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Sometimes Saving Money Is About Principle

Published: 03/05/2010 | Updated: 08/28/2020 by Financial Samurai 49 Comments

Saving money is about principle sometimes. Let me explain.

For the past two years I’ve taken the bus to work after driving for 7 years prior.  The company re moved our free parking benefits and I wasn’t about to pay $350/month to park in a garage just 5 miles away.

I have a love hate relationship with the bus.  When it’s raining, and I have to stand outside shivering, I hate it.  When the bus skips my stop every so often, I hate it.  When the bus driver slams on the brakes a couple feet away from the stop light and we all go flying, I hate it.  When the bus is packed like sardines, but there are some very attractive riders I need to squeeze next to, well, I guess it’s OK.

My VIP Pass aka monthly bus pass costs $60, while taking a cab to and from work costs $30.  Hence, the cost breakdown is simply $60 for a bus, $350 for parking, and $600 for a cab every month.  Out of principle, I wasn’t going to spend 5-10X more on transportation if I could just ride the bus.

WHAT A DUMMY



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The People Asked To Get ROCKED & A Boulder Drops On Their Heads

Published: 01/29/2010 | Updated: 02/19/2020 by Financial Samurai 30 Comments

Feel The Pain And Like It

The Rock Of Gibraltar, Only Backwards

Anybody want to guess what happened on Wed, January 19, 2010 right before the market fell off a cliff?  If you guessed Obama delivered a politically charged speech to rally for his own support and crucify others, you’re right!  On Wed, January 19th, Obama went on national TV to tell the world, “we want our money back” and “if they want a fight, a fight is what they’ll get.” The “they” of course, are “greedy rich” people.  The markets immediately started to sell-off and the S&P 500 is now down about 6% since.

Good old fashion class warfare is never good for the economy, neither is continuous political jibber jabber.  Do you ever remember a president being on TV as much as our current president?  The risk of overexposure is very real, and the record low approval rating for any president at this point in his term shows this.  The State of The Union address is supposed to be an opportunity to unify the people.  Besides the typical feel-good rhetoric, what I heard was a continued attack on others, protecting personal interest groups, and maintaining giant silos.

YOU SO CRAFTY NEBRASKA

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Someone Always Farts In A Crowd: Moral Hazard Is Normal

Published: 01/26/2010 | Updated: 08/28/2020 by Financial Samurai 47 Comments

Moral hazard is the way of life. We don’t like the government, but just look at the government spend trillions in stimulus to bail out America during the 2020 coronavirus pandemic?

Everybody was quietly watching the puppet show at the Asian Art Museum when I hear a “boooooooP!” What was that, I think to myself as a stench waffles in the air.  Someone must have farted!  I look around to see if I can identify the culprit.  Then I notice others looking around, with some staring right at me!

“Not me!” I silently voice with my lips as I point towards a kid rolling around on the floor in front of the stage.  “Probably the kid!” I mime again with each crease of my lips extending more exaggerated with every word.

Once the show was over I tap the kid on the shoulder and say, “Hey buddy, you got me in a lot of trouble with the adults.  The bathroom is over there!”

“Sorry sir, I was just farting.  Everybody likes to fart right?” replies the kid with a big, teethy smile.

“You’re right buddy, listen to this one!” KABOOM!  I let one rip right next to him.  We laugh and go on our separate ways.

THE MORAL HAZARD OF AMERICA

Someone always farts in a crowd, both men and women.  It’s sometimes hard to hold it in, and frankly even if you unleash the beast, nobody will know it’s you if you keep an oblivious face.  “Whoever smelt it delt it” was a favorite elementary school phrase because we’re able to lay blame on some poor classmate.  Furthermore, any weak retort never seemed to work!

HOUSING

When you know  the government will bail you out of your home, why not try and borrow as much money as possible and live the life you couldn’t otherwise? 

If rough times occur, just hand back over the keys and let the bank deal with the fallen asset. Meanwhile, you’ve enjoyed a lovely 5 years living large on someone else’s dime!

Please everyone, follow the 30/30/3 rule for home buying so we never get into another financial mess.

Here is also my House Expense Guideline For Financial Freedom post for those who want to retire earlier.

BANKS

The financial bailout of late has recently been punctuated by an even more ominous sign of moral hazard.  The government quietly allowed Citigroup to save billions of dollars in future taxes by changing the rules!

The Washington Post’s article is somewhat confusing, but all you need to know is that Citigroup received another multi-billion bailout because the government is a shareholder and wants to claim investment success from its initial $45 billion investment.

Thankfully, the mortgage industry is now very tight in 2020+. The banks have learned their lesson from the 2008-2009 crisis!

CARS

A friend of mine is a genius at driving cars he can’t afford.  He leases them.  The other day, he picked up a new Audi A5 with no money down, and a payment of $968/month.  The duration of the lease is 60 months, and he figures after the second year, he’ll just tell the dealer he’s got no more money and hands over the keys. 

What is the dealer going to do, repo his car?  Fine!  He has no equity in the car in the first place.  What about his credit?  Who cares, as the dealer gave him the lease with his mediocre credit rating in the first place.

Related: The 1/10th Rule For Car Buying Everyone Should Follow

GROUP PROJECTS

Facilitator, collaborator, slacker.  There’s always a slacker in a group project.  I remember being so tired after a long week that I fell asleep during a Friday night conference call.  We were strategizing about our final presentation!  Each member had their role.  I volunteered to hold the clip board and dozed off.

Do I feel bad for not carrying my weight?  A little bit, but not enough to stay awake.  In my heart, I knew that my team of go-getters would carry me towards a good grade because they felt it important to get straight A’s.  Getting a “B” was good enough for me, as there is a non grade disclosure policy.

HEALTH CARE

The National Health Statistics say that 34% of Americans are obese and 66% of all Americans are at least overweight. We Americans know there is universal health care reform coming, and “the rich” will be paying a disproportionate amount for this catch-all system.  If there are magical pills to pop and cheap doctors visits to extend the life of our hearts, why not keep eating to our heart’s content?

Can you imagine if America had NO health care system?  We’d probably be the fittest people on earth because everybody would work out like crazy knowing that there’s nothing to save them.

Related: How To Get HealthCare Subsidies As A Millionaire

TEACHERS 

Congratulations to the 300,000 teachers out there who are going to receive a $26 billion bailout by the Obama administration!  It is wonderful that Congressional Democrats came up with an emergency bill this Wed, August 11th to help teachers keep their jobs. 

Although some may argue that our system doesn’t reward performance, and needs some serious overhauling.  Teachers are the lifeblood of society!  We need more teachers, even if they aren’t very good, than less.

Furthermore, many of the teachers, firemen, and policemen were the loudest opponents of the financial services and automotive industry bailouts.  With them receiving bailout money themselves, maybe they’ll be more accepting of others who received and who will receive bailout money.

Now that I review this post in 2020, I think teachers need to get paid more and support more by the government. Asking them to teach in person during a coronavirus pandemic is not fair. There needs to be hazard pay!

Moral Hazard Is Everyone

Confucius once said, “Wise man never play leap frog with unicorn.” In other words, he who knows the pitfalls makes informed decisions.  Americans are much smarter than the world gives us credit for.  We adeptly exploit inefficiencies to our own benefits, sometimes to the extreme.

Smart people somewhere in a boardroom are rubbing their hands together figuring out how far they can push and still get away with all the spoils.  The government will bail us out as they’ve demonstrated time and time again.  Just remember that when it’s crowded and you need to let one rip, go for it!  You can always blame someone else and walk away.  USA!

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Updated for 2020 and beyond. Moral hazard is everywhere.

An Ambulance Screams By, Do You Feel Happy Or Sad?

Published: 01/06/2010 | Updated: 02/19/2020 by Financial Samurai 43 Comments

There was once a time I felt very sad every time an ambulance zoomed by with sirens blazing.  I knew someone was suffering, and sorrow would fill my heart not only for the injured, but also for the person’s family and friends.  Nothing is permanent, and the ambulance reminds me of this fact every time I hear one.

Over lunch, I was sharing my feelings with a friend, and she changed my mindset.  She mentioned, instead of feeling sad, feel happy. Be happy the ambulance is out there saving someone’s life.  Feel emboldened help is on its way!

My friend was right.  I chose to feel sad about an unchangeable past rather than focus on the good act of trying to make things better.  It was this simple epiphany 12 years ago that changed the way I looked at everything, forever.

Rather than sulk about those personal finances on life-support, why not change the way you see your outlook?  Instead, look at your massive debt, or your crummy income as an opportunity to recover.  The worse you are, the more upside you have!

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Updated for 2020 and beyond

Keiju,

Financial Samurai – “Slicing Through Money’s Mysteries”

Someone Has To Give Birth! Why Women Shouldn’t Be Penalized For Being A Mom

Published: 12/11/2009 | Updated: 09/25/2020 by Financial Samurai 69 Comments

Swans And Their Babies

Women shouldn’t be penalized for being a mom. After all, if you want kids, someone has to give birth! This post discusses the unfair double standard some women face in their careers if they take time off to have children.

I originally wrote this post on December 11, 2009 when I was 32 years old and still working in finance. I had gotten married one year earlier and just started thinking about having kids. However, due to the high cost of living in San Francisco, a busy work schedule, and this potential penalty my wife may have faced if we had a baby, we delayed having kids.

Now that I reflect more as a father of two young kids in 2020, not having kids sooner is one of my regrets. If I could rewind time, I would have tried to have my first kid at 34 (2012) and then at 36 (2015).

If you’re considering having kids, know that there isn’t a perfect time. That said, since you will love your kids more than anything else in this world, having them sooner enables them to be a part of your life for a longer period of time.

The following is a story about kids and the workplace you might not expect.



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Simple Pleasures Are What Make Life Worth Living

Published: 09/04/2009 | Updated: 02/20/2020 by Financial Samurai 9 Comments

I was cleaning up my basement and realized the best things I’ve bought were simple and affordable, and have provided years of entertainment.

Here’s my list:

  • A pair of Hi-tech hiking boots.  Cost: $65.  Age: 5 years.
  • A Cannondale mountain bike.  Cost $250.  Age: 7 years.
  • A Wilson Basketball.  Cost $30.  Age: 4 years.
  • A Martin acoustic guitar.  Cost $350.  Age: 10 years.

The great thing about this list is that pretty much anybody can afford all four or at least one of the four.  How easy it is to strap on a pair of hiking shoes and go for a zen journey into the wilderness. How nice it is to go for a ride down the back roads without a care in the world.  There are community centers all around with indoor gyms, which are especially convenient during the winter months.  Finally, nothing beats strumming that new tune until your fingers go numb.

Maybe it’s true.  The best things in life are free, or close to it! It makes me happy knowing that if I ever had to go back to my old McDonald’s job again, my leisure activities wouldn’t decline as precipitously as my income.

Readers, what are the inexpensive things you like to do?  What are the affordable things you’ve bought that have provided you years of enjoyment?  Have a great weekend!

Related: Things To Buy With Your Massive Investment Gains

Best,

RB

Financial Samurai

30 Minutes At Starbucks: Observing Day-to-Day Life

Published: 08/15/2009 | Updated: 02/20/2020 by Financial Samurai 6 Comments

So here I am at Starbucks, testing to see if being here among the bustle of loungers helps gives me writing inspiration.  They say it’s good to get out of the house once in a while to recharge the soul.  I take the first seat that’s available, and what do I notice?

Hanging on the side of the chair, hidden behind the backrest is a white purse.  I look around wondering if someone had dared claim their space with something so valuable.  Several minutes past, and I thought to myself definitely not.  A poor woman must be frantically back-tracking where she could have misplaced her purse.  Eventually she would return, or will she?

As I waited, I felt like a culprit.  I didn’t want to take the purse and give it to the front counter.  For what if in that instant, the woman popped into the store and saw me?

I’d be implicated as the thief and would have to explain myself.  Maybe she was simply taking a long time in the bathroom after a venti mint mocha frappuccino and had a very large husband to boot?  I was trapped, and felt like I was on candid camera, being tested on what I should do.  The temptation to open the purse and reveal any treasures was not great.

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Obama’s Universal Healthcare Proposal

Published: 08/09/2009 | Updated: 02/20/2020 by Financial Samurai 10 Comments

In Sarah’s first online post since quitting her job as Governor of Alaska, she writes that Obama’s Healthcare Plan is “Evil” because of its support for euthanasia. Obama later explains, “Nobody is going to be forcing you to make a set of decisions on end-of-life care based on some bureaucratic law in Washington.”

What’s interesting to note is how this story has garnered so much more attention rather than the costs and implementation of Obama’s healthcare plan. I have admittedly not paid attention to this debate, but feel I should. In this post, I attempt to provide a brief understanding of this controversial topic, along with various viewpoints.

THE SKINNY ON UNIVERSAL HEALTHCARE:

WHAT IS IT?
* Universal health care is also known as single-payer system, united health care system, or national health care. Universal health care is similar to the current US Medicaid program for low-income folks, and would apply to all citizens of the US regardless of the ability to pay.

WHY HAVE IT?
* Supposedly 50 million or so Americans, or almost 20% of the country’s population is without healthcare. People will argue that it should be the right of every American to have coverage, just like the Canadians and the British.

ADVANTAGES
* With a single Universal Healthcare system, Americans will save money because the new system will slash billions of dollars in administrative costs. Furthermore, 50 million people will have coverage.

DISADVANTAGES
* To provide 50 million more people with free healthcare, someone has got to pay for it. Some don’t believe big government will be able to run the new system as efficiently as the private sector.

With this quick understanding, here are various opinions from real people I’d like to share with you.

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