Financial Samurai

Slicing Through Money's Mysteries

What Income Level Is Considered Rich?

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Boat on Lake TahoeObama considers single people making over $200,000 to be rich. He has specifically called for raising taxes on singles making over $200,000 and couples making $250,000 every year he’s been office. Yet, he’s been unable to pass any tax increases because I don’t believe most people agree with him that $200,000 for singles and $250,000 for couples is rich.

Thank goodness there was at least a compromise with Congress at the end of 2012 for raising income taxes for those making $400,000/$450,000 and above. Why $400,000 + $400,000 doesn’t equal $800,000 for a married couple to pay more taxes, I’m not sure. The government still harkens back to its old days of believing one spouse should stay at home.

There are two aspects of monetary wealth we can focus on: Income and Capital. Some make a lot of income, but have only a little amount of capital since they are either starting off in their careers, or haven’t saved and invested an appropriate amount. That’s not going to happen to you because you read Financial Samurai and will follow my savings guide to ensure capital accumulation.

Meanwhile, there are those with a tremendous amount of Capital, with little income given they may have inherited their wealth but have no income generating skills. Capital heavy people may have invested skillfully over the years, built great companies, or were incredibly disciplined in their savings. There are many different types of folks in the Capital heavy category. It’s not a bad place to be at all.

Ideally, it’s best to have both high income and a large capital base. This is my goal, and therefore my goal for all of you as well.  In this post, we’ll focus on the income side of the equation and what to strive for just in case we don’t have a trust fund from mom and dad.

HOW MUCH INCOME DO YOU NEED TO BE CONSIDERED RICH?

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Always Be Grinding! Financial Samurai 2017 Goals And Outlook

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Financial Samurai 2017 Goals and OutlookHappy New Year Everyone!

Hopefully all of you survived and are ready to rock it in 2017! I spent a lot of time over the holidays thinking about why I failed at so many things, and the consistent answer I came up with was that I wasn’t grinding hard enough.

Why did I gain 5 lbs instead of lose 5 lbs? Answer: Because I didn’t grind hard enough at the gym and give a crap about the way I looked. I worked out maybe twice a month on average and didn’t watch the quality of food I ingested.

Why did I lose all my tennis league matches? Answer: Because I didn’t grind hard enough on the court. I wasn’t practicing my serve and volleys as much as I should. Instead, I was just playing fun matches that did nothing to improve my skills.

Why was my online traffic only marginally up in 2016? Answer: Because I didn’t grind my mind hard enough. Instead of writing more posts, introducing new mediums of communication, addressing new topics, and publishing a new ebook, I left things status quo. I told myself in my 2016 review post I was most proud of not quitting. Come on. That’s weak! Writing is like a full body massage compared to digging for coal or constructing a house in the middle of a Texas summer.

It’s so easy to get soft in America, especially as you get older. As a result, my theme for 2017 is: Always Be Grinding. ABG baby!

Related: Perpetual Failure Is The Reason Why I Continue To Save So Much

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Financial Samurai 2016 Year In Review: Better Lucky Than Good

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Financial Samurai 2016 Year In Review

Art by CKongSavage.com

It’s always fun to do a year in review post because it’s interesting to review all the failures! I’m always so enthusiastic about my goals during the beginning of the year and I inevitably lose steam towards the end. Does this happen to any of you?

For 2016, I had 15 goals divided into business goals, personal goals, and personal financial goals. If we can do just one important thing a month, we’ll all become superstars over time.

I didn’t believe this year would be any good due to my less than enthusiastic outlook for the stock market, real estate market, startup ecosystem, and my own personal business. After all, 2015 eked out just a ~1% total return if you include dividends. But of course as we all now know, everything turned out lollipops and cotton candy!

Let’s go through why it’s always better to be lucky than good.

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Hawaiian Hustle: Sometimes Life Is All About Coconuts

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I’m sadly finishing up my 10-day business offsite in Honolulu, Hawaii. It’s only about 50 degrees back home in San Francisco, which is disappointing given I’m paying 10% state income tax along with a boat load of property tax. States should adjust their tax rates based on the weather don’t you think? Otherwise, what’s the point of paying state income taxes and freezing your buns off? Crazy!

I swear you will be happier, less stressed, and live longer if you live in a warmer climate. I’m always so impressed by folks who live in Canada, the Midwest, and the Northeast. How do you guys even think with temperatures below freezing? Content on Financial Samurai would grind to a halt for four months a year if I lived in Manitoba!

As part of our company team building efforts, we spent two hours swimming and hiking each day. After each exercise session, we’d spend an equal amount of time strategizing on new business initiatives. During the middle of brainstorming one afternoon, we saw a fella climb up a coconut tree belonging to an ocean front mansion worth ~$20,000,000. Things got interesting. 

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The Unhealthy Desire For Prestige Is Ruining Your Life

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Pursuit of prestige is ruining your life!Theory: The desire for prestige is why we: 1) spend an outrageous sum of money on education, 2) kill ourselves at jobs we don’t like, 3) put up with colleagues and bosses we despise, 4) never pursue our dreams, and 5) eventually fill our hearts with regret. If we can figure out how to rid ourselves of the desire for prestige, we will become much happier in the process!

About a year and a half ago when I was attending Finovate, a financial innovation conference, I met a fintech entrepreneur named John. He told me his revolutionary idea was to simplify the documentation gathering process for people looking to refinance or get a new mortgage. As anybody who’s ever taken out a mortgage can attest, it’s a real pain in the ass.

I was intrigued since I’ve done about 10 refinances on four properties since 2003 and planned to refinance one last time when I met him. But when John showed me his product, it still required the user to upload all of the docs the bank wanted onto his website. Further, there are always additional document requests from the bank to upload on his platform after that. What’s the point?

Creating an unnecessary barrier between consumer and lender didn’t seem like a good business idea. At least John was trying to solve a problem. I thanked him for his time and wished him well.

Then just last month I ran into John at another fintech conference. I tend to go once a quarter with a free media pass. Otherwise, I’d go less often because these tickets cost anywhere from $300 – $2,000 each! Running conferences during the internet boom is akin to being a landlord. It’s one of the best ways to profit.

I asked John how his product was doing, and he said that he’s looking to hire a CEO with more product experience. One guy slipped away thanks to an offer from Google, but another guy was close to joining.

Fantastic! I told him. In order to get someone with CEO-level experience to quit his/her job to join his startup must mean his product is doing pretty well. But when I talked to him further, he said he was still looking to launch his MVP, or minimum viable product.

Huh? If an entrepreneur hasn’t launched his MVP, there are no customers or revenue. All an entrepreneur has is an idea. So after 1.5 years, John basically spent $10,000+ attending financial conferences, collected no revenue, and hasn’t even launched a working website. Totally illogical, right?

Wrong.

John mentioned that he was bored back home in Seattle with his wife and daughter. Same old stuff, every single day. Ever since he left the mortgage industry after it imploded in 2010, he’s felt lost. He decided to attend business school part-time, and from there he discovered his passion for fintech.

When I asked him whether he felt that flying down to San Francisco to attend conferences for 2-3 days at a time was costly, he mentioned, “not at all!”

“I feel so alive coming to all these conferences. I get to pass out my business card that says ‘Founder & CEO’! Before, I was just one of many mortgage officers trying to make a buck. Now, I get to meet so many aspiring entrepreneurs looking to do something new with their lives. They treat me as an equal. It’s wonderful!”

He went on, “Also, I’ve been able to meet plenty of interesting women. I always tell them I’m looking to hire a VP of Marketing or whatever role they are currently doing to keep their interest. As soon as I tell them this, their eyes light up as I’m suddenly the man of their dreams! I’ve been seeing this one woman for over a year now in the Bay Area. Even though she lives 45 minutes south of San Francisco, she always makes time to drive up and have dinner and drinks with me. I don’t know how long I can keep stringing her along about the VP of Marketing role, but she likes the attention and the idea of potentially working for me, so why not enjoy it while it lasts?”

It’s always about a girl isn’t it? Revenue, product, helping others with their financial problems be damned. On the one hand, it’s bad of John to string this woman along for so long as a married man. On the other hand, she’s an adult who makes her own decisions. Sadly, I have a feeling John is heading towards some difficult times both financially and personally as this fintech startup is his only gig. 

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