Financial Samurai

On Friday afternoon, March 11th, the largest earthquake in Japan’s history hit with a magnitude of 8.9.  The devastation of the tsunami is unbelievable and my heart goes out to the victims and family members of this tragedy, which is still ongoing.

I’m sure many of us would love to do something, anything to help our brothers and sisters out in Japan.  The best and quickest way is to donate money to organizations who have the infrastructure and processes set up to help.

To donate money to the Japanese earthquake relief efforts, please visit the Red Cross’s site here.  You can also donate money by mobile phone to the American Red Cross Relief by texting REDCROSS to 90999.  Every time you text REDCROSS, $10 will be debited to your phone bill and a donation will be made.  The death toll has breached 10,000.

I encourage those of us with blogs, Twitter accounts and any online presence to help spread the word.  Japan needs all of our support right now!

Highlight Posts From Around The Web Read more…

You might have heard recently that an unemployed architect by the name of Mark Epple found a whopping 12 carat, yellow diamond ring when he and his family was skiing in Vail.  The first thing that came to mind was who wears a 12 carat diamond ring?  That must be so gaudy!  My second thought was what is an unemployed guy doing spending thousands of dollars flying his family to Vail to go skiing?  Each lift ticket costs $100, not to mention lodging and food for the family.  Finally, I wondered whether I would return the 12 carat diamond ring if I was unemployed.

It’s easy to argue not to return the ring.  Anybody who can afford a 12 carat diamond ring probably isn’t hurting for money.  It turns out the original owners have a vacation home near Vail, so that sort of proves the point.  Based on the new rule of engagement ring buying, a husband can get away with spending up to the value of his car for his bride to be.  Cheap car, cheap ring!

And based on my 1/10th rule of car buying, one doesn’t spend no more than 1/10th their annual gross income on a car.  In other words, this couple is earning at least $2,000,000 a year.  Furthermore, they probably have personal property insurance coverage like so many do with expensive jewelry.

It’s also easy to argue for why one should return the ring.  If you lose something of value, you certainly hope someone will have the decency to return what doesn’t belong to them.  I’ve lost everything under the sun before and am so grateful when someone returns my lost item.  Furthermore, it’s not like you can easily sell a 12 carat diamond ring without bringing any attention to yourself.  The largest engagement ring I’ve ever seen is 6 carats, and that was just ridiculous.  Finally, if you do happen to return something of great value, more often than not the person will likely reward you for your good deeds.

What would you do?

HIGHLIGHT POSTS FROM AROUND THE WEB Read more…

You guys have really rocked the discussions with multiple 100+ comment posts this year!  You’d think this was a big blog or something.  I can’t begin to thank you enough for your contributions and what I’ve learned from you.  A post recap of 2010 is a good exercise to not only discover what worked best for some guidance in the new year, but to also give new readers a chance to catch up via one easy page.

There are literally 36 posts in the queue for 2011, with some of them just screaming to get out.  Why has the queue gotten so large?  Two things mainly:

1) Using a wine terminology, it’s good to give each post a chance to breathe.  Often times there’s so much discussion that to post a new post the very next day feels off.  This is the main reason why I don’t post everyday.  A topic needs to be sussed out thoroughly before we move on.  I like to respond individually to all comments who require a response.  Also, I love reading all the other great blogs out there every other day.

2) I guess I just like to write a lot.  There is always something ridiculous going on in the world that needs addressing.  If you are a blogger who is afraid of running out of ideas, don’t be.  Just read the newspaper, turn on the TV, or go out and socialize with friends.  Remember, if you can speak forever, you can blog forever!

For 2011, I probably should only have a queue 10 deep because I’ve found multiple times that I forget what I wrote just a month ago, and sometimes the topic gets stale or irrelevant.  Let’s add that to the blogging new year goal!  Happy reviewing.

TOP POSTS FOR 2010 Read more…

 The following is a guest post by a regular reader who just turned 30.  Hope you guys enjoy and help her share in her thoughts!

So often we let society overly influence how we feel and act. I could go on for hours about topics like body image, nutrition, and politics but for now let’s just touch on age and children.

Maybe I’m on my own in this, but it annoys me that society teaches us that couples should raise a family once they’re married. While I have no ill feelings towards you wonderful parents out there, it frustrates me that I still find myself doubting my lack of interest in having kids because it’s abnormal, against the grain.

TO HAVE OR NOT TO HAVE Read more…

Twitter is a truly amazing platform.  I’m impressed with how some can literally Twitter all day and not get tired.  There is definitely an addictive element to Twitter which makes the program so alluring.  There are a ton of announcements of self greatness which I am very fond of reading for some reason.

Twitter Love Examples:

* “I rock because I created an awesome commercial about my product!”

* “My stock picks are up huge and outperforming the markets!”

* “Check out my net worth, killing it up 10%!”

* “Take a look at my new Gravatar picture!  What do you think?  Ain’t I cute?”

* “Happy birthday to me!  Come celebrate with me over on my site!”

* “Thanks!” -> What?  “Sweet!” -> What? “Cool!” -> What? Read more…

The Bay Area is full of entrepreneurs.  There’s something in the air that creates an almost godly electric spirit that causes people to work hard and innovate.  As 2011 nears, more and more I hear about how small business owners are clamping down in preparation for next year’s tax hikes.  Clamping down is generally not a good term to use if you are a politician who wants to create job growth.

Let’s say you make roughly $3 million in annual gross revenue from your internet business like my friend Zach does.  Not bad, but not exactly big money if you take into account his cost structure.  If his pre-tax operating profit margin is 25% after he pays the salaries of all his employees, the rent, and so on, Zach is left with roughly $750,000 subject to taxes.  If his tax rate goes up from 36% to 39.6%, for every dollar he makes over $375,000, he will pay roughly $25,000 more in taxes a year in 2011.

Well guess what?  My friend is letting go of one of his junior programmers who makes roughly $85,000 to pay for next year’s $25,000-$35,000 tax increase!  My friend feels bad letting his 2006 college graduate employee go, but he has no choice since revenue has declined since 2007, and the government is tightening the screws.  Zach believes that 2011 revenue will be worse next year than this year, and is budgeting a decline.  Thank goodness for 99 weeks of unemployment insurance!  And no, it’s not reasonable for the junior programmer to just go work in fast food after only several weeks of looking.

DON’T LISTEN TO THEIR LIES.  THEY AREN’T IN IT FOR YOU. Read more…

I don’t talk much about my finances, but I will tell you that I’m in the process of refinancing a couple mortgage loans down by 1% each.  The interest savings is tremendous, making me very positive about consumption trends going forward as 10 other people I know are also refinancing.  It behooves you to at least call your local bank and check their latest rates.

It does make me wonder with the strength of the stock markets lately, how the bond market can still be so frothy to provide such record low interest rates.  Do remember that the higher treasury bond prices go, the more yields fall.  Could there really be deflation on the way?  I highly, highly doubt it but the bond market is telling us otherwise.

To humor our minds, lets say there is deflation on the horizon.  What would you do with your spending habits?  You’d probably stop consuming due to the assumption that whatever it is you want to buy will be cheaper in the future.  As a result, you’d hoard cash and de-leverage.  Bingo, that is exactly what plenty of folks are doing, including myself.  This self perpetuating mentality is very damaging to economic progress.  In addition to delaying consumption, you will probably seek ever higher yields.  With the 30 year treasury yielding 4% right now, it sure looks like a buy compared to only 2.85% on the 10 year.

When talking about deflation, keep in mind that money is simply a medium of exchange.  The more money currency you have, the better as the strength of your currency improves vis a vis the goods and services which it can buy.  Frugality really is en vogue again, and I just can’t wait until Samurai September when I spend the whole month buying nothing!

POSTS THAT CAUGHT MY EYE: Read more…

This is a guest post written by Mike, a financial planner / web entrepreneur who is pursuing his dream of running his online business. You can follow his progress at The Financial Blogger (RSS Feed).

3 years ago, I was told by many bloggers: “You will never make money blogging. And if you do, $200/month will be your highest peak ever”.

Three year ago, The Financial Blogger was averaging 500 visits per month and I was ecstatic when I made my first deal of $10 for a link.

Three years later, I now run three financial websites, bought 2 of them and flipped a blog within a year. I am now able to work 1 full day per week on my online business (while I still have to keep my “day job” in the meantime). I really like buying and managing finance blogs as I think it is currently one of the best investing opportunities we can find.

When I asked Sam if I could write a guest post for Financial Samurai, he asked me to include more details on how I appraised blogs and how do I decide or not to send $10K over the wire (or more!) simply to buy a “.com”.

Look at Blogs as a Real Estate Investing Opportunity Read more…