Financial Samurai

Slicing Through Money's Mysteries

Nature Will Dictate The Best Time For Parents To Go Back To Work

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Over the past two years, I’ve gotten to know another stay-at-home dad in the neighborhood. Bob has a boy who is also two years old. We try to meet up once a month to catch up and trade notes on how to be better fathers.

Our latest topic du jour is trying to figure out when the right time is for us to go back to work full-time. We’re tired and need a vacation from parenthood.

Go back to work too soon and you’ll miss many of your child’s precious milestones. Go back to work too late and you might never be able to get a similar paying job or a decent job again.

What is a conflicted parent supposed to do? It turns out, we may not have to make a decision at all if we can hang on.



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Warning! Beware Of Revealing Your Financial Independence Plans Too Soon

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When I started Financial Samurai in July 2009, I only told my Japanese colleague who sat next to me, nobody else. I didn’t want any colleagues who had influence over my career to know about my personal website. Financial Samurai was my sanctuary to write about what was on my mind during turbulent times.

When I negotiated a severance in February 2012, I almost blew myself up because I couldn’t contain my excitement. I told a couple colleagues what I had done and they immediately spread the word across the entire floor. What was meant to be a smooth and amiable three-month transition after 11 years at the firm turned out to be an awkward one.

Our HR head called me into her office and told me not to talk about my severance with anyone. I didn’t share details, only that I had negotiated one and that I was leaving. She said that a couple other employees had come up to her asking if they could negotiate a severance as well. If I continued to talk, my severance would be withdrawn.

Our office Managing Director, a guy who could never look me in the eye for longer than one second, also began to give me the cold shoulder. He was understandably annoyed that he might lose a couple of his troops due to what I had done. I’m sure he also didn’t appreciate me looking so happy-go-lucky at work each day given the office atmosphere was usually quite intense.

In the end, I got 100% of my severance money. But I left unceremoniously with no retirement party. It was bittersweet.



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The Best City In The World To Make Money: San Francisco

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If you want to get rich you need to go where the highest paying jobs are. The highest paying jobs come from the fastest growing, economically strongest companies.

Getting rich, like dating, is a numbers game. If you’re in a room with 80 millionaires and 20 non-millionaires, you’ve got a better chance at meeting a millionaire than if you were in a room where the ratio was reversed.

According to a Deutsche Bank study of over 50 cities in the world, San Francisco is the #1 city to make money. Since 2018, average salaries in San Francisco have risen by 31% and by 88% since 2014.

Damn, since I live in San Francisco, I really should have kept working instead of retiring in 2012. I could have been so rich! Alas, there’s always the next life to fix my current mistakes.

With company giants, such as Facebook, Google, Apple, Uber, and Salesforce, all paying healthy six-figure salaries on average, it should come to no surprise that San Francisco is #1.

In 2019, people in San Francisco can expect to be paid an average of $6,526 per month or $78,312 a year. Put two of these people together and you’ve got a healthy $156,624 a year in combined income. If you want to make over $20,000 a month, consider being a public transit janitor or a city government employee.

New York residents, on the other hand, make 29% less than San Francisco residents at only $4,612 a month. However, comparing New York to San Francisco is a little misleading given NYC has a 10X larger population. Comparing San Francisco to Manhattan is more apples-to-apples.

Let’s take a look at the rest of the cities on the top 10 highest paying cities list. See if you can guess which other cities are on the list before proceeding.



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A Severance Negotiation Success Story For Parents Looking To Leave Work

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The #1 thing I recommend for anybody who aspires to retire early is to negotiate a severance. If you are planning on quitting anyway, there is no downside.

Every time I hear of someone quitting their job, I’m happy for them. But at the same time, I also liken it to a baby panda dying in the woods. Leaving so much potential money on the table is a travesty because of ignorance, fear of confrontation, or not knowing your worth. I want to change this.

I’m pleased to announce the 3rd edition of How To Engineer Your Layoff is now live! The book first went into production in 2012 after I engineered my own layoff from the finance world at age 34. Negotiating a severance package was my #1 enabler for retiring early.

Over the past six months, my wife and I have been diligently editing, updating, and adding to the book after our little one goes to bed. We’ve taken in all the feedback readers have provided since the 2nd edition was released in 2017 and made the book even better.

Here’s a summary of what’s new:

1) The third edition expands the ebook from 150 to over 180 pages. We’ve added three new chapters bringing the ebook’s total to 20 chapters. In addition, we’ve added a useful worksheet and checklist to go through to help guide you step-by-step through the severance negotiation process.

2) Thanks to continuous feedback from readers, we’ve been able to add new real-life case studies in the third edition to demonstrate just how beneficial it can be to negotiate a severance.

3) The third edition also brings in recent data, revised facts and figures, new charts and graphics, and an expanded featured posts section to help you learn more. We’ve also added helpful information on employment news, unemployment resources, market trends, and more.

To help celebrate the launch of the third edition, one of our readers, Mark, wanted to share his story of how negotiating a severance changed his family’s life for the better. His is a case study for working parents who want to be stay at home parents.

I’ve also created a $10 discount code “saveten” for anybody interested.



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How To Take Advantage Of Rich People So You Can Get Rich Too

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I’ll never forget what my contractor told me in the midst of my home remodel.

“After I’m done building your bathroom, I’m heading over to Pacific Heights and charging 2X more for a similar-sized bathroom,” he said.

“How is that possible when sheetrock, pipes, tiles, and fixtures all cost about the same?” I asked.

“Easy. Rich people don’t care. They have so much money that as long as I provide them good service, I can charge them whatever I want.” he said somewhat smugly.

“Good to know! Well, thanks for building my bathroom for the price we agreed upon. It’s looking great,” I replied.

I was going to tell him that if he did a good job building my master bathroom that he could then work on remodeling my condo in Pacific Heights. But after his comment, I decided not to!



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When People Doubt You, Just Keep On Winning

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When People Doubt You, Just Keep On Winning: Tips For Overcoming Your Doubters

After 10 years of grinding away, one of my friends sold his business for $73 million at age 32. It was a bootstrapped business, so he ended up getting over 80% of the gross proceeds. Can you imagine? Wow.

When I asked him what he did with his newfound riches, he said he took a month off to go surfing with his buddies. After he got his fill, he then started a new software business.

When I asked him why he decided to get back into the grind so quickly, he responded, “I want to see if I can go do it again to prove to everyone and to myself that it wasn’t a fluke.”

During my financial journey, I’ve met so many people who have done extraordinarily well, yet continue to work all day and night because they know they were extremely lucky to have achieved their success. By replicating their success they also eradicate their guilt.

Their work ethic and self-awareness are both inspiring and concerning. But I empathize with my friend because I have the same desire to prove my doubters wrong all the time. It’s in my DNA.



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The Best Life Hack For Americans: Taking Advantage Of Canada

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The Best Life Hack For Americans: Taking Advantage Of Canada

I’m always looking for arbitrage opportunities to help readers make more money and live better lives.

My favorite arbitrage opportunity for the next couple of decades is investing in non-coastal city real estate due to lower valuations and higher net rental yields. Technology is accelerating the flow of capital towards attractive real estate opportunities, and I want to get in front of that wave.

Recently, I found another multi-decade opportunity by looking north towards our friends in Canada. Despite the frigid weather for four months a year, Canadians have a lot going for them.

Their GDP per capita is a respectable $45,000. Few people go through medical bankruptcies because healthcare is heavily subsidized. Meanwhile, the average annual tuition for Canadian universities was only $6,571 for the 2018/2019 academic year.

Let me share how one Canadian friend is taking advantage of America and how we, in turn, can take advantage of Canada.



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How Uber Sold The False Dream Of Riches And Enriched Itself Instead

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How Uber Sold The False Dream Of Financial Freedom And Enriched Itself
My first tip

The sun was just starting to peek over the mountains so I pulled over to stretch my legs. It was 6 am.

I had only been driving for about an hour, but I had never come to this part of the Bay Area before. Right over the Golden Gate Bridge and down towards Stinson Beach I had dropped off a passenger.

Perhaps it was his “ride of shame” after a late night of partying? Or maybe he was going to some secret yoga studio retreat before the stock market opened at 6:30 am.

As an Uber driver, what my passengers did at unusual hours was always left up to the imagination.



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Conquering FOPA: The Fear Of Other People’s Approval

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Conquering FOPA: Fear Of Other People's Approval

Everybody has some degree of FOPA, or Fear of Other People’s Approval. We’ve become so accustomed to fitting society’s mold that we’ve stopped thinking and acting for ourselves.

But I argue that to truly make a difference and to truly live your best life, you’ve got to figure out a way to eliminate most of your FOPA. Once you do, you’ll be more comfortable taking on new challenges that may change the status quo.



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