This is a free Financial Samurai newsletter that was published on April 6, 2024. Every week, I come out with a free weekly newsletter to help readers achieve financial freedom sooner rather than later. Join 65,000 other readers and subscribe here. This way, you'll never miss a thing. You can also subscribe here to receive my posts via e-mail as soon as they are published.
Financial Samurai began in July 2009 and is the leading personal finance website today with over 1 million organic pageviews a month. Everything is written based off firsthand experience because money is too important to be left up to pontification. If you want to read about personal finance from someone with a finance background, you've come to the right place.
Sam is the pioneer of the modern-day FIRE movement. He attended The College of William & Mary for undergrad, got his MBA from UC Berkeley, and worked at Goldman Sachs and Credit Suisse for 13 years until he retired in 2012 at age 34. Sam is one of the rare personal finance writers who actually has the background and experience in finance.
You can learn more about Sam Dogen by clicking his About page. The Financial Samurai newsletter is one of the best you'll ever subscribe to and read.
Financial Samurai Newsletter April 7, 2024: Being Grateful Can Be Profitable
This newsletter was brought to you by Fundrise, my favorite private real estate firm with over $3.3 billion in assets under management. Fundrise primarily invests in residential and industrial real estate in the heartland, where valuations are lower and yields are higher.
Being grateful can lead to profitability. Let me illustrate.
One of the best aspects of leaving my day job in 2012 was bidding farewell to my daily commute. Each weekday, I faced the challenge of boarding a packed bus at 7 am for my 16-minute journey to work.
However, due to the overcrowding, I often had to walk five to seven blocks west to catch an earlier stop. Failing to do so meant a 50% chance of waiting in vain as the bus passed me by. Who needed that stress at 7 am?!
Upon being relieved of the daily commute, I felt an overwhelming sense of gratitude. So much so that I chose to dedicate the time I would have spent commuting to writing on Financial Samurai instead of indulging in extra sleep. Twelve years later, the site still thrives, partly fueled by the gratitude for the newfound free time.
Related: The Surprising Benefits Of Early Retirement I Never Anticipated
However, in August 2021, my tranquil morning routine was disrupted. After 18 months of homeschooling our son, he began preschool three miles away. Once again, I found myself navigating rush hour traffic.
From traffic snarls caused by inconsiderately parked vehicles obstructing major lanes to narrowly avoiding accidents, commuting swiftly became one of my least favorite activities.
The Courage To Invest More
Yet, one day, as I waited at a red light, it struck me how remarkable it was that the streets were teeming with people rushing to work or school. This surge in activity signaled a robust economy, contrasting sharply with the desolate streets of 2001 after the first dotcom crash.
Instead of wishing for a swift commute, I began hoping for gridlocked traffic, viewing it as a sign of economic vitality. This newfound perspective bolstered my confidence to invest in stocks in 2022, particularly in the technology sector. Then in Q3 2023, with traffic seemingly getting worse, I overcame my fear of living a better life and went all-in on a new home.
If you can stay optimistic during suboptimal situations while feeling grateful, I dare say you might create more wealth in the long run. Having the courage to take action is often what it takes to get ahead.
The Most Relevant Post I've Written In A While
Given that everyone needs a place to live and transportation, my latest post, The Right House-To-Car Ratio For Financial Freedom, could be one of the most practical pieces I've written in years.
When I began dropping off my son at school, I couldn't help but notice the prevalence of nice cars on the roads. It became apparent that many people were driving luxury vehicles back to their modest homes, and even some of my tenants were driving BMWs, Audis, and Teslas.
This observation led me to question whether Americans are properly prioritizing their spending on housing and transportation. Considering that cars have a high probability of depreciating over time, while houses typically appreciate, it seems logical to spend less on a car and more on a house.
With my new House-To-Car Ratio guide, you can assess whether you're on the right path to financial independence or if adjustments are needed. Looking back, I wish I had access to this guide in my twenties. It might have prevented me from making reckless car purchases.
I'm grateful for the time spent in traffic that led to the creation of this new framework. I believe it will ultimately help thousands of people reclaim their time.
Property And Income Taxes Due
Unfortunately, income taxes are due on April 15, 2024. Given the complexity of my taxes, I'll need to dedicate a day to completing them, then I'll file an extension. Depending on your location, property taxes are also due. For homeowners in San Francisco, the deadline is April 10, 2024.
Paying property taxes is one of the biggest ongoing downsides of owning physical real estate. While some or all of it can be deducted from your income, it can still be a substantial sum to pay.
Hitting the limit of what I feel comfortably paying in property taxes is one of the reasons why I decided to invest more in private real estate funds instead. Sure, investors still pay property taxes as part of the expenses. But at least I don't have to physically write a check.
What bothers me the most about property taxes is that they don't automatically decrease when your property's value goes down. Instead, they are almost always assessed higher, even during a downturn. This seems unfair to me. As a result, I've written two posts to help homeowners save money on property taxes.
See first post: How To Lower Your Property Taxes (step-by-step guide)
During the global financial crisis in 2008, I successfully appealed my property taxes lower for three consecutive years. If I hadn't fought, the city would have continued to raise them despite the economic turmoil. From an economic standpoint, this makes sense because tax revenue declines during recessions, leading cities to try to extract more money from their citizens.
However, this experience taught me that you can't always trust your local government to do the right thing. Furthermore, due to politicians' higher desire for power and fame compared to the average person, there is often corruption and underhanded dealings.
Defend Your Financial Freedom From The Government
As a result, it's imperative that we not only fight for our financial freedom but also defend it. This mindset leads me to the second post: Downgrade Your Property Statistics Online.
Through numerous conversations with property assessors, they revealed that they use websites like Zillow and Redfin to assist them in valuing properties for tax purposes. Since they lack the resources to physically inspect every house or obtain permission to enter homes, they must rely on publicly available data.
Here's the reality: the more appealing you make your home look online—through fancy pictures, updated square footage, or new amenities like a hot tub—the higher the likelihood that the assessor's office will increase the value of your property.
I once had a disagreement with an assessor who believed a fixer-upper I had purchased was tastefully remodeled. It clearly wasn't. It was a dump! Despite the kitchen lacking a range in the pictures and being in its original condition from 1960, he insisted that it was in great shape. Unfortunately, there was nothing I could do to change his assessment. I felt like I was getting mugged.
Those of you who don't pay property taxes or don't pay much in taxes overall may disagree with making your property look worse than it is. You might even think it's sinister to protect your family's financial well-being! But once you start paying a hefty amount in taxes on an amount you feel is unfair, you might change your tune.
To Your Financial Freedom,
Sam
Financial Samurai Newsletter Exclusive Sponsor
This newsletter was brought to you by Fundrise, my favorite private real estate firm with over $3.3 billion in assets under management. Fundrise primarily invests in residential and industrial real estate in the heartland, where valuations are lower and yields are higher.
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