Do You Have The Right Money Mindset To Get Rich?

Money Mindset, Financial Samurai

Priceless Art, Deep Thoughts

A 63 year old man knocked on my garage door at 9:30am. I let him in because he was one of my contractor’s helpers. His task for the day was to install baseboards in my downstairs hallway and put up crown moldings in my master bedroom and master closet.

For a couple months I deliberated whether to put crown moldings in my downstairs rooms to match the upstairs rooms. I was so tired from sanding and painting all the walls that I thought “good enough is good enough.” But as I went to view several nice open houses for design inspiration, I realized that what differentiated the truly nice houses from the average houses were the detail, i.e. crown moldings, wainscoting, draperies, wood panels, furniture, and electrical covers.

The total cost for the baseboards and crown moldings, including materials was $780. If Bed, Bath & Beyond can force me to buy $1,300 worth of curtains (ridiculous!), I figured I could spend $780 on some woodwork.

The older gentleman greeted me with a smile and told me in Mandarin, “Son, great job on choosing crown moldings. You will be elevating the feel and stature of your home! And when you turn around and sell it, you will be able to sell the house for much more.”

I thanked him and wished him good luck in the walk-in closet where the space was extra tight because I had built in some shelves the day before. The man and his helper were supposed to come a week before to install the baseboards and crown moldings, but their boss changed the schedule last minute as is commonly the case when dealing with contractors.

He proceeded to ask, “What about the lower level part of the house? Do you plan to develop it so you can rent it out in order to pay off your mortgage sooner? I’d definitely do that!”

I wasn’t evening thinking about developing the storage area downstairs. All I wanted to do was get the existing footprint squared away. “No plans, sir. I’ve had enough of remodeling and I just want to keep things simple,” I responded.

When I came back home from work at 6pm he was filling in the staple holes with silicon. He was proud of his work, and I was impressed with his work ethic. The crown moldings definitely made both rooms look much more luxurious.

Now all I have left to do with my remodel is blow a hole in the closet wall to install a window, install sliding glass doors in the bedroom, build a 250 square foot deck, create a new bathroom and I’ll be done!

Should I Contribute To My 401K Or Invest In An After-Tax Brokerage Account?

foragingThe great thing about a 401k is that you are contributing with pre-tax money. The higher the tax bracket you are in, the more tax savings you will have. If you can start withdrawing from your 401k when you’re in a lower income tax bracket, then you’ve successfully conducted some tax engineering to boost your wealth.

The problem with the 401k is the 10% early withdrawal penalty before age 59.5. If the government gets desperate, they can raise the early withdrawal penalty percentage or increase the age limit. I ascribe a 75% chance one of these two things will occur over the next 30 years.

It’s easy to understand why saving for retirement is difficult. The value proposition is that you put your money away in an institution like Fidelity, which operates under the confines of the omnipotent government, who punishes you if you err from their rules, all for the chance that your money will grow decades down the road.

With no assurances from your money manager or the government that your money will be there in retirement, spending money now on instant gratification makes perfect sense. Give me the latest iPhone vs. the potential to have $25,000 more in retirement! Therein lies the dilemma of the 401k contributor who can’t max out his or her account every year, and who therefore doesn’t have excessive after tax savings for liquidity and other purchases.

Why Would An Aerospace Engineer Want To Be An Uber Driver?

Uber Driver

Harry Ubering

Previously, I had written about my struggling friend Jabir who was unemployed for a couple years before he discovered Uber. He drove for Uber for a year before switching over to be a dedicated hotel driver. In this post, my other friend Harry shares why he drives for Uber even though he’s financially thriving. Enjoy!    

Normally when I’m out putting around in my SUV driving people around for Uber (or Lyft – I do both), the first question they ask is: “So do you do this full time?”  Reluctantly, I usually tell them, “No, I also work for an engineering company as an aerospace engineer.” (odds are, if you’ve ever flown, you’ve been on one of our planes). It’s not that I’m embarrassed to be a full time engineer/part time Uber driver, but it always elicits a very strange reaction from my passengers.

Why would anyone who has a perfectly good job want to drive around a bunch of jokers during his free time? They don’t outright say it, but I’m sure that’s what they’re thinking. But there are actually a lot of reasons why I enjoy it and as you may have guessed, it’s not just about the money. Well a big part of it is about the money, so let’s explore that a little more first:

How One Company Is Trying To Screw Over A Loyal Employee

No Freedom

No Escape by Horizon

For 10 years, Rachel dedicated her life to working for Up Yours Inc. She rose through the ranks from analyst to senior manager. But her path wasn’t smooth. I told her to find another job many times before because they weren’t treating her well. When it was time for her to get a promotion two years ago, she was passed over for another male colleague. The guy was qualified, but she was more qualified. Unfortunately, she had to wait another 6 months before being considered again.

The great kick in the pants is that the guy who got promoted quit six months later to take some other job. For managers out there, this is your worst nightmare because those employees who you didn’t promote will not only secretly laugh at your poor managerial decision, they will also make you regret your choice as well.

Two months after being passed over, Rachel walked into her manager’s office and demanded not only the promotion she should have gotten earlier, but an even higher raise than she should have received.

“If you don’t like my term, unfortunately it’s time for us to say good-bye,” she told her boss firmly.

Her boss was taken aback by quiet, little, loyal Rachel. He apologized about the situation and promised her a promotion during mid-year. Rachel not only got that promotion, but also a retroactive raise as well.  It’s unfortunate meritocracy doesn’t work on its own. 

How To Overcome Money Guilt

Couple Gazing In The Fields At Stone HengeMy parents came to visit me for only three short days recently and I miss them already. One of the reasons why I wanted to leave my stressful job in finance was to spend more time with them. I flew back to Hawaii four times in 2012 and three times in 2013 to visit for two-to-five weeks at a time. But our first meeting of 2014 was in September.

Totally my fault. Life seems to always get in the way.

Ever since going to college, I’ve longed to make my parents proud. My goal was to do well in school so I could earn enough money to support myself, a family, and them. They took care of me for the first 22 years, it’s only right I take care of them.

Some children have no problem accepting financial help from their parents as adults. That’s probably because they weren’t bad like me. I got in a lot of trouble as a teenager, and I really feel guilty for giving my mother so much heartache. I wanted to make up for all the money they spent on me by proving they didn’t raise a dead beat, but someone who could be independent as soon as he graduated college.

I also suffer from money guilt because I grew up in developing countries for the first 13 years of my life (Philippines, Zambia, Malaysia, Taiwan), and frequently went to China and India for work. Every time I’m about to buy something I don’t need, I think back to the times when I witnessed destitution. Every time I eat, I try and eat more slowly in order to be mindful of the starving.

Developing countries are full of hope and growth, but the juxtaposition between the haves and the have-nots is very stark. The poor are extremely poor and the rich are obnoxiously rich. You want to help, but after a while of helping, you come to the realization that the poverty is endless – like trying to catch a rain drop moments before a monsoon washes you over.