2011 Mid-Year Review: Personal Finance Goals

2011 Mid-Year Review: Personal Finance Goals was written on July 15, 2011. I'm revisiting the post on April 6, 2021, almost 10 years later. It's been great to update old articles during the pandemic and clea things up.

We all need good personal finances.  It's easy to lose discipline as the year goes on, just like it's easy to eat a lot of cheeseburgers after the initial health foray.  My personal finance philosophies are very straightforward: 1) save as much as you can without crimping your lifestyle, 2) take advantage of all company retirement programs and matches, 3) build wealth by increasing income rather than just cutting costs, 4) never rely on anybody else or the government for a handout and 5) make personal finances fun while giving some of it away.

When I read stories about 55 years olds having difficulty making ends meet because their 99 weeks of unemployment insurance has run out, it bums me out.  But, I also scratch my head because after 33 years of saving and investing, we should all be on the beach somewhere without a financial care!

Saving just $10,000 a year on average over 33 years means you'll have at least a million bucks saved up if you returned the same rate of the overall stock market in that time frame.  Hence, I'm wondering if many folks are just understating their income by hundreds of thousands or even millions of dollars just to take advantage of government benefits.  I know one of my friends is.

Not saving and investing over your working life is completely irrational.  Depending on government promises to take care of you is also completely irrational.  Have you not observed all the corruption, greed, thievery and power-tripping our great leaders have shown over the decades?  The government can't even manage its own finances, how does it expect to help us out.  We need to take care of ourselves.

2011 Mid-Year Review: Personal Finance Goals

1) Take more financial risks

I’ve never been much of a financial risk taker partially because I’m easily satisfied with whatever I make, and partially because I’m too chicken to lose hundreds of thousands of dollars.  Although things have recovered, it was disconcerting to observe so much wealth destruction in 2008.  The pain of losing $100,000 is at least 2X the pleasure of making $100,000.  I haven’t decided whether to open up a new trading account to punt the market with, or buy another vacation or rental property.  Maybe I could turn $100,000 into a million bucks and surpass one of my goals from last year?  Or maybe I’ll lose $50,000 of it and become an alcoholic for a week.  I’m looking to invest in another private company, so if you know of any promising ones out there who need capital, let me know.

Personal Analysis

I've been 100% long the financial markets all year until I cut my equities holdings down to 30% on May 1 after being up 11%.  You know from my Twitter stream and various posts that I've been bullish for a while now, but a 11% ramp after 4 months was too much of a good thing.  On June 13, I raised my equity weighting back to 70%, which is where it will probably stay for the rest of the year.  I don't have a good sense for the markets now after the rally.  But, I do know there is one fantastic bubble here in the Bay Area with all the social media and gaming companies going public for extraordinary valuations.  The money is flowing in hot and heavy and people have learned from the dotcom bust by quickly diversifying into real estate and stable value investments.  Equity investments is roughly 35% of my net worth and the rest is spread between CDs and real estate. 

I haven't taken as much financial risk as I would have liked.  The reason is I'm comfortable with a guaranteed 4% return on my cash and I'm just too afraid to speculate anymore.  After you get to a certain point, it's really about capital preservation and creating a steady flow of income.  For example, 4% on $100,000 isn't much, but if you can get 4% guaranteed on a couple million, that's $80,000 a year risk free and you won't want to risk that nut as much as if you only had $100,000.  The unemployment picture is still murky, and I'm surprised the unemployment rate is still above 9%.  I don't see the S&P500 gaining more than 10% for the year, and I'm there already.

I do have a project on Yakezie.com that will cost me tens of thousands of dollars if I so choose to build.  That's a big risk, since I've never spent that much money on an entrepreneurial endeavor before.  However, every stock position and private equity position I've ever invested in is larger, so perhaps I'm over-thinking things.  I should believe in the investment in me, yet I undeniably have my doubts.

2011 Mid-Year Review: Personal Finance Goals update 2021: I wish I took more risk. I've just seen too many bear markets and tragedies.

2) Get rid of excess and maintain living expenses.

I’m keenly aware of lifestyle inflation.  This is the problem with hanging out with wealthier people, or simply older people for that matter.  I’m joining an expensive tennis club and now I’m getting pitched to join this resorts vacation program which costs $130,000 and “only” $10,000 a year for 10 days in any one of their “400 multi-million dollar residences” around the world.  That’s the cheap package!  If I want 30 days of usage a year, it costs $300,000 and $30,000 a year to join.  At least they give you 70% equity.  Ummm, no. Stop spending money like Snoop Dogg and simplify life.  Break free from things and reduce, reduce, reduce.

One of the greatest challenges will be to remain frugal, but not cheap with friends who are wealthy.  The strategy I’ve come up with is to simply spend money on them so they have nothing to say about the way I live.  Coffee, lunch, tennis balls, golf balls, dinner whatever… they’re all on me rich buddy.  Please, just don’t call me cheap.

Personal Analysis

I've gone to Goodwill 9 times this year, 5 of which was to help donate stuff from my parent's house.  It felt great getting rid of my things and their things.  Although, sometimes it was hard to donate from my parent's heap because of the memories they've associated with their items.  We saved all the good stuff, like the Kodak slides from the 1950s.  But, I found tons of clothes my father had bought 25 years ago which haven't been used since!

I didn't join the “Exclusive Resorts” vacation membership program for a crazy $100,000 initiation fee.  I haven't bought anything extraneous, except for several retro Nike basketball and tennis shoes I've wanted since I was a kid but could not afford.  My biggest expenditure this year was on the $10,000 tennis club membership fee, which was a fair decision in hindsight due to the friends and client relationships I've built in the past 6 months.  The most expensive purchase this year were a couple tennis rackets that cost about $400.  Not bad, since I play 2-4X a week.  I've spent a lot of necessary money building a business, which feels very rewarding.

My rich friend who called me cheap now calls me frugal, which is nice.  I think he could tell from my face that morning his words bothered me and made a conscientious effort to change.  Seriously, not many can keep up with his lifestyle, multi-million dollar vacation property in the South of France, 60 acre vineyard in Napa Valley with a tennis court and so forth.  But, I do kick his ass in tennis, so that's cool with me. 

See: Housing Expense Guideline For Financial Freedom

2) Save at least 60% of my gross income after maxing out my 401K.

This goal will be on my list every year until I retire.  Everything is pretty much automated as I save one paycheck and 90%+ of my year end bonus if I receive one.  If for one instance I feel that saving this amount crimps my lifestyle, I will allow myself to spend more by saving 50%.  Thankfully, good personal finance is quite basic and logical, which is why I try and write about all the fun things around personal finances instead.  Hope you guys feel the same way about personal finance, so we can address some more interesting topics this year.

Personal Analysis

I've continued to save 100% of every other paycheck that I get.  If I did nothing else, that's saving 50% of my after tax income right there.  As for the other paycheck, sometimes I save 20-35% of it, sometimes I spend it all.  So mathematically, I will save at least 60% of my after tax salary this year.  And, if the world doesn't fall a part, I will receive and save at least 80% of my after tax bonus this year, which will therefore result in 70%+ overall savings for 2011.

Year to date, I haven't felt that my savings habit has crimped my lifestyle yet.  I generally have an excess buffer of 10% most of the time which I save or invest.  I haven't bought many things.  Instead, all the big ticket items have gone to experiences and lifestyle: round trip tickets to Hawaii and Rio, tennis club membership, adventures during vacation and so forth while at the same time I'm de-cluttering.  With the excess buffer, I'm using it towards a two week Mediterranean cruise I'm planning this fall.

Why hasn't lifestyle inflation really grabbed a hold of me I don't know.  If you ex out my primary residence, I'm basically living the way I was 7-8 years ago, when I was making 50-60% less.  At the same time, I still feel I should live it up more.  Do I really have to drive a 11 year old car that leaks and rattles?  Can I really not take a 10 minute cab ride home after a late evening of tennis instead of a 30 minute long bus ride?  Can I really not spend $400 on an luxurious pair of work shoes that will last forever, and a new LED TV since the bulbs are burning out in my 7 year old projection LCD TV?  I should feel able to, but I don't because I still feel bad and have a propensity to use things until they completely break. 

Associating with personal finance bloggers has instilled more frugality in me than normal, and that's a good thing.  However, there's really no point making money if you don't spend it on things you enjoy.  Hoarding cash is a pretty pointless endeavor after a certain amount.  Perhaps I don't want to spend more because I want to retire early and I know this income is somewhat of an anomaly and therefore won't last forever.  That said, I firmly believe all of us here will die with too much money.

2011 Mid-Year Review: New Mid-Year Goals

* Accelerate a rental property mortgage payoff.  At 4%, my SF rental property mortgage is my highest debt interest rate.  It's not high by historical standards, but it's still 2.4% higher than the best 5 and 7 year CD yields now.  Everything is relative, and it's important to arb the spreads.  Given my risk free return goal is 4%, I will add an extra $2,000-$5,000 a month in principal as long as the 10-year yield and 5-7 year CD rates are below 4%.  I will slowly pay the rental mortgage off by 2017, which would be 16 years early on a 30-year amortizing loan.  It doesn't make sense to pay if all off tomorrow because it's important to match cash flows and have liquidity for good opportunities.

* Look to buy rental property in Wyoming, Nevada, or Washington.  Although Hawaii is nice, I need to really start looking at some distressed properties in these three livable no income tax states.  When I retire, I don't want my passive and online income to be taxed 10% a year by the state of California.  Hawaii has 8.5% state tax, and I want to have the option of having residency either in Hawaii or one of the three no-income tax states, depending on the size of my income.  The larger the income, the more worth it it is to be a Washington resident.

I truly believe in building a portfolio of cash flow positive real assets.  10-20 years down the line, there's nothing better than having a paid off mortgage, a property manager who does all the work, and a recurring income on a more than likely highly appreciated asset. As a result, I've invested heavily in real estate crowdfunding across America.

Related: The Case For Buying Rental Properties Today

2011 Mid-Year Review: Personal Finance Goals Conclusion

Everything is pretty much on auto-pilot, which makes things kind of boring.  I can predict what my liquid net worth will be 12 months from now within a +/- 10% range if I still have a job, which is kind of why I want to take more risks!  Daydreaming has helped liven up personal finances at times.  I like to drive to the most expensive part of town and go for a jog to get inspired. 

I love stopping by any car dealer and pretend I'm about to waste money by getting behind the wheel and inhaling the new car smell.  I get excited when readers e-mail in asking for help, as one reader did about a father who was afraid to lose his disability payments if he sold trees on his land.  We found a solution, and the father is going to be just fine!

I'd like for more readers to mail in some serious questions that are hard to answer.  Try and stump me if you will because we've been slicing through money's mysteries for a while now.  It's fun to use the community here to find the best answer.  Thousands of heads are definitely better than just one!

Passive Income X Factor – Starting A Website

It's been over 12 years since I started Financial Samurai and I'm actually earning a good passive income stream online. The top 1% of all posts on Financial Samurai generates 31% of all traffic. The average age of the top 1% posts is 2.3 years old. In other words, after putting in the hours to write some very meaty content over two years ago, 10 posts consistently generate a monthly recurring income stream that's completely passive.

I never thought I'd be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build. If you enjoy writing, connecting with people online, and enjoying more freedom, see how you can set up a WordPress blog in 15 minutes with Bluehost. It's cheap and easy to start!

Photo: Stray dog under a bridge in the middle of China by Sam.


2019 Year In Review: One Of The Best Ever

2020 Year In Review: Surviving The Pandemic

1Q 2021 Review: Outlook For Real Estate And Stocks

About The Author

49 thoughts on “2011 Mid-Year Review: Personal Finance Goals”

  1. By

    By WayToWealth whose comment got deleted

    Sam, I fully agree. It doesn’t make sense at all why normal working class folk land up in financial trouble after 30 years of working and saving. In South Africa, it is such a problem. People either don’t want to save or don’t know how to save. It’s a big problem!
    The fact that you have goals and work towards them is probably one of the biggest reasons for your success. All about the basics.

  2. wow you are doing great Sam! I wish I was in your situation, saving 70% of my income. Once you pay off your primary residence, you’ll probably be saving even more income!

    That dog picture is so cute. Did he eventually free himself from the tether? :)

    I’d say go for Washington. It’s nice there too.. and I can come down and visit! haha

    1. Thanks Y&T. I think once I pay off all my mortgages I will be retired and then reverse course and probably spend 70% of my income and save 30%. When we’re retired, we don’t have to save for retirement!

      K, sounds good. See ya in Washington or Hawaii!

  3. World of Finance

    Great financial goals and progress! Sometimes it hard to know what the perfect balance is between saving and living life. We definitely have to save for retirement and perhaps to retire early as I know is the goal of many bloggers :P and due to the fact that our government can’t manage our money; we can’t depend on any social security money that’s for sure. At the same time, we do need to make sure we work hard and also enjoy life too. :)

  4. Sure, have some in the queue. Not that exciting though i’m afraid. It’s all about cap rates vs. borrowing costs vs. expected returns and sitting on the property for a long time.

  5. Looking for distressed properties? Then Detroit and surrounding areas have your name all over them Sam. (Or maybe that was just gang graffiti?)

    You are doing great financially Sam. You are smart and saving while you have the ability (since you never know what life is going to throw at you- unemployment, mudslide, twins, etc.). So many people are in your shoes and they just spend for the sake of spending.

    I am curious, is your ultimate goal to be making all your income online one day (along with passive income such as rentals). Or, do you plan to be keeping your 9-5 for a long time?

    1. Gosh, I bet there are a lot of distressed props around Detroit. Kinda rough. I think i’ll pass on the offer, but thanks!

      You’re right about never knowing what life might throw at me/us. Hence, best to save as much now without crimping too much when we can.

      My ultimate goal is to have an established and proven stable side income that I can live 100% the same lifestyle I am now when burnout from my day job arrives. I think burnout will come definitely within the next 10 years, so I have a 2018 goal of 7 years away to achieve my financial goals.

      I want to be so sick of working my day job, that I will happily quit and do something else. If I can’t give my day job at least 75% effort, then I should let someone else have it.

  6. Money Reasons

    Confidence is a funny thing, and peer groups are important too. Where I come from, neither has been in place, and apparently I’ve missed out. I’m kind of a big fish in my childhood neighborhood pond, but apparently there are much larger fish and whales in the oceans of opportunity.

    I’m late to the game, I wonder if I can make it in the ocean now that I see it? If I can’t, at least I plan a path for my kids to get there.

    Thanks for sharing your financial background Sam, while over the years I thought I had an idea where you are coming from, you are really way beyond where I supposed!

    Great work, and great financial game! Hats off to you sir!

    1. Am I really beyond where you supposed though Don? I’m just another guy trying to do the best he can to secure his financial future b/c I don’t believe anybody else will help me, least of all the gov’t.

      It’s good to be a big fish in a small pond! I like to keep things simple.

      1. Money Reasons

        I definitely hear what you are saying about the government! Kind of sad huh…

        Financially, I think you are much further than I am, but that’s what’s so great about pf blogging. We all come from different areas and have different ways. I learn a great deal this way! It’s been both fun and educational!

  7. “I don’t want to spend more because I want to retire early and I know this income is somewhat of an anomaly and therefore won’t last forever.”

    I can’t say I want to retire early at this point, but I do want to be able to retire or stop working whenever I effing feel like it. I’m not really motivated my material stuff. Just the ability to be free to do whatever I darn well please without having to answer to anyone, e.g., employers, customers, government, significant other, etc. While you’re making a good living, you might as well set aside as much money as reasonably comfortable. Things can change at any moment.

        1. Nice historical midtown cottages or suburban single levels, from $60 to $100
          per square foot. Compared to the California, dirt cheap. But it’s not the house
          itself, it’s the dirt underneath that’s valuable. So, housing is cheap, but state
          taxes are not, and the roads suck mightily.

  8. Darwin's Money

    That notion of saving half your income or more – now that’s commendable. How did you ever avoid the temptation to, at least to some degree, “live up to your means”. Most save say, 10-20%, but then live up the the 80% after-tax take home…

    1. After a certain amount of income, I think we stop spending and just save the rest. It could be $50,000 for some, or $250,000 for others. I’ve found my stead state, and it’s about spending just 20-30% of my after tax income.

      The only way I could spend more is to buy a fancy car and a bigger house, both of which I don’t need right now. There’s literally nothing else I want, or don’t spend money on as it’s all within my budget.

  9. Wow those are some great savings goals. Paying down more of your mortgage sounds like a good plan. I always feel good paying down debt. Taking on a rental property sounds like it could be quite a haul if it’s out of state though unless you will have a property manager to help out.

  10. Can you do a post or perhaps a series of posts on the various insurance coverages you have either personally or through work so we get a big picture idea and also understand the pros and cons of them.

    This is one of my fav. blogs btw

  11. Interesting cash flow strategies Sam. I’ll be honest, I had a hard time concentrating on the rest of the article once I learned that a fellow PF blogger had a weakness for retro basketball kicks. I’m all about the throwback jerseys and Air Force Ones, I hope one day to actually be able to indulge a little. Until then, I will just have to be content with the ones I get as gifts. Do you find it weird to be drawn to these items? I always wonder what it is about them that is so attractive to me seeing as how today’s shoes are obviously very superior.

    1. To me, it’s because of nostalgia that brings back fun memories as a kid. I loved the NBA, playing, and watching with my dad. I couldn’t afford anything then, so I just buy everything now. I gotta post somewhere about this ready to be punished!

  12. You’re going to take on more risk now? No offence, but that’s a typical suckers move for investing! All the hedge fund guys are getting out now while they can. Sell!

  13. Wow, saving 100% of your regularly salary is amazing! You’ll have to write about how you do that. Hopefully you have a pretty big bonus to provide for the year!

    Enjoy the Black Sea and take pictures and post em on your blog!

  14. Yes, I Am Cheap

    Alright Sam, I’m gonna pop your bubble. Those 55 year old collecting 99 weeks of unemployment might have made an average of $45K each year and depending on where he lived or if he had a family he might not have had much left over. I gotta play devil’s advocate for the little guy.

    I’m working on saving more of my pay but my tenant has wiped my out! I’m happy that I had a decent buffer so it won’t kill me but it’s cramping my savings.

    1. I definitely empathize with unfortunate situations, which is why I’m pumped the government has provided such a great security net for all of us. My only issue is, why does the government stop at 99 weeks, and only $1,400/month ($16,800) max a year? That might be OK for someone making $30-45,000 a year, but what about those who make more? I’m thinking we should employ my Shock & Awe Yeah unemployment benefits to 5 years, and increase the $16,800 to $50,000 a year to help. That way, we will never be afraid of losing our jobs, and we’ll take risks and do our best!

      Let’s say we only save $5,000 a year for 33 years, that’s still well over $400,000 in savings after a 4% average return a year. One could live on $400,000 for a while right?

      I’m glad you got a new tenant!

  15. I def agree someone your age should look to invest more in a business, in ideas, in anything that will help build your foundation of wealth. You don’t need the money now.

    Tax strategies is a good idea. It’s why they pay lawyers the big bucks because it’s so damn confusing!

  16. I think it is neat that you are hobnobbing with the big guys (hobnobbing – thats a word from my parent’s mouths – means hanging out with in case you didn’t know).

    Seriously, you can – and probably do – pick up attitudes, information and contacts that may accelerate your asset build and your life enjoyment when you associate with those with different lifestyles than yours. I’m just a bit jealous!

    1. I think I’m just hobnobbing with older folks. Older folks are on average wealthier by default… and that’s what my new tennis club has.. a lot of older folk!

      A lot of things do rub off, that’s why I encourage everyone to associate with smarter folks if they can. It’s also good to get some insights through blogs on how some people think.

  17. Man look at you making moves – I feel like we are traveling the same type of path but your’s has an extra 2 Zeroes at the end of the moves LOL

  18. Don’t you have a place in Tahoe? I thought I read it somewhere a while back. My financial independent friend moved there from southern CA for exactly that reason. Washington is quite nice too.
    My enthusiasm for rental properties is starting to wane a bit after encountering many crappy properties.

    You are doing great on all your financial goals.

    1. Yep, but there are two sides to lake Tahoe, California af Nevada! Doh.

      When you buy rental property, you have to make it worthwhile and go bigger IMO. Otherwise, it’s too much of a hassle.

  19. I’ve got to admit I’m not much of a risk taker either. I’m almost certain I would have been able to make more than I have at this point in my life. In the back of my mind however I’m still not able to let go of what I have and put it towards a high risk money maker. Currently I take advantage of what I call safe investing, company retirement, savings is in a money market account and own a home. My goal is to try and venture out of the box a bit this next year. Not with every dime I have but take a chunk that I might otherwise spend on a vacation or other desire and put that towards a higher yield.

  20. “Perhaps I don’t want to spend more because I want to retire early and I know this income is somewhat of an anomaly and therefore won’t last forever. That said, I firmly believe all of us here will die with too much money.”

    I’m hoping that the first sentence will be my attitude out of business school and that at some point I’ll be able to gracefully transition out of “hoarding” in a timely manner and avoid the latter.

    I’m also feeling that my goal of paying for business school in cash is getting close to being on autopilot. Ran the numbers a few days ago and with some reasonable assumptions I should be very close to making it. I’m trying to avoid having the experience be a check in the box as I move onto other things since there’s a lot I want to get out of it.

    1. One tip for you: You can deduct 100% of your tuition income if you go back and work in certain sectors. Check with an accountant, is this is one of the huge benefits for part-timers.

      Impressed you can pay that business school degree in cash! Shen do you graduate?

      1. I’ll be graduating Spring 2013. Figuring out the tax deduction is on my to do list for the end of the year. Hopefully I’ll have a tax refund to help my goal along.

    1. Only a one time fee! The kicker is, $100k was only the mid-tier package. It goes up to $300,000 for the Platinum level!

      If I had a family of 10, it might be worth it given their vacation properties are all 5,000sqft houses. But, I don’t!

  21. Re: “Look to buy rental property in Wyoming, Nevada, or Washington…..these three livable no income tax states”

    On 3 occasions I have visited Nevada during the summer. Categorizing it as “liveable” during the summer months indicates an entirely different definition of “living”

    A great place to visit the other 3 months but (even as a long time resident of a different no tax/hot weather state) I could not endure the oppressive heat.

  22. I will keep you in mind if I ever decide to start up a business. I have mulled looking to gather capital and put it into real estate creating a REIT in the Midwest (just a larger version of what I am doing now). The cap rates here in Indiana on SFH are in the 8-10% range. One of the guys at works keeps talking about being a real estate mogul but I don’t think he is interested in managing.

    I have also considered trying to somehow monetize my options trading strategy. I have made enough mistakes to have identified a pretty good system. I have been trading in my retirement accounts for more conservative “practice” but have managed to close out 24 of 25 trades with a gain. They range from 0.68% (YHOO) to 793% (IMCL which I bought a few months before being bought out). Mostly double digit returns are the norm (14 of them). My only loss was on VCLK (-35%).

    I currently have 6 open positions. One is profitable (SLW) and I am working on the rest as part of the system. I have one HUGE loser which I am working to “repair” for the experience. I know the mistake that I made so I want to see how to work my way out of it. I did manage to work out of EMC selling for less than my initial purchase price but still making 8.7% annualized over 3 years.

    Ideally, I could come up with the 6 figures that I need to work with this system in a taxable account but just can’t right now. It may take me about 5 years so I waver between asking some people I know to get started sooner or trying to tough it out on my own and wait to really start trading for myself. I am still debating and have set in on a side burner for now until I get through the remainder of the year since there are major changes occurring at work.

    Anyway, maybe I could share more in a non-public forum, but I am OK with where I am in life and things are looking better by the day.

    1. 8-10% cap rates are huge man! I’ve mulled over the same stuff before too…. but I just don’t have the time.

      Feel free to shoot an e-mail if you’d like. If you are getting 793% returns, you should hit multiple six figures by…. end of this week!

  23. Love the picture of the dog!!!!

    What does that picture say to me? perseverance!

    Which IMO is very important to sucessful investing/wealth building. Save a modest amount in good times and bad and years in the future you will have a nice sum of dollars.

    For me most everything is on autopilot. Automatic 401K, Roth IRA and stock purchases every paycheck/month. I also have virtually all of my expenses on autopay – mortgage, credit card bills, car and home insurance, telephone, internet.

    The only think not on autopay is that if I have extra dollars, I will pay extra towards my mortgage.


    1. It was the 3rd hour of trekking somewhere in the middle of China. The heat breached 96 degrees since 11am and I was DYING! I walked under a bridge to catch some shade, and there he was, tethered and longing.

      Persistence is key to practically everything. People give up way too soon and way too easily. There’s so much out there to be had, it’s so exciting!

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