Why Are People So Ashamed About Inheriting Money?

InheritanceHow did I get my million dollars? It was simple. One day, I bought an apple for a nickel. That night, I cleaned and polished it. The next day, I sold it for a dime. With that dime, I bought two apples. That night, I cleaned and polished them, and sold them the next day for twenty cents. I repeated that process every day, without fail, until I had amassed $6.40, whereupon my grandfather died and left me $999,994 in his will…” – A Yahoo commenter named Dave

A funny thing occurred on Yahoo Finance the other day. A fellow blogger by the name of Anton was able to get interviewed for a focus piece on how he became a millionaire by age 27. When I first read the article, I was pretty pumped. I thought to myself, Neat! Another guy showing the world that it’s possible to get rich through disciplined savings and investing! I had experienced some similar luck with investing, earnings, and savings in my 20s as well so I thought his overall story was believable.

I never once questioned how he got to $1 million because he offered solid tips, invested in real estate, and spoke so eloquently on camera. But I guess the massive amount of attention he got from being featured on Yahoo’s front page for a couple days wore on him. He admitted on his Facebook page just days later that he had actually inherited 75%-80% of his net worth from his parents who died years ago!

Immediately, everybody started bashing Yahoo Finance and Anton for the deception in the comments. They’ve got the toughest crowd online. Despite all the blowback, if his new revelation about his inheritance is true, he’s still a millionaire!

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. 

The Maximum 401k Contribution Limit: What You Could Have If You Max Out Every Year

Mega yacht in HawaiiThe government has blessed us with the ability to max out our 401k to $18,000 a year starting in 2015, up from $17,500 in 2014. If you are 50 or older, you can add up to $6,000 extra per year from $5,500 in 2014. Although $500 isn’t that big of an increase, it’s still better than a sharp stick in the eye!

I always recommend trying to max out your 401k as fast as you can. Once you get into a max habit you’ll rack up some nice bucks in no time.

So many people don’t even bother to try because they don’t feel like it’s possible. But once they try, they kick themselves for wondering why they didn’t max out sooner. Remember, the contribution to your 401k is pre-tax so an $18,000 contribution is more like $13,500 less from your paycheck a year if we use a 25% effective tax rate.

Here’s a simple chart to see how much you can accumulate in your 401k by age or years worked if you contribute $18,000 a year starting today. The chart is obviously more helpful for younger folks, given older folks had lower maximum contribution limits in the past. For example, when I first started maxing out my 401k in 2000, the contribution limit was only $10,500.

I’ve also included my high-end 401k target amount by age based off continued maximum contributions plus a constant 4-8% annual return. My high-end 401k savings target can also be considered your overall total savings target, which includes after tax savings as well. The numbers are for “ideal” conditions. We all know that life, recessions, and buying things we don’t need get in the way of savings and returns all the time.

Should I Buy A Fixer-Upper Property?

Home Remodeling Gut Job

Breathe in fresh sawdust air

“Forget money. Remodeling is the number one cause for divorce.” – Anonymous

Before my current house, I had never bought a fixer-upper before. The most I did in the past was build a new bathroom out of a closet, put up a wall to create an en-suite bathroom, and remodel my ground floor by adding a shower and blowing out a center divider so one could fit a bed. Oh, I also changed all of my windows, which wasn’t so bad.

After my remodeling activities, I swore never to do another remodel project again because it kinda feels like hell on earth. But that was almost 10 years ago.

After getting ferociously outbid on a particular piece of property ($1.2 million ask, went for $1.8 million), I decided to look away from nicely done properties. There seems to be a massive embedded premium for new or recently remodeled properties that I wasn’t willing to pay. All I really wanted was a view, gosh darnit it. The property itself almost seemed secondary!