Financial Samurai

I was reading some posts around the web discussing how it’s common place to live at home with mom and dad.  Is it really that common?  Have I lost touch with reality, yet again?  After four years of college, where there are just ridiculous amounts of parties and unspoken amounts of fun, who on earth goes home and lives back with mom and dad?

Even if I was unemployed, I’d pay several hundred bucks and rent the sofa in my buddy’s living room or something.  Is there no shame in living at home with parents as a grown adult?  Perhaps not.  Right on my street, live three 26-27 year old young bucks with grandma.  Come on, how can these guys live with themselves living with grandma?  After 25 years old, that’s 3 years after college to find independence.  So I got to thinking, perhaps it is feasible to live at home with mom and dad, or grandma and still get girls!

STRATEGIES FOR GETTING GIRLS WHILE LIVING WITH MOM & DAD Read more…

Here’s a short 10 minute video I stumbled upon which eerily highlights several things I do and why (ie play guitar), as well as touch upon reasons why some people are willing to do things for free, and others strongly consider giving up big salaries to just work on a hobby.

NODDING MY HEAD Read more…

Pick any private school.  The cost is about $200,000 over four years.  These figures don’t surprise anybody anymore given the ever rising application volume to storied institutions such as Harvard, Yale, and Princeton.  That said, there have to be some who believe $200,000 for a private school is a hard pill to swallow over an excellent public school for just $40,000.

With an estimate 17% of people aged 20 through 24 unemployed, swallowing a bowling ball may be easier than finding a desirable job post graduation.  Let’s say you are one of the unlucky few who can’t find a job after a $200,000 education.  Does it really matter? Let’s think about why it doesn’t really matter from the eyes of several recent graduates.

THE BOY WHO WAS FORCED TO GO Read more…

It’s difficult to save money and not splurge on things you want.  Let’s face it, those financial goals you made this year will need as much help as you can get.  One of the key ways I save is to play games.  Let me show you what I mean.

SAMURAI SEPTEMBER

Last July, I made a resolution not to spend any money on things other than basic necessities such as food and my bus pass in September.  Even filling up Moose with gas was pretty much off-limits as we decided to do a lot of biking, walking, and carpooling instead.

By naming September, Samurai September, the game was set in motion to see if I could succeed.  Not only did I not spend any money that month, I didn’t spend any money in October either!  I wanted to beat the rules of my game, and break the record by as far a margin as possible.  The feeling is just like trying to smash the Pacman record by a wide margin, so nobody will ever unseat you.

THE “I WON’T SPEND MONEY UNTIL…..” GAME Read more…

Back in the 9th grade, I remember goofing off quite a bit with my buddies.  We skipped class, stayed out late, and essentially did a lot of stuff that was detrimental to our grades.  Despite working with plenty of Spanish speaking colleagues during my part-time job, I still only got a “C” in Spanish because I didn’t care.   All I wanted to do was have fun, and fun is what I had!

My parents spoke to me one evening and asked, “How are you ever going to be a great business man if you can’t even get an “A” in math?  Do you think award-winning scientists get “C’s” in high school chemistry?  Do you think Andre Agassi doesn’t practice hard every single day?”

The questions stuck with me because ever since I was 12, I wanted to be a “business man.”  I remember getting picked up in a sweet Mercedes 300 SEL by one of my father’s friends to take us to their mansion party.  The whole experience with the infinity pool, car, food, and servants made me want to do what they did, whatever that was!

After the pep talk, I began caring about my grades through college.  I didn’t want a silly thing like grades to get in the way of my dreams.

THE QUESTION TO ASK ALL PEOPLE Read more…

The following is a guest post by long time reader and entrepreneur, Investor Junkie!  IJ writes about how we should stop our complaining, and realize we are wealthier than the large majority of the world.

If you live in the United States, you are wealthy beyond what most others dream of. Your salary is 99% higher than of the world population.  Visit areas like India, and Africa, and you’ll see what real poverty looks like. If you moved there, you could live like a king! Don’t believe me?  Visit Global Rich List and plug in your yearly salary.

So what exactly does it mean to be wealthy anyways?  It’s all relative to the environment you live in. What might be considered below the poverty level in the USA ($22,050 for a family of four), might be considered well off when living in say Uganda.  According to the Global Rich List even at the US poverty level, you still make more money than 89% of the world.

If you look at the Wikipedia chart, you will see the USA has the most wealth compared to any other country (including Japan). No other country comes close to the USA.  So while you may not feel wealthy comparative to what you see in the media, you still are better off than 99% of the world population.  In terms of average income,  the USA is only 13^th in the world, but we still have more stored wealth than any other country.

Stop complaining that you can’t afford that new Lexus you lust for. Many people around the world don’t even own a car! They get from place to place by bicycle. It’s true you may not live like a rock star, famous actor, or business titan, but you live better than most.

Most people in the United States have: Read more…

If I read one more biased article pushing people to convert to a ROTH IRA I’m going to lose it!  Not to be melodramatic or anything, but the lack of unbiased analysis is like seeing a sea of zombies instructed to walk off a cliff. Wake up zombies, wake up!  Don’t make a decision without seeing what lies down below.

The ROTH IRA conversion idea is that those who have pre-tax funded retirement accounts such as a 401K or Traditional IRA pay taxes UPFRONT in 2010, so as to not pay taxes when you retire.  This is just absolute hogwash donkey dumb for a large majority of people out there.

Proponents of the ROTH IRA conversion argue:

1) Tax rates are low and are just going to go up in the future.

2) You will likely make more money in your retirement years, and hence pay more taxes.

3) Paying taxes now improves performance in the long run all else being equal.

THE SAMURAI REBUTTAL: Read more…

David by Michelangelo

Here’s a guest post from Ryan at Planting Dollars.  I was intrigued by one of his comments of “failing forward” (not falling forward) and asked him if he’d be interested in writing a guest post about the topic.  Please enjoy and visit his site afterwards.  He has my envy of living in Hawaii and pursuing his dream of being a shark photographer!  Best, Sam

Have you ever noticed that some of the most successful people in the world seem to just naturally fit in their role? It’s as if they’ve been perfectly sculpted to be the best actor, businessman, or even blogger.

I have a secret to tell you… It’s because of their previous experiences… The one’s you didn’t see before they became wildly and unbelievably successful. These people are actually the biggest failures in the world! But shhhhh, I didn’t tell you that…

Don’t believe me? I want you to try something… The next time you talk to a successful person simply ask them this question:

“What failures have you experienced on your journey towards being where you are today?”

They’ll probably talk your ear off for hours and you’ll begin to realize this: They’ve just swung the bat of life a few more times and eventually hit one out of the park.

SCULPTING A MASTERPIECE Read more…

Raging against the machine is in my nature.  It annoys me to no end when I read about injustices such as government raises during our recent implosion.  I once skipped a morning of work to demonstrate against an apparel company which used racist slogans.  Up yours Abercrombie!  As I age, I’m discovering a more peaceful side that just accepts things the way they are.

There’s a lot of messed up things in the world such as war, poverty, and corruption.  Some things we can try to explain, and some things we can’t.  And yet, I wonder if every irrational thing has a rational reason?  Let’s look at some examples and decide for yourself.

The Kid Who Just Wants To Have Fun

Everybody knows that grades start accumulating in the 9th grade, and without good grades and SAT scores, the chances of getting into a good college, and therefore landing a desirable job goes down.  Is it really so bad that Johnny High doesn’t go to Yale, and become a rich physician?  What’s so bad about community college and working for $20,000/yr at a dead end job which he enjoys?  Nothing at all!

Johnny High’s decision to not study hard in high school is perfectly rational.  He chose to have a whole lot of fun, while other kids were miserable studying and participating in extracurricular activities to boost their resumes.  When he’s 35 years old and still working at his job with the same salary, he’ll think back at all the fun he had in high school and smile.

Who’s to say that being a multi-millionaire physician and going to Yale is good anyway?  He could end up incredibly miserable, with tremendous amounts of anxiety everyday as a doctor. Instead, Johnny High chooses to live a more relaxing life, and doesn’t care about money.  If he did care about money, he would have studied harder.  And if Johnny starts to care about money, he may go to grad school and give himself another shot.

The Lady Who Loves To Eat Read more…

A Reuben, My Favorite!

There’s a fine line between being a jerk and being constructive.  As a parent, manager, spouse, or friend, most of the time we just want what’s best for others.  The problem is, we’re afraid to offend and we therefore lose any ability to help.

There’s no better reward than advising someone how to improve, and then watch them flourish.  Push the person too far, however, and you’ll engender resentment.  The Sandwich Method is one the best ways for delivering constructive feedback.

SCENARIO: Your friend Sam comes up with a corny idea for a website called “Financial Samurai.”  Sam thinks it will become a Top 25 personal finance site in the world one day and thinks the tagline “Slicing Through Money’s Mysteries” is catchy.  He thinks he’ll be able to retire off the advertising revenue and is already thinking about buying the latest Audi S5 and quitting his day job with his expected income.

You know better because there are 50 million active websites out there (200+ million total), and only the top 100,000 (0.2%) sites earn 74% of all the revenue according to Alexa.  As a friend, how do you knock some reality into Sam, without crushing his enthusiasm? Read more…

In a stunning move to shore up a $535 million budget gap, the UC Regents voted to raise student undergraduate tuition by 32 percent (to $10,302/yr) this past Thursday!  Nothing like a little 10X increase over the rate of inflation to get blood boiling.

It’s really sad that during a difficult economic climate, the University of California Regents can conceivably raise tuition by such a magnitude.  Part of the reason why many of these fine students attend the UC system is because of cost.  Students from UC Berkeley or UCLA, for example, can easily get into many of the best private schools in America.  But for many, $40,000 a year in tuition is just too hefty a burden to carry.

The reality remains that due to careless spending by the state, budget cuts and a competitive market place for attracting top professors, tuition increases are inevitable. Read more…

A True Hybrid

Why is it that some hybrid vehicle drivers eventually start looking down at non hybrid-owning drivers in disdain?  Is the “holier-than-thou” complex too hard to contain during flights of fuel sipping passion?  It’s natural to feel that whatever you purchase is the right purchase.  After all, if I overpaid for a hybrid vehicle (zing!) in hopes of saving the environment when a similar non-hybrid vehicle will do, I’d defend my decision and look down on others as well!  Don’t be mad, let me explain.

THE FINANCIAL SAMURAI VEHICLE

For those of you who have been following this site for a while, you’ll know that I’ve had plenty of cars over the past 10 years, and I now drive a 9 year older beater SUV which is MAYBE worth $6,000.  I love “Moose“, as I affectionately call him, because he adeptly takes us up the snowy mountains during the winter with its 4-wheel-drive capabilities.  Moose can conveniently carry up to  5 people with plenty of storage space, which is especially helpful when our parents visit.  Too bad Moose only gets 15mpg in the City, and 19mpg on the highway.  I can hear the hissing and booing now!

I bought “Moose” for $8,000 three years ago, from a woman who was in a hurry to dump her car before relocating to Amsterdam.  Special brownies anyone?  The hybrid craze at the time was dizzying, where seemingly rational people would spend $25,000 for a Prius vs. $15,000 for a comparable Toyota Corolla.  If people did the calculations, they’d realize the premium price paid for the car is much greater than the gas savings over an average 7 year ownership period.

Consumers weren’t adhering to our “1/10th” rule either, as I knew plenty of sub $100,000/yr income earners spending $25,000 for these hybrids.  I must repeat here again that it is absolutely financial destruction if you are spending more than 1/10th your annual gross income on a car.  Multi-millionaires follow this rule, why shouldn’t the rest of us?  Don’t give into your weak desires!

MOOSE GETS DISRESPECTED, I FIGHT BACK Read more…

I thoroughly dislike watching CNBC for investing purposes due to all the noise.  When the markets are up, they bring on every single pundit to talk about how the market is going higher.  When the markets are down, they bring on all the bearish pundits to tell you why the world is coming to an end.  I remember when the S&P hit the ominous 666 level earlier this year, they brought in a “famed” technical analyst who said to expect S&P 200 by year-end.   What was her name again? I forget.  Watch CNBC for entertainment purposes mainly, and a little bit of learning.  Don’t watch CNBC to get rich.

Sometimes though, CNBC puts together something great.  And that great feat was bringing Warren Buffet (Columbia B-School Alum) and Bill Gates together in a town hall with all their business school students to ask them questions.

Here are some of the most memorable lines paraphrased from the show: Read more…

Art by Daryl Cagle

People have been freaking out lately by a weak US dollar.  I’m here to tell you it doesn’t really matter.  Did you know that 60% of Americans have never left the country and less than 25% of Americans own passports?  Most of the 40% who leave come back, so it’s only a temporary amount of time when their purchasing power may be relatively hurt.

An even better statistic states that only 20% of Americans speak a foreign language.  Hence, where the heck are the 80% of Americans going to go if they can’t communicate with the locals?  Ok, so they may understand what “I want a double quarter pounder with cheese please” in English means, but we aren’t going very far if we can’t speak another language.  Sure a vacation is fine, but it’s not like we Americans are suddenly going to relocate overseas and establish roots.

If you are an American who makes a US$ denominated salary, buys US$ denominated assets like property, consumes Levi’s jeans, and never plans to leave the country, what are you freaking out about? The US Dollar can depreciate by 90% against the Euro, and it still wouldn’t really matter. Read more…

The first winner is Eric, a senior from UCLA!  Eric commented sincerely about his concerns post graduation, and whether or not it is a good idea to go to a “2nd tier” business school or just work for whatever company that hires him first.

We’ll be working with Eric to strategize a plan after UCLA and coach him through the process of finding a job in his desired field of finance, or applying to business school. Read more…