Financial Samurai

On January 2, 2011 I came up with the below predictions for 2011.  The idea behind making predictions is to test the mind and exercise some logic.  It’s important that everyone have some sort of opinion on politics, economics, and the markets to make informed decisions.  With predictions, you can then asset allocate, invest, and focus accordingly.

2011 has been a trying year by any measure.  We didn’t go to the depths of despair like we did in 2008, but we really didn’t have any sort of euphoria either.  The year felt as if we were running in place, making little-to-no progress on any front.

Let’s go through the predictions and see what happened shall we?

PREDICTIONS 2011 RECAP Read more…

The appraiser came out to my rental the other weekend and spent a total of 3 minutes assessing the place before he said, “See ya! I got everything I need!”

Oh really? I thought to myself as I saw him run to his double parked BMW X5 in the tow-away bus zone.  Why do real estate agents and appraisers always drive fancy cars anyway?

I got the appraisal report today, which came in lower than expected, but high enough to refinance. The cost?  $635.  $635 bucks for 3 minutes of work and maybe 30 minutes spent typing up the report in a template.  That’s $1,200 an hour and $3 million for 50 weeks of work at 50 hours a week.  That’s NUTS!

If anybody is out of work looking to make a little extra money, sign up to be a real estate appraiser.  Besides the amount you make per hour, you’ll probably be tempted with bribes from mortgage officials, homeowners, and homesellers who are depending on your “expert” appraisal assessment to see whether a loan can be made, and a transaction can be closed.

There’s perhaps no easier way to make a lot of money doing so little. Read more…

As we come to the end of the year, now is the time for reflection.  I generally don’t have many regrets because what’s the point?  I’m an optimist who likes to keep moving forward.  In fact, I have no idea what my top misses and hits are for 2011 until I start writing this post.

The economic backdrop has been difficult for many, including myself.  With interest rates so low, it’s very hard to generate relatively safe returns that have any meaning.  Even if you have $100,000 in the bank, you’re only making roughly $2,000 a year in risk free passive income given where the 10-year US Treasury is.

Given all the economic and financial problems today, we must focus on improving our own financial health every single day.  If you find yourself not working towards a brighter economic future, you’re slowly becoming a prisoner to the European Union, the Federal Reserve, President Obama, Congress, Corporations, and anybody more powerful than you who can make or break your future.

Here are some of my misses and hits for 2011.  Hope you can share some of yours as well!

TOP 5 MISSES Read more…

My tennis buddies and I decided to arrange a late-night tennis match from 8pm-10pm and go out drinking afterwards.  Whichever doubles team loses pays for beers all night long.  It’s a good system that brings out the competitiveness and trash-talking in us.  Besides, we feel less guilty drinking heavily if we exercise first!

My partner and I lost this time around and started buying a round of drinks when an attractive girl came up to me at the bar and said, “You have very nice, large incisors!”  She beamed me a smile.

“Why thank you very much,” I responded.  ”But what’s that?” I glanced at my pecs, guns, and tummy.

“Your incisors are your upper four front teeth.  Hi, my name is Cynthia and I’m a 4th year dental student at UC San Francisco.”

“Well hello Cynthia, and thanks!  I try to floss twice a day and keep em sharp.  What would you like to drink?”

As far as pick-up lines are concerned, this one’s pretty good, especially for a female.  She brings up something completely random, and explains in a way that shows her intelligence and occupation!  Women generally just smile or send winks if they’re interested, at least that’s from my experience.

Cynthia was aggressive and showed a lot of personality.  She had wavy black hair, size 0 skin-tight black pants, and a matching soft leather jacket.  Around her shoulder hung a Chanel bag with an interlinking gold chain strap.  Of course, no outfit would be complete without Manolo 3-inch heels.  Her skin was smooth and unadulterated with marks.  I venture to guess she’s the type of woman plenty of women hate.

At 27, she’s clearly intelligent and isn’t afraid to ask what she wants!

SO WHY IS SHE STILL SINGLE? Read more…

If you’re a regular ‘ol person, the answer is, “There’s more to life than just money.“, and “If you don’t sleep, you’ll die.”  Those are fine answers that are not very insightful.  Since you are a personal finance reader who by virtue is interested in money, let me go a different route.

After coming home from a 14 hour day at 9:30pm due to a client dinner, I got back to work, online work that is.  A conference call with Mumbai was scheduled for 11:30pm and another was scheduled with London at 6:30am the next morning.  Normally, I would be OK with these one-off conference calls, however, this was the 8th consecutive workday in a row I was getting home after 8pm and I was beginning to tire.

I was pissed because the guy who was supposed to call me at 11:30pm didn’t call until midnight.  I hate egregiously late people.  It’s disrespectful.  Meanwhile, my conference call at 6:30am went 30 minutes over and I had to then go to work.  My client wasn’t willing to stay 1 minute past 5pm in London (9am PST) to resolve an issue and pay for my services.  As a result, I didn’t close the deal, which left me annoyed.  He said that I’d have to wait until Monday which was baloney since I bent over backwards to accommodate his schedule.  I will likely never work with him again given how painful the process was.

Why can’t people be on time and do what they are supposed to do?  Why can’t folks just provide a little bit extra?  If everybody did their duties well, the world would be a much better place.  But, you know what?  I’d rather have something going on than nothing.  Things were too quiet for a week during Thanksgiving and I was itching to get back into the fray.

There’s a saying that “Money never sleeps” since money can always be working for you no matter what time of day.  Money will also find itself in the most lucrative of investments and flee from the most horrific.  Since money never sleeps, and you want to make money, why should you sleep either?

MAKE IT COUNT WHEN IT RAINS Read more…

According to First Data, credit card usage was up 8.2% YoY in 1Q2011, 9% YoY in 2Q2011, and 10.6% YoY in 3Q.  If those aren’t healthy signs of consumers spending again, I don’t know what is.  What’s a little more shocking is that the latest November industry-wide car sales figures are up 14% YoY to 994,000 according to Auto Data Corp with Chrysler leading the way up 45% YoY!

CNN recently highlighted that credit card mailings have surged 85% since the beginning of 2010 to 1.3 billion credit card offers in 3Q2011 and that online credit card use will increase by 63% from 2011 to 2016 according to Javelin Strategy & Research.  There seems to be no stopping the use of credit cards is our daily lives.  If you are a cash only man, you’re missing the great big bandwagon!

It’s becoming quite clear to me that the US consumer is alive and kicking with money to burn.  Some may even call it the start of a bull market!  We’ve been frugal for long enough and what better time to start spending money than during the holidays?  I recently reported that I spent around $1,700 gross, and $1,010 net after reimbursement on my personal credit card in November, 2011.  I definitely feel that I’m spending more than 10% over last year, perhaps more like 25% more.

Besides looking at the hard data, I’ve asked all my friends and family whether they are spending more this holiday season and the general answer is yes.  I’m curious to know whether your credit card spending habits have picked up by 10% or more vs. last year as well.

One female friend who makes about $70,000 a year bought herself a $3,500 Louis Vuitton handbag on credit card.  I think that’s nuts, but guys spend tens of thousands of dollars more on cars than they need, so oh well.  I  bought myself a pair of $315 Tod’s handmade loafer shoes for work, which were on sale from $485.  I also think this is kind of nuts.  I’ve wanted a pair for 5 years, but could never bring myself to spend more than $150 on a pair of work shoes.  This year, I said what the hell.

The real issue is whether or not these healthy retail sales numbers will continue through the new year, or fade?  I’m seriously considering returning my shoes because I feel too guilty spending double what I normally pay.  There’s a good chance other people might feel the same, it’s just a little too early to tell since we’ve all got a 30 day return policy on average!

Are you guys spending more on your credit cards this year vs. last year?  If so, by how much do you think?  Do you believe consumer spending is permanently back?

Photo: Lake Tahoe Camp Fire, Sam.

Best,

Sam

In my fiscally irresponsible state of California, Governor Jerry Brown (D) is proposing raising taxes on people making over $250,000 a year.  According to the SF Chronicle, 65% of those polled believe this is a great idea.  Well No Duh useless poll and uninsightful newspaper.  Most people or households don’t make more than $250,000 a year so of course they’d be for raising taxes on those income earners!

In fact, less than 5% of the population makes more than $250,000 a year, so why don’t 95%+ believe this is a great idea?  The reason is because Jerry Brown has also proposed raising the sales tax by another 0.5%!  Uh oh, suddenly since everybody has to pay for an increased sales tax, not everybody is for it!

Hey, what’s a 10.5% sales tax rate from the 10% now?  At least you have a choice in paying taxes, whereas if you are making above a certain income level, you don’t.  Let’s just raise sales taxes to 20% since rich people have a lot of money and buy way more things they don’t need anyway!

WHY ISN’T THERE PENSION REFORM? Read more…

My parents taught me never to order a beverage other than tap water because prices were astronomically high compared to cost.  Til this day, I still have trouble ordering anything other than a glass of water with a lemon slice if I’m going out to eat.  I start rationalizing how water has zero calories, is plentiful, and good for me.  Meanwhile, I’m craving the $6 fresh young coconut juice to go with my chicken satay at my favorite Malaysian restaurant.

One of the best tricks I’ve devised to overcome spending guilt is to actually purchase what’s desired, marvel at it through the duration of the return policy, and return it!  If there was a 30 day return policy on cars, I would literally be the most hated customer in the area because I would have no shame buying a new one every other month and handing back the keys.  I’m addicted to cars and their new car smell, even though I’ve stayed “sober” with Moose for over 5 years now.

OLD HABITS ARE HARD TO BREAK Read more…