Financial Samurai

My mother is a white cloud.  Every time I see her, she smiles even bigger than I can ever smile.  She loves to talk stories about any of life’s teachings she’s discovered, and I generally just keep quiet and listen.  Sometimes I don’t understand everything she says, but that’s OK.  It makes me happy just knowing she’s happy imparting wisdom onto me.

One of the holiday presents I got my father was a signed copy of Andre Agassi’s autobiography, “OPEN.”  To me, the book was gold, because Andre is my idol.  It was my only copy, and I decided to give it to my father because I remember him loving to read and enjoying the game long ago.

When my father opened his present, he did thank me and showed his appreciation.  However, a week later, the book still lay on the coffee table unread.  Somewhat dismayed that Agassi was being ignored, I spoke to mom about perhaps taking the book back since I cherished it so much.  She mentioned her unused Barnes & Nobles gift card and had an idea.

Later that evening, my parents went to the Mall for date night without us.  Apparently, Carl’s Junior had a two-for-one special and my father was just dying to go!  When they returned, my mother brought me over to the kitchen and told me, “Shhhhhh, take a look at the book.  I bought another copy of “OPEN” and swapped it with your signed copy, so you can take it home!  Dad will never know!” We laughed so hard it hurt and gave each other high fives!  My mom was right, dad never found out.  Mom, who knows very little about tennis, was encouraged by my enthusiasm she even read “OPEN” before dad!

LESSON LEARNED Read more…

Author: Robert Pagliarini, author of The Six-Day Financial Makeover and president of Pacifica Wealth Advisors.  You may have seen him on Dr. Phil or 20/20.

Publisher & Book Info: St. Martin’s Press, hard cover, 301 pages, $25.99.

Review: The main premise for Rob’s book is that everybody’s day is split into three eight hour parts: work, sleep, and everything else.  Rob’s hope is to get you motivated to do more during the everything else portion to maximize your own potential.  First of all, I don’t know anybody who only works 8 hours a day.  10 hours of work a day seems more realistic.  Second, who gets to sleep 8 hours a night?  Sounds like elusive bliss to me.   Let’s assume 6 hours of nightly sleep instead, which ironically leaves the same 8 hours of time for everything else!

The Other 8 Hours is an enjoyable read because each chapter contains not only practical advice, but real life inspirational stories to help motivate readers to action.  Too many times we just come home, plop on the sofa, and do nothing.  That’s no way to live.  Below are Rob’s top 10 things he recommends doing with your spare time to help increase wealth and purpose.

Top 10 Creator Channels: Read more…

Michael Moore thinks he is pointing out injustices through his latest documentary, “Capitalism: A Love Story“.  Instead, Michael simply reminds us that life isn’t fair in a free market economy where those who work hard sometimes get the short end of the stick through no fault of their own.

I find it ironic that one of the wealthiest documentary filmmakers is bashing Capitalism.  Despite highlighting that 33% of “young Americans” now believe in Socialism (37% for Capitalism, 30% undecided), it’s hard to argue for a better system.  It’ll be interesting to see if these young Americans still believe in Socialism by the time they reach their thirties and make some money.  Socialism just creates a new set of problems for society.  Is it really that bad buying a foreclosed property from someone who can’t pay their debt on time?  Property vultures are necessary to provide a floor in many devastated markets or else things go to zero and more people suffer.

There is a sense of self-righteousness when Michael tells the viewer that he can’t fight the system alone and encourages all to rise up.  Michael you aren’t alone.  Thousands upon thousands of us fight for what we believe in every single day.  I wish Michael would put his money where his mouth is and donate all his proceeds to helping victims he continues to highlight.

A STRANGE PLACE Read more…

Author: Lawrence Dorfman, some old fella with three decades worth of publishing experience.

Publisher: Skyhorse Publishing, soft cover, 167 pages, $12.95

Summary: If you ever need something to prop open a door, or start a fire, The Snark Handbook might just be your solution!  For those who don’t know what snark is, it simply means a slyly biting, smart-ass remark with disparaging undertones.  Larry’s book is a collection of incredibly witty phrases from luminaries the world over.

Communication skills cannot be underestimated.  Give me a good communicator over a brilliant mind any day!  Ever wonder how some people can respond with such quick wit?  Some say it’s a gift of tongue, but I say it’s a learned skill that everyone can cultivate.  With The Snark Handbook, not only will you bust a gut laughing, you’ll be able to insult others without them evening knowing!

Please enjoy some snarky examples from each of the 14 chapters below: Read more…

Social Security Act FDR

The following is the second and last part of my interview with Charles Farrell, the author of “Your Money Ratios“.  We discuss the much maligned 401k, whether Social Security will survive, and crowd favorite, how raising personal income tax levels further will ruin America!

The 401K AND ALL ITS GLORY

Question: Why do you think there are so many detractors of the 401k plan? Furthermore, do you think it is fair that the pre-tax limit contribution is only $16,500 for some 22 as well as someone who is 45? Presumably, the average 45 year old is making much more than the average 22 year old, so how come the government doesn’t propose an increased pre-tax contribution scale the older one gets?

Answer: Many people don’t like 401(k) plans because they believe the burden of funding retirements should fall on employers and not employees; thus they would like to see us go back to defined benefit plans that are funded by employers. Well, that is just not going to happen. Employers have no appetite for guaranteeing to pay their workers for 30 or 40 years after they stop working for them. And DB plans are not flexible enough to accommodate a globally competitive marketplace, plus they discriminate against individuals who change jobs or careers. Moreover, many DB plans (particularly government plans) are significantly underfunded and many who thought they had guaranteed retirements may be unpleasantly surprised at some point. So I think the “romance” with DB plans is misguided, but many people would like to see those types of plans again. I just don’t think it’s going to happen.

Then there is another set of individuals who don’t like 401(k) plans because of the limited investment choices and sometimes high expense structure of the plans. I agree with people on this front, and there are problems with some 401(k) providers, particularly those smaller plans that can’t drive better deals on their investment platforms.

But, most plans do offer competitive options and are low cost. It’s important for readers not to lose sight of the primary reason to use a 401(k) plan, which is the huge tax benefit provided to those who contribute; and if you get a match, that is just makes it more attractive. The tax deduction, the match and the tax deferral on growth are incredibly valuable tools to help build your capital. So even with some restrictions, the plans are basically the best place to build your retirement assets.

Regulators Are The Problem! (401K Con’t) Read more…

Charles Farrell

As I wrote in my review of “Your Money Ratios”, Charles’ book sings to me. Charles has the ability to simplify complicated financial topics for the average reader to understand. His book is seriously one of the best books I’ve read on personal finance in a long while.

One of the keys to progress is learning from experts in their various fields.  Charles is gracious enough to answer some follow up questions I’ve been burning to ask after reading his book.  This will be a two part post due to the 2,800 word length of the interview.  In part I, we discover Charles’ motivation for writing his book, strategies for early retirement, and his conservative and debatable 50%/50% investment split between stocks and bonds.  In part II, we discuss the much maligned 401K, personal income taxes, why Social Security will survive, and why the flat tax is the right way to go!  Please enjoy!

WRITING “YOUR MONEY RATIOS”

Question: Was there a particular lightning bolt reason why you decided to write this book? For aspiring authors, what suggestions do you have to get your worked published in this ultra competitive field of business?

Answer: I wanted to write a book that would help average readers understand the most fundamental and critical relationships among one’s income, capital and debt, and how those things must be managed throughout your working career to build financial independence. So I took what are often quite complicated topics and figured out a way to present them in a very simple format that anyone can follow. I would like more people to enjoy the benefits of financial independence, and I hope this book does that.

As far as writing, all I can say is write about what you believe in. Hopefully, if you believe in it strongly enough, you’ll develop some expertise and then seek out ways to spread your ideas. Try to develop some niche that is reflective of your expertise. So I developed the ratios and they came out of my background in tax, finance and also working with individuals.

Think about what you do that is a little different and try to focus on that unique nature of what you do. It is a tough slog because the field is very crowded and often the least valuable information gets the most press. But you have to accept that reality and still push ahead. And then you need a little luck. Your message has to somehow get into the hands of people who appreciate and understand it. And that is hard to predict, which means you need a little luck to get it out there. So if you are going to pursue that path, I think you need to accept those realities of the marketplace.

EARLY RETIREMENT Read more…

Author: Phil Villarreal was a syndicated film critic (one of the best jobs on earth) and is a general reporter for the Arizona Daily Star.  Phil contributes to OK! Magazine and blogs at becauseitoldyouso.com.

Publisher: Skyhorse Publishing, Inc.  244 pages in soft cover.  $12.95.

Summary: “Secrets of A Stingy Scoundrel” is a hilarious book that has been reviewed by many personal finance sites already.  Hence, I’ll take a slightly different approach.

First of all, Phil is one proud cheapo who is potentially helping millions of Americans (if they buy his book) save thousands of dollars a year.  Second of all, the breadth of stinginess is impressive, with nine chapters: Personal, Eating, Relationships, Household, Finance, Leisure & Entertainment, At The Workplace, Corporate Cataclysm, and Gross, Mean and Just Plain Wrong. Read more…

Ready, Set, Go! From now on, all advertising revenue after operating costs will be donated to charity!  I’ve finally got off my rump to figure out this peculiar aspect of blogging.

For the past 6 months I’ve been very disinterested in advertising.  The only thing that did interest me was practicing “free-writing”, meeting new folks, and learning new things.  I played around with various advertising platforms like Adsense early on, and I just scratched my head wondering who would click on ads such as “600% Penny Stocks”?  What if the advertiser was a scam?  For those who use Adsense, more power to you.  It’s my own personal issue for not being entirely comfortable with their platform.

As I learned more about advertising online, I realized there were other solutions to my pre-screening desires.  One solution is to sign up with affiliate advertising networks such as LinkShare (thanks Matt Bell), where I can screen hundreds of advertisers beforehand to provide relevant solutions or interests to readers.  We still will never know with 100% certainty the veracity of the products (Enron anybody?), but at the very least, it’s one level higher than putting up contextual advertisements where we have no control over.

It’s important that advertising never alters the spirit of this site. We will not be like politicians, swayed by corporate interest groups and their tantalizing dollars.  If there’s a product we like we’ll endorse it and introduce the product to others.  If not, we just won’t bother no matter how attractive the incentives.  Making money online is a learned skill that takes time to cultivate.  The best ads are those which are unobtrusive and relevant.

MIND SHIFT Read more…

Author Bios: Manisha Thakor and Sharon Kedar have their MBA’s and CFA’s and are the coauthors of “On My Own Two Feet: A Modern Girl’s Guide To Personal Finance.”

Publisher / Physical Description: Adams Media.  Paper back.  148-pages of easy reading.

The Summary: With a tag-line of “how to talk money with your honey,” how can you not like a book with this kind of wit?  Personal finance books tend to be a little bit mundane and redundant, but not so with Manisha and Sharon’s latest offering.

The first point of interest simply lies on page two.  All page two says is “To All Women…”  As I am not a woman, I immediately began preparing myself for some male criticism.  Does ‘To All Women” really mean “Stay Away All Men”?  To my relief, the real meaning of page two is about empowering women to become financially independent on their own.

Getting financially naked really is about having as clear of an understanding of each partner’s finances as possible.  The authors don’t want women to one day wake up realizing all their money is gone after their husband invested their finances in some unscrupulous investment.  Women need to have a full grasp of each others finances so that there are no surprises.  Even before marriage, our authors go through steps to discover whether a couple is financially compatible.  Financial matter shouldn’t be taboo among serious couples. Read more…

The S&P showed five consecutive days of gains in the first week of 2010 to close up 2.68%.  Meanwhile, The Samurai Fund (TSF) outperformed by 200 basis points to close up 4.77%! For an actual fund of 17 positions, this is absolutely huge!  We are up almost $80,000,000 this week, and if we keep this up, the team is going to get paid like rock stars come year-end!

I’ve put up a permanent tab to track our names to facilitate accountability.  If you are one of the 17 contributors, please provide periodic updates in the page to keep this as realistic as possible.  There will be a review of the bottom performers end of the quarter, to potentially make room for 3 new entrants.  Nobody is safe in this meritocracy!

INCOME POLL: There’s a new poll on the south-right side bar, asking how much money you made in 2009.  The poll is totally anonymous, so feel free to contribute.  It’ll be interesting to see the income distribution of our community, to help me help you discuss more pertinent things. Read more…

Publisher: The Penguin Group.  Hard cover. 257-pages. Price: $26.

Author: Charles Farrell, JD., LL.M., investment adviser with Northstar Investment Advisors, in Denver.  He writes the “Retirement Roadmap” column for CBS Moneywatch.

Review: “Your Money Ratios” sings to me!  For someone who loves using ratios such as the 1/10th rule for car buying, and 30/30/3 rule for home buying, I absolutely adore this book.  Charles’ writing style is very balanced and easy to understand.  When it comes to math, many people, including myself fall asleep.  But, if you can just do simple division and multiplcation, this book will keep you on the right path towards financial security.

Charles’ “Unifying Theory of Personal Finance” is his core philosophy that all decisions you make should help move you from being a laborer to being a capitalist.  In other words, make money work for you, and not the other way around.  It’s important that with every single monetary decision you make, you ask yourself will this help you become a capitalist or not.

Capital To Income Ratio Read more…

Author Bio: Jane White is Founder & President of Retirement Solutions, LLC, which promotes 401(k) reform and provides investment education.

Publisher: FT Press.  A compact 247-pages in hardcover.

Summary: This is one angry, no-nonsense book!  Jane White blames more politicians than I can name for causing the mess we’re all in.  She plays no favorites and thinks both parties are corrupt.  Phil Gram (R-TX) deregulating the banking industry is the genesis of this crisis, while Chris Dodd (D-CT) is blamed for carrying bank deregulation further by deregulating exotic financial instruments.

Jane even questions whether Bernanke knows anything about economics.  One of my favorite assertion of her’s is that big business owns both parties, and politicians are just playing puppets to their lobbyists. Read more…

“The New Rules For Mortgages” by Dale Siegel provides a fantastic understanding of everything you need to know about mortgages.  For many, a home is the single biggest purchase of their lives, and the mortgage is a necessary instrument for making homeownership dreams a reality.

Qualifying for a mortgage is daunting, but it doesn’t have to be under Dale Siegel’s guidance.  After all, who’s better to give instructions than the president of her own mortgage company?  It’s important to highlight that Dale truly tries to provide readers knowledge about mortgages and doesn’t use her book as a sounding board for her company.  The book is like a secret weapon for first time home-buyers who dare tip-toe past enemy landmines.  The enemy is the industry which has adeptly blown off many appendages via exotic liar loans and oh-too-high fees. Read more…