Education Archives

Why I Wrote A New Personal Finance Book: Buy This, Not That

Updated: 09/12/2022 by Financial Samurai 94 Comments

After two of brainstorming, writing, rewriting, and editing during the pandemic, my book, Buy This, Not That: How To Spend Your Way To Wealth And Freedom is now available!

The book became an instant Wall Street Journal bestseller and can be purchased on Amazon, B&N, and in bookstores everywhere. Buy This, Not That also became a #1 bestseller on Amazon in Retirement Planning. Hooray!

I’ve spent a combined 30+ years working in finance, studying finance, and writing about finance. As a result, I firmly believe Buy This, Not That (BTNT) is one of the best personal finance books out there. It is the book I’ve always wanted to write to help readers everywhere live better lives on their terms.

During the course of my writing process, I also read over a dozen nonfiction books to understand what makes good books great. I then worked in my ideas with my editors at Portfolio Penguin Random House to make the book shine.

Money is too important to be left up to pontification. Therefore, everything I’ve written in the book is based on firsthand experience from a finance veteran. This way, I can share with you the good and the bad to help you make better decisions.

The secret to stop saying, “If I knew then what I know now,” is to simply learn from someone who has been through what you will go through.

I’ve also set up financial frameworks to help guide you on your path to financial freedom. Think of BTNT as your financial coach who gives you the confidence and the motivation to overcome life’s biggest dilemmas in a smart and practical manner.

Order a hardcover copy of Buy This, Not That by clicking one of the retailers below. My book is your unfair competitive advantage for getting ahead in this brutally competitive world!

Financial Independence Is Only Part Of The Journey

Once you get your money right, you can start better focusing on things that really matter to you. After all, money is only a means to an end. And for those of you who treat money as the end all be all, I hope my book will help change your philosophy.

Once you achieve a certain level of financial independence, where your passive investment income covers your living expenses, the world opens up.

The ultimate goal is to move money into the background so you can stop obsessing over it and start focusing on doing things that matter.

I show you how in the first half of my book. With actionable advice under a logical framework, I help you move forward with confidence.

Solving Dilemmas We May One Day Encounter

In the second half of my book, I tackle many of life’s dilemmas and how to approach them using my 70/30 decision-making framework.

If you believe there is a 70% probability or greater you will make the correct decision, go for it! At the same time, have the awareness of knowing you may get things wrong 30% of the time. Unless the outcome is death or financial ruin, you will be able to learn from your mistakes, recover, and make better choices over time.

My book encourages you to think in probabilities, not absolutes. If you think in absolutes, you will likely miss out on a lot of great opportunities because you’ll feel you need 100% certainty before moving forward. However, if you start thinking in probabilities, plenty of new possibilities opens up.

Here are some dilemmas the book explores:

Pay for private school or public school

Join a startup or work for an established company

Start a lifestyle business or go for the grand slam

Job hop or stay a loyal soldier

Live in an expensive coastal city or move to a low-cost area

Invest in real estate or stocks

When to rent or buy

When to invest in tax-advantaged versus taxable accounts

Angel invest or don’t

Buy a fixer or a fully remodeled home

Marry or cohabitate

Marry for love or marry for money

Have children early or late

Return to work or be a stay-at-home-parent

Combine your finances or keep separate accounts

Get a divorce or stay married

Seek fame to boost your wealth or stay low key

Support your adult children or let them learn to swim

And so many more topics.

Again, money is just one part of the equation. It’s how we use our money to make better choices that matters most. If any of these topics interest you, Buy This, Not That will help you minimize regret and maximize satisfaction.

Why I Wrote Buy This, Not That

I wasn’t planning on writing a traditionally published book. As a tired father of two young children who also publishes three times a week on Financial Samurai, I already had my hands full. However, when Noah, an editor at Portfolio Penguin approached me on December 2, 2019, about the idea, I was intrigued.

When the pandemic hit in March 2020, I thought why not! If I was going to be stuck at home anyway for who knew how long, I might as well make the most of a suboptimal situation. This is the Financial Samurai mindset!

Back in 2008, something similar happened. The global financial crisis was starting to deepen and I was losing a boatload of money. However, it was in the summer of 2008 that I finally decided to propose to my girlfriend of nine years. I knew that even if I lost all my money, I didn’t want to lose her.

Now, every time I think back to the global financial crisis, I immediately think about our small beach wedding, not the economic calamity during that time period. By writing Buy This, Not That during a pandemic, I’ll look back and feel good knowing I did something productive to help others.

Here are some more reasons why I wrote my latest book.

1) It Had To Be Written

Buy This, Not That: How To Spend Your Way To Wealth And Freedom Bestseller

One of the reasons why I started Financial Samurai in 2009 is because I noticed there weren’t any personal finance bloggers with finance backgrounds. Therefore, I thought it would be a good idea to fill this obvious hole. I thought about money differently and wanted to bring my expertise and perspectives to the world.

When I was approached by Portfolio Penguin Random House with the book idea, I noticed there also weren’t many nonfiction finance books that were written by people with finance backgrounds. Further, both my wife and I are practitioners of early retirement, not pontificators with steady paychecks. Therefore, I figured I might as well fill the hole again and share my perspectives!

After being able to escape corporate America at 34 and live the life I want for the past 10 years, I just had to write a book that could help other people potentially do something similar. Once you see how something is done, it’s much easier to believe a similar path is possible for you.

2) The Importance Of Financial Education

There’s a whole world of consumers out there who love to read books and not blogs. Therefore, it was only logical to write Buy This, Not That to try and reach them.

Creating maximum impact in an affordable way is important. I could create $2,000+ e-courses like some peers do. However, I felt packing in all the information in a book that costs $27 or less was a more accessible solution.

After 13 years of writing on Financial Samurai, I’ve also gathered a wealth of different perspectives from over 90 million visitors. These perspectives have helped me make better decisions and be a more empathetic person along the way. Buy This, Not That includes many blindspots I’ve had to potentially help others see things more clearly.

The world is in need of more financial education. A personal finance course should be mandatory in high school or college, but it is curiously not. I live in this bubble where I studied economics in college, got my MBA, worked in investment banking for 13 years, and have written over 2,500 personal finance articles since 2009.

The things that seem obvious to me or others with finance backgrounds don’t seem as obvious to those without financial backgrounds. Therefore, my goal is to bring more financial education to those who seek to grow their wealth in a risk-appropriate way. It’s our duty to share what we know.

3) Narrow The Growing Inequality Gap

Since the global financial crisis in 2008-2009, the rich have gotten extraordinarily rich compared to the middle class. Meanwhile, those in the top 0.1%, have blown past the top 1% as well. I want to bring their secrets and ways of investing and thinking to the public in order to help more people build wealth.

While writing Buy This, Not That I also had an epiphany as to why so many personal finance authors write mainly only about saving money, budgeting, and index funds. I kept wondering why not also write about more interesting and potentially lucrative topics? After all, you can only save so much. But income and investment returns are unlimited!

After over a year of writing and re-writing my book, I finally understood why. Without a finance background, writing about anything else beyond budgeting and saving is much more difficult. No wonder why so many personal finance books just scratch the surface of so many important topics. Hence, I’ve introduced helpful financial concepts, gone deep with multiple subject matters, while also making them easy to understand. There are two levels of rich. The highest level didn’t get there through just saving and investing in index funds.

My hope is with the knowledge you will gain from reading Buy This, Not That, you will build way more wealth in your lifetime than you thought possible. And if this happens, your standard of living will go up and the growing inequality gap will ultimately narrow.

Why I Wrote A New Personal Finance Book: Buy This, Not That - net worth levels by class

4) New Perspectives With More Representation

As an Asian person who lived in Asia for 13 years, I used to be part of the majority. Then when I came to Virginia for high school and college, I became part of a minority that made up only six percent of the U.S. population. The juxtaposition was eye-opening.

At times, it was hard to fit in. I got into fistfights and was suspended once. I often felt like I had to battle to be given an equal opportunity to participate. Although some of the experiences were harsh, they also gave me tremendous motivation to try harder.

By high school, I clearly realized the world isn’t fair and never will be. Therefore, instead of complaining, I accepted the way things were and focused on what I could control. I bring this fighter’s mindset to the book. It will give you the motivation to push on through no matter who you are or how difficult your struggles.

BTNT is your unfair competitive advantage to getting ahead!

We know people are biased towards people who look, think, and talk like them. It’s why podcast interviewees, award-winners, bestsellers, and families who attend elite schools tend to be quite homogenous.

Therefore, I thought it would be nice to change things up a little and provide new perspectives. Maybe there will be more love and understanding for Asian folks in America if they read a good book by an Asian person who helps them. Perhaps kids who seldom see anybody who look like them will be inspired to write their own book or do something out of the ordinary.

Including People Who Live In High Cost Areas

In addition, a large percentage of every country’s population lives in more expensive urban cities. High cost of living areas presents some unique challenges which I address in the book.

With how bifurcated America is, I’m hoping to create an understanding bridge between those who live on the expensive coasts and those who live inland. Ultimately, we all have the same goals of supporting our country and doing more of what we want.

I’m convinced most conflict in this world is due to a lack of understanding of other people and their personal situations. Let’s spend more time getting to know each other and less time judging people for their choices.

5) Steady Navigation Through Bad Times And Good Times

As someone who has worked in finance since 1999, I’ve gone through the euphoria and despair of the first Dotcom bubble. Then I went through the investment mania of 2007 and the devastation a few years later with a significant amount of capital.

After each collapse, I’ve learned how to strengthen my finances so that no matter what happens, I’ll most likely be OK. I want to share what I’ve learned to help more people survive downturns without too much harm. Reading Buy This, Not That will help armor your finances and provide security for your household. The book will also give you the courage to do more of what you want.

For so long, it’s only been good times. And you may have read only the perspectives of people who’ve only experienced good times since 2009. This can be very dangerous. Bad times will eventually come, which is when you’ll need financial guidance the most.

It is hard to understand your true risk tolerance if you don’t go through a prolonged bear market yourself. Although the March 2020 crash was violent, it was also quick to rebound. Now things are once again very uncertain, which is where BTNT readers will outperform.

Buy This, Not That will help you navigate through stormy waters so that no matter how wretched the economy, you will not drown but thrive. Having peace of mind during difficult times is priceless.

Below is a snap shot of BTNT making the Wall Street Journal bestseller list. It felt good to be the only new entrant and the only person with black hair to do so. Breaking the status quo!

Buy This Not That Wall Street Journal Bestseller — BTNT is a WSJ Bestseller

Thank You For Reading Buy This, Not That!

I’m thrilled for y’all to read Buy This, Not That: How To Spend Your Way To Wealth And Freedom. I actually violated my publisher’s recommendation of keeping the word count to 80,000 words. Instead, I wrote about 111,000 words. I wanted toadd as much value as possible given nonfiction books are all about the same price.

It is a big book full of vital information to help you enjoy a better life. There are so many important subjects that I believe you’ll actually be left wanting for a book two!

Buy This, Not That is meant to be read and discussed with friends and loved ones. You’ll have a great time debating my reasonings and making your own cases. I truly believe discussion and listening to the perspectives of others is the best way to learn and grow.

Order a hardcover copy of Buy This, Not That by clicking one of the retailers below.

Virtual Speaking

If you’re interested in doing an author chat, shoot me an e-mail at sales AT financialsamurai DOT com. BTNT is meant to be read with others and discussed. And who better to lead the conversation than the author of the book!

So far I’ve video talks with folks at Google, Yelp, William & Mary, Facebook, and several other organizations. They’ve all been a lot of fun.

Finally, if you’re thinking about becoming a professional writer, here are my thoughts about how to make it work. It’s not easy, but you will feel a tremendous amount of satisfaction after you’re done. Write because you love to write, not because you want to make money!

Thanks for picking up a hardcopy of Buy This, Not That. If you enjoy it, please leave a nice review on Amazon or wherever you purchased it. It’s the best gift an author could receive.

To Your Financial Freedom,

Sam

Why The Ideal Income Is The Student Loan Forgiveness Income Threshold

Published: 08/26/2022 by Financial Samurai 59 Comments

Have you ever wondered what the ideal income is to live a comfortable life before retirement and after retirement? Well, look no further than the student loan forgiveness income threshold of $125,000 per individual and $250,000 per married couple.

On August 24, 2022, President Biden unveiled a plan to cancel up to $10,000 tax-free in federal student loans for borrowers who individually earn less than $125,000. $125,000 is a generous income threshold given the median household income is about $75,000 in 2022.

For lower-income individuals who received Pell Grants, they will be eligible for up to $20,000 tax-free in student loan forgiveness. You can even get a refund for any payment (including auto-debit payments) you made during the payment pause, beginning March 13, 2020. Finally, President Biden will also extend a pause on federal student loan payments for what he called, “the final time” until December 31, 2022.

The plan could bring relief to over 43 million borrowers with an average of $30,000 debt outstanding. More details from the White House can be found here.

Whether you believe forgiving student loans for individuals making up to $125,000 is right or wrong, we must accept the government has the power to do what it wants. Society is all about giving and taking.

For background, I went to William & Mary and paid in-state tuition because that’s what we could comfortably afford. At the time, tuition was $2,800/year versus $22,000/year for a comparable private university.

Student Loan Forgiveness Income Threshold Is The Ideal Income For Most

The Ideal Income To Earn While Working

The ideal income where making more doesn’t provide more happiness has been hotly debated. But the government has revealed to us the answer. The $125,000 income threshold for individuals and $250,000 income thresholds for married couples reveals to us the upper boundary of who the government views as middle class.

The middle class is the best class because it is the protected class that gains the most favor from the government. The middle class makes enough to live a comfortable lifestyle without the need for subsidies. We’re talking about making enough to own a house, own a car, have two kids, and save for education and vacations.

At the same time, the middle class is always eligible for subsidies, such as student loan forgiveness, stimulus checks, and child tax credits. Why? Because politicians rely on the biggest demographic group in the country to stay in power.

Holding Onto Power

One main goal of a politician is to stay in power for as long as possible. Once you have power it’s hard to let go. Power is intoxicating and can set your friends and loved ones up for life. Power is also the reason why billionaires enjoy buying media companies.

This combination of having your cake and eating it too is one of the reasons why wealthier households like to claim they are also middle class. Learning how to convince people you are middle class when you’re rich is a skill worth learning.

Who doesn’t want to feel like they belong to a larger group the government always supports? Nobody wants to feel persecuted for earning or having too much. We all want to be middle class, whether we truly are or not.

The tricky situation every politician faces, however, is determining what income cutoff is eligible and ineligible for free money. Deciding this income threshold for a redistribution of tax dollars is carefully decided by a team of strategists, economists, and advisers. They didn’t just one day come up with $125,000 / $250,000 out of thin air!

Determining The Income Threshold Is Tricky

If the income threshold for free money is too high, then enough people will start grumbling that politicians are providing tax cuts and free money to the rich. Since most politicians enter the office rich and become much richer after leaving, they don’t want to make it too obvious their policies are also helping themselves and their friends.

If the income threshold for free money is too low, then politicians won’t be able to effectively buy enough support to remain in power. Let’s be honest. The vast majority of people would vote for someone if the candidate promised to give them a free $1,000, let alone a free $10,000 – $20,000. Observe what people do with money not what they say.

We’ve seen this income threshold debated in the past when President Obama wanted to raise taxes on anybody making over $200,00 and any household making over $250,000. In his administration’s eyes, folks who made more were considered rich. Eventually, there was a compromise.

Perhaps due to inflation and an increase in overall wealth, President Biden has raised the income threshold for higher income taxes to $400,000 per individual and $450,000 per household. If the student loan forgiveness plan goes through, then it sets a strong precedent for higher income taxes to come.

The Ideal Income To Earn In Retirement

Given the ideal income to earn while working is between $125,000 and $250,000, then the ideal income to earn in retirement is roughly the same. After all, most of us would love to live the same lifestyle or better once we no longer have to work.

However, the great thing about successfully retiring is that we no longer need to save for retirement. This is one of the biggest realizations many retirees have told me after decades of saving 20% – 50% of their incomes.

When you no longer need to save for retirement in retirement, you free up a lot of cash flow. Further, we should be able to spend 100% of our retirement income or more if we plan to decumulate and not die with too much.

Therefore, the ideal income to earn in retirement is closer to $100,000 per individual and $200,000 per couple. At these income levels, the government will unlikely increase your taxes or cut you out of subsidies.

Finally, retirement income usually comes from investments, pensions, and Social Security, which have more favorable tax rates. Below is a chart that shows you can earn up to $41,675 as an individual and pay no long-term capital gains tax.

With $100,000 in passive retirement income a year per person, you should be able to live like a king or queen for the rest of your life!

Capital Necessary To Generate The Ideal Retirement Income

If you agree the ideal retirement income is about $100,000 per person in America, then how much capital is necessary to generate such an income level? To find out, we simply divide $100,000 by various rates of return.

To generate $100,000 a year in passive retirement income, you would need the following invested capital:

$10 million at a 1% rate of return

$5 million at a 2% rate of return

$3.33 million at a 3% rate of return

$2.5 million at a 4% rate of return

$2 million at a 5% rate of return

$1.66 million at a 6% rate of return

$1.43 million at a 7% rate of return

A reasonable rate of return in retirement is somewhere between 2% and 5%. The last thing you want to do in retirement is take too much risk, lose a lot of money, and have to go back to work. Therefore, most people will likely need between $2 million to $5 million in invested capital to generate the ideal income in retirement.

I’ve written in the past how having a net worth of $10+ million is the ideal net worth in retirement. It’s what the majority of you voted on. However, based on government analysis of the student loan forgiveness income threshold, $10+ million is probably too much.

You Don’t Need The Ideal Net Worth Or Ideal Retirement Income

Now obviously, not everybody needs to earn $100,000 in annual retirement income to have a great life. We’re talking about the mass market ideal here.

If you’re happy spending $50,000 a year gross per person in retirement, then all you need is $1 million to $2.5 million in invested capital at a 2% to 5% annual rate of return. Plenty of retirees live happily on less if they have no debt and proper health insurance.

If you’re happy spending $30,000 a year gross per person in retirement, then you’ll only need $600,000 to $1.5 million in invested capital.

With the average Social Security payment of around $20,000 a year, you may only need $200,000 – $500,000 in invested capital to generate $10,000 a year in retirement income. Very doable after 40+ years of working.

The cost of attending college and federal support

People Retire In Different Ways

I profiled a woman who retired with a net worth of only $600,000 and relocated to Taiwan to teach English. She started a new life partly because she wanted to escape the money trauma endured in America. So far, she seems to be having a great time living on a lower budget.

On the other end of the retirement spectrum, I profiled a man who gave up a $300,000+ job at 41. He retired with a net worth of $4 million and has two young children. Instead of lowering his household budget, his strategy is to support his wife in her career endeavors.

If you’re able to earn some supplemental retirement income, like I hope all retirees do, then you’ll need even less capital. The supplemental income fills the gap between your retirement income and your desired living expenses.

But more importantly, doing some work that provides meaning and purpose keeps life interesting. Personally, I’m much happier when I have a purpose. Purpose is partially why I continue to publish three times a week on Financial samurai.

Use Government Policies As A Guide To Live A Better Life

One of the reasons why I felt more comfortable leaving work in 2012 was due to an upcoming change in tax rates. There was a new surtax of 3.8 percent on income from investments coming up in 2013. Further, the highest marginal income tax rate was going up to 39.6 percent from 35 percent.

In 2012, I was exhausted and bored with my job. Therefore, it didn’t sound appealing to continue working 60 hours a week and pay more taxes. So instead of complaining, I negotiated a severance and changed my life. As a result, I became happier even though I was making a lot less money.

Never complain for more than a moment. Do something about a suboptimal situation.

Don’t change your life due to upcoming government policies. That’s the tail wagging the dog. Instead, use government policies as a guide to make marginal improvements. Government policies were at most 10% of the reason why I wanted to leave finance.

Marginal Differences In Effort With Different Presidents

With my belief that Obama would remain in office until 2017, I assumed there would be a bigger government safety net. Therefore, it felt safer to take things easier when you don’t have to try as hard to take care of yourself. Worst case, I felt I wouldn’t starve to death with a bigger government.

When Trump became president on January 20, 2017, a part of me felt I needed to work harder. The five years since I left my day job were a nice respite. However, over the next four years, I assumed there would be a shrinkage of the government safety net along with lower taxes. With the birth of my son in April 2017, I decided to step on the gas.

Now with President Biden fulfilling his campaign promises, I feel it is rational to take things down a notch again. Higher tax rates are most likely coming to pay for more government subsidies. Hence, if you’re burned out and making over the ideal income of $125,000 per person, you should feel less guilty taking things easier as well.

Making over $125,000 per person in America won’t make you much happier. Neither will making more than $200,000 per person if you live in an expensive coastal city. In many circumstances, making much more than $125,000 will make you unhappier given the stress and long hours that are often required to make such an income.

The student loan forgiveness program comes at a time when millions of people are exhausted after two-and-a-half years of the pandemic. The next presidential election is on November 5, 2024. If you need a break, utilize the next two years to recharge. At least join the quiet quitting movement and gain back your sanity.

However, in the event the recession deepens, please act rationally to protect your finances. The government can only do so much. In the end, it’s best for you to depend on yourself to win. If free money comes your way, rationally take it and be thankful. If not, you never expected it in the first place.

Reader Questions And Action Items

Readers, what are your thoughts about the student loan forgiveness program? Do you think the income threshold of $125,000 per person to receive student loan forgiveness is appropriate? If not, what do you think is a more appropriate income threshold, if any? What do you think is the ideal income while working and in retirement?

If you enjoyed this discussion, pick up a hardcopy of my WSJ bestseller, Buy This, Not That. Not only will the book help you build more wealth, but it will also help you tackle some of life’s biggest dilemmas in a logical way.

For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009.

What Makes A Bestselling Nonfiction Book? Insights From A Major Publisher

Updated: 09/07/2022 by Financial Samurai 25 Comments

After 2.5 long years, Buy This, Not That: How To Spend Your Way To Freedom, is now available for purchase! Pick up a hardcopy on Amazon, Barnes & Noble, or your local bookstore (call ahead). The also became an instant Wall Street Journal bestseller!

To celebrate, I’d like to share what makes a great nonfiction finance book based on insights from my Portfolio Penguin Random House editor, Noah Schwartzberg! But first some background.

Back in 2012, I looked for a literary agent in order to get a book deal. I was three years into writing Financial Samurai, had just left my banking job of 11 years, and felt I had a unique message to share.

After putting together my pitch about teaching people how to negotiate a severance, I contacted over two dozen agents. I waited for a couple of weeks and heard the sound of blackness under a pale moon light.

Not one to be deterred by rejection, I decided to work together with my father and wife to write How To Engineer Your Layoff: Make A Small Fortune By Saying Goodbye. The book is now in its 5th edition and has helped thousands of people break free from jobs they dislike with money in their pockets.

The ebook has also generated over $500,000 in net profits since it first came out in 2012. Not bad if you are considering self-publishing a book, yeah?

For those of you who are told “no,” don’t listen. If you want to create something special, do it! Don’t let the gatekeepers hold you back. The internet is making more things possible for more people.

Read More…

The Most Illogical Reason To Go To Business School I’ve Ever Heard

Published: 04/05/2022 by Financial Samurai 39 Comments

There are good reasons to go to business school and then there are bad reasons to go to business school. Let me share one of the worst reasons I’ve ever heard. I’ve changed some names and figures for privacy reasons.

I caught up with a friend, Peter, who is a partner at a private equity firm the other day. He was beaming about how their youngest son got into U Penn after letting him take a gap year after high school.

“Getting into college these days is like playing roulette! You really never know where you’re going to get in!” he said. “My son got rejected from everywhere, except his top choice. Go figure!”

I congratulated him because getting into an Ivy League school nowadays seems like mission impossible. He then went on to say one of his associates was leaving to go to Harvard Business School.

I asked him why and Peter said the associate wants to explore venture capital or fintech after graduation. That sounded fine to me at first, but not after my friend explained some more.

Read More…

Why More Public Schools Will Eventually Rank Higher Than Private Schools

Updated: 07/09/2022 by Financial Samurai 47 Comments

Ever since the college admissions bribery scandal in 2019, I’ve been patiently waiting for society to start viewing public schools in a higher light. I postulated that some public schools will eventually be viewed as more prestigious than many private schools since it’s harder to bribe your way in. Getting into public universities is all about merit.

According to the FBI, the universities involved in the admission scandals between 2011 and 2018 were Georgetown, Stanford, UCLA, University of San Diego, USC, Wake Forest University, and Yale.

In other words, only one of the schools involved in Operation Varsity Blues was a public school, UCLA. University Of Texas El Paso men’s assistant basketball coach was also caught accepting a bribe. However, UTEP’s acceptance rate is literally 100%, so that school doesn’t count.

When already wealthy families are spending between $250,000 – $6 million on bribes, you’ve got to wonder how rigged the college admission system really is. The people caught are likely only the tip of the iceberg.

Meanwhile, extremely wealthy families are donating hundreds of millions through the front door. These funds aren’t legally considered bribes, but donations. However, we all know the quid pro quo assumption is that all of the children and grandchildren of those families will be admitted in the future.

Read More…

5 Money Lessons For College Students To Graduate Financially Ahead

Updated: 04/11/2022 by Samurai Sydney 18 Comments

As part of my sabbatical, I’ve convinced my wife to write more posts. Yes! My master plan is working. Here is Sydney discussing money lessons for college students. – Sam

Even though I haven’t been in school for over twenty years, I always get excited during back to school season. I think back to the days of Trapper Keepers (I hear they’re back by the way) and pencil boxes.

And, I still remember the giddiness I felt flipping through the class registration guide in college. It was like a puzzle figuring out how I could max out my credits each semester. But, I also like to reminisce about the money lessons I learned while I was a college student.

College wasn’t that fun for me in the grand scheme of things. But it was something I was determined to do. You see, neither of my parents nor any of my grandparents went to college.

My dad went to vocational school and my mom only went to a few secretarial training classes. This really limited their career options. As a result, they had money struggles their whole lives.

Read More…

Forfeit The Enrollment Deposit For A Better School? A Tricky Dilemma!

Updated: 08/05/2021 by Financial Samurai 45 Comments

Something funny happened on our long and intricate preschool admissions journey. A school we had applied to in 2017 reached out and said they have a spot for our son this fall. Now we have to decide whether to forego an enrollment deposit at another school or stay the course.

We jokingly refer to this school as the “Harvard Of Preschools.” Even one of our wealthiest friends, who regularly donates six figures a year to his children’s schools, advised us not to bother applying

“It’s impossible to get in. Save your time,” he told me years ago.

Not being one not to try, we applied anyway when our son was only three months old.

A year ago, we got word from the Harvard of Preschools that we had been waitlisted. 80 families had applied for just one non-sibling spot. Oh well. I should have listened to my friend.

The admissions director said we were at the top of the waitlist, but I suspected he was just being nice.

Then recently, the Head of School e-mailed us and said a spot opened up for us this September because a family was leaving. Guess my friend was wrong!

At some point in your child’s education journey, they too may also come off a waitlist from a “better school” after you have paid an enrollment deposit for another school. Therefore, I thought it might be useful to describe our thought process to help you decide.

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To Build A Great Business, Trust Is Paramount (A Visit To The Dentist)

Updated: 01/13/2022 by Financial Samurai 40 Comments

I cheated on my dentist and I will never do it again. This is a story about the importance of trust if you want to build a great business. It is also a story about not taking your business for granted if you’ve been at it for a while.

During regular times, I’d see the dentist every six months to get my teeth cleaned. Once a year, I’d get some x-rays and go from there. However, due to the pandemic, I skipped out on seeing the dentist for 18 months.

Getting breathed on with my mouth open in an indoor space for over an hour didn’t seem prudent. So I waited until I got fully vaccinated before going.

In the meantime, I flossed, brushed, and rinsed religiously. I even bought a metal plaque scraper and pick to help remove any buildup. In essence, I became my own dental hygienist.

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Using A 529 Plan For Generational Wealth Transfer Purposes

Updated: 07/09/2022 by Financial Samurai 87 Comments

If you’re a parent, you might consider starting a 529 plan for generational wealth transfer purposes in addition to paying for your child’s education. Even if you are not a parent yet, you should consider opening up a 529 plan. You can open the 529 plan in your name and change the beneficiary later.

There’s a decent chance the estate tax threshold will eventually come down from its current all-time high of $12.06 million per person. Further, the number of millionaires in the world is expected to continue growing.

Therefore, using a 529 plan to reduce the value of your estate by the time you pass may help you save on taxes. After all, who wants to pay a 40% death tax rate when you could help fund a loved one’s education in a tax-efficient manner?

To recap, 529 plans are funded with after-tax dollars just like a Roth IRA. The money gets to grow tax-free. All money taken out—including investment gains—is tax-free as long as it is spent on qualified education expenses such as tuition, room and board, books and supplies.

If the money is used for non-educational purposes, you must pay income taxes on the growth plus a 10% penalty. Your original capital contributions are not subject to income taxes or a 10% penalty.

Let me share our original intent for our son’s 529 plan. Then I’ll discuss how the example might evolve for tax-efficient wealth transfer purposes. I’m convinced every parent and parent-to-be should contribute to a 529 plan.

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What If You Go To Harvard And End Up A Nobody?

Updated: 08/15/2022 by Financial Samurai 227 Comments

Harvard University consistently is ranked one of the top universities in the world. But what if you go to Harvard University and still end up a nobody?

When I say nobody, I’m just talking about being an average person working an average job. Not someone still living in mom’s garage playing video games all day at age 40. OK, a little harsh, but you get the idea.

A happy life is all about managing expectations. If you matriculate at Harvard, whether for undergrad or graduate school, great things are expected of you. And if you don’t do great things, are you a disappointment? Many would say so. More importantly, you might even think so.

Education has been on my mind a lot lately after my son got into preschool. If he likes the school, it goes through the 8th grade. However, Is it worth spending tens of thousands a year in tuition for the next nine years? I’m not so sure!

In addition, I was a private high school tennis coach for three years observing how the kids went through the pressure of trying to get into a good university. I sometimes wondered whether their grind was all worth it.

Supposedly my high school is one of the best in the city, yet not every graduate goes to a university like Harvard. In fact, most attend regular schools any high schooler could have gotten into.

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