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The Four Different Ways To Spend Money By Milton Friedman

Published: 11/03/2020 | Updated: 01/24/2021 by Financial Samurai 54 Comments

Back in 2010, I first addressed this topic because I was frustrated by how much I was paying in taxes. I was regularly working ~70-hour weeks and faced an ever-higher marginal income tax rate. I was burning out and needed a change.

Who knew that two years later I would negotiate a severance and permanently leave the well-paying finance world behind.

In 2021, I’m much happier because I no longer have to work or work nearly as much, don’t make as much, and don’t pay as much in taxes.

With likely higher taxes and higher spending on the horizon with Joe Biden and Kamala Harris in power, it’s worth revisiting the four different ways to spend money by Nobel prize-winning economist, Milton Friedman.



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I’ve Seen The Future And It Looks So Bright

Published: 09/06/2020 | Updated: 02/16/2021 by Financial Samurai 72 Comments

I've Seen The Future And It Looks So Bright
Copenhagen Sunrise

Part of creating great wealth and happiness is anticipating the future, understanding the future, betting on the future, and adapting to the future. Well I’ve seen the future and it looks so bright.

With President Joe Biden in power until 2024 at least, the government will be getting bigger. Taxes will be going up and there will be a larger social safety net. Thanks to trillions of dollars of stimulus and an accommodative Fed, the best time to retire may be under a Democratic President! Why keep grinding so hard if your taxes are going to go up? Not me. No sir.

The Future Of America Looks Like Europe

America will become more like Europe. And that’s not a bad thing given the top 5 happiest countries in the world all hail from Europe.

We just need to be careful not to be Europe in its existing form where too much debt torpedoes our entire economic livelihood. But even if we go overboard, there will always be the Federal Reserves of our greatest nations to help us out. As the world police, they owe us!

Given America is becoming more like Europe, I decided to go to Europe and see for myself what our future might be like. You thought I was just going on a 2.5 week vacation to inject $10,000 into the Eurozone to help save the world didn’t you?

Au contraire mon frere. My main purpose was to conduct some front lines investigative reporting to provide readers with unique, real-time insight into how to live and prosper over the next four years!

The funny thing about seeing the future is that I originally wrote this post in 2012 and talked about President Obama. Now that we’re in 2021, it seems like all my predictions hav come true. And, we’ve gotten rich as a result!



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A Self-Publishing Book Scam That Took Down A Greedy Politician

Published: 08/05/2020 by Financial Samurai 8 Comments

Many of us are now looking for viable ways to make money from home. One way is by self-publishing a book. During my research I came across a fascinating self-publishing book scam every crooked politician would be proud of.

I’m assuming that the more dire the economy gets the more scams there will be. The same thing goes with the more free stimulus money that gets pumped into the economy. When desperation increases, it’s just human nature to do shady things.

However, right before the pandemic began, there was this fascinating self-publishing book scam I came across. On February 27, 2020, ex-Baltimore Mayor Pugh was sentenced to three years in federal prison and three years of probation for a fraud scheme involving a children’s book series.

Trouble for Pugh began when The Baltimore Sun reported the University of Maryland Medical System bought 100,000 copies of Pugh’s book, Healthy Holly for $500,000.

100,000 is quite a lot of copies for a children’s book. The University of Maryland Medical System would need to have 1,000,000 young students to potentially justify a 100,000 buy.

If I sold 100,000 copies of How to Engineer Your Layoff in one tranche, I’d use some of the $9.7 million in gross profits to charter a Gulfstream 700 to Hawaii to see my family. We’d rent a beachfront mansion and live the good life until an effective vaccine ever becomes available.

OK, enough fantasizing for now. Let’s go back to the self-publishing book scam.



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Survival Of The Richest: Why Some Support Indefinite Lockdowns

Published: 05/18/2020 | Updated: 01/14/2021 by Financial Samurai 165 Comments

One of the main reasons why I’ve turned more cautious on stocks is due to a growing number of extended lockdowns around the country.

However, investing is all about beating expectations. I had been secretly hoping most of the country would reopen by June 15, after roughly three months of staying at home. Unfortunately, in 2021, there are still country-wide shelter-in-place orders!

The economic destruction so far has been immense. Keeping the economy closed for much longer than three months feels like an extreme overreach by our politicians.

We’ve slowly gone from locking down in order to flatten the curve to locking down indefinitely until there is a vaccine for COVID-19. What happened to locking down until there is enough hospital bed and ventilator capacity? The healthcare system is no longer overwhelmed. Tens of millions of lives are being ruined.

If Congress successfully passes another massive stimulus package with enhanced unemployment benefits extending through the end of the year, we know that lockdowns around the country will be extended. Be mentally prepared for what’s to come.

In an effort to provide different perspectives, I reached out to folks who support indefinite lockdowns to fight the coronavirus. Their stories will also help explain why the stock market has held up so well, in spite of so much economic disaster we hear in the news on a daily basis.

If you’ve been on the fence to support keeping the economy shut for longer than three months, perhaps these stories will persuade you to help minimize the risk to our essential workers. Or, maybe these stories will have an opposite effect and piss you off. Perhaps we’ll find a middle ground.



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Lessons From The Rich Who Took Advantage Of Free Government Money

Published: 04/22/2020 | Updated: 01/17/2021 by Financial Samurai 63 Comments

If you want to get rich, you might as well learn from the rich. Here are lessons from the rich who took advantage of free government money. In 2020, there was over $3 trillion in government stimulus money. In 2021, there will be at least another $1.9 trillion in stimulus “rescue money.”

Thanks to the additional $600/week in enhanced unemployment benefits, there are now some people who are making more in unemployment benefits than they did while they were working. Although the enhanced benefits are only temporary, this is still great news! Free government money is hard to turn down.

The never-ending pressure in America to hustle has taken its toll. Our bodies are breaking down, mental illnesses are ubiquitous, and our children are being neglected all by the desire to make money.

As someone who stepped off the treadmill in 2012, although I’m sad millions have lost their jobs, I’m also excited that millions will get to experience what it’s like to finally be able to stand still in adulthood. May we all experience a period of meditative calmness until the worst of the coronavirus is behind us.

With trillions of dollars of government assistance going to individuals and companies, there will inevitably be some who will take advantage of the system. So long as they are doing so legally, like millionaires receiving health care subsidies or millionaires receiving stimulus checks, people don’t seem to mind. There’s so much money to go around.

But when mega-millionaires and fake small businesses owned by very wealthy individuals take advantage of government assistance despite knowing the money was not really meant for them, that’s where I see many seem to draw the line. Let’s have a look at what’s going on.



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How Millionaires Will Spend Their Coronavirus Stimulus Checks

Published: 04/14/2020 | Updated: 01/13/2021 by Financial Samurai 138 Comments

If you want another reason why having a high net worth is better than having a high income, all you’ve got to do is look at who gets stimulus checks from the new CARES Act. That’s right. There are millionaires getting coronavirus stimulus checks.

If your latest tax return shows an adjusted gross income of under $75,000 for single filers or $150,000 for joint filers, you get a $1,200 or $2,400 stimulus check. With each child, you get an additional $500. Once you make over $98,000 as an individual without children, and $198,000 as a couple without children, you no longer get any benefits.

To make between $75,000 – $150,000 a year in investment income at a 4% rate of return requires having a portfolio of $1,875,000 – $3,750,000. At a 3% rate of return or withdrawal rate requires having a portfolio of $2,500,000 – $5,000,000. Therefore, plenty of millionaires who are retired or semi-retired will be eligible for stimulus checks.

Yes, many of these people are the same millionaires who are also getting healthcare subsidies under the Affordable Care Act. Even though the ACA is supposed to help make healthcare affordable to the middle class and poorest of Americans, I guess you can’t blame these millionaires for legitimately taking advantage of the system.

Based on all these benefits offered by the government, if you want to be a millionaire who lives the best lifestyle while also getting continuous maximum government benefits, then strive to have a net worth between $2,000,000 – $5,000,000.

Out of curiosity, I asked several millionaire stimulus check receivers about what they plan to do once the free money arrives. Here are their profiles and what they had to say.



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Maximum Unemployment For Maximum Stock Market Returns

Published: 04/10/2020 | Updated: 01/23/2021 by Financial Samurai 43 Comments

Are you a little befuddled that with every record-breaking unemployment claim, the S&P 500 surges higher? After 6.6 million jobless claims on April 9, 2020 and even more the first week of May, the total number of jobless claims in 2020 stands at roughly 30 million or almost 20 percent of the working population.

Even in 2021, unemployment levels are highly elevated given the pandemic is not under control. It will likely take until 2022 until we reach herd immunity.

With a once working American population of ~158 million, I’m now wondering how many Americans will have to file for unemployment before stocks stop rallying.

Is the inflection point at 50 million unemployed? Or how about 100 million unemployed? Whatever the case may be, the stock market continues to perform well into the unemployment crisis, the lockdowns, and the global pandemic.

Record-high unemployment claims

Nobody knows for sure, but what we do know is that stocks rally after dismal unemployment figures because investors expect the Fed and the Government will provide even more monetary and fiscal stimulus. The worse the numbers, up to a certain point, the more monetary and fiscal stimulus.

Given I’ve got plenty of extra time to think and write during the lockdown, I thought it might be interesting to see what life would be like under maximum unemployment of 70%. 30% of the American working population still needs to work in order to run the government, provide food, shelter, clothing, energy, and technology. So let’s just agree that 70% or 110 million people is the maximum unemployment level.

Given we already have 17 million registered for unemployment, at a rate of 6 million unemployment claims a week on average, we will get to 110 million unemployed in 16 weeks, or by July 30, 2020.

Similar to Governor Gavin Newsom’s bold proclamation on March 18, 2020, that 25.5 million Californians will get coronavirus by May 14, 2020, I will make the assumption that by July 30, 2020, 110 million Americans will find themselves unemployed if lockdowns extend until then. This is a possibility since the decision of how long we should shutdown is being made entirely by extremely wealthy people who are getting paid either way.

For those wondering, as of April 9, roughly 19,131 Californians or 0.07% of the Governor’s estimate have gotten the coronavirus. So with only 25.49 million more people to go, I guess presidential hopeful Gavin still could be right just like how I still have a shot at making the NBA.



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Paycheck Protection Program: The Best Economic Rescue Package Ever

Published: 04/07/2020 | Updated: 01/16/2021 by Financial Samurai 84 Comments

Every time there is a government rescue package, I’m left scratching my head wondering where all the money really goes. During the 2008 – 2009 financial crisis, Congress approved a $787 billion economic stimulus package that basically went to three things:

  1. $288 billion in tax cuts
  2. $224 billion in unemployment benefits
  3. $275 billion for public works

Getting up to 99-weeks of unemployment was pretty huge for those who lost their jobs. This was the time when the term “funemployment” emerged since so many Americans lost hope in finding work and decided to purposefully take an extended break while collecting a paycheck during this difficult time.

But the money that went to tax cuts and public works seemed like it just disappeared into thin air. When the federal government announced years later that the bailout money for many of the largest financial institutions had provided huge returns, I’m not sure any one of us saw a penny. At least the economy recovered.

With the Paycheck Protection Program (PPP) part of the $2 trillion CARES Act, however, I truly believe this will be one of the most impactful rescue packages the government has ever implemented. The other one was FDR’s New Deal between 1933 and 1939.

The PPP promises to lend out and forgive $349 billion $659 billion (due to another round that passed on April 24) to small businesses with under 500 employees if these small businesses keep their payroll.

If you’re not a small business owner, you might be thinking who cares about small businesses. However, I assure you that providing direct relief to small business owners is paramount for our economy.

According to the Small Business Association, over 99 percent of America’s ~30 million firms are small businesses that employ roughly 59 million Americans or 47.5% of the employees. The vast majority (88 percent) of employer firms have fewer than 20 employees, and nearly 40 percent of all enterprises have under $100k in revenue.

In other words, small businesses are our country’s heart and soul! Companies like Apple, Coke, and Clorox get all the headlines, but it is the small business we must do our best to protect.



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Follow The Money: A Look At The Best Paying Government Jobs

Published: 03/25/2020 | Updated: 03/05/2021 by Financial Samurai 86 Comments

This article looks at the best paying government jobs. Government jobs may not pay as well as private sector jobs, but the benefits and pension are very attractive.

In fact, due to a collapse in interest rates in 2020, the value of a pension has gone way up! It takes a lot more capital to generate the same amount of risk-adjusted income. Therefore, government jobs are even more valuable than ever before due to those pensions.

Before I get into the best paying jobs, I’d like to share a couple ridiculous articles about the government that will make you appreciate government jobs more.



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Should Capitalists Really Be Afraid Of A Bernie Sanders Presidency?

Published: 03/02/2020 | Updated: 05/05/2020 by Financial Samurai 105 Comments

* On April 8, 2020, Bernie Sanders dropped out of the presidential race, paving way for Joe Biden to be the Democratic presidential candidate. Bernie’s views were too extreme, even though proposals such as UBI and healthcare for all is needed now more than ever during the pandemic.

Sooner or later investors will stop freaking out about the coronavirus. We will become inured to the word and to the daily death toll numbers just like how we’ve become inured whenever we hear about something tragic has happened on the news.

In the long run, I’m hopeful that a lot of positives will come out of this coronavirus-induced market panic. I’m hopeful that as early as this summer, we’ll be able to look back on this time period and wish we had bought more equities.

Unfortunately, for a capitalist, there is no time to rest. As capitalists, we must always be aware of the next variable that may benefit or hurt our wealth creation goals and adjust accordingly. Thus, after the panic surrounding the coronavirus starts to fade, I’m certain investors will turn their focus on the Presidential race.

Democratic Socialist, Bernie Sanders has a decent chance of becoming the Democratic nominee for the President of the United States. It’s basically a two-man race between Bernie and Joe. As Bernie’s popularity grows, given his anti-capitalistic policies, so will volatility in the stock market.



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