Career Advice For Women From Female CEOs

HappinessOne of my goals in 2015 and beyond is to publish new forms of content such as infographics, short essays, podcasts, and comedy. I’m working on the podcast part (takes forever), and I can write short and long form content with some comedy infusion no problem, but I’ve got no graphic skills other than being able to draw an arrow. The solution I’ve found is to simply ask permission from relevant personal finance companies to be able to republish their infographics.

It’s an amazingly small world because one of the leaders in producing infographics is a company called Visual.ly, also based here in San Francisco. They raised a $8.1 Series A round of funding in January 2014 from well-known VC investors such as SoftTech VC, and Crosslink Capital. I think they charge anywhere between $1,000 – $50,000+ for a customized infographic! With companies the world over spending more on content creation, they are in a sweet spot for growth.

You might think I’m crazy for continuously encouraging folks to move to expensive San Francisco to find their fortune since starting Financial Samurai in 2009. But I’m pretty confident that if you work hard, develop the right skill-set, and get on that $120 Greyhound bus from anywhere, you will have a terrific chance of finding your fortune here.

Lending Club in SF is now worth over $7 billion after its IPO pop. I could have joined them three or four years ago, but didn’t like a donkey. HortonWorks in Palo Alto went public, despite losses of $80+ million this year. Then there’s Box, Dropbox, Uber, and Airbnb in the pipeline. A $40 billion dollar valuation now for Uber from just $18 billion at the beginning of 2014 is amazing! It sure feels frothy when companies are valued on price-to-sales multiples instead of operating profit multiples, but you might as well ride the wave and get off before it crashes.

Should I Invest In P2P Lending? Prosper Performance Review

live-long-and-prosperAt long last, Lending Club went public recently with an estimated $5 billion market cap. It’s the first really big new generation fintech IPO, and boy is it going to make a lot of people a lot of money. To give you some perspective, at a $5 billion market cap, Lending Club is ~$1.3 billion larger than Yelp! I’ve been following both Lending Club and Prosper since their inception as their offices were right next to mine in downtown San Francisco.

In 2013, I finally decided to invest some money into P2P lending with Prosper to see what the fuss was all about. I had a friend working at Prosper at the time who helped teach me about the market place and the company over several lunches. I’ve written a post on tips for P2P borrowers from a lender’s perspective, a post highlighting the P2P lending returns by borrower rating and credit score, and how P2P lending can even get a little addictive due to the ability to pick and choose who gets to borrow your money.

I was relatively gung ho about allocating several hundred thousand dollars to P2P lending, but I didn’t because I still wanted to do more research given I expected rates to stay low and the stock market to outperform as a result. I also ended up buying another house, so I only invested several thousand in P2P lending as a result, and basically ignored the account for much of the year until now.

MY EXPERIENCE WITH PROSPER ALMOST TWO YEARS IN

Here’s a snapshot of my current performance: Prosper Annualized Return

A 7.43% overall return isn’t too shabby for 2014 given the stock market has returned about ~9% over the same period. I’m a very conservative investor with P2P lending since it’s only been about two years of actual investing. As a result, I pretty much invested in A and AA Prosper Rating borrowers along with several B Ratings to get some juice.

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.

Important Year End Tax Moves To Make

Year End Tax Moves SunsetThe good thing about having multiple income streams is the financial security it provides. The bad thing about having multiple sources of income is a much more complicated tax structure. With 70,000+ pages to the tax code, things can get confusing.

My income sources come from investment income, rental income, W2 income, deferred income, K1s, and 1099 income. My goal is to shield as much income from taxes as legally possible and keep Adjusted Gross Income to no greater than $250,000 a year due to AMT and deduction phaseouts that completely go away after this level.

But as my online business grows, it gets harder to shield income. For example, one can only contribute so much to a 401K and SEP IRA. Meanwhile, I can’t eat $300 business steak dinners every night with clients nor am I willing to buy a luxury car to write off or pay 4X the price for first class flights. Maximizing ROI and minimizing waste is the way I like to run my business and my personal finances.

The majority of actions to reduce your taxes must take place during the calendar year unless you’re filing as a business entity on a fiscal year. So if you want to pay less taxes, it’s worth setting aside some time during the holidays to wrestle this beast to the ground.

Do You Feel It’s Our Duty To Help If We Can?

A helping hand Financial SamuraiI’d like to be fabulously wealthy. So wealthy that I wouldn’t think twice about taking a taxi home or booking a first class ticket to Europe on my next adventure. Alas, I still ride coach with terrific strangers who take both arm rests even though I’m sitting in the middle. It would be nice not to have to pontificate for years whether or not I should finally buy a new car. It would be lovely not to get upset about speeding or parking tickets.

To the mansion, Alfred!” would be a fun phrase to say once in a while.

But I’m happy because the journey is a riot. To be able to share stories with all of you makes life so much more fun. I swear, if I wasn’t already writing for free online, I’d consider paying Al Gore, the creator of the Internet, the right to continue publishing online every month!

So I got to thinking during hot tub time one day whether we all have the duty to help if we can help.

Candid Reasons Why You Didn’t Get The Job According To HR

Rejected From A Job

Rejection

There’s too much demand for any one job position. It doesn’t matter whether you are applying for a job as a barista at Starbucks, or as a marketing director at a tech company. If you get the job, it’s like winning the lottery. When demand is too great, companies deploy very quick and easy screening mechanisms to whittle down the pool. At Goldman, unless you were the son or daughter of a client or high level employee, you had to have at least an A- GPA to be considered for an interview. At least that was the case with my class in 1999.

Goldman hired roughly 60 Equities financial analysts total around the world my year. Somewhere around 8,000 candidates applied. By screening schools, GPA, and legacy, HR told me they culled the pool down to about 600 potential candidates for phone interviews, alumni interviews, and Super Day in NYC. Without screening mechanisms, the hiring process would take even longer than it already takes (my interview process took eight months).

Given the post, “Why It’s So Hard To Get A Mortgage According To A Loan Officer” was such a hit, I’d like to share with you some candid feedback I’ve received from several HR managers during my time.

Be Careful Justifying Your Spending As An Investment

Lambo Huracan For $237,000

The Lambo Huracan For $237K: Because You’re Worth It

One of my readers on The Spending / Savings Balance post asked why I should feel bad spending money on remodeling my house when it should be considered an investment, so long as I don’t go over board. The truth is that when I was cutting multi-thousand dollar checks every week, I was telling myself that all this spending was indeed an investment to make myself feel better about going outside my spending comfort zone.

But now that I’ve taken a hiatus from spending for a couple months, given it takes time to get my drawings approved by the San Francisco Planning Department, I’ve come to realize how dangerous it is to justify every single dollar spent as an investment. An investment has an implicit assumption that it may provide a return some time in the future. The reality is that there are no guarantees, except for the guarantee you no longer have the money you spent!

My hope is that by spending around $100,000 on my home, I’ll provide at least $200,000 in value at some point in the near future. Given I was so focused on this type of “investment return,” I cut checks with ease for the first $60,000. Now that I’ve taken a break and only have $40,000 left in my budget to spend, I’m going to be as scrupulous and strict as possible to make sure the contractors do an amazing job within budget. If I didn’t take a break from remodeling, I’m pretty sure I’d go over my budget by at least $20,000.