How To Get The Lowest Mortgage Interest Rate Possible

Time to refinance a mortgage once againI must be mad, because after multiple mortgage refinances, I’ve decided to take my own advice on improving my cash flow further by trying to refinance my mortgage again! I say “trying” because getting a mortgage or refinancing a mortgage is still not a slam dunk like it was pre-2007.

Lending standards are strict with ~729 being the average credit score for denied mortgage applicants. Furthermore, my debt-to-income ratio could be a problem because 100% of my 1099 (freelance income) won’t count for 2014 because banks require two years of 1099 income, and I’ve only got 14 months worth.

Can you believe that? Even if I made $800,000 in freelance income over the past twelve months, big banks would still disavow all of it and likely reject even a small mortgage refinance amount if I had no other income. Banks should discount 1099 income by some amount, but not by 100%. There’s a growing misconception now that full-time income is more stable. A full-time employee is betting on one horse. An independent contractor can bet on multiple horses.

We’re close to all-time lows again in 2H2015. Volatility is up, collapsing oil prices are stoking fears of weak global consumer demand, and chaos reigns once again in Europe. I’m glad there isn’t anymore US government shutdown drama at the very least.

I’ve got two years left on a ~$1 million dollar jumbo 5/1 ARM at $4,338 a month at 2.625%. My goal is to refinance this puppy down to a 2.25% 5/1 ARM at $3,822 a month, for a cost of less than $3,000. The annual interest savings is $3,750, and the monthly cash flow increase is $516 or $6,192 a year. That’s a good move towards my unwavering quest to generate $200,000 a year in passive income. 

It’s Impossible To Stay Retired Once You Retire Early

Retired couple by Sebastian Flickr Creative CommonsIn the spring of 2012, I hung up my sword after working in finance since 1999. There was actually a hiccup the very last day of work, a Friday. When I was e-mailing some personal files from my work account to my personal account (pictures, tax docs, etc), I inadvertently e-mailed a five year old client file that was caught by compliance. I was warned this was a violation of company policy and that I would be hearing from them about any repercussions the next week. I apologized for the mistake and waited nervously about the fate of my severance check.

To allay my worries, I actually went to a free Hastings School Of Law community service event where law students and professors helped those with legal questions. They just so happened to host the event on what I thought was the first free weekend of the rest of my life. It was great to see the school give back to literally hundreds of people regarding questions about divorce, employment, accidents, theft, trusts, and more.

My question to a professor and to a law student was simply, “Can my firm take away the agreed upon severance contract due to a five year old company file that I inadvertently sent to myself?” Financial companies are notoriously strict about ex-employees transferring sensitive client documents that can be advantageously used against their old employer if they join a competitor. I told my company that I was retiring from the finance business altogether, but how could they know I was really telling the truth? In our business, few people voluntarily walk away from such paychecks.

After getting comforting council saying that I should be fine, I promised that day to NEVER go back to work in finance if I could still get my severance and deferred compensation. My new manager was in from New York City that day and was already busting my balls for the incident. I went a step further and promised to never go back to working for anybody. Hundreds of thousands of dollars were at stake and I was worried.

HR called me the following Tuesday and told me everything was fine in the end. They agreed the client file was irrelevant given it was five years old, and accepted my e-mail apology for the mistake. Once I got my severance check several weeks later I felt like I had sheepishly won the lottery. Instead of spending it all, I sat on it like I would any financial windfall. By the summer of 2012, the market had taken a little dive and I finally invested the entire amount in the stock market so as to make it disappear. I wanted to stay hungry and pretend I received nothing. 

Make More Money, Save More Cash, Grow Your Net Worth Now!

Big Goals by Sergiy Matusevych

I hope everybody is locked and loaded to get… loaded again! The bull market is now in its sixth year and we probably don’t have too many good years left until a lot of volatility returns. We’re already seeing signs of demand weakness with oil prices down 50% from 2014.

Let me first discuss five basic and important financial goals everybody should achieve this year and every year. I’ll then highlight my personal goals for 2015.

IMPORTANT FINANCIAL GOALS EVERY YEAR

The Rise Of The Chief Content Officer: The Next Hot Job Of The Decade

Raygun Rocketship SFEvery year I tend to discover one significant thing that fish-slaps me in the face based on some sort of experience. This year, it’s the realization of the next high demand job of the decade.

You know how computer science and software engineering jobs have become all the rage over the past 10 years? I predict that any job that has to do with creating content online is going to blow UP in 2015 and beyond. For those of you still in college, take as many classes on web development, creative writing, and online marketing as possible. For others who are looking to switch careers, now is the time to build your resume and take the leap if you like this field.

The most senior of these content-related jobs is Chief Content Officer, followed by Director Of Content And SEO, and Director Of Engagement And Social Media. For the past 12 months I’ve been intimately involved in developing a content marketing strategy for a financial technology company. I’ve edited, written, sourced, curated, SEO optimized, and help grow the company’s brand online through their blog and social media channels. Brand awareness has gone up, marketing costs per result has gone down, and lead generation has grown. Such a job is slowly beginning to pop up all over the place.

A company can no longer just have a website to do business. A company must also have a coherent and effective content marketing strategy. Every single startup or established firm will be hiring a Chief Content Officer or Director Of Content soon enough. This bodes well for struggling journalists or editors of traditional media companies who have been hollowed out due to the desecration of offline content consumption. The natural path is for senior management to hire such journalists and editors due to their pedigree.

But I argue there is someone even better to fill the CCO role: the pro blogger who has organically built a brand from the ground up and displays the combination of creativity plus business savviness.

The Median Net Worth Of US Households Over Time Has Gone Nowhere

Median Net Worth Of US Households Over Time In 2013 Dollars

Edward Wolff, a professor of economics at NYU put together a really shocking median net worth chart over time in 2013 dollars I wanted to share with everybody. The main takeaways are:

1) The median net worth of middle class households has dropped by a whopping 44% since 2007 and has not recovered after the worst was over in 2010.

2) The median household today is 6% poorer than their parents were in 1969.

3) There have been periods of income declines before from 1990-1995, with large rebounds over the next 10 years.

How To Not Get Pulled Over For A Traffic Ticket: Race And Sex Matter!

Never get a traffic ticket, rolls royceWhen I got my speeding ticket for going 35 mph in a 25 mph zone, all my friends laughed and jibed.

Are you sure Moose can even go 35 mph in two blocks?” (Moose was a slow, 14 year old Land Rover Discovery)

How the hell can you speed during rush hour traffic at 6:45pm? It’s bumper to bumper then!” (SF traffic is horrendous thanks to robust employment compared to five years ago)

Dude, you’re a victim of racial profiling. Out of all the cars out there, they chose your piece of shit? Don’t they have something better to do?

I laughed at all three responses, but then I was asked again, “What color were the police officers?

They were both White,” I responded.

Ah hah! Proof right there. You were targeted!” responded my Hispanic friend.

Come on, that’s just a coincidence,” I replied, even though I was miffed at getting pulled over when everybody was going the same speed during rush hour.

Never forget Rodney King, Don Sterling, Trayvon Martin, Eric Garner and the town of Ferguson!” shouted my friend with one fist raised up high!

Bankers, Techies, And Doctors: You’ll Never Get Rich Working For Someone Else

Although I estimate an entrepreneur needs to make at least 35% more to replicate his or her day job income to run in place, I’m truly beginning to realize after two and a half years how much more upside there is to entrepreneurship than to working for someone else.

I came from the world of banking where 23 year old graduates with one year of experience can clear $100,000 no problem. Despite ascending from Financial Analyst, to Associate, to VP, to Director within 10 years, and earning Director level compensation for three years before leaving, I still wasn’t able to earn and save enough money to buy my dream home in Kahala, Oahu.

Dream House In Kahala, Oahu, Hawaii

Contemplating on never being able to afford my dream home

The above is a picture of me sitting on a lanai, looking down the southeast coast of Oahu towards Koko Head. The home is on Blackpoint Road in the exclusive Kahala/Diamond Head neighborhood. Since I was a kid, I’ve always dreamed about living here one day. But I’ve come to realize my childhood dream will likely never come true.

The asking price for this 6,000 sqft Kahala home with 4 bedrooms and 4 bathrooms is $3.5 million ($583/sqft). The lower level is a 1,800 sqft rental apartment that is going for a below market rate rent of $2,500 a month. The main house is therefore not that huge. $3.5 million is actually great value given the view and the size of the house. Other houses in Kahala are easily asking for $900/sqft or more.

If I had $4 million cash, I would buy this house in a heartbeat. It needs at least $300,000 in renovations given it is quite dated. But the lanai and the spectacular view are priceless. All I think about when I’m looking for my dream home is being able to sit outside in 72-85 degree weather with an ice cold beer and write about various adventures. 

How To Prevent Your Wealthy Man From Straying

Kissing During Sunset

A female friend asked me over a drink one day whether I had any tips on how she can lock down her husband forever. I immediately started imagining her throwing her hubby in a dark cage after sunset and maniacally laughing as she twisted a thick key to keep him hidden from the world. Her husband is a wealthy fella who is charming enough to have a whole lot of extracurricular fun if he wanted to. She’s attractive and successful as well, but still she has fears.

My friend’s situation reminded me of a UC Berkeley study that found wealthier people are more prone to cheating, taking candy from children, and failing to wait their turn at four-way stops. This is pretty obvious if you think about the correlation. When you’ve got more money, you’ve got more options. When you’ve got more options, you’ve got more temptations. When you’ve got more temptations, the chances of fulfilling those temptations goes up.

Men who know you’re the best thing they’re ever going to get are much less likely to cheat. They’ll probably appreciate you much more, be more attentive to your needs, wash the dishes, do the laundry, vacuum the floor, take out the trash, keep the bathrooms clean, give you foot massages, buy you flowers every week, take you on romantic trips to Target, and maybe even let you go out for drinks with your handsome physical trainer. Nirvana right?

I’m always on the lookout for any type of correlation between relationships and money because the topic is so fun! Several years ago a blogging buddy sold his personal finance site for $4 million dollars. Soon after, he divorced his wife and decided to travel the world with another woman. Coincidence? Or did money give him the courage to break free? It’s like Obamacare allowing millions of Americans to no longer be tethered to a job they despise anymore. Screw you boss! I’m outta here!

Let’s discuss three strategies women can deploy to lock down their men and create happier relationships. 

Are You A Real Millionaire? $3 Million Is The New $1 Million

True Millionaire. SF Giants Win The World Series

The Day After The SF Giants Win Our Third World Series

Although being a millionaire sounds nice, it’s not that impressive anymore thanks to inflation. If you retired today at 65 with $1 million and no Social Security, you’d only be able to spend $40,000 – $45,000 a year for 25 years until you’d run out of money. $40,000 – $45,000 a year is not bad for an individual or a couple with no debt. But it’s not like you’re popping Crystal in the hot tub on your luxury yacht in the South of France – not that that’s what everybody wants to do of course.

The first thing we should do is pray the government doesn’t raise the minimum Social Security age to something absurd like 85 years old or simply cut payouts drastically. If our prayers aren’t answered, let’s hope our 401ks and IRAs don’t get taxed out the wazoo come distribution time. If our hopes for a well-managed government are crushed, then surely we’ll have developed multiple income streams by retirement so no one event can get us down!

When I was working at McDonald’s for $4.25 an hour, I filled up my 1987 Toyota Corolla FX16 babe-mobile for $1 a gallon. I distinctly remember not being excited about making $4.25 an hour, but I had to do it because my parents didn’t give me much spending money. Besides, I wanted to do more than treat the ladies to free apple pies and Mcflurries.

The minimum wage in America is now close to $10 an hour ($10.75 here in San Francisco), and gas is around $3.5 a gallon depending on where and what type you get. I think it’s interesting that the minimum wage used to be 4X the amount of one gallon of gas. Now the gap has fallen to only ~3X as the cost of goods have surged faster than wage inflation.

I’m not sure whether this post will motivate people to accumulate more wealth or demoralize people who don’t think amassing a $1 million net worth is remotely possibility. I constantly need motivation to try harder because I tend to kick back too much. Only until we fully understand reality can we come up with a realistic financial plan. 

Should I Contribute To My 401K Or Invest In An After-Tax Brokerage Account?

foragingThe great thing about a 401k is that you are contributing with pre-tax money. The higher the tax bracket you are in, the more tax savings you will have. If you can start withdrawing from your 401k when you’re in a lower income tax bracket, then you’ve successfully conducted some tax engineering to boost your wealth.

The problem with the 401k is the 10% early withdrawal penalty before age 59.5. If the government gets desperate, they can raise the early withdrawal penalty percentage or increase the age limit. I ascribe a 75% chance one of these two things will occur over the next 30 years.

It’s easy to understand why saving for retirement is difficult. The value proposition is that you put your money away in an institution like Fidelity, which operates under the confines of the omnipotent government, who punishes you if you err from their rules, all for the chance that your money will grow decades down the road.

With no assurances from your money manager or the government that your money will be there in retirement, spending money now on instant gratification makes perfect sense. Give me the latest iPhone vs. the potential to have $25,000 more in retirement! Therein lies the dilemma of the 401k contributor who can’t max out his or her account every year, and who therefore doesn’t have excessive after tax savings for liquidity and other purchases.