high? Maybe people who have internet connections are a protected group…

TRYING TO UNDERSTAND THE DISCONNECT Read more…