Financial Samurai

I’ve decided to start a new series entitled, “Credit Card Enlightenment” revealing a portion of what I spend on a monthly basis from my personal credit card and any enlightenment that is found through the analysis.  This monthly series will be a good way to track expenses and keep things from getting out of control as peripheral income grows.  In other words, tracking credit card expenses is one way to battle lifestyle inflation.

The use of credit cards is critical in the way I spend.  I buy items with confidence knowing that I have 30 days interest free to pay it off.  I also like how credit cards provide reward programs and buyer protection in case of product dissatisfaction and fraud.  Finally, I do not like carrying much more than $80 in my wallet.  Credit cards are easily replaced if my wallet is lost or stolen, whereas cash is usually gone forever.

Besides my mortgage, my credit card is my largest monthly expense.  I own three cards: a corporate card for work, a corporate card for my online business, and a personal card.  The discretional spending really comes from my personal credit card, hence this card is what I will focus on in this post.  I try and put everything other than business expenses on my personal credit card because the credit card tracks all my expenses, provides free financing, and produces rewards points.

PERSONAL CREDIT CARD EXPENSES FOR NOVEMBER, 2011 Read more…

Alas, after 8 weeks my primary residence mortgage refinance is now done!  It took so long that I actually forgot I was refinancing my mortgage until the bank called to ask when I could meet the notary to sign all the documents.

The process was pretty painless since I refinanced with the same bank.  I sent them the general paper work such as my W2, bank asset statements,  and pay stubs.  They did one appraisal which took all of 20 minutes and all I had to do was wait four more weeks to get it done!  The refinance this year was much easier than the refinance in 2010, boding well for the thousands of others out there who are also looking to refinance their mortgages.

I learned some new things beyond the basics which you might find useful in your mortgage refinancing or initial mortgage application process.

MORTGAGE REFINANCE TIPS TO THINK ABOUT Read more…

Debt and bankruptcy are two words most people frown upon.  After all, debt is usually the cause of bankruptcy followed by an excuse of a lack of income.  I look at debt as a key motivator.  Debt is something that has driven me to work harder.  Without debt, I would ironically feel a little empty making money because it doesn’t take much to make me happy.  Before buying rental properties 10 years ago, I sometimes questioned the point of working one’s entire life away.  It felt pointless logging onto a computer screen just to see your savings go up.

When you are single, you really don’t need that much money to survive.  Even in big cities like San Francisco, Manhattan, London, and Tokyo, $45,000 is enough to live a happy life as a single person.  There’s only so many fancy meals you can eat a year before you start getting sick of eating out.  Your Macbook and gigantic big screen LED TV should last you at least 4 years.  Meanwhile, the ladies love guys with bus passes since it shows that we are enviro-friendly and keep it real! A black Porsche 911 Turbo is so 2007.

So how does one go from a happy life to utter financial ruin?  Getting obnoxiously way over our heads in debt, that’s what.

BE CAREFUL WITH DEBT, IT MAY GET YOU DRUNK Read more…

Imagine waking up one morning to see a Genie at the foot of your bed with milk and cookies.  She grants you the wish of converting your future earnings or current illiquid net worth into $250,000 cash.

For example, say you were to work for 20 more years and earn a median income of $60,000 a year before taxes.  Instead of methodically saving 20% for the next two decades, you can get all that money right now.  Would you take it?  I bet most would say “yes” since it’s your money and the present value of a buck is greater now than later.

The big question is, what are you going to do with the $250,000?  The stock market is volatile, bonds are bubbliscious, and savings interest rates are less than 0.2%!  Perhaps you’ll use some of the money to pay off your debts, further your education, and help out your loved ones.  Or maybe you’ll invest the money in your start-up company and watch it grow into the multi-millions.

Finally, maybe you’ll do absolutely nothing with the $250,000 and just keep it liquid for a rainy day.  The political landscape is pretty horrific as there’s no way the Jobs Act Bill will get passed since it attacks charities and municipal bonds which fund state construction.  Massive layoffs are imminent before the holidays despite cashed up corporate balance sheets because demand is uncertain.  You might very well be in for rough times, and that $250,000 + $1,600/month in unemployment insurance will help you get through!

Genies are appearing in front of many homeowner’s beds thanks to Ben Bernanke and the Fed’s low interest rate policy.  Few people would have ever expected the 10-year yield to drop below 2%, but it has.  Cash-out mortgage refinances are tempting people night and day now, but the party can’t last forever.  Ben’s nickname is “Helicopter Ben” for making it rain money.  I prefer to call him “Bengenie.”

WHAT I’D DO WITH $250,000 OF MY OWN MONEY (REMEMBER, IT’S NOT FREE MONEY!)

* Look for attractive 8%+ yielding 2 bedroom, 2 bathroom rental properties.

* Decide which municipal bond ETFs to buy.  Examples: CMF, CXA, HYMB, INY, ITM, PVI, NYF, PWZ, PWA, SHM, SMB, SFI.

* Invest $10-20,000 into the Yakezie Network for better user experience, interface, etc.

* Look for offshore high yielding, but stable assets given the USD will likely continue to remain weak or depreciate.

* Send $15,000 to my parents to help contribute to their home remodeling project.  Good luck guys!

* Do absolutely nothing with all leftover funds and wait for a potential recession to come when Obama gets re-elected.  There could be much better opportunities in the stock markets as a result.

Readers, what are some of the considerations before accepting the Genie’s wish? 

What would you do with an extra $250,000?

Regards,

Sam

The following is a guest post by Jasmine from Check N’ Go.

With the miserable state of the economy today, some are desperate to find ways to reduce their debt without filing bankruptcy or losing their home and savings.  The sad reality for many is that bankruptcy and foreclosure are the only events on their financial horizon.

In order to attack debt and free yourself from financial woes, it’s going to require some creative use of existing resources and changing the way you approach debt reduction.

Change Your Habits Read more…

I’m feeling a little sadistic right now.  A large part of me is hoping the equity markets take a big dump again before the end of summer.  Bring on the pain baby!  I thought I was absolutely done with refinancing my primary residential mortgage in 2010 when I got 3.625% for 5 years.  But, I just called my banker and he says I can now get 3.25% jumbo and no points or fees for the same duration!  Because I would simply refinance with the same bank, the process would be streamlined since they have all my documentation.

What is this world coming to?  Who does that, putting more money in the pockets of consumers who never asked for it?  Why save me thousands of dollars a year in interest expense when there’s a guy who’s been out of work for over two years and needs it more?  If I do the refi, living in my house will be cheaper than living in a 2 bedroom rental.  Something is wrong with how government policies are working.  The more the Fed and the Treasury meddle, the more unintended consequences result.

Those with debt are the bad guys right?  We’re living in houses we can’t afford to pay in cash, and we refuse to live in crappy rentals whose landlords never do any updating.  Debtors are living it up because they can, and know there’s only one life to live.  There’s no point making money if you aren’t spending your money.  Meanwhile, savers are getting squeezed as their rates head to 0% and their equity investments go down the tubes.  Debtors are being rewarded again for living beyond their means and that’s just fine by America and our politicians.

ROLLING THE DICE WITH CHEAP MONEY Read more…

The debt relief industry doesn’t really have the greatest reputation for some reason or another.  Perhaps the reason is because we secretly harbor resentment for people who get in way over their heads and look for solutions other than paying off their debt!  When you can solve your debt situation yourself by begging, pleading, calling your creditors to come up with a repayment program, why would you let a debt settlement company charge exorbitant fees?  If you make your case strong enough, you might even get the credit card company or the bank to forgive a portion of what you owe!

Thanks to the horrendous economy in recent years, consumer debt levels have risen to alarmingly high levels.  From buying that new car you shouldn’t have, to big screen TVs that ruin the feng shui in your bedroom, to luxury clothing with 95% margins that never get worn, to nice vacations which you think you deserve, to $100 meals per person, people’s consumer debt has blown up in a bad way.  Never fear though!  With the government ready to bail you out with incredibly long unemployment benefits, free money for your mortgage, and credits for paying on time (shouldn’t you do that anyway?), some consumers will be alright.  But for others, in come the debt relief companies to save the day!  Maybe.

The Issues With Debt Relief Companies Read more…

Refinancing now is generally a wonderful idea as jumbo loans are back to all time lows.  That said, what happens if you are so underwater on your mortgage that you feel it doesn’t make sense to continue paying anymore because you don’t think value will ever recover?  Banks have become so annoyingly stubborn regarding allowing underwater homeowners to refinance, that you might have a better way.

Have you ever wondered why there have been so many foreclosures in states such as California, Nevada and Flordia?  I’ll tell you.  If you live in one of the 12 “non-recourse” states of Alaska, Arizona, California, Connecticut, Florida, Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington you are in luck!  If you so happen to own property in one of these states, and have substantial assets elsewhere, you can legally hand over the keys to the bank and exonerate yourself from the mortgage with no penalty against your other assets!

AN EXAMPLE ABOUT GETTING IN OVER YOUR HEAD AND BAILING Read more…