Financial Samurai

Everyday, we are inundated with e-mails. I personally get over 300 a day, and other colleagues I’ve heard get 500.  Despite many of the e-mails being largely irrelevant, or impersonal given the blast distribution trend, it’s worth responding every once in a while with a “Thank You” and a recognition of what they’ve sent.

Most of the time all the emailer wants is for someone to respond and recognize their work.  How many times have you proceeded to review your e-mail AFTER you sent it, just so you can relish in what you’ve said?  Yesterday, I spent about 30 minutes consciously responding to about 12 e-mails which I normally wouldn’t have responded to, and it felt good.  Furthermore, I sent out another quick 22 e-mails of congratulation for those who got promoted to celebrate their success.  All replied, and were extremely appreciative. Read more…

Who's Behind The Shadow Government?

After reading several of my favorite sites out there, I’m beginning to wonder whether there is a shadow government running America.  The “Cash for Clunkers” program will cost the US tax payer $3 billion to graciously put 700,000 people who drive beaters into cars costing 5-6X more.  Yay, there’s a one time boost to August US auto sales due to hundreds of thousands of people who can’t afford new cars (according to the 1/10th rule)!

Over at DINKS Finance, I’m reminded that the income limit for Roth IRA contribution for single people is $105,000.  So they’re telling us after saving a party-throwing $6,000 bucks, the moment you make over $105,000 you can no longer contribute?  Too bad for you 29 year old grad students out of business school with a median income of $105,000.  Oh yeah, and all you doctors who spent 8+ years of your life AFTER college and those bagillion hours studying, so sorry!  The government isn’t willing to help you save for retirement.  No soup for you! Read more…

Someone once said, “nothing is certain except pressing the reply all button by mistake and taxes.” How true the saying as we face rising taxes under the new administration.  Supposedly 32% of Americans filers pay ZERO TAXES!  I doubt this statistic sits well with the other 68% of files who pay taxes.   I also doubt the percentage of non-tax payers could be that high, but either way, even 15% is a lot.  The good thing for high income earnings is that the highest marginal tax rate has come down by almost half  since the 70′s.  Furthermore, generally if you are paying no taxes, your adjusted gross income is less than $8,350 as a single, or $16,700 as a married couple.   Wouldn’t you rather make more money and pay taxes than make little money and pay nothing?

Given we don’t blog for a living, and several readers asked me this afternoon “whether I think higher taxes lead to Socialism in America, Yes or No only”, my answer and thesis is therefore: “Yes, higher taxes do lead to socialism in America.” Read more…

Valuations Gone Wild

I declare September frugality month.  If I’ve learned anything from my 20+ years working, it’s that September and October are generally dicey months for people’s fortunes.  9/11 wasn’t good, neither was last September 15th when Lehman declared bankruptcy.   Since 1928, studies show that September is by far the worst month in the calendar year for performance at minus 0.7%.  Sentiment turns on a dime, and when markets rally 50%+ into the months of September and October, our risks are greater than our rewards. Read more…

Honolulu, HI

BusinessWeek

comes out with a Top 10 list of best places to buy vs. rent.  This is their formulation in their words:

“To create a fair match-up between owning and renting, we calculated ownership costs assuming a fixed 30-year loan for 100% of the purchase price with no down payment. If they had instead decided to factor in a 20% down payment, owning would have been the cheaper option for the top 10 metros on our list.”

The problem I have with this list is that I don’t see the words “Honolulu”, “Newport Beach,” “Malibu”, “San Francisco”, or “Paradise”! Everywhere one wants to live is expensive, and everywhere one doesn’t really prefer to live is cheap. Things are cheap for a reason, and real estate is no different.

Think about prime real estate sitting a top a triangle. The triangle’s base always gets wider as demand continues to grow.  Meanwhile there’s only one prime location.  Is it no wonder why Realtors always talk about “location, location, location”?  You can also think of your sub-prime location as an inverted triangle ready to topple over.  Only a very few want to buy, and the supply is overwhelming.

During this real estate correction, you’ve seen expensive areas such as San Francisco correct 15-20% from the peak, however, drive out 1 hour east and places such as Antioch and Pittsburgh have gotten crushed by 40-60%.  If you’re an investor, focus on places where you’d actually see yourself willing to live in.  After all, if you wouldn’t want to live in your property, why would someone else?

A similar purchasing analogy can be made with cars.  You may think that someone buying a limited production Lamborghini Gallardo Spyder for $210,000 is foolish with his money.  But, after one year later, he’ll sell that Lambo for more, or at the least recoup more than if he had bought a brand new Ford Expedition for $48,000.  Obviously this example is extreme here, given most don’t have $200K to splurge on a car, but you get my point.

Things are cheap for a reason. Only if you have the financial means, and are already living in one of these 10 cities should you consider buying.  Otherwise, just focus on buying or renting in that tropical paradise in the best location possible.

Read more to see what paradise cities lie in BusinessWeek’s Top 10 list! Read more…

“Michael Vick – A Second Chance Or No?”

When Michael Vick was convicted of animal cruelty a couple years ago, he lost everything. Particularly painful was his $135 million multi-year guarantee contract from the Atlanta Falcons. Probably even more painful was the shame he felt and the 18 month experience in the slammer. He’s now free and signed with the Eagles for $1.6 million this season, with a potential to make $5mil next year if the Eagles choose to keep him. The question on many sports fans and animal lovers minds is: Should Michael Vick be given a second chance?
The question really has two parts. Should Michael Vick be given a second chance in the NFL? And should Michael Vick be given a second chance at life? After some thought, and seeing his latest appearance on 60 Minutes, I’m leaning towards acceptance and forgiveness.

Read more…