Reflecting On Two Years Of Freedom From Work

Why work when you can SCUBA?March 2014 officially marks my two year anniversary since I last held a full-time job. It’s been an amazing two years, filled with uncertainty and excitement as I worked to balance play with trying to feel useful.

To keep some discipline, I created a “production schedule” that officially began at 7:30am and ended at 11:30am. Sometimes I’d cheat by calling it quits before 10am because there was nothing left to do. Other times I’d keep going because I’d get hooked on what was happening in the stock market until it closed at 1pm PST. By spending three to four hours a day trying to produce something – writing in my case – I would never feel guilty spending the rest of the day doing whatever I wanted.

“Feeling useful” is probably the single most important attribute I’ve needed to experience during this time away. I’ve spoken to other people who no longer have to work and everyone agreed they need something meaningful to do in order to feel fulfilled. I’m thankful this site provides an easy way to add some value to society, no matter how small it may be. If you’re an early retiree who is bored and would like to share some insights, I’d be happy to publish your post here.

This post will share with you some thoughts after two years of being away from the days of always wanting to get paid and promoted faster. I’ve written a similar post about what early retirement feels like, but that post was written immediately after emancipation – like when Andy Dufresne from Shawshank Redemption finally broke free. 

Either Zillow Is Broken Or We’re In A Massive Housing Bubble

In January 2014 I wrote a post entitled, “Exploit Online Data To Lower Your Property Taxes“. In the post I highlighted a chart of my house’s estimate value by Zillow. The chart looks like a internet stock from 1999-2000. The chart significantly impedes my efforts to lower my property taxes this year because property assessors use online sources such as Zillow to partly make their assessments.

Since the publication of the post, the chart has continued to go up every day (see below). We’re now close to 300 days in a row of price increases according to Zillow. Are you looking at a new billionaire in the making who only hangs out with super models? Or is Zillow completely wrong? There is no way my home price could be up 60% since May 2013. Furthermore, there is no way prices can rise every day in a straight line for 10 months in a row. Just looking at the gap between the bold blue line and the dotted line (average price of my area) shows things are out of whack.

Thank goodness San Francisco is limited to raising property taxes by around 3%. But for someone like me who was able to successfully lower my property valuation for years, I will now be reset back to the original assessed value +3% a year catchup if I fail this year.

Housing Bubble Chart

Zillow is either broken, or San Francisco is in a massive housing bubble. Thanks to the robust growth of tech companies here in the Bay Area (e.g. Facebook at record highs, AirBNB and DropBox going public next, etc), I don’t think San Francisco is in a housing bubble. I don’t even have to mention rent control, land restrictions, good weather, and an international city as other reasons for propping up demand. We’re probably in the sixth inning of a dramatically tight ball game. 

Financial Disconnect Or Financial Awareness?

Picanha - Best Brazilian Meat

Just order picanha and skip everything else!

One of my new favorite restaurants in San Francisco is Espestus Churrascaria. The restaurant serves good old fashion Brazilian meat that is more tasty than some of the finest dry-aged rib-eyes. Ever since visiting Rio de Janeiro in 2006 during business school, I’ve been craving to eat some Picanha (rump cap) until finally my best friend took me to Espestus last month.

After going without picanha for eight years, I wanted to return just a month later. Perhaps one of the main reasons why I never went was because of the cost. At $74 a person after tax and tip for food alone, Espestus costs a pretty penny! Instead of just going with my friend the second time around, I asked her if she’d like to invite another couple friend of ours to make it four.

Here’s her text response: Too expensive for them.

Espetus is surely an expensive place to eat, but our friends are in their late 30s, rent a $3,700 a month apartment and drive a 2010 Porsche Cayenne. The husband also has a $10,000 motorbike.

Here’s my text response to my friend: Ask them anyway. They drive a Porsche that costs literally 15X more than Moose!

She texts back: OK, I’ll see. 

The Only Reasons To Ever Contribute To A ROTH IRA

Government Pork SpendingIt’s been a while since I published, “Disadvantages Of A ROTH IRA: Not All Is What It Seems” and since that time, hundreds of thousands of folks have decided to think more carefully about their retirement savings strategy. One of the main things people have learned is that the government manipulates individuals into forking over more money than they otherwise should due to gross mismanagement of their own budget. Massive deficit? Let’s announce this huge “benefit” to allow people to convert their pre-tax retirement funds into a ROTH IRA! We’ll raise the spectre of higher tax rates to get more people to bite.

It’s sometimes daunting to go against the government because they employ some of the smartest people on Earth to keep themselves in power while keeping the rest of us dependent on their largess. But I’m here to help you fight back and live a better life.

If you contribute to a ROTH IRA or convert your pre-tax retirement accounts into a ROTH IRA, you aren’t going to be damned to hell. You’re just not maximizing your wealth over time. I’m a rational person who likes to see both sides of the story. So let me share with you the only legitimate reasons why one should ever contribute to a ROTH IRA.

For those of you who already have a ROTH IRA account, what you are about to read probably makes so much sense you might feel a little bad. But don’t worry. The number one solution when you are in a hole is to stop digging and slowly climb out.

My GS Elevator Moment

It’s hard to believe that it’s been 15 years since I interviewed at Goldman Sachs in NYC. But there’s one incident from my interview time at One New York Plaza that I remember clearly above all others: my GS elevator moment.

For those of you who haven’t been following the funny story on Twitter, for years, @GSElevator Gossip has been posting tweets about what many assumed to be overheard gossip exchanged by GS employees from around the world. The tweets range from cringeworthy to poignant in nature. The goal was to stereotype the ridiculousness of Wall Street culture, while inciting outrage from every non-Wall Street person imaginable. With 650,000 Twitter followers and a potential book deal, I think it succeeded.

Here are two examples of @GSElevator Gossip tweets:

GS-elevator-gossip

Goldman Sachs is an easy target on Wall Street because it consistently ranks at the top of the league tables in terms of deal flow and profits. Furthermore, GS alumni permeate the ranks of senior government officials, including folks such as former US Treasury Secretaries Bob Rubin and Hank Paulson. The GS Mafia is out there, and conspiracy theories abound. When you’re the top dog, many want to hunt you down. (This is why it’s important to practice Stealth Wealth if you get too far up the food chain in any field.)

It turns out the person behind @GSElevator was not a Goldman Sachs employee after all, but an outsider named John who worked at Citibank and “left” in 2008. I love Citibank as a commercial bank, but on Wall Street, Citibank isn’t considered to be in the same league as a Goldman. Citibank has always been seen as “the backup bank” if you got rejected from Goldman or Morgan, much as Columbia would be a backup to Harvard – both are excellent schools, they’re just not quite the same. Such are the petty attitudes of type-A recent college graduates. Coming from a non-target, public school myself, I would have been happy to get any job on Wall Street, let alone one at GS.

I give props to John from Citibank for creating @GSElevator because he was able to “fake it until he made it“. Here’s a guy who never worked a day at Goldman, made up a bunch of attention-grabbing tweets, and yet was able to create a brand based on Goldman culture that is followed by hundreds of thousands of people worldwide on Twitter. If his book is published, it should net him at least six figures in compensation. John’s example demonstrates yet again that it doesn’t matter whether you fully know your stuff or come from the organization in which you represent; as long as you can manipulate the system, money and attention will follow.http://new-cdn.financialsamurai.com.s3.amazonaws.com/wp-includes/js/tinymce/plugins/wordpress/img/trans.gif?b8f397

Do Landlords Have The Right To Maximize Rental Profits?

Rent Control Causes A Shortage

Rent control leads to a shortage

One of the key income streams to obtain for financial independence is rental income. Not only will rent increase over time in good locations, your asset value will also increase as well. One day the mortgage will be gone and you’ll have this wonderful asset producing a stable income to take care of you and your family. But before you get to glory, a lot of hard work and soul-searching must be committed along the way.

The other day I received a lovely comment on my post, “How To Raise The Rent, Extend A Lease, And Get Rich As A Landlord“. We all know by now that landlords are greedy and evil people, especially those of us who own property in San Francisco. So this comment below simply reinforces the notion that you should never let your son or daughter marry a property owner.

YOU SHOULD ALL BE ASHAMED OF YOURSELVES!!!!! Conniving to use your power over your tenants to manipulate them into a situation that forces them to choose between the stress and hassle of uprooting their lives, and coughing up some amount you designate oh so carefully and gently deliver to line your own pockets.

I know you own it and you deserve to make a profit. BUT COME ON….The mortgage DECREASED by 23% but you still jack up the rent? You expect us to think that maintenance costs jumped up THAT MUCH that a 23% decrease in your mortgage doesn’t offset it???? That’s just a lie you tell yourself to ease your conscience. And the despicable lies you tell them to make them feel like they’re getting a deal and that you “probably” won’t increase it next time when you’re publishing articles on how to beguile them so you can do just that??? Wow.

It’s your property and it’s a business, granted, but you are absolutely heartless for sticking it to those who make their home in your “business”. Renters already have NO RIGHTS in this city so thanks a lot for publishing the tools for those in power to continue to stick it to us. I honestly don’t know how you sleep at night…oh wait….on the Egyptian cotton sheets the brand new parents who are probably doing their best to save for their kids college funds are buying you. Sweet Dreams Samurai.

That’s it! I’m giving away all my property now. Who wants some? The commenter makes some good points. However, if you know how to negotiate well by understanding one’s Best Alternative To A Negotiated Agreement (BATNA), you can increase your returns – and that goes for both sides. Besides arguing why landlords have the right to maximize profits, I’ll also share with renters how they can keep rents down in this post. Call me an equal opportunity advisor.

The only beef I have with this commenter is that she missed one thing: I only sleep on the finest Moroccan cotton sheets after I bathe myself in Evian water. Where’s my baby giraffe? Come on now!