Who Is The Typical Financial Samurai Reader?

Financial Samurai - Samurai Alexa Ranking ChallengeEver wonder the demographics of who else is reading and commenting on Financial Samurai? I’ve always felt the community here is one of the most financially savvy on the web based on my interactions with so many of you. I just didn’t have a post to prove my belief until now!

Polls are a great way to anonymously figure out what other people are thinking and how other people are doing. Everything is relative when it comes to personal finance since we all live in one of the most prosperous countries in the world.

Everybody wants to know their position vis a vis another. It’s the reason why the following posts are some of the most popular on Financial Samurai:

How Much Should I Have In My 401k By Age?

The Average Net Worth For The Above Average Person

The Average Net Worth For The Above Average Married Couple

What Should My Net Worth Or Savings Be By Income?

How Much Do The Top 1% Income Earners Make?

Over three years I’ve conducted over 80 polls. Almost all of them received over 500 submissions, a dozen received over 1,000 submissions, while a handful rocked the 5,000+ submission level. In other words, these polls are statistically significant for a demographic that enjoys reading about personal finance.

Solving Financial Insecurity To Live More Freely

Curing Financial Insecurity In Order To Be FreeWe all suffer from financial insecurity to some degree because society can be cruel and the future is always unknown. Financial insecurity is the reason why we tend to stay in cash long after the signs of a recession are over. Financial insecurity is the reason why we work long after we need to because we fear some financial disaster might wipe out all our wealth. Financial insecurity is why we buy insurance!

In a positive light, being financially insecure helps us become more financially secure because we take action to get rid of such an uncomfortable feeling. But after a certain point, financial insecurity may become debilitating – ruining relationships, limiting potential, and creating a sea of regret.

Here are some signs you might be overly insecure about your finances:

* You constantly tell others how much you make for the purpose of making yourself feel better.

* You crave constant adoration or at least reaffirmation that you aren’t one of your insecurities e.g. weight, education, product.

* You enjoy constantly checking yourself out in the mirror, taking selfies, and posting pics of yourself for all to see. There’s a correlation between physical fitness and financial health.

* You sometimes lie awake at night, unable to sleep because you’re worrying about your liabilities or potential liabilities.

* You buy nice cars, fancy clothes, expensive jewelry, and nice watches to show off your wealth or make up for shortcomings.

* You have multiple-years of living expenses saved away, but still work at a job you hate in order to save more money you don’t need.

* You feel your friends are all more successful than you, despite having an income or net worth well within in the top 25% for your age.

Let’s see if we can provide some help to a reader who writes in about his financial insecurity!

The True Cost Of Building A Luxury Master Bathroom

Building a dream bathroomSpend an hour reading through my Budgeting and Savings category, and you’d probably consider me frugal if you are a nice person. If you are a nasty person, you probably think I’m a cheap bastard. I find no joy in spending money on fancy cars or designer labels. In fact, I feel stupid whenever I purchase an item with high profit margins. As an investor who has pored through financial statements of luxury goods companies in the past, it’s just shocking how much they make off people.  I’d much rather spend money on experiences.

Despite my frugal nature, there is one area where I feel no guilt spending a large amount of money: everything housing related! We spend roughly half our lives in our house. Why shouldn’t we buy the best mattress to sleep on or pay up to rent a beautiful house with a balcony overlooking the water? After going through an unpleasant roommate situation when I first moved to San Francisco in 2001, I decided to “live it up” by getting my own $1,800 a month one bedroom in a nice part of town.

Living in a craptastic place for years in order to save money to one day live a better life seems a little backwards. You don’t have to spend $100,000+ a year to rent a nice place. But if you’re over 30 years old, perhaps the days of living like a college student are over!

This post highlights the true cost of constructing a dream master bathroom. Mine was really an expansion instead of a remodel, since the bathroom went from 36 square feet to roughly 170 square feet. 

Scraping By On $500,000 A Year: Why It’s So Hard For High Income Earners To Escape The Rat Race

Living Paycheck To Paycheck On $500,000 A Year

Help! I’m drowning from all my money!

I’ve highlighted in a previous article how living off $200,000 a year in an expensive city is really just an average lifestyle. In this article, I’ll discuss how one couple is living paycheck to paycheck while making a combined $500,000 a year.

$500,000 a year is a level which I think is considered rich. Anybody who thinks otherwise has no concept of financial reality. Even the government almost agrees after compromising by raising the income level for when the highest marginal tax bracket kicks in to ~$400,000 from $200,000.

Although making $500,000 a year may sound like a Herculean task, you’ll be surprised to know there are plenty of regular folks who hit the half million mark every year. This article will discuss how many folks who earn a large income won’t be retiring any time soon. 

New Retirement Planning Calculator By Personal Capital

Retirement Life Infinity Pool, Bali Indonesia

Hanging Gardens Resort Ubud, Bali

Do you really know how much you need to retire? A lot of people like to throw out random numbers without really doing the math. One million dollars is a nice round number that often gets brought up for retirement. Unfortunately, $3 million is the new $1 million thanks to inflation in rent, property prices, tuition, automobiles, and food.

Even if you come up with a retirement number, chances are high that your number will change due to unanticipated life events. Maybe you’ll become unemployed for a year and draw down most of your savings. Or maybe you’ll find an amazing new job with a 50% pay raise. Maybe you’ll end up having triplets due to the latest $20,000 IVF procedure when you were hoping for just one baby. Who knows? Life has a great way of keeping us on our toes.

What we need is an interactive retirement calculator that is dynamic, has multiple adjustable variables, and also incorporates real data. Let’s first have a look at some current retirement concerns by the public at large. 

The Health Benefits Of Early Retirement Are Priceless

Game OF Thrones Mance Rayder

One stressed out King Beyond The Wall

Mance Rayder, The King Beyond The Wall once said, “The freedom to make my own mistakes is all I ever wanted.” After three years of being away from Corporate America, his words have never rung more true.

If I wanted more money, I would have stayed in my investment banking job for the rest of my career. But I longed for the freedom to choose after my 13th year. Being absolutely free is priceless. Unless you love what you do, it doesn’t matter how much money you have if you’ve still got to take direction from someone else.

But besides glorious freedom, there are also incredible health benefits I’ve noticed after leaving the permanent workforce. Let me share some with you.

Living In An Expensive City Can Make You Richer, Happier, And More Diplomatic

Chrysler Building, NYCWhen asked about career advice, I always recommend people just follow the money. New York City has all the financial firms. San Francisco has all the tech, internet, and venture capital money. While Washington DC and the surrounding suburbs have all of our tax money to spend on massive government contracts!

I’ve lived in all three areas for extended periods of time, and I’ve seen massive fortunes made in multiple ways. If you want to “get lucky,” then you might as well go where there’s opportunity. Because twiddling your thumbs in a dying town, complaining why you can’t get ahead doesn’t make sense when you live in a free country with no state border controls.

The biggest push back I get for my “follow the money” advice is that such places are just so damn expensive. It is absurd that the median rent in San Francisco is now around $4,000 a month. But the only reason why rent is $4,000 a month is because incomes are high enough to afford such levels! If there weren’t, rent would fall.

The market is efficient. Capital is fluid. Everything is rational. Only an idiot with an online business would NOT try and geo-arbitrage his way to a lower cost area of the world. Oh wait, that’s me. 

The Financial Benefits Of Joining The Military: Free Education, Great Retirement, And More!

Raising The Flag in Iwo Jima 1945

Raising The Flag in Iwo Jima 1945

The following is a terrific guest post from Spencer, a captain in the US Air Force, who gives a complete overview of the financial benefits of joining the military. Spencer has been publishing on Military Money Manual for the past three years, helping military folks achieve financial independence.

There are many different paths you can take in life. Blue collar, white collar, no collar – the jobs you do often reflect your upbringing. If you come from an affluent community or family, one path you might not have considered is joining the military. Military service has many rewards, some of which can be a free college education, an exciting non-standard job, travel opportunities, and the chance to do some amazing things around the world.

A college degree is a necessity to achieve substantial financial goals, unless you’re the next Mark Zuckerberg or Bill Gates. But college is getting more and more expensive every year, way outpacing inflation. Student loan debt only gets you a negative start on your journey to financial freedom. Alternatively, military service can enable you to get a free college degree, have a job lined up when you graduate, and make money while you go to school.

The Top 1% Net Worth Amounts By Age

Mega Mansion - What Is Considered Rich?

Tom and Gisele’s mansion

People like to throw around random net worth figures all the time when asked how much is considered rich or how much they would need to never work again. Often, the figures just sound nice, like saying “one meeeeleon dollars” without any mathematical justification.

This post puts some numbers behind ascertaining how much wealth one needs to be in the top 1%. Remember, having a large net worth is better than having a high income. The government goes after income more than it goes after wealth. For example, you can live in a $8 million mansion and get Universal Healthcare subsidies if you make less than ~$94,000 a year with a family of four.

So what do we know?

Based on my Top 1% Income Earners post, we know that in order to be in the top 1%, you’ve got to earn at least $380,000 in gross income a year. The data comes from the all-knowing IRS.

Based on my Net Worth For The Upper Middle Class post, we learn that the net worth range for the top 15% of all Americans between the ages of 45 – 74 is around $700,000 – $830,000.

Finally, I’ve shown numerous examples as to why earning roughly $200,000 – $250,000 gross a year per person and $300,000 a year per couple is the ideal income for maximum happiness. Being rich is sometimes a state of mind, and I’ll use these income figures in my analysis as well.

Given these data points, I’d like to construct two simple models to demonstrate what I think should be considered top 1% rich. All wealth and no income is not ideal. Similarly, all income and no wealth is not ideal either. There needs to be a balance.

Social Security Will Make Us All Millionaires In Retirement

Social Security Makes Us All MillionairesWhen I was driving home from San Mateo one day I took a wrong turn and ended up at Hillsdale Mall. There I saw an amazing relic, a Barnes & Noble bookstore! Before 2011, I used to spend an hour every week reading personal finance books at my local San Francisco B&N. It was a lot of fun, but like the trees in Dr Seuss’s story, The Lorax, the stores began disappearing.

There’s nobody I know under the age of 40 who believes Social Security will be paid in full when it’s time to collect. Maybe half of what’s owed, but certainly not 100%. As a result, many have smartly decided to write-off Social Security from their retirement plans in order to focus on accumulating enough assets on their own. Depending on an inefficient government during our golden years is dangerous. Instead, we must max out our 401ks and IRAs, while investing even more into after-tax investments.

Out of all the books on the Personal Finance bookshelf, I decided to pick one up on Social Security because it’s been off my financial radar screen for years. Here are some important bullet points we should all know about a program that will make us all millionaires if we work long enough!