Slicing Through Money's Mysteries
One of the main reasons why I read lots of books is to learn from people who’ve been there before. And after reading The Price You Pay For College, one of my biggest blind spots I realized is that I don’t have to save so much for college anymore!
If you are a parent who’s been fretting about the growing cost of college, this post may provide you some comfort. It certainly has for me.
I finally understand why I haven’t been able to shake the niggling stress I’ve been feeling lately. Despite writing less, doing fewer business deals, and exercising more, I still feel this gnawing pressure because I’m responsible for investing my immediate family’s money.
When you invest family money, family money always feels more important compared to simply investing your own money. If you make a wrong investment decision with your own money, you may feel bad. However, you’ll either work harder to recoup your losses or just internalize the pain and move on.
But if you mess up investing your partner’s money, your children’s money, or your parents’ money, then you feel like a big donkey! Not only will you be disappointed in yourself, but more importantly, you will feel like you have let your family down.
That feeling of shame is why I don’t want to manage anybody’s money outside of my own. It’s also why I don’t want to give readers specific investment advice. I’m just sharing what I’m doing with my money. It’s up to you to decide what you want to do with yours.
I have a love-hate relationship with owning real estate because something always comes up. The more physical rental properties you own, the more problems you will have as a landlord.
In June 2022, I decided to rent out a fully remodeled single-family home I had purchased in 2019 to a second family. We had originally planned to live in the home once it was finished.
However, I severely miscalculated how long it would take to remodel the entire home. Instead of taking one year, it ultimately took two and a half years to complete partially thanks to the pandemic. So when a close by fully renovated home was for sale in mid-2020, we decided to pounce on it.
For our old home, we first got a family to rent the top two floors while the ground floor was remodeled. When the remodel was complete, a new family of three moved in at a higher rent.
So far, the tenants are solid and pay through electronic autopay each month. With only three of them and no pets, the wear and tear on the property are less than the previous family of four with a dog.
A 529 plan is one of the best generational wealth transfer vehicles. Instead of just giving our kids or grandchildren money, it’s way better to give them the gift of education. Thanks to the SECURE Act 2.0, we will be able to roll over leftover 529 funds to a Roth IRA without taxes or penalties.
As a parent, it was rational to feel hesitant about funding a 529 plan or contributing too much. With restrictions in place on how the plan’s money could be spent, parents rationally hedged the way they saved for a college education.
In fact, one of the main questions that has come out of my 529 savings guide by age post is whether to contribute to a Roth IRA or a 529 plan to pay for college. Contributing to both plans, if you are eligible, is a smart move.
In the past, the only real option for 529 funds that were not used for some kind of secondary education program was to roll the money over to another beneficiary, either for school expenses or to repay student loans.
Thanks to the SECURE Act 2.0, the 529 plan becomes more valuable due to the Roth IRA conversion option. Here are the details.
Want to get into an elite university? Develop a better personality so you can receive a higher personality score during the admissions process.
In the Supreme Court case regarding using race-conscious admissions (affirmative action) at Harvard University and UNC, we learn Harvard assigns a personality score to every applicant.
By assigning a lower personality score to Asian applicants, Harvard attempts to justify its rejection of some Asian applicants, despite their higher overall grades and test scores on average. This is one way universities use to better shape what they believe the racial mix of each incoming class should be.
Below is a chart that shows the percentage of undergraduate enrollment of Asians has been relatively steady at Ivy League schools since 1990 but increased at Caltech. 1997 was the last year before the affirmative action ban in California took effect.
For over 20 years, I’ve been a tennis club member. Player levels range from beginner to ex-professionals. Everybody gets along and rallies around a sport they enjoy, no matter their level of wealth.
But I just realized something odd. And the realization wouldn’t have come had I not become a father. After three years of mingling with preschool and kindergarten parents, I’ve been wondering where the heck are all the adult athletes?
Maybe I’ve lived in a sports bubble for too long. Because the vast majority of my friends play sports. Tennis and softball are what we do for fun. It’s so much better than going to the bar and drinking all night!
I was also taught the importance of learning tennis or golf because they are lifetime sports commonly played in business settings. If I didn’t know how to play either, I might be left out from career and client events.
Since 2012, I have tried hard to stop playing the status game. After all, leaving my job in banking meant losing status at age 34 when folks are usually coming into their own.
After my career was over, I turned down multiple TV show appearances, podcast interviews, and speaking gigs. To be able to just do my own thing felt incredibly freeing.
I wrote on Financial Samurai because I just wanted to write, not to gain fame. This is one of the reasons why I don’t have an Instagram account or post many pictures.
Sure, due to my lack of status and publicity, few people credit me with kickstarting the modern-day FIRE movement in 2009. Nor have I ever won any awards. But that’s OK. As a minority, being ignored is something I’m used to. I’ve got my archive of posts and that’s what matters.
Although it was jolting at first to be a nobody after 13 years of being a somebody, things got easier. Without status, I felt lighter. Without the desire for status, I could also do things for the pleasure of it, not for the accolades.
The joy of being a nobody became a way of life and I continued carefree until about 2019. Then something happened that made me realize I had better get some status back for the well-being of my family.
This post is for people who:
One of the main reasons why I wrote Buy This, Not That was to help readers feel less regret by making wiser choices. Regret is one of the worst feelings, especially if it is a type of regret that could have been prevented through knowledge.
The easiest way to stop saying, “If I knew then what I know now, life would be better,” is to simply learn from someone who has experienced what you might experience. But it can’t be learning from just any experienced person. It has to be from someone who is willing to share both the good and the bad.
It feels like most of us tend to conduct revisionist history, where we make bad things seem less bad to make ourselves feel better. However, if we mask the pain, we rob those we want to help with the truth. And if you don’t know the truth, you may end up making suboptimal decisions, which can lead to more regret!
Hence, as soon as you find me writing how everything is awesome, please slap my head to stay balanced. As a perennial optimist, I have a tendency to always look at the positives.
Here in the San Francisco tech startup scene, we have a term called “the trough of sorrow.” The trough of sorrow refers to the sadness that comes after a setback or a big win.
After a setback, you’re tasked with finding product-market fit to survive given your company has a limited runway of cash. You may feel a combination of dread and emptiness. Instead of getting back up for the tenth time, it’s tempting to just accept defeat.
On the other hand, after experiencing the joy of a big win, there is often a question of what’s next? Sorrow can form because everything that comes next may never be as good. You may feel a combination of emptiness and disappointment.
What I’ve discovered is there is also a trough of sorrow that relates to one’s personal endeavors. Instead of experiencing incremental upticks in happiness, we go through these peaks and valleys due to our insatiable desire for more. Further, emotion is difficult to regulate.
The more effort you put into something, the more you set yourself up for disappointment. Therefore, to avoid the trough of sorrow, it may be wise to manage not only your expectations, but your commitment.
With everybody away on holiday, let me use this post to reflect on a funk I felt a couple of weeks ago.
If you’re in the market for a vacation property you will likely have to decide between purchasing a single-family home or a condo. However, what if you have enough money to buy a single-family mansion for $10+ million versus a condo at a luxury resort for $500,000+? I used to think a single-family mansion for sure, but now I’m not so sure.
For the record, I think buying a vacation property is a suboptimal financial decision. Most people won’t use the property enough to justify its purchase price and ongoing costs. While your vacation property could help you generate additional passive income, however, it does require extra work and time.
Do you really want to give yourself more work for a property that’s supposed to help you relax? I don’t.
If you insist on buying a vacation property, buy one for lifestyle reasons first and economic opportunity a distant second. This way, you’ll buy more responsibly. You’ll also have more reasonable expectations about your vacation property’s place as part of your net worth.
