Budgeting & Savings Archives - Page 3 of 16

How To Write A Real Estate Love Letter And Save Big Bucks

How To Write A Real Estate Love Letter To Get The Best Deal Possible

A well-written real estate love letter can reduce a buyer’s purchase price by 1% – 10%. If we’re talking about a $1 million property, that’s $10,000 – $100,000 in savings.

At the very least, a real estate love letter can help you get a counteroffer when a seller receives multiple offers. Staying in the race is vital if you really want the property.

Yet most people, out of ignorance or laziness, don’t bother writing a real estate love letter when making an offer.

After every job interview, writing a hand-written note can make the difference between landing the job or not. Yet, few people bother to write a hand-written thank you letter either.

I firmly believe one of the reasons why it’s so easy to get ahead is because most people don’t care enough to try. Folks are kinda clueless when it comes to building rapport with others. Instead of first trying to give, it’s all about taking, taking, and taking some more.

There is no downside, only upside, to writing a letter to try and make a connection with the seller. The listing agent has a fiduciary duty to present all offers as is. Thus, the greater the connection you can make, the greater your chance of getting the best deal possible for a property you want.

Another person’s lack of emotional intelligence is your pot of gold!

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Build A CD Step Stool, Not A CD Ladder In A Flattening Yield Curve Environment

Posted by Financial Samurai 70 Comments

When you’re young, you spend time accumulating wealth. When you’re old, you should spend time protecting wealth. Building a CD step stool to protect a portion of your wealth is a smart way to go.

Multi-millionaires go broke all the time because they exposed themselves to too much risk and temptation. Think about all those pro athletes who would still be rich if they had just kept all their money in a bank.

You just never know what type of risk is lurking out there. Nobody would have guessed a coronavirus pandemic would have shutdown the world economy for over three months in 2020.

Since 2010, money market and CD rates have been particularly horrible. Retirees depending on fixed income were forced to take more risk. And thankfully, such risk has paid off as the S&P 500 and the real estate market across various parts of the country took off.

Further, we’ve all been able to refinance our mortgages at all-time low interest rates. Credible is my favorite lending marketplace to get pre-qualified lenders competing for your business for free in under three months.

As a result of a flattening yield curve, financially savvy individuals should optimize their cash and build a CD Step Stool and NOT a CD ladder. The first step is a one-year CD and the second step is a two-year CD at most.

With each expiration of the CD, the strategy is to re-invest the proceeds in another 12 – 24 month CD. Only if the yield curve steepens should you consider building a CD ladder where you’re investing in three, four, five, seven, and 10 year CDs.

Let’s look at various financial scenarios where building a CD Step Stool may or may not make sense.

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The Stupid Things People Do To Save Money

Posted by Financial Samurai 48 Comments

Stupid things people do to save money ex. Bumbleride Deluxe Baby Stroller

As a frugal person and a personal finance writer, I love saving money. But there are smart ways to save money and stupid ones. I’ve put together a collection of stupid things people do to save money in this post for your entertainment. In addition, I hope you can learn from these examples to better maximize your time and efforts to save and build wealth.

Hilarious Example Of Stupid Things People Do To Save Money

Here’s a hilarious example of stupid things people do to save money that I witnessed.

One time I was driving my old SUV Moose to the local Chevron station to puut air in his 18 inch beasty tires. When I pulled into the gas station, I came across the picture above.

Study the picture carefully, what do you see? What you see there are two lovely moms trying to figure out how to use an industrial powered air pump to inflate their baby stroller!

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The Healthiest Foods To Make You Fit And Rich

Posted by Financial Samurai 83 Comments

Well now, it looks like some people weren’t very happy with my defense of people who like to eat out to win business or order food delivery to save time and their marriages.

I’m not sure whether the true anger lies in going against the food preparing norm or highlighting the truth about how we can all be doing more for our health and our finances.

I don’t shout angrily on the internet when I disagree with something. Nor do I insult people with different beliefs. Instead, I like to listen carefully to feedback and adopt any good ideas to improve my life. And I’ve got a good one that could really make a difference!

In the near future, I plan to drop my writing frequency from 3X a week to once a week and stop podcasting once a week in order to cook more for my family and to save money.

I calculate by cooking at home, I’ll save between $500 – $1,000 a month, equivalent to the monthly cash flow savings I’ve earned from refinancing my mortgage. Not bad! Although I might also suffer revenue loss 10X greater, that is neither here nor there. All good things are worth the initial sacrifice.

Further, I’ve been looking for a good reason to give up my posting cadence after reaching the 10 year mark. I’m tired and want to mix things up. After the second year of writing, I started consistently getting thank you e-mails or comments every week from readers saying how XYZ article helped them. As a result, I started feeling guilty that if I didn’t post regularly, I would be letting people down.

Thanks to reader feedback, it’s time to make a change for health and wealth!

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How AOC And Other Congressional Members Can Afford To Raise Kids In Washington, DC

Posted by Financial Samurai 114 Comments

How AOC And Other Congressional Members Can Afford To Raise Families In Washington, DC

There are two things people seem to want more than anything else: money and power.

For the sake of money and power, we study like crazy, work like dogs, delay starting families, then abandon our children once we have them, all for these two things that really don’t make us much happier. How strange we are.

Billionaires are in the top 0.1% of wealth. They make “everyday multi-millionaires” sometimes feel like uncomfortable failures.

But who are the billionaires of power?

They are our politicians who pass laws that affect the livelihoods of millions. Members of Congress, The President, and Supreme Court Justices are all part of the top 0.1% of power.

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Wedding Spending Rules To Follow If You Don’t Want To End Up Broke And Alone

Posted by Financial Samurai 87 Comments

Given half of marriages eventually end in a divorce and wedding ceremonies last for at most 12 hours in America, it’s wise to spend as little as possible just in case things don’t work out.

Despite such pure logic, the average cost in America is around $33,000 according to The Knot’s 2020 Wedding Survey. If you live in Manhattan, the average spend is closer to $77,000. In comparison, San Francisco weddings only cost $39,329.

With the median household income in America at around $60,000 according to the US Census Bureau, what is going on with couples who are willing to spend roughly 70% of their annual after-tax income on such ephemeral pleasure?

Here are some random responses I’ve received from couples who have spent $33,000 or more on their weddings:

“I wanted a night we’d never forget.”

“The wedding is more for our family than it is for us. We both have huge extended families that must all be invited.”

“Everything from the venue to the flowers cost so much nowadays. It’s hard to spend less.”

“I already spent $18,000 on a ring. What’s another $50,000 spread among 200 people?”

“I didn’t want to spend $200,000 on the wedding, my wife did. I hate weddings and would rather have just gone to City Hall for a couple hundred bucks. It’s all curated and fake for thirsty Instagram users.”

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The New Rule For Engagement Ring Buying

Posted by Financial Samurai 252 Comments

To all the ladies in the house, you’re in for a real treat! To all the fellas thinking about proposing, maybe not! It all depends on how materialistic you are in the first place. Even if you are already married ladies, point your hubby to this article and you might just get a ring upgrade!

It’s 2019, so what’s the new rule for engagement ring buying you ask?

Well before we get into the most obvious new engagement buying rule all of society should follow, let’s discuss some of the current ridiculous rules that must be thrown out the window!

Current Engagement Ring Buying Rules

1) The Three Months Gross Salary Rule. This rule stipulates that if a man makes $80,000 a year, he should spend $20,000 on an engagement ring! What kind of nut came up with that idea? There’s really no rhyme or reason why a man should spend 3 months of his gross salary on an engagement ring, let alone 2 months. After taxes, 3 months gross is equivalent to 1/3rd his take home pay.

Imagine if the man makes $400,000 a year. Is he supposed to buy her a $100,000 Harry Winston pink diamond? Ridiculous.

1b) The Three Months Net Salary Rule. Crazy!

1c) The Two Months Gross or Net Salary Rule. Nuts!

1d) The 1 Month Gross or Net Salary Rule. OK, not so bad as it’s under 1/10th a man’s annual gross or net income. Again, here we go with the 1/10th rule for car buying, which hints at something beautiful.

2) The Age Rule. Another crazy rule is for the man to buy a quality ring whose size is equivalent to the age of the woman. For example, if the man proposes to a 32-year-old woman, he should buy a 3.2 carat diamond engagement ring! Wow! Even if he gets em young at 18, that’s still 1.8 carats!

What if you’re a late bloomer, or are simply into older women? Is a man supposed to buy a 50-year-old vixen a 5.0 carat ring? Forget it! A very rich woman told this rule to me with a straight face at a bar one day. She showed me her 3 carat, E color, VVS1 princess cut diamond as proof. Poor guy.

3) The Hotness Rule. This could be the most dangerous rule for men as it is all or none. Essentially, every man before proposing will say how beautiful his girlfriend is. The problem with showering her with praise such as, “You are the most beautiful woman in the world,” or “Your beauty makes the stars look dim” is that you are setting expectations incredibly high!

Your fiancé will rightly think that if she really is the most beautiful woman in the world, she better get the biggest, most beautiful rock in the world! If I am a 10/10, then you better give me the most luxurious engagement ring among all my girlfriends. Women will pretend to tell you they don’t care what ring you get, but don’t listen, not for one second, unless you want to start sleeping on the coach for no good reason.

The Solution: The Car Rule For Engagement Ring Buying

Now that you understand what silly rules there are for guys to follow when spending money on an engagement ring, you’ll now realize the absolute beauty of The Car Rule For Engagement Ring Buying. The Car Rule simply states that a man should spend up to, but no more than the initial purchase price of his car!

Most guys like cars. The more obsessed he is about cars, the bigger and better your potential ring. We all realize that buying a car hurts our finances because it’s a depreciating asset. Yet, guys still overspend anyway, and in a big way.

If a guy making $80,000 a year is dumb enough to buy a $50,000 Cadillac Escalade (78% of his net after tax income) you should most definitely demand he spend $50,000 on a 2 carat, Tiffany Novo ring that is an E color with VVS1 clarity! Blow up his finances with glee!

Conversely, if your man is fortunate enough to make $300,000 a year, but drives a 10 year old Honda Civic he bought for $3,000 8 years ago, then all you can really hope for is that he buys you a nice 0.25 carat, H color, VS2 ring from a generic store.

Unless you live in New York City, Boston, or Los Angeles where the average carat size is 1.8-2.0, the national average carat size is around 1 carat, so stop being greedy!

Finally, if the man so happens to be the biggest nature lover on earth and takes the bus and rides his bike, well, you’re out of luck! There is no way you can demand anything more than a Push Pop ring!

Be Practical With Your Engagement Ring Purchase

Cars are to men what engagement rings and are to women. If your man can’t spend as much money for a ring as he does on his car, you’ve got a problem. He is being completely self-centered and selfish if he hints to you that spending money on a nice engagement ring is a waste of money. This is especially true if he’s sporting anything MORE than a $20,000 Honda Civic in his garage!

If a man follows the 1/10th rule for car buying, he’ll never be stuck in this engagement buying predicament. Of course, the woman can be incredibly gracious and tell him only love matters. But we all know you’re just being nice!

Top 20 Most Popular Engagement Rings

Curious what the most popular engagement ring designs are right now? Check out the latest top 20 most popular engagement rings. There are so many beautiful choices nowadays with that wow factor you’re looking for.

It’s hard to go horribly wrong with a classic solitaire of course. But, it’s definitely worth looking at the top 20 engagement ring designs if you want to find an impressive ring that will bring tears of joy to your finances eyes, make her proud to wear it every single day, and make a long lasting impression. After all, you know the first thing everyone (at least your female friends) will say when they find out you’re engaged is, “Congrats! Show me the ring!!”

If you want to add your own personal touches to one of the most popular engagement ring designs or get a custom ring , it’s easier than ever to do so now. Blue Nile, the first and largest on-line diamond retailer, has a Build Your Own Ring feature that lets you choose from over 300 settings.

Filter by price, metal, metal karat, band width, designer, material and more. Once you find a setting, select a diamond using convenient filters for price, carat, cut, clarity, color and much more.

Being able to browse for engagement rings and compare prices from home or anywhere you have internet access without the pressure of a salesperson staring at you the whole time is super convenient and so much less stressful.

Wealth Building Recommendation

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After you link all your accounts, use their Retirement Planning calculator that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing. I’ve been using Personal Capital since 2012 and have seen my net worth skyrocket during this time thanks to better money management.

Retirement Planner Personal Capital — Is your retirement on track? Check with PC’s Retirement Planner for free

Thoroughly updated for 2020 to account for the 10-year long bull market we’ve been experiencing.

Regards,

Sam @ Financial Samurai – “Slicing Through Money’s Mysteries”

How To Dress Well On The Cheap For A Black Tie Wedding

Posted by Financial Samurai 14 Comments

The following is a post by Sydney, aka Mrs. Samurai. She’s one of the most frugal people I know, which is one of the reasons why we get along so great. She’d rather go to Target than Prada. That’s the secret to financial independence right there. Whoo hoo!

Did you just receive a black tie wedding invitation and are in a bit of a panic over the dress code? I was in the same boat!

Here’s my own story about how I figured out how to dress to the 9s for a black tie wedding for cheap. After doing research, it look like we had to spend over $1,000 for the two of us to attend. But it’s totally possible to look the part without spending a fortune.

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Posted by Financial Samurai 76 Comments

Gyeongbokgung Palace in Seoul

Before leaving for Asia I told myself I’d live it up by staying at only the finest 5-star hotels. Compared to America, Asia ex-Japan is relatively cheap. I had just finished paying down $100,000 in mortgage debt seven months earlier than expected and felt like I deserved to be rewarded. Billing 60 hours a week for three months in a row as a consultant in order to expedite my mortgage payoff was also the antithesis of being an “early retiree.”

All excited to start booking my hotels, I clicked the 5-star only search option online for Seoul and Kuala Lumpur. But instead of booking four nights at the Shilla Hotel in Seoul for $350 a night, I decided to book the Centermark Hotel in Insadong for only $120 a night after taxes and fees. The Centermark Hotel was rated four stars and had free wifi. It was walking distance to all the major palaces and the Buchchon village. A $1,320 savings could easily pay for all food, transportation, and attraction tickets while in South Korea!

Then it was Kuala Lumpur’s turn to book a hotel. Originally I was going to stay at Villa Samadhi, a 5-star resort in the heart of Ampang where I used to live as a kid. The hotel looks like an oasis, perfect for a honeymoon retreat. At $250 a night for a suite with a private pool, breakfast, and wifi, it’s pretty good value compared to the prices you’d find for a similar suite in San Francisco.

But here’s the thing. My personal finance brain took over. The GDP per capita in Malaysia is only about $24,500 vs. $35,400 for South Korea and $78,000 for San Francisco! What business do I have spending $250 a night for a 5-star hotel in Malaysia as that would be equivalent to spending around $850 a night in San Francisco, something I’d never do! Instead of booking Villa Samadhi for $250 a night, I decided to book the four-star Impiana Hotel in KLCC for $120 a night. It just felt right.

_{Disclosure: Financial Samurai has partnered with CardRatings for our coverage of credit card products. Financial Samurai and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.}

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The Best Way To Gain Financial Security Is To Develop Financial Buffers For Your Financial Buffers

Posted by Financial Samurai 37 Comments

Leaving my job in the spring of 2012 was not an easy decision. Even if you have all your ducks in order, it’s still a leap of faith where you hope fluffy pillows await instead of jagged rocks. One of the main reasons why I wrote my book, “How To Engineer Your Layoff” was because negotiating a severance was the key financial buffer that gave me the courage to break free.

Before figuring out how to get laid off in order to gain a severance, my only real financial buffer was my various passive income streams which equaled about $78,000 a year at the time. I did input a Blue Sky scenario of $118,000 a year gross if things worked well on the rental property front after a couple years. But Blue Sky scenarios are never to be used in important life altering decisions.

$78,000 a year in passive income might seem like a healthy figure, but I live in San Francisco where the median single family home costs around $1.1 million as of 2016. Food and gas are also expensive and entertainment costs can quickly spiral out of control if you let them. We’ve had a terrific 100+ comment discussion on my post wondering how people in expensive cities live a comfortable life making less than six figures a year. It’s definitely possible as the comments have suggested, but it’s not easy, especially if you’re over 30, have a family, and no longer want to live like a college student.

I didn’t want to compromise my lifestyle in early retirement by eating dog food and living in the boondocks just to have all the time in the world. Otherwise, retirement is counterproductive. When I started writing this post, I could only recall two financial buffers. But as I kept on writing, I realized there were many more.

I’m confident you’ll find more of your own financial buffers than you first realized as well. Many people I’ve professionally consulted with have asked about building alternative income streams while working so that one day they don’t have to work. This post is for all of you and a revelation that the world isn’t as scary of a place after all.

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