Financial Samurai

Well, well, well.  Not everyday does a $300 million dollar mega yacht stop by the San Francisco Bay Area!  The creatively named “A” yacht is owned by 38 year old Russian billionaire Andrey Melnichenko and his lovely supermodel wife Aleksandra!  Andrey made his money in fertilizer, banking, and energy and is worth a reported $4.4 billion dollars.  Interest alone on $4.4 billion at 4% is over $178 million a year!

The “A” looks like something out of a James Bond movie.  Can you imagine all the crazy parties on this bad boy?  Wow!  I rode my bike to the very north end of San Francisco to take a look and boy oh boy is it big.

Some nice mouth watering yacht stats for all you billionaire wannabes out there! Read more…

Elephant > Moon. Eh?

One of my graduate school friends recently found himself out of a job.  It was a tough slog, but at last, he and his co-founders decided to shutdown their startup and start something new.  Nobody is really going to feel sorry for Greg, as he joined Google the year they went public and cashed out on a couple million dollars in stock options over the next 4 years.

His $180,000 a year salary was nothing to sneeze at either, but also nothing too spectacular in the land of $1 million dollar starter homes.  In a nutshell, Greg is the typical Silicon Valley success story who busted his butt to get ahead, networked like no other, and fell victim to a downshift in the economy these past couple years.

There are literally thousands of millionaire 30-somethings in the San Francisco Bay Area who are underemployed or just not working because they haven’t found that great idea, or that premium company fit yet.  Why should they bother wasting a companies’ time and enlist only to quit 6 months to a year later when something better comes along?  That’s not fair to the company and so they do the right thing and wait.

When I asked millionaire Greg about his thoughts on the government extending unemployment insurance to 99 weeks he let out a big “YIHAW!“  You see, Greg has been collecting unemployment insurance for the past 16 weeks via the solvent state of California, and he is worried that Obama will crack down on people like him once Federal care starts kicking in.

A MILLIONAIRE’S TAKE ON COLLECTING UNEMPLOYMENT AS A MILLIONAIRE Read more…

"Carried By The Wind" by Veronika Nagy

My nose plugs up and I can hardly breathe when I’m around cats too long.  I don’t know why I’m allergic, I just am.  One time I stayed over a friend’s place with three cats, and I woke up with red hives.  It was a surprise that I was able to fall asleep at all, because I could have sworn I sneezed over 100 times until the underside of my nose bled.

One of my best friends invited me over to visit her childhood home this fall.  Her mother lives near Boston, and unlucky for me another downside of East Coast living is the enormous pollen count.  I remember countless days when I couldn’t go to work because my allergies were so bad.  Ever since moving out West, my reactions have been much tamer.  The San Francisco Bay acts as a natural filter, sucking out stagnant air to sea.

In addition to being out East, my friend’s mother also has a couple of dogs and cats!  She sees this trip as a fun homecoming to introduce me to where she grew up.  To me, I have no attachment there and it’s like going to a gas chamber for vacation.  Imagine only being able to breathe through your two front teeth.  That’s how I feel sometimes when allergies attack.  You can’t get enough oxygen, so you aren’t able to speak.  You lose energy and let sleep take over even though it’s in the middle of the day.

THE QUIET PLEA Read more…

May retail sales drop 1.2% or the most in 8 months as more and more people turn to personal finance bloggers for frugality advice!  I’m pretty certain nobody has ever come up with this statement, but think about it for a little bit.  Why is it that the public should take personal finance advice from BusinessWeek, for example?  The articles are written by relatively well-paid writers who are on a mission to report the news.  They do a fine job at that, but perhaps not as fine a job making things visceral like the personal finance community.  What’s more personal than a real person like Jeff delivering pizzas to get out of debt?  Not much!

It’s very hard for the mass media to compete against a team of personal finance bloggers such as the Yakezie.  We’re real life people responding to comments and putting ourselves out there.  There’s a two-way street with us.  If I were Editor in Chief of any mass media publication, I’d go out and hire an bunch of influential personal finance bloggers and put them on my payroll.  $75,000 a year will do or perhaps $150,000 a year if you want us to write an article a month exclusively for you.  By doing so, the Editor will inject new life, new readers, and therefore a wealth of new advertising dollars to the publication.

As evidenced by May’s retail sales figures, we are creating the news with our frugal ways instead of just reporting the news.  There’s a movement underway, can you feel it?  Maybe we’ll band together and talk about how we should never buy new cars again, causing June’s new car sales to dip.  Or maybe we’ll discover how amazing one person’s unsung journey is to fight poverty in Uganda and direct millions of dollars their way.  That counts for something.  Let’s make a palatable difference with the words we write.  Someone is out there listening.

Have a great weekend everyone!

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

Dr. Thomas J. Stanley wrote a great book called “The Millionaire Next Door” where he surveyed a bunch of folks and discovered millionaires for the most part are pretty simple, everyday people.  The next door millionaires drove second hand cars, shopped at Walmart, and lived in sub $500,000 houses which were of course, all paid off.  Part of the reason why Dr. Stanley’s book is such a big hit is because he appeals to a mass audience and shows us we can all be millionaires because there’s nothing really special about them!

Hence, like getting your college degree, is becoming a millionaire by the time you retire fast becoming a rule rather than the exception?  The answer is “yes” if you ask Dr. Stanley and all the next door millionaires.  In fact, they are probably all shaking their heads at those who can’t get there because it’s so easy for them.  Success skews reality proclaims Roger at The Amateur Financier.  So true.  If you’re rich, you think everybody is rich or should be rich.

SO EASY, EVEN A KNUCKLEHEAD CAN DO IT! Read more…

Dear Readers,

It’s been a wonderful journey so far and I want to thank you for visiting my tiny slice of the matrix.  We may not always agree, but that’s the beauty of it all.  Through differences of opinion, we’re allowed to learn from each other and flourish mentally, and hopefully financially as well.  Besides, it’s not like I’m going to hold your puppy hostage or something if you challenge my opinion!  Hope you feel the same.

Sometimes it’s hard to to respond to all of your wonderful comments (7,100+ so far), yet I will always try.  I wish there was an easy way to tag all of the most interesting comments and show case them.  Perhaps I still will!  It’s so fun to visit other sites, comment, and interact, I want you to experience the same here.

Each blog has a different personality and tone to it.  I’d like to think that Financial Samurai is unique with a flavor that challenges conventional thinking.  We can go back to basics regarding budgeting, savings, and retirement planning.  Or, we can continue blazing new trails.  It’s really up to you frankly.  What would you like to read more of going forward?  Generally we should enjoy writing what we’d enjoy reading.

Finally, I thought it would be fun to dedicate this song to all the female readers who helped share their viewpoints.  Five String Serenade was composed by Mazzy Star in her 1993 album, So Tonight That I Might See.  The original plan when I learned Five String Serenade 12 years ago was to sing to a girl after an evening picnic on a beach somewhere.  I never got the chance until recently, and now it’s been recorded, in my own version for you.  Funny how things never turn out quite like you plan.

Here’s to another 200 posts!  Thank you again! Read more…

If you feel like debating, head over to “The Dark Side Of Early Retirement” and get your fix.  I stand by my main thesis that nobody quits a job they love to do.  Someone who is able to find a fulfilling job is one of the luckiest people on Earth.  We shouldn’t make fun of them for being a “loser” as one commenter put it.  Instead, we should figure out what makes them tick!

Everybody gets bored at something after enough repetition.  That’s why it’s key to have many different interests which straddle both the mental and the physical aspects of your life.  No surprise that interesting people have a plethora of interests.  These people also probably have a higher than normal level of commitment to their activities which make them that much more intriguing.

THE TOP 5 “I CAN’T BELIEVE THEY’RE PAYING ME TO DO THIS!” JOBS Read more…

Looking back at history brings mixed emotions of happiness and fear.  How can it be that 20 years have passed since Pearl Jam was huge and mullets were still in?  It can’t be, can it?  The 90′s don’t seem too long ago, yet so much has happened since.

People say that we’ve just experienced the lost decade, given the lack of returns in the stock market.  I disagree completely.  What’s more important here is ironically nominal increases not “real”.  If you compare what you have now to what you had 10 years ago, I’m pretty sure you have lots more. Heck, some of you may have still been in school or had absolutely nothing but a tit to suckle.  You may have developed a business, or found someone over the past 10 years.  Rest assured you’ve made a lot of progress.

The one thing we have less of is time.  10 years past means 10 years less of life to go.  I think about what I’ve done and what I’m doing in 5 to 10 year blocks all the time.  If I plant the seed now, will the project be worth something in 5 years?  If I slave away at business school part-time, will I be able to leverage the degree and the relationships 10 years down the road?  If I master one guitar song a month, will I be able to play 6 albums worth of songs in 5 years?  The idea is to just start now and stay consistent.  You ignore the short-term tribulations and just focus long term.

The problem is that eventually, we all run out of rope.  That’s when we can only look back and hopefully smile at all the things we’ve accomplished.

A SONG THAT CAPTURES THE QUESTION IN THE TITLE Read more…

If you look carefully around the web, you’ll read scores of articles about the desire to retire early.  Yours truly wishes to finish up no later than 45, as I believe working for 20 or so years is a long enough time.  I’ve done the math with various living and return scenarios and it can be done.  But the question is whether it’s a good idea?  Perhaps not.

Now that the economy is in recovery mode, it’ll be interesting to see how attitudes change towards early retirement.  Will those who’ve short circuited their careers feel the pull to return to full time work and maximize their earnings potential again?  I believe so.  What about all our “lifestyle design” and “digital nomad” friends who had a rough time landing something stable they truly love?  Possibly they’ll come back too.

Those who are able to retire early are often cherished.  I certainly admire those who are able to cut down their desires to the bare bones and live a very frugal lifestyle.  I also admire those who’ve been able to strike it rich very early!  That said, perhaps early retirement isn’t a good idea for the large majority of people.  Let’s explore several reasons as to why people want to retire early, why they exist, as well as understand why it may not be a good idea.  Someone has to argue the other side, so it might as well be me.

WHY PEOPLE WANT TO RETIRE EARLY (IT ISN’T THAT OBVIOUS!) Read more…

Oh, the monotony of it all!  Imagine clocking in, day in and day out with really no change to your job.  You’ve got little risk of getting fired, and in 10 years you’ll retire with several million to last you a lifetime.  In the back of your mind, you wish you didn’t have job security because you despise boredom.  At the same time, you realize you’ve got it made and shouldn’t be so spoiled in your thinking.

One day a headhunter gives you a ring asking if you want an opportunity to make 50% more money a year guaranteed for two years.  The catch?  You’ll be working for a start up with no such promises of job security after year two.  You’ll also have to move to a different city where the cost of living is also 25% higher.  The hours and stress will most certainly more as well.  Welcome to Kathy’s world.

10 YEARS COMPLETED, 10 YEARS LEFT TO GO Read more…

Look around.  What do you see?  I see packed buses, traffic jams, busy open houses, expensive restaurants with only 9pm seatings, and friends finding new jobs again.  Double dip recession?  I don’t think so.  With the Dow over 11,000 and the S&P 500 over 1,200, it’s as if last year was just a bad dream.

Yet, it is exactly during good times, when we must be more diligent about our finances.  It’s so easy to forget how bad things were and stray.  Rather than spend more money, save more money during upswings so that we can spend more money during downturns.

When times are good, it’s not necessary to spend more money to create any sort of additional fulfillment or pleasure.  We’re getting paid more, the opportunities for promotions are greater, and the demand for our services surpass our supply.

In essence, we feel good because we feel wanted again.  It’s when a downturn hits when money can help balance the mood out a little with some retail or food therapy, or maybe even a vacation.  In essence, spend money counter-cyclically for better returns.

DAY DREAMING TO RELIEVE DESIRE Read more…

Young or old, amateur or veteran, know there are rocketships in your midst ready to be ridden.  The rocketship is someone who is going places, and hopefully, through his or her shear power, you can hop aboard and increase your own success as well.

Look around the office and see if you can identify the rocketship.  The person is likely a hard worker who is respected by almost everyone on the floor.  If you were to view each person like a stock, you would buy the rocketship because there’s just something about them that tells you they’re going places.  The higher they fly, the more likely they will promote you along the way.

The same thing goes with social media and the blogosphere community.  Don’t count out the little guys.  Instead interact with those with an unusual amount of dedication and creativity.  Sincerely get to know them and help them out.  One day they might be the next Pete Cashmore from Mashable, you never know.  Expect nothing in return because if your relationship is sincere, things will just come.

A lot of folks talk a big game.  Beware.  The more one needs to talk about their successes, the less likely they are the rocketship.  It’s likely they are insecure, craving constant reassurance to justify their own relevance.  Remember to watch what they do, rather than what they say.  There are too many empty promises that never get delivered.

Everybody likes to win.  But first, you must identify the likely winners.  Once you do, it’s only a matter of time before you’re surrounded and soaring towards the moon!

Readers, do you have enough fuel to be a rocketship?  Have you benefited from others through their own success and initiatives?

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

My name is Lyndon and I’m overwhelmed by all the feedback from “The Curse Of Making Too Much Money And Not Pursuing Your Dreams.“  Thank you guys for sharing your thoughts, and thank you Sam for presenting my dilemma in a tasteful manner.  It’s only right for me to provide some feedback and give everyone a little more insight.

WEALTH IS AN ILLUSION OF HAPPINESS

One of my happiest memories was studying abroad in Chile for an entire semester.  I lived off beans and rice, and slept on a wooden plank bed.  At night, sweat would bead up on my forehead until it dripped down across my temple and into my ears.  It was that hot.  Yet, despite having no money, I was so happy.  Life was simple and the greatest pleasure I got was learning from others.

At the time, I told myself that if I could just earn $1,000/month and have my trusty camera, I’d be happy.  Well, I lost my way when McKinsey gave me a job offer.  Nobody turns down McKinsey, partly because nobody gets into McKinsey.  The curiosity of the job compelled me to take it rather than pursue my interests.

I recognize I’ve been blessed with the opportunity to work for a respectable company that may one day allow me to retire comfortably.  Yet, I wonder about that semester abroad in Chile all the time.  A couple years ago I went down to Chile and revisited the old AC-less dorm room where I used to live.  It brought back so many good memories.  Afterwards, my friend and I went back to our 4-star hotel, sipped on a Mojito and ate some ceviche.

It was then that I realized that despite living in a much nicer place on 100X the budget, my happiness compass pointed towards the dorm room of the past.

CAVORTING WITH THOSE WHO UNDERSTAND Read more…

The Mon Oda (Crest)

Dear Yakezie Group,

It’s been just over a month since the Samurai Alexa Ranking Challenge was announced, and I’m pleased to report we’ve made tremendous progress!  With 35+ members strong, we are actively helping each other achieve our respective goals.  I’d like to use this opportunity to recognize several Yakezie members for their achievements and initiatives in helping the team.

* Daniel-San from Sweating The Big Stuff took the initiative to compile the list and keep track.  His efforts have in turn created a home for us members to visit once a week and get pumped.

* @Elle_CM from Couple Money has been amazingly selfless in retweeting my posts and many other posts.  She is exactly the type of member the Yakezie Group seeks.  @FinEngr created a Yakezie Twitter Group to keep track of us and follow.  Pls follow so the group can follow you back.

* Monevator, The Amateur Financier, Evolution Of Wealth created weekly wraps to specifically highlight posts from the Yakezie Group.  Meanwhile, Money Funk wrote a derivative post on how to increase your Alexa ranking.

* Eliminate The Muda and Planting Dollars have busted through their 200,000 goal and should obviously now shoot for top 100,000!

THE RULES HAVE CHANGED AND WE WILL ADAPT 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…