Financial Samurai

For two decades I’ve been managing my own money. It all started when I saved up $3,000 from random minimum wage jobs to open up an online trading account under my father’s guidance. This was in the early 90′s when Charles Schwab first came out. One time I bought a company which I thought sold software, but was actually a bank! Clearly, I had no idea what I was doing. Thankfully, when you start off with only $3,000, the most you can lose is $3,000.

When it takes you several summers at $4 an hour to squirrel away $3,000 only to see half of it vanish in a matter of months due to poor investment decisions, you kind of curse the world. But, you also learn from your mistakes so you can minimize the experience of feeling that dull knife slicing through your financial security. Losing money early on taught me the importance of managing money.

Although the financial crisis of 2008-2009 certainly gave my net worth a massive uppercut to the chin, I didn’t panic. I just started this site and have more than doubled my net worth since then as everything has more than recovered as well. I credit net worth diversification to surviving the crisis and not jumping off a bridge when the S&P 500 hit 666. I also credit my childhood stupidity.

In this article, I want to provide the best advice on how to manage your own money. We will talk about fundamental principles as well as mental states you should accept if you want to continue growing your wealth over the long term.

THE RIGHT MONEY MENTALITY Read more…

The Boston attacks are a stark reminder of how much hatred there still is for America. Sadness has turned to anger as the country pulls together to understand why and move forward. It’s been more than a decade since 9/11 and yet I still think about what happened all the time after being on the top floor of WTC 2 for a conference just months before.

There are an estimated 7 billion people on Earth today. If only 0.1% of the population hates us, that’s still 7 million people who might very well be ready for war. We are a rich country full of opportunity, yet not everybody can have our same opportunity. The more successful we become, the more risk we face. The more we act as the world police, the larger resentment grows.

Whenever I meet someone in person, I do my best to downplay anything I’ve done that might seem successful. It helps that I’ve removed myself from corporate America and no longer have the desire to compete for money or status. I’m acutely aware of the widening gap between the haves and the have nots thanks to an unlevel playing field. The undercurrent of anger flows strongly through society, ready to drown anybody who is perceived to have more. Hate is part of the reason why I recommend everyone align themselves with the middle class. Blend in so that nobody can target you.

When I believe in something strongly, I will tell you so. If you demonstrate kindness, I will try to show more kindness. If you attack my honor, I won’t hesitate to defend it by confronting you and kicking your ass. What’s the point of studying martial arts for so long anyway? I do enjoy the occasional conflict if there is an intellectual debate. It’s when things start getting personal where I draw the line.

When you have what someone wants but can’t have, you’ll undoubtedly encounter some sort of conflict. One quick check at the background of your haters will reveal they have the most insecurities about themselves. Maybe they are lonely or work a deadend job they can’t escape. Constantly comparing ourselves to others is a sure fire way to zap happiness from our souls.

STRATEGIES FOR LESSENING THE HATE Read more…

Mahalo! I’m currently on vacation from vacation so apologies if comments or e-mails do not get responded to in a normal fashion. Long time FS reader Jason is sharing his early retirement story and isn’t quite sure whether it’s all worth it. Hopefully you guys can provide some different perspectives as always. Thanks! 

After almost 20 years of work, I feel like I’m on the road to an early retirement. According to my back-of-the-napkin calculations, I’ll be done in another 5 years, give or take, which will put me in my mid-40s. But, as much as it’s inspiring to have a game plan and see the progress, I feel it’s also sucked some of the happiness out of my life.

From No Net Worth To $500 After Four Years Of Work

When I came out of college with a degree in Math in 1995, the economy was not the best and I had no idea if I was even remotely employable. It took me close to 6 months (sending out 10 resumes by mail each day) but I finally landed a beginning-level job in the IT industry. The salary was over minimum wage, but not by much. I was very happy with getting the job, but I felt as though I could do better. I then asked myself “What’s next?”, a phrase that even now drives my wife crazy. Within 1 month, my resume was updated and I was fishing for the next thing.

In the following years, I worked like hell at my career. Working during the day, taking courses at night, learning all I could. I was now a software developer (a job I still do) and was switching jobs every 2-3 years, always negotiating a higher salary. During these years, I also moved to the US from Canada and became familiar with the harsh and often arbitrary immigration system.

It was very clear that if I were to become unemployed, there would be no safety net. Then, the large layoffs from the dot-com implosion started to happen in 2000 and the company I was working for closed. I managed to find something else, but it was not easy and I had to move across the country to do it. Even in a good economy, few companies want to spend extra money on immigration lawyers and paperwork.

Starting A Failed Online Business Read more…

Many of my actions are driven by guilt. I’m constantly asking myself how I could be so lucky when there are so many folks just struggling to get by. My trip to India ten years ago made me stop overeating given all the poverty I saw. If I can’t help them, at least I won’t disrespect them through gluttony.

Even small, innocuous things are constantly being driven by guilt. After being up 4-2 in the second set against my friend Jaabir, I decided to tank the match just so he wouldn’t have to pay the $20 bet he initiated. I felt bad taking his money given he’s already down $140 this year alone. Lest you think I’m the one egging him on to bet, I’m not. He’s got an undesirable thirst to smack talk, while I have a consistent desire to defend my honor whenever challenged.

I absolutely hate raising the rent on my tenants because I feel bad. Although San Francisco rents went up by an estimated 12-15% in 2012, I only raised my tenant’s rent by 3%. My tenant is kickass awesome and to ask her for more money just felt dirty. The only time I do raise the rent is when there is turnover, which doesn’t happen too often.

One of the main reasons why I wrote, Renters Should Pay More Taxes is so that I could get over my guilt of raising rent. I’d much rather have the tenant pay the government directly for an increase in property taxes rather than through me. I wanted renters to get agitated by the notion of a “Renters Tax” where a renter sends in an annual check to their local assessors office twice a year based on the amount of rent they pay. This way, renters can directly experience the discomfort of paying for unnecessary spending and maybe, just maybe there will be less legislation that passes that sticks it to homeowners since we are the 30% minority.

It’s easy to spend another person’s money on yourself. With a Renters Tax, we all share in the burden of new government expenditures voted on by the people and will therefore think more carefully about the next legislation that proposes to raise taxes. The counter argument is that renters are already partially paying property taxes through the rent they pay. I realize this, but this is only true in a perfectly free market.

If there were no restrictions to the amount of rent a landlord could charge, and if landlords were not human beings with guilty consciences, but robots who could automatically adjust rent prices based on algorithms that measures current supply and demand, then a Renters Tax is not necessary. Unfortunately, a good portion of landlords do feel guilty. My fellow landlords I’ve surveyed all say that guilt is their #1 reason for not raising the rent to market rates. The #2 reason is rent control. If you own a multiple unit building in San Francisco that was built before 1970, a landlord can only raise rent by an index earmarked to inflation e.g. 1-3% a year.

If you read the fiery comments from the Renters Should Pay More Taxes post, you’ll see that renters bristle at the idea of paying more taxes just like homeowners. Hence, I think I’ve created a understanding between homeowners and renters where everybody who votes for more spending is willing to pay more taxes and therefore higher rents.

CHARGE WHAT THE MARKET CAN BEAR Read more…

Your property assessors’ #1 goal is to collect as much property tax from you as possible. Your goal as a homeowner is to make your home look like the dumpiest of dumps to pay the least amount of property tax possible. An asteroid could wipe out your entire city, but if the assessors office survives, they will come for you to collect!

Ever since the downturn, I’ve religiously filed a property tax appeal to get my assessed value lowered. In the midst of the financial crisis I was shocked that the assessors office appraised my primary residence for $100,000 more. If they got away with it, I would have paid roughly $1,200 more in property taxes that year. I ultimately won my appeal three months later and kept my assessed value the same as before.

For the next three years I got more aggressive and managed to lower my assessed value $100,000 below my purchase price. When the world is falling apart, it’s an easy sell to say your property’s value is also going down the tubes. In fact, my goal is to get the city to assess my property as close to $0 as possible.

Now that real estate is roaring back, I’m having a much harder time convincing the city I live in a rundown shack. This post will highlight how I almost got screwed over by the San Francisco property assessor again, and how I fought back and came to a compromise. Just like how every homeowner should be taking action to refinance their mortgage, every homeowner should take action by filing property tax appeals!

A CONVERSATION WITH AN ANGRY PROPERTY ASSESSOR EMPLOYEE Read more…

It hit me the other day that I’ve been sitting on a goldmine of wealth and knowledge living here in San Francisco, the startup capital of the world. As a 12 year resident of the city with an entrepreneurial bug, a desire to meet more interesting people, and a personal finance blog with a yearly readership in the millions, what a great opportunity to meet up with some of the promising new companies of our generation and bring their stories to all of you. I plan on profiling at least one new startup a quarter in an assortment of industries. I hope you enjoy the new series!

For most people, your car is usually your first or second most valuable asset, and it’s also one of the fastest depreciating assets. Long time readers know that I don’t recommend anybody spend more than 1/10th of their gross income on a car if they want to build financial wealth.

Not only do you have to pay ongoing operating and maintenance costs, you’ve also got insurance costs that could easily total in the thousands of dollars a year. With the average car sitting idle 92% of the time, most folks are flushing money down the toilet with cars they don’t need.

The multiple financial meltdowns over the past 10 years have created a shift in consumer’s attitudes towards ownership. I think consumers are wisening up to the fact that tying up a lot of capital to own a car when good jobs are hard to come by is foolish. Millions of car owners with uncomfortable car payments that last long after the initial euphoria of ownership wears off are wondering how to mitigate costs.

RelayRides is trying to make these economics more favorable for their car owners by allowing them to turn this idle, depreciating asset into a source of income. For car renters who want to preserve their capital, but still want the flexibility of having a car for 20-40% cheaper than renting from a large agency like Avis or Hertz, RelayRides wants to help you as well.

A SITDOWN WITH ANDRE HADDAD, CEO OF RELAYRIDES Read more…

If I wasn’t whipped so hard during my first job out of college, I never would have saved over 50% of my after-tax income every year for 13 years in a row. I probably would’ve blown the majority of my income on fancy cars, late nights at the clubs with bottle service, and frequent weekend trips to Atlantic City or Vegas.

At age 22, I already had the penchant for the good life having finally landed a plum job in finance. Going from making hardly anything to making a tidy sum very quickly is a very dangerous situation (think lottery winners). When your peers are recklessly spending money every weekend, it’s very hard not to follow. But I didn’t follow because of the jobs I once had.

Getting in at 5:30am and often leaving after 8pm was NO FUN. I gained 15 pounds, was constantly sick, and became a stress case. I also worked most weekends for the first two years because I was a dumbass who needed to learn more about finance if I was to sound remotely intelligent with clients. Each minute I worked past the 12 hour mark was a reminder to keep on saving money. There was no way I could last for more than three years in this cutthroat business I remember telling myself.

Before the post college lashes, there were three other jobs that helped me prepare for the real world. I hope to never do any of these jobs again, but never say never when you’re unemployed. What I realize today is that adversity builds character. The following three jobs helped prepare me to navigate workplace politics, resolve conflicts with employees, endure marathon work hours, produce consistent work and appreciate the value of a hard earned dollar.

CRAPTASTIC JOBS THAT CHANGED MY LIFE FOR THE BETTER Read more…