Happy 2019 everyone! This is the Financial Samurai 2019 economic outlook and personal goals.
With my 2018 finishing with 3.8 4.0 out of 5.0 stars, I’ve thought long and hard about how I can make 2019 better. I’ve found a solution.
My 2019 theme is: live the good life. If you live the good life, how can life not be better?
Some people like to tighten their belts during economic uncertainty. I used to be one of those people in 2008-2009. But after a raging bull market since 2009, I feel it’s OK for my family to start spending more on life instead of letting our investments piss away our wealth.
Besides, if panic increases, there will be lots of things going on sale. Let’s first discuss my outlook for 2019 and then I’ll go over my goals.
Financial Samurai 2019 Outlook
Things are uncertain, to say the least. From policy errors by the Federal Reserve to trade wars by Trump to a drastic slowdown in corporate earnings growth (20%+ down to ~7%), we are facing many headwinds in 2019.
Despite the 4Q2018 sell-off in the stock market, JP still wants to raise rates another two times in 2019 to keep inflation at 2%. There’s an old saying on Wall Street: don’t fight the Fed. You will get run over.
If the housing market is weakening, the stock market is correcting, and if the labor market softens given companies are now 20% less valuable on average, it’s baffling why the Fed thinks inflation will accelerate in 2019.
The good news is that 4Q2018 has baked in a lot of the negatives. Valuations are now at around historical averages and expectations have been reset.
And unless JP is a complete idiot for going to Princeton and Georgetown, he will probably adjust his interest rate stance if we enter full bear market territory. And let’s put things in perspective, a -6.4% year for the S&P 500 is not that bad.
The question everybody needs to ask themselves is whether the equity risk premium is worth taking. If you can get a 2.45% risk-free rate of return (now 1.75% in 2020, and 1.3% in 2021) or pay down more expensive debt (mortgage, student loans, credit cards), is it worth taking risk in equities to maybe make a potentially greater return?
My answer is no. Give me a 2.45% – 5% guaranteed return any day while the world recalibrates. The stress of trying to make perhaps a 10% return in the stock market is simply not worth the premium since there’s probably an equal chance stocks will go down. The peace of mind of a risk-free return should not be under-appreciated, especially if you have more certain ways to make money.
Of course, there are no guarantees. Therefore, my plan is to keep my existing public investments just the way they are (45%/55% stocks/bonds) and use my monthly cash flow to pay down debt and invest in a 70%/30% ratio. At the very minimum, my Solo 401(k), SEP IRA, and son’s 529 plan will all be maxed out. If the S&P 500 gets back to 2,800+, I will be aggressively selling down more stocks.
I’m in the “low interest rates for life” camp. Once again, I don’t see the 10-year bond yield finishing over 3% in 2019. This is a risky call since the 10-year bond yield is not far away at 2.75%, and reached as high as 3.2% in 2018. But this call simply means the yield curve will continue to flatten as the Fed stubbornly continues to raise rates, leading to a recession by 2020.
Given it takes 2-5 years for real estate cycles to play out, I see further weakness all year in expensive coastal city real estate markets like San Francisco, San Jose, Seattle, LA, San Diego, Boston, New York, and Washington DC. Cities with unlimited land for expansion like Las Vegas, Dallas, and Denver are likely going to continue weakening as inventory surges higher. The heartland of America will not be immune to a real estate slowdown unfortunately.
The positive in real estate is that mortgage rates will continue to stay low. With rising inventory and low interest rates, affordability will increase and bring in new buyers. There might even be a refinancing boom again. I don’t see a real estate crash like the stock market crash of 4Q2018. Instead, we’ll see a soft landing as prices slowly decline by another 5% – 10%.
Finally, I predict more people than ever will generate new income sources beyond their day job. Whether it is starting a website or investing in assets that are countercyclical to the stock market, people will no longer take their job security for granted.
Only the misinformed believe a large correction in stocks has no bearing on future corporate employment decisions. You must always be forward-thinking when it comes to investing.
Buckle down folks! If you do not get your finances right in 2019, you might end up losing years worth of time and effort. 2019 is not the time to be a hero. Instead, 2019 is the year to bullet proof your finances by earning more based on what you can control.
Financial Samurai 2019 Goals
1) No gray hairs, no chronic pain. I’ve learned over the years that our body reveals our true stress level no matter what we do or what we say. My goal is to keep things like sciatica, lower back pain, TMJ, grey hairs, wrinkles, hair loss, migraines, and excessive weight gain at bay in order to live longer and feel healthier. Stress is the silent killer of our generation.
Specific activities for the year include: exercising and stretching 3X a week, taking walks with my son 5X a week, incorporating 15 minutes of meditation 3X a week, and eliminating sugary drinks. I will continue to maintain a body weight of between 165 – 170 lbs at 5′ 10″.
2) Remain unemployed until September. My son turns two in April, and I plan to remain a stay at home dad at least until then. Although, I’ve given myself a green light to find full-time work after two years, my ultimate goal is to remain a stay at home dad until he is eligible for preschool in September if he is mature enough to attend. If he is not, then my goal is to remain a SAHD until September 2020 for 3 years, 9 months total.
In order to stay unemployed, I need to make sure my risk exposure is appropriate so I don’t stress out about losing too much money, get out of the house at least two hours a day for some me time, and attend more social functions. Activities include tennis, softball, startup gatherings, Napa/Lake Tahoe getaways, and our first family trip to Hawaii. Of course, if the bull market continues, then staying unemployed will be relatively easy.
3) Hire help for the business. After almost 10 years of running Financial Samurai with only my wife, it’s time to get some help with writing. I’ll be slowly looking for someone who is WordPress savvy, trustworthy, intelligent, reliable, dedicated, believes in my five core principles, enjoys writing and wants to earn some steady side hustle income. The fit has to be fantastic, otherwise, I’ll just continue to operate the site as usual.
I realize many sites my size or smaller have 1-4 people, on average, working to write content and handle some of the business elements. Now that I’ve discovered how great it is to hire help around the house, it’s only logical to hire help for our business.
4) Focus on profits. Since I’m going to hire help for the business, I want to get a return on my investment. To not get an ROI on my capital expenditure would make me a foolish businessman.
I or my new hire will write more review posts, develop more affiliate partnerships, build my blog marketing business, update my severance negotiation book, and maybe create a new Financial Samurai product. I’ll still publish my usual style posts 2-3X a week. There will just be more content all around as there is no limit to how many posts and pages a website can publish.
It’s going to feel great to finally start seriously focusing on monetizing Financial Samurai after 10 years. I already get the occasional flak from readers who criticize my work and don’t pay me a cent. So I now plan to unabashedly take full advantage of my platform to take care of my family, especially if the economy softens.
5) Grow the Financial Samurai Forum. For four years, I was a forum junkie in college. It was one of the best ways I learned about investing and finance. But in order for a forum to grow, it needs to be nurtured. Therefore, I plan to continue posting and corresponding at least 5X a week on the forum to build the FS community.
I have a 5-year plan to grow the Financial Samurai Forum into one of the best financial forums on the web. Specifically, I want to double its traffic in 2019. The forum is geared towards people who fundamentally believe that making more money is a better way to grow wealth than mainly through saving. I want to build a community that is open-minded and always curious about new ways to get better. I’m aiming for thought diversity not groupthink.
6) Help my boy reach the following milestones by year-end. Being a full-time parent is an incredibly rewarding job because you get to teach and witness progress on a daily basis. I’ve discovered that through Financial Samurai, foster youth mentoring, and coaching high school tennis that I enjoy being an educator. Below are some specific goals we are looking to help him develop by 2 years 9 months.
Play and Social Skills
- Sit comfortably in circle time for more than 10 minutes
- Enjoy playing with the piano, guitar, and drums
- Play with toys without mouthing them
- Screw and unscrew jar lids and turn door handles
- Build towers of more than 6 blocks
- Copy a circle with pencil or crayon
- Show affection for friends without prompting
- Be away from parents with supportive and familiar people for 4 hours or more to prepare for pre-school
Coordination
- Walk down stairs unassisted
- Maintain balance while catching a ball or when gently bumped by peers
- Throw and attempt to catch ball without losing balance
- Walk and maintain balance over uneven surfaces
- Use both hands equally to play and explore toys
- Learn to pedal a tricycle
Daily Activities
- Able to self-calm in car rides when not tired or hungry
- Tolerate diaper changes without crying or whining
- Has an established sleep schedule of 10 hours or more a night and 1-2 hours of nap time after lunch at least 5X a week
- Able to self-calm to fall asleep
- Able to tolerate and stay calm during dental visits
- Able to brush his teeth without whining or crying 3X a day
- Is potty trained before preschool starts in September
- Dresses and undresses self by figuring out buttons, zippers, and straps
Communication
- Is able to consistently use 3-4 word phrases e.g. “I am hungry,” “The garage door is white,” “Walk with daddy,” “Financial Samurai is the best!”
- Uses “in” and “on”
- At least 75% of speech is understood by any caregiver
- Follows 2-step unrelated directions, e.g. “give me the ball and go get your coat”
- Understands “mine” and “yours”
- Says words like “I,” “me,” “we,” and “you” and some plurals (cars, dogs, cats)
- Understands half of what we communicate to him in English, in Mandarin
The next 12 months is going to be a huge challenge due to his growing temper tantrums. Another challenge is staying healthy since we’re all getting sick more often now as he’s exposed to other kids. Luckily, my wife and I haven’t been sick at the same time yet. We’ll finally introduce some screen time to him after his second birthday, which should help keep him occupied during trips.
7) Spend $1,500 more a month on life. We have frugality disease. We are spending less today than we were in our late 20s, despite having a much higher income and net worth. Our estate planning lawyer sessions really made us realize we will likely die with too much.
I’ve been slowly spending more money on things that may improve our lives. For example, the $4,000 large jet tub I bought in 2014 has come in handy for family bath time now. The $15,000 I spent on the outdoor hot tub in 1H2017 was one of the best purchases ever. Further, I have no regrets paying $58,000 cash for a used family car in December 2016 either. Baby steps on the road to lifestyle inflation!
We will allocate the extra $1,500 in spending towards more babysitting help, more massages, bi-monthly house cleaning, and quarterly gardening. We will purchase at least economy plus tickets for all our parents to come visit. Further, if we take our first flight as a family, we will purchase economy plus tickets as well.
We are also going to regularly give to two charities all year. One will be to a center for foster kids and abused youth. Another will be for children with visual impairments. I also like supporting public park tennis initiatives.
Related: Practice Taking Profits To Pay For A Better Life
8) Pay off $200,000 of mortgage debt. Paying off my SF rental condo in 2015 felt wonderful. I don’t care whether it goes up or down in value because I truly plan to own it forever. Selling my SF rental house and paying off a $815,000 mortgage in the process also felt terrific. No matter how much more I could have made investing in risk assets, I’ve never regretted paying off debt.
Our ultimate goal is to be debt free by 2022, when our boy is ready for kindergarten. Paying down $200,000 a year in extra mortgage debt will accomplish this goal. In a bear market, it feels great to earn a guaranteed return. But it’s also important to have lots of liquidity to take advantage of opportunities as well.
9) Aggressively search for a larger house. I dodged a canon in 2018 by not buying a larger house for more money. I wrote two offers for San Francisco homes that both got rejected. I was seriously going to try and buy this one expensive SF house in a great neighborhood, but by the time I was going to put in an offer, they had accepted another offer on November 1 for asking. If I had bought the house I’d be feeling nervous today since the stock market corrected by 20% soon after. It’s not unreasonable to assume to house is now worth $200,000 (4.5%) less today.
Meanwhile, the seller of the house in Honolulu I’ve been eyeing since 2016 gave up trying to find a buyer in 4Q2018 and rented out the house from Oct – January to short-term tenants. The original asking price was $4.7M in 2016. Today, I think there’s a good chance they will accept $3.5M – $3.7M because they finally dropped the ask down to $3.98M.
I want a bigger house in SF so my parents, in-laws and sister can come visit for a longer period of time. One more bathroom and 500 sqft more of space would be ideal. However, if I move to Honolulu, I won’t need a bigger house since my parents have their own house.
I anticipate there will be many more deals in 2019 given inventory will likely be up 50% – 150% in San Francisco and Honolulu. I suspect the IPOs of Uber, Lyft and others will put a -10% floor on SF prices.
10) Be a voice for at least 50% of the population. Due to the high cost of living, there are very few personal finance bloggers who live in an expensive coastal city. This makes rational sense, especially if you are a FIRE blogger. But a full 50% of the national population lives in expensive coastal cities and other big cities around the country that face slightly different challenges. Same for many big city residents around the world e.g. London, Hong Kong, Singapore, Sydney, Mumbai, etc. Therefore, I have an opportunity to establish Financial Samurai as a go-to resource for big-city audiences.
It’s going to be fun tackling topics such as: private grade school tuition, the feasibility of retiring early with a family in a HCOL area, forsaking wealth and prestige, the dangers of creating multi-generational wealth, featuring diverse cultural backgrounds, and more. My goal is to convince big media to provide a more diverse perspective on financial independence since not everybody can or wants to move to a low cost area of the country.
11) Be more forgiving of myself. No matter what project I undertake, I always run through the finish line. Financial Samurai’s finish line is July 1, 2019 after I made a promise in 2009 to publish 3X a week for 10 years. After that, who knows the future.
The funny thing about this finish line is that it is completely arbitrary. There is absolutely no need to put pressure on myself to produce so much content, especially if I’m having a rough week or sick. Financial Samurai surpassed my expectations long ago. Therefore, I’m going to give myself four weeks where I’ll just publish one post plus I’ll take it easy the entire month of June, when traffic is slowest.
By giving myself a break, I hope to sleep in more regularly until 6am. For the majority of 2018, I was naturally waking up by 5am after going to bed around 11pm. But during 4Q2018 and after daylight savings, I started naturally waking up as early as 3:30am to get my writing done before my wife and son woke. This crazy early time must have been due to increased anxiety from the stock market collapse.
With more sleep and less stress, I hope to improve my overall mental health and happiness. My desire to constantly grind stems from mistakes made in high school, plenty more rejections as an adult, and an indoctrination since I was a kid that I need to try harder as a minority to get ahead in America. I know I have a really good thing going now, so I don’t want to take my good fortune for granted.
12) Celebrate big and small wins. To make the hustle more worthwhile, we will celebrate all our achievements as parents, writers, and entrepreneurs. A celebration can be as small as opening a nice bottle of wine. These celebrations will also help us fulfill our goal of spending more.
Every evening I will highlight something specific I appreciate about my wife so she always feels recognized and loved. She is an incredible full-time mom who also launched the FS Forum, finalized our revocable living trust, registered How To Engineer Your Layoff and Cutie Baby with the Library Of Congress, and is responsible for all ongoing business accounting. It’s clear I haven’t done a good enough job appreciating her efforts over the years, which is why I’m committed to do more for her in 2019 and beyond.
Steady As She Goes
If we can grow our net worth by just 5%, I’ll be happy. I’m willing to forego upside investment potential to help ensure our net worth goes up in 2019. Despite our public investments accounting for only about 30% of our net worth, it gave me the most stress in 2018. This will change.
I still have hope the Fed will slow down its rate hikes. If they do, I’m confident the economy will chug along at 2% – 2.5% GDP growth and not enter into a recession. However, there are no exciting positive catalysts on the horizon except for a trade agreement with China by end of 1Q. 2019 will likely be another volatile year.
The last two years working on FS and being a SAHD has worn me out. Given we save most of our after-tax business income by living off our passive income, I’m excited to live it up more in 2019 and use my “vacation credits” to take it easier.
If you have any tips on how to smartly inflate your lifestyle without feeling guilty, I’d love to hear them. I also want to learn how to inhale the roses more often without feeling the need to always be productive.
Recommendation. Manage your finances in one place with Personal Capital, the best free financial tool on the web. It’s important to stay on top of your net worth, understand your risk exposure, and make sure your retirement plans are on track. Get your finances right the first time. There’s no rewind button in life.
Related post: Financial Samurai 2021 Outlook For Stocks And Real Estate
First, keep up the good work!
I realize I am very late to this discussion. A friend of mine just sent this post to me.
First, the process of setting goals sets you apart from most people, and is vital to your success.
And please, keep helping people who live in high cost areas. I enjoy reading your posts. My entire family lives in high cost areas. We have adapted and thrived, but it is never easy.
And just a thought about your property. I am looking hard at selling a property and reinvesting in a Delaware Statutory Trust (DST). It is not a conventional solution, and there are some downsides to this kind of legal structure. However, it is worth a look. Just a thought.
Everyone wants to make too much money too soon. They do stupid things and lose it.
A secure 3 million is better than 5 million lost in a crash.
Seriously—how much money do you need? IMO there are far more nourishing goals in life than how much money you have in the bank. Money is just a means to an end and the real test is how rich would you be if all the money went away.
I don’t respect net worth, I respect how you got it. What did you do to get it? What have you added to the world and to culture in getting it?
Hi, my first day reading your stuff. I read 14 articles so far. I’m not sure if this is an answer to a question of yours or to my impression of you, so bear with me. You want to feel less guilty about slowing down, smelling the roses and allowing yourself to enjoy life!? You might try this. Go somewhere beautiful, wonderful, enjoyable for a days vacation with your wife and child. Maybe a zoo, or a National Park, when I lived near San Francisco I loved visiting John Muir National and Giant Sequoia National Park next to Yosemite. But instead of taking your time, seeing all the beauty, filling your lungs with relaxing fresh air, enjoying a nice walk with your wife and pointing out the many wonders of nature to your son, rush thru whatever place you go, take 1000 of photos but don’t spend enough time just soaking in the view. You will return home more and more annoyed at your day. Trust me. You will start thinking of the beautiful views, even more, when you look thru a 1000 photos of it, and regret not just sitting down for a minute or two soaking it really in, smelling the roses as they say. You will think of your child and regret not sharing in the wonder of all the new things your child saw, you will begin to hate yourself, the lost day, the lost opportunity, of not grabbing a hold of nature with your child, so much could have been enjoyed so much more but you were focused on getting those photos. And then your wife will look at you, sad you missed out taking nature really in because you rushed around taking photos. Then your wife will get really annoyed with you, because she had to keep rushing to keep up with you, and so all those times she just wanted to take in the view just for a minute more she couldn’t since she always had to catch up to you, speedy Gonzalez (from bugs bunny cartoons, ) finally she will feel more stressed now then before you left home for your enjoyable day out (not.)
By now you must get what I’m getting at. And actually as fast as you are, a half day wasted like that will do (maybe after it will be better if you really go somewhere, and take your time enjoying yourself, maybe after a snack or a slow lunch, otherwise your wife may disown you?) But, you will never forget the experience, the wasted opportunity, the wasted time, how you lost out on a possible wonderful day if only you took your time. And, especially, you will remember how you made your family miss out, and feel even vexed with you.
Then, if ever you will go out and start rushing this experience will come to mind. You’ll be so annoyed with yourself. You’ll never repeat your mistake. You’ll slow down, take your time, smell the roses, and feel good about it too. Finally, every now and then this life lesson you learned will come to mind. Like it did for me now, here, while I type.
Sometimes it takes burning your hand to learn to be careful around a hot stove. And burning your hand may be the best teacher. Especially to any part of you that doesn’t feel comfortable taking it slow and just enjoying yourself, at a nice, leisurely, unrushed pace. And you will see, every time you rush, this will come to mind, and you will naturally slow yourself down, and finally be able to slowly enjoy yourself guilt free, forevermore!
Hope it helps!
Happy travels!
CARPE DIEM!!
Richie
Great goals Sam especially #10. Being a SF native myself I hope that you will be a huge voice for being a great example of someone reaching FIRE and living in HCOL area with San Francisco being one of those cities. We can’t all move out of a HCOL area and settle in a LCOL area that easily. Their are some factors for making that happen like establishing a career and family. Hopefully you will put out more posts this year that relate to people living in coastal cities.
Also like your milestones for your son!! I was going through the same thing my 2 year old as he was taking steps to reach to milestones. Right now, one of the most stressful ones for us is potty training. He’s turning 3 in a few months and we plan to take him to preschool this fall and of course he’s required to be potty trained by then. Unfortunately he’s reluctant to even use the toilet since he’s comfortable handling his business on the diaper. Hopefully we can get him to transition the early part of the year.
Thanks! Got it now!
Hi Sam,
Thanks for keeping delivering high-quality educational posts. Following your advice, I’ve started using Personal Capital, Fundrise, Wealthfront. Thanks a lot! I have a question regarding your post ‘Is 2019 still a good year to buy SF real estate area'(I cannot find place to comment under that post so I am posting it here) :
I work in SF and have some savings to pay for the down payment for a condo in mission bay. I plan to live in this condo for 3-5 years and rent it out to cover all the cost. As you mentioned, the cap rate at SF is pretty low so we probably should look at long-term appreciation. Right now the 1b1b condo at Mission Bay is already around $900k. I am wondering if they will still appreciate in the next few years to make a positive return, especially as you mentioned, there is a recession expected in 2020. Any insight from you is greatly appreciated!
San Francisco condo prices are weakening unfortunately. Check out the prices since the first Q of 2018. Move been going down. I would make sure you boost your cash hoard and deleverage.
I expect things to be weak for a couple years, even after all these IPOs. But prices won’t crash.
GL!
I have decided the problem with successful investing is it is too simple and we by nature must complicate it. We believe we do not deserve to be rich unless we work very hard. The market works hard. We don’t have to. I believe work hours and hours on research before buying. Buy 5 or 6 stocks, keep adding shares, reinvest dividends and then hang a sign on the door “gone fishing”. That’s it. When the bear market comes you don’t want to be around. There is nothing you can do. By fishing, you won’t do anything stupid – like sell
Last thought. None of the people who complicate investing and tell you what to do with YOUR money fish.
Hi Sam! I’ve been reading on real estate crowdfunding after seeing many financial bloggers recommend it. On the surface, everything looks nice according to most things I’ve read. However, I’m wondering how Fundrise and others compare to traditional non-traded REITs. These seem to boast the same advantages but the traditional ones are widely described as terrible because of their fees and illiquidity. I also particularly care about correlation with the stock market and can’t find anything useful on this. Curious if you invested in any eREITs Fundrise offer or do you only purchase specific properties? If so how did they perform in 2018 when the stock market went down? I’m not planning to invest more than a few grand in it but seeing you put $500K+ in it certainly makes me curious.
I like Fundrise a lot because they are so innovative and are available for all investors. I did a review of their eREITS here.
I invested in a real estate fund with RealtyShares b/c I didn’t have time to pick and choose. It was more an asset allocation for my alternative investment class. The fund has 17 different investments and I get one K-1, so that’s good. But RS closed its doors to new investors and are in the process of selling themselves.
Great article Sam! I’ve been following the blog for a few months now as I’ve been keen on starting my own finance blog, which I finally did after reading your post on Blogs and consistency. I’m a recent graduate from Harvard and currently work at a management consulting place at 22, you are one of my inspirations of where I want to be later in life. I was raised in a similar family where my dad was a SAHD for 18 years. My brother and I definitely appreciated him being there for so many of our milestones so just know that what you’re doing will make a big difference one day. Huge shoutout to all the SAHM out there too! Excited to start my blogging journey and hope to be as cool as the Financial Samurai one day!
Cool! Good to hear about the benefits of having a stay at home dad.
I’ve always wondered what strategy consultant actually do. You got to give me a hint one day! Good luck in the real world!
Great post!
Do you count your son’s 529 in your net worth calculations? With my three kids, I have a good amount of money hanging out there, and always waffle on if I should include it or not.
Great goals Sam especially #10. Being a SF native myself I hope that you will be a huge voice for being a great example of someone reaching FIRE and living in HCOL area with San Francisco being one of those cities. We can’t all move out of a HCOL area and settle in a LCOL area that easily. Their are some factors for making that happen like establishing a career and family. Hopefully you will put out more posts this year that relate to people living in coastal cities.
Also like your milestones for your son!! I was going through the same thing my 2 year old as he was taking steps to reach to milestones. Right now, one of the most stressful ones for us is potty training. He’s turning 3 in a few months and we plan to take him to preschool this fall and of course he’s required to be potty trained by then. Unfortunately he’s reluctant to even use the toilet since he’s comfortable handling his business on the diaper. Hopefully we can get him to transition the early part of the year.
Hi Sam,
I just heard you on the Biggerpockets podcast and was moved by the type of father you hope to be to your son. I am a pediatrician who also chose to stop working in order to be home with my children. I highly recommend the books, The Conscious Parent or The Awakened Family by Dr. Shefali Tsabary. She’s a clinical psychologist that brings a new and revolutionary perspective to parenting.
Thank you and hope it helps!
Thanks for the recommendations Jessica!
It’s been quite a journey as a FT dad, and I appreciate every moment. So difficult at times, but so worth it. Time is going quick and I just want up excited to be with him every day!
Thanks for sharing your thoughts through the years……been a fan and love that you are going to allow yourself to indulge a bit more.
Wishing you the best this 2019, Sam.
Hi Sam, always so great to read another post from you, especially getting a peek into your personal goals and life. I’m excited to see you spend more, too. If you ever need ideas, let us know! I could see y’all vacationing more. After seeing Gwen Paltrow’s Instagram over the New Year, I put Soneva Jani in the Maldives as a bucket list item. They have rooms of chocolate and ice cream that are open all day there. I’m not sure you need more than that.
I would like to hear your thoughts on nominal GDP targeting. I am a relative finance newbie, but it seems like a decent idea to me. The current Fed system seems arbitrary and not tied to actual market forces, as you noted with the inflation issue.
Happy New Year and best wishes.
Yeah, it looks like you have done amazingly well. Great jog! You definitely deserve to enjoy life and not get stressed out. I’m curious though, with how much income you are bringing in, why might want to go back to full-time work? Won’t you miss the freedom + flexibility? Or did I miss a post?
Thanks Chris.
Here’s the main reason after two years of FT parenthood: https://www.financialsamurai.com/thinking-about-taking-a-vacation-by-going-back-to-full-time-work/
“My goal is to convince big media to provide a more diverse perspective on financial independence since not everybody can or wants to move to a low cost area of the country.”
Once again, thanks for this. It’s extremely refreshing to see a perspective outside of the echo chamber of smug stoicism and/or what I would call “aggressive modesty” that often dominates the rest of the FIRE community. Their advice is fine for the average American who needs some financial sense knocked into them, but it can be quite stifling for high-achievers. Your writing actually provides a model for above-average people to aspire towards (especially people in their early 20s).
Hi Sam, really enjoy the blog. Although I signed on not too long ago, it’s been great reading what you and everybody else is doing, thinking, and planning. I think the first few days of 2019 is a glimpse of what the rest of the year holds for us as far as volitility. I am a simple trader of options (not day trader…) to enhance the portfolio so the more volatile the market is the better. Sell puts in steep declines and write calls on huge upswings. Seems to be working. Panic is now opportunity. Welcome to the new year.
How did you go about finding the best estate lawyer? What other professionals do you think are necessary as we think about not only our parents aging (husband and I are late 30s and we both have parents who aren’t as financially OTB in their 60s) but also making sure our ducks are in order for our progeny? Thanks! We both have financial backgrounds and MBAs so it’s more who did you use to write your medical/financial wills, did you set up any trusts, etc.
Wishing you a Prosperous New Year!
I enjoy your blog and style of writing more than other financial blogs. I like to read your thoughts on wealth building and the trials of living in such a high cost of living area.We don’t travel much due to cost so I’m not aware of lots of things that you mention.
As you have the joy of raising your son and get into the swing of private school costs and travelling with him, your mind will be working overtime on where money from tuition goes and how comes it rises by 30% every year? Plus you’ll gain the patience of a Saint when flying and dealing with rude passengers who do not have children. I’ll compare notes and see how you handled it.
We are not financially independent. But we have taken more risks and overcame more obstacles than our parents. While our incomes were only 20% of the cost of a home and our parents made 4x the cost of a home, we survived lots of downturns and difficult times. And we’re still here to tell the tales.
My main goal this year is to take a vacation to Hawaii. We are inviting my sister and niece to join us and it will be a week long of fun activities and fun. It will be very expensive but we have to do it while we are healthy enough. And EVERY year, I hope to do this. We work too hard and too many hours and due to our health issues, it’s time. I don’t know what will happen in 5 years. So, let’s spend it and enjoy it. And still pay the bills……
FS- I have been following you for a few years now and really enjoy your posts and growth as a new parent. I often smile as I reflect on your writing. After 14 years on the job I left to become a SAHD in Seattle for 18 months while I cared for my 2 and 6 year old daughters. We moved to Oahu 2.5 years ago and but kept our real estate assests in Seattle. Sounds like we have a few things in common. Let me know if you are ever on island, I would enjoy grabbing a coffee and comparing some notes about the journey.
Wonderful! How’s life there and what does your spouse do?
A HONOLULU get together would be great.
We really enjoy the slower island life and raising our two daughters in an outdoor all year, kid friendly environment. In general, I feel people here are happy and we enjoy higher quality of life. However, paradise does have its challenges at times. Housing and trips back to the mainland can be very expensive. Many parents send their kids to private schools which can add up over the years. My wife works remotely in IT for a mainland company and I work at one of the hospitals on the island. Salaries here are lower and the expenses are higher, this takes its toll over time. It feels hard at times to get ahead here. I look forward to talking shop with you one day in person.
Dan
You underestimate the power of your presence during early years. Your kid whines when he has to brush his teeth? Oh well. Play laugh and enjoy. My daughter’s first year was spent in a Russian orphanage. There were days I didn’t think she would ever speak or finish potty training. She is 16 and doing great. I retired 5 year ago– early. Consider staying home again when he is a tween. Thanks for your newsletter. 40 years ago I used to live n Lawton St.
Happy New Year!
I’m from another expensive coastal city (Melbourne) so really looking forward to more posts this year on investing in these types of cities.
Happy New Year!
Another stellar post Sam. Although I am a busy surgeon with 2 side hustles one of my real joys is a cup of coffee while reading your posts. I do not have the same problem with feeling guilty about spending or smelling the roses unfortunately. I think it is either in your DNA or not. There is certainly a balance that is different for everyone. I was deployed in the service for a time and the lives some people live outside the US makes me very appreciative of all I have.
Cheers!
Ah, your comment reminds me of this post when I went to Europe:
I’ve Seen The Future And It Looks So Bright
If I was a surgeon with two side hustles, I probably wouldn’t feel guilty during my down time either!
Europe would have been nicer than Mosul amd Talifar
:)
Quick quiz. Are you able to reallocate from stocks to safee heavens without paying any tax on it? If sell my stocks and put them on my 2% bank accounr, then i ha e to pay taxes on the stock earnings first.
Stock market stress is the worst!! Absolute worst case, I don’t need to touch my stock market money for 10 years, most likely never. Doesn’t make the pain any less. My wife is tired of my moods swings which correlates with the daily swings of the S&P.
It’s kinda funny, doesn’t matter if you have enough, or don’t, or have to much, the stress is real. I guess it’s all relative.
My prediction for 2019 is that the market will get back above 2800. Powell told us today that he has our backs and Trump is gonna need a win this year. The easiest way is an agreement with China. Either way I’m gonna continue to buy.
I understand why real estate is your favorite asset class( nice not to have a daily reminder of how much your losing) Mine will continue to be equites,(I love stocks) I just hope my wife can handle my mood if we drop another 20, 30 percent!
Best wishes, Bill
Hah, I hear you.
If we get back to 2,800, I am probably going to sell 80% of my stock holdings and buying a nice place to enjoy. Got to enjoy your wealth, not let your wealth give you stress!
Awesome and inspiring post. The one that resonates with me the most is #11 – Be more forgiving of myself. I am a perfectionist and often struggle getting started with something because I can’t imagine it not being RIGHT immediately. Very inspiring, and I look forward to following your progress.
What a week 2340 to 2520 +7.6%
What next?
“We have frugality disease.” That made me chuckle. Glad to see you’re going to loosen up a bit. Enjoy 2019!
Thank you Sam for sharing your goals and always giving practical advice. We have been reading your blog for years which helped us tremendously on a personal and financial side. We honestly feel very fortunate, so it is our turn now to help others. Our goal for 2019 is to help 500,000 people achieve their dreams (and resolutions) while raising $100 million for 100+ Charities. There is nothing better than living a Life true to yourself. Cheers to 2019!
So it’s becoming more and more apparent that we can never allow deflation. Real deflation I’m talking about. With a system so levered to elevated collateral prices, at the end of the day it’s nice to imagine a Fed chairman being all hawkish & butch on the markets, but in reality the spectre of deflation is too much. They will print to the point that “price controls” are in place for financial assets.
This is the crux issue investors must face soon. Do you believe in price controls or markets forces?
What’s better inflation, deflation or stable money? For me I think a 2% inflation rate has a ton of benefits. Deflation or higher rates of inflation become disruptive to decisions and create more inefficiency.
Sam,
Wishing you and your family a Happy Healthy New Year!
Been a reader since 2013 and thank you for so many informative posts! I learned a lot from this site even though I mainly focus on fixed income investments.
You have some great goals for 2019 especially to let loose, spend more, to hire more help for your web site & home and to focus on making MORE money. You only live once. You got enough to live several life times so enjoy and take it easy.
For 2019, we will continue to keep our finances simple and as always playing it safe.
– The bulk of our money is in individual NY muni tax free bonds earning an avg of 4%
– Our 401Ks are ALL in our company’s gurantee fixed dollar earning 4.55% this year.
– We will need to deploy some cash from 0.10% savings to 2.47% CDs at Citbank.
– Will continue to save 75% of our incomes while I am still working.
– Wife forced to retire at age 51 and I will retire at age 55 in 4th QTR of 2019
– Planning to celebrate my retirement by going to Hawaii and taking a long cruise.
– After retirement, there will be no reason to save and we will spend freely with passive incomes from munis and 2 pensions which will cover 2-2.5X inflated lifestyle expenses.
Ever since year 2000, we have no money in the stock market. I KNOW that if we didn’t sell then we would have made out better but that is ok since we are not greedy. People tell us that we are not hedging against inflation by not having money in the stock market. That is also ok since I can’t stomach losing principal even though it is just a paper lost. BUT I can’t help panicking which forces me to sell at the wrong times which then becomes a real financial loss. My IT job is stressful enough so I don’t want to endure any financial stress if we had investments in the market.
With our munis, pensions, 401Ks interest and Social Security at 62, it will cover 3-4x current expenses. Maintaining Financial Samurai’s definition of fat FIRE is our goal.
Slow and steady wins the race is our motto. Most of our investable income are earning 4% plus except for cash savings at 0.10%. Our investable networth increased 4.4% in 2018 and I expect it to increase a stress free 4% in 2019.
Adam
I really love how you KNOW THYSELF. If the reward is not worth the risk, then you do not take it. To compound work stress with financial stress would be counterproductive if it hurt your lifestyle.
It’s the same reason why I like to keep most of my investments in private investments and real estate versus stocks.
A 4% return will be another great year! Exciting retirement year for you.
What are the core skills you are looking for in a writer. I am a newbie in terms of a blog etc and come from an accounting and finance background but would love to help out.
I had no idea you have a forum. Time to hang out in there more. :)
I’m glad you asked and here are my predictions for 2019 in order of confidence:
1. Kim Jong Un continue nothing.
2. Putin escalates in Ukraine and Syria.
3. Trump impeached but not convicted.
4. Tariffs reduced but continue.
5. Brief opportunity at 2800 due to trade announcement or Fed decrease.
6. 10-year bond near 2.5%
7. GDP near 2%.
8. Fed reduce interest rate.
9. Infrastructure bill passed for no wall.
10. Real-estate keep pace with small cap.
11. Bay area real-estate drop less than 10%.
12. The Cleveland Browns move to Oakland. The Oakland Browns.
13. Marquette will beat Kansas.
1b. Agape Soul with beautiful Sonia this weekend.
3b. Intern turns down job offer in Texas because she is afraid to drive alone in snow! Millennials, what have your parents done to you!! They planned everything.
At 2,800, I think I’m gonna turn my House Sale Fund into 100% cash and just call it, earning a risk-free 2.5% until I can find that next house.
Nice predictions!
FS – did you turn your House Sale Fund into 100% cash since the S&P is now 2,900?
Regardless, great info you provide and look forward to your next post.
Semper FI,
Luis
Sold 65%! Feeling really good. Used the proceeds to buy something important. Might share in the future.
Please don’t keep your loyal readers guessing. Can’t wait to read what is the “buy something important.”
Thanks again FS for your efforts!
Semper FI
I am about 60% stocks and about 10 – 15 years from retirement. I plan on reallocating down from 60% to 50% or even 45% in the next week or two. If I can find bond funds earning in the 4% area or better if I am lucky will be great. I feel like the evidence is more for that of a soft landing / slow growth based on my read of the general data. The fact that I think it’s more likely is more of a 60 / 40 chance which I think is pretty good.
I am tempted to move a significant amount of my assets to pay off my mortgage. My mortgage is at about the same rate as a great high yield savings account. Basically, I could see all of my non retirement investments and I’d be debt free. I’d still have my emergency fund, and I would still have all of my retirement investments. Its a tough call.
I would love to hear other folks thoughts on this
Great post and best wishes to 2019.
One comment/point of debate. I wouldn’t put Vegas in your housing decline list with plenty of available land. Despite being in the middle of the desert, it’s surrounded by mountains and national parks. Vegas itself is currently very much landlocked and new development is increasingly denser (townhomes and apartment buildings).
Got it. I hope so, as I have a real estate crowdfunding investment there where I thought it was a bad deal.
I also wrote this page: The Hottest Housing Market In 2018 Will Likely Be The Worst In 2019
What is your affinity for Las Vegas real estate?
I like Vegas real estate for a lot of reasons you outlined. Low cost of living (250k-300k house), and a migration of people out of high cost high tax locations to lower tax lower cost locations. Factor in baby boomers retiring and it’s quite compelling to sell a house in Southern California buy a house in Vegas and live off the equity difference.
You noted the volatility as a key concern. Many of the factors that led to the 2008 crisis aren’t there anymore. Mortgage lending has tightened significantly. The market has been tight and most of the buyers have been cash investors (both mom and pop and Giants like invitation homes)
You noted the increasingly inventory levels, vegas’ inventory is now normalizing (roughly four months of inventory and in line with the national average). With the price run up, financial investors are taking a breather and waiting for rental yields and cap rates to catch up. More of the buying is end users with a mortgage and as you know, that process takes longer.
I don’t think it’s time to sound the alarms for Vegas. The fundamentals are strong (population growth, new housing demand in excess of new housing supply, housing remains affordable vs income). The investor vs homeowner mix is normalizing a bit. 2019 isn’t going to be as great as 2018 but I’d much rather be overweight Vegas which is low cost, low tax, low supply than overweight a costal city with high taxes and high cost inflated by overseas buyers.
Cool. I hope you are right! And I hope the Raiders get better in Vegas.
I would factor in the fact that LV is rapidly depleting its water resources. Cape Town, SA has already come close to the edge in terms of running out of water recently so it’s no longer an apocalyptic fantasy for certain cities.* Once the golf courses dry up and water is rationed, LV might be a far less attractive place to live. Their water mitigation measures up to this point have been pretty weak..
* I have to be careful here Sam, as I don’t want to feed the financial end-times troll you seem to have picked up recently. This is a regional problem, not a global one.
Vegas isn’t Cape Town. Vegas (along with Arizona and parts of California) gets it’s water from the Colorado River. Snowpack gets melted and flows to a man-made reservoir and hydroelectric dam. There are long term agreements on water usage and if water supplies are low, Arizona has junior rights. Both Arizona and California use substantial amounts of water for agricultural purposes and those will be the first users cut off. Although Vegas is in the desert, there is a ton of snow in Colorado which will provide water for years to come. Almonds might get more expensive though…
Eric,
I’m afraid you have how this will play out completely backwards. CA made it clear during the last drought that these agreements can and will be altered in emergencies. Guess who gets left without water in that scenario?
I totally agree with the assessment of a continuing flattening (and eventual inversion) of the yield curve leading to a recession soon. I hear many criticisms of this idea and claims that the yield curve has lost it’s predictive power as a recession indicator due to quantitative easing. The Fed are going to push rates up to unsustainable levels to control anticipated inflation and the economic cycle of expansion will end. 2020 could be a bit soon but it’s a pretty good guess based on the data.
Great post Sam, looking forward to seeing a blog post on how you are able to monetize the website better and give us other bloggers some good ideas!
You have an aggressive plan in place. I wish you the best in 2019. In terms of the market, would you not consider this a buying opportunity for stocks (i.e., what goes down, will come back up….eventually)?
If you believe the reward is worth the risk, go for it.
For me, I do not. Hence my focus to mainly pay down debt in 2019.
What’s your mortgage rate? Sorry if you’ve mentioned before; I don’t recall seeing it. I struggle with this because in theory I’d like to wipe out mortgage debt instead of invest in taxable this year. We expect to have appx $150k free cash flow to figure out what to do with this year – which is the approximate balance on my four rental mortgages. But my home mortgage is 2.75% and my most expensive rental mortgage is 5.125% – which is effectively 3.3% given our tax rate and the full deductibility of that interest. The ROI on a retail priced rental property would easily exceed that return even assuming break even cash flows, so it seems almost silly to pay down such cheap debt in this environment…even though in theory I know that being debt free is anything but silly. Decisions, decisions…
It’s adjusting in July 2019 to 4.25%. Hence, I’m excited starting then to aggressively pay it down or refinance. I can refinance to 3.25% for another 5/1 ARM, but I don’t want to spend the money and it’s a PITA kinda.
Ha, yes getting a mortgage is usually a large PITA – as is extending one (which is a large part of what I do as a banker). I definitely think the bull run of the last 8 years lulled many people into a higher risk tolerance and made it easy to ignore prudent, boring advice like paying off (or avoiding) debt. I’ve been slowly de-levering for years but have reached a point where building up some cash in case of recession buying opportunities might be more favorable for me personally. But I don’t have kids! That definitely changes things. Thanks for all your writing I really enjoy it.
I am leaning more and more to focusing on paying off debt. I feel like the risk/reward is there – I get guaranteed “returns.”
Hi Sam,
I’m in my low 30s with 100% of my 401k invested in U.S. equities funds. I started investing in January 2010 and have been riding the wave ever since. It seems more than likely that at some point in the next few years, we will hit a bear market and reducing risk will be important. I have no problem buying a bond index fund now. I am concerned, however, with missing the upside because I’ll have to time the market on the way back in.
So — with 30+ years until retirement (I don’t live FIRE), do I just stay in my aggressive funds and buy shares at low prices? Or do I try to minimize losses on my bull-market-bloated account and hold bond indexes for a few years?
If you truly plan to work for 30+ more years, I would keep maxing out your 401k.
The thing is, are you building a sizable after-tax investment account? I believe that’s what truly moves the needle bc you can only invest $19K max in the 401k.
Just know that desires change, and can change quite quickly. At 32, I thought I would work until 40. At 34, I decided work wasn’t worth it anymore.
Related: https://www.financialsamurai.com/after-tax-investment-amounts-by-age-to-retire-early/
I’m one of those rare people who loves his job. Maybe I’ll grow to hate it, but for now, yes, I want to keep going.
I was more asking about my asset allocation in my 401k. That is — move my money and near future investments within the 401k from S&P indexes and aggressive growth funds to a bond index.
Depends on your goals and how much you need the money. Feel free to elaborate your entire financial situation or go to the forum to get better feedback.
See: https://www.financialsamurai.com/forums/financial-advice/
Thanks as always for your thoughtful and well informed posts Sam… as we enter 2019, just wanted to express gratitude.
Also, I’ve been reflecting on your ‘living the good life’ and being less frugal idea for 2019. I’ve been so focused on living frugally for so long that I know my personal rate of inflation has been flat or negative as I’ve continued to optimize my life. Its a great achievement, but for me it may have run its course.
I’m in the situation of having a very decent income — and have nearly reached my ideal level of financial independence, however, if I was willing to spend a bit more, it may be that I’d be willing to work longer. I’ve been trying to figure out this trade-off. Once you reach FI, you could literally stop saving and spend all of your income. I’m not sure how to do that, but am wondering if allowing just a little lifestyle creep could be a good thing and help me to stay motivated in my career.
Me like. Best of luck in 2019, my friend.
Looking forward to furthering debate on public vs. private school (since I totally disagree with you). Cheers to a successful 2019! You were an inspiration to start my own site.
I agree w your analysis for 2019, but damn it’s hard to get off the bull. The stock market has changed my financial position in unimaginably (at least to me) positive ways… I rode the dot com and I’ve ridden post 2008 to ridiculous gains and here we are, clearly in some kind of slow down. My gut tells me to ride it out, but paying off the mortgage would be sweet. My brain is telling me to reallocate to safer ratios but that kind of thinking got me nowhere when I had nothing to lose.
No ez answers in life but the Spockian nature of FS gives me some solid logic to anchor my internal conversation.
So thanks for that and Happy New Year!
Best of luck on your 2019 goals…as a lover of goal lists, I envy the amount if detail involved.
I’ve you’ve been around the dotcom days like me, then surely you’ve made a nice return since? If so, the key is to KEEP what we’ve returned. The worst thing that could happen is if we give it up like those dotcom millionaires did in 2000 and start all over.
That would truly be the worst.
Can’t lose if you lock in a win!
Sam, I’d like to write for you! I’ve been blogging ten years for myself, and have had staff members on several financial sites. I specialize in practical frugality.
I’d be happy to tell you more, plus provide some sample posts on spec.
Hi, Sam. Longtime reader here, first time commenting. One of the things I most appreciate about this blog is all the self-reflection and willingness to see things from a different perspective, and of course, the comments from your readers. I am sad to hear that you are feeling aches and pains and am a bit surprised to hear about the amount of stress you’re experiencing from running FS.
If you are willing to entertain the idea that most, if not all, body aches and pains have to do with our emotions, then there are a lot of ways you can help yourself. Craniosacral therapy, structural integration, and acupuncture can all help with the physical symptoms. Still, the pain relief will likely be temporary until you resolve the emotions underlying the pain.
What stood out in this post is that you are stressed out running FS even though you don’t need to spend any of your income from it and still feel guilty about spending to take care of yourself. In this case, you might want to explore systemic family constellations to see where your stress and guilt are really coming from. [Hint: I don’t think it’s from the business or your having lived frugally most of your life]
If you’re interested in Bay Area practitioners and other resources, please email me and I’ll send you a list.
I’d love to try craniosacral therapy, structural integration, and acupuncture.
Except for the cold I have right now, I’m feeling pretty good in general. My favorite book is Healing Pack Pain, which completely ties in the emotional to the physical.
I’ve always been frugal due to my parents. Check this passage out from the post too:
My desire to constantly grind stems from mistakes made in high school, plenty more rejections as an adult, and an indoctrination since I was a kid that I need to try harder as a minority to get ahead in America. I know I have a really good thing going now, so I don’t want to take my good fortune for granted.
Related: Why Is Asian Income So High?
How about you? What’s your story?
Glad to hear you’re feeling good! I’ve heard good things about Healing Back Pain.
You should definitely read it!
I feel good that at almost 42, I still have no grey hairs and very rarely do I experience chronic pain anymore. I just have to be careful overexerting myself in sports.
How about you? What’s your story?
I plan to write about it someday on my blog. Still too new to this, and trying to figure out how much and what to reveal. :)
Sounds great, but I still don’t see how you are unemployed. You are a small business owner!
Unemployed since 2012 and proud.
Potahto potato!
Sam,
The market has the expected S&P values between 2175 and 2850 by Dec 31, 2019. There is a 23% probability that it will reach and exceed your target of 2800 by year end. Agreed on taking less risks as we grow older. Watching the market pissing away or gaining the value of a Porsche 911 turbo on a daily basis in one of my active managed portfolios in Q4 definitely is not fun. With the sentiments (including the surveys of AAII with over 50% bearish), usually it may benefit on taking the other side. But that is besides the point, as retirees are on capital preservation and distribution modes.
With that said, I think there is an alternative method to generate consistent retirement income and reduce retirement portfolio volatility via some options strategy that don’t require too much management. I do some google searchs and I could find very little information on a comprehensive management-lite options retirement strategy that retirees will never run out of money. I think that may be a book topic for the options based retirement strategy for the book series of dummies or idiots. Kind of along the line of thinking process of Steve Jobs who produced computers and smart phones that are easier to use and cater to the masses. Perhaps, there are retirees who could benefit from easier-to-use options strategy for consistent retirement incomes. It is a sweet spot between CDs and stocks/bonds combination, and or REITs, etc.
I am a member of a private network consisting of former hedge fund, quant fund, mutual fund portfolio managers and financial analysts, I am sure they will pop holes on my proposed strategies when I run it by them as nothing is 100% perfect. But then the critiques will help make my strategy better before I publish a small easy-to-follow booklet. I guess there will be some audiences for simple and yet beneficial retirement income strategy.
What is specifically the alternative method you speak of? thx
Options based strategy. It is a particularly useful scheme to produce incomes consistently for retirees if done correctly, and I have not seen much of that discussed as a viable retirement strategy. I think it is analogous to the pre-PC era in the 70s, when everybody, including the experts, deemed that the computers are too complicated and too expensive for the average Joe and Jane, and it was inconceivable for people to have a computer at home. Unfortunately, options were mis-characterized as something really bad or dangerous according to conventional wisdom. But then, if it is a wisdom then it is not conventional.
The point is, there are many different levels of options strategy, similar to karate that has levels ranging from white belt to black belt level 10, and average retirees can just need a white-belt like options strategy to produce consistent and hopefully perpetual incomes. It is not a get-rich-quick scheme but a consistent means to produce retirement incomes without spending down the principal.
Totally unrelated to finances, but I noticed that one of your goals is to teach your son how to pedal a tricycle. Instead, look up the benefits of a balance bike. Balance bikes are generally considered the best way to teach a child how to ride a bike. Good luck!
Or a scooter. I have a son exactly a year
older than yours, born April 2016. He and his neighborhood friends all learned to ride a scooter around 2/2.5 years old. Through trial and error we discovered that the Micro brand is the easiest to use/balance on.
We don’t have a ton of hills- live in Miami- so the scooter has been a great addition to walk time; we can go further and mom get some actual exercise.
Sounds good. Yes, will definitely try those too.
So agree! I never let my son use a tricycle or training wheels. He started with a strider at 18 months and was on a little 12′ bike (no training wheels) at 2.5. Now at 7 he’s better on his mountain bike than I am!
Cool. Didn’t know starting with a tricycle was so bad. I gotta do a better job at reading the parent handbook of what’s right and wrong.
You got a handbook? Dang. We never got one.
By kid 3 you get a lot more mellow about things.
We use a small bike where I pulled the pedals off and no training wheels. They can easily reach the ground and push off to learn balance and it’s inexpensive since it’s just an old bike the right size.
re: “Sit comfortably in circle time for more than 10 minutes”
As the mother of two (now very grown boys) I can certainly attest that is a challenging goal! LOL
I’m hoping for at least five minutes! Otherwise, he won’t be able to get into preschool :-)
Hi Sam-
Please be cognizant of pushing your child to meet your goals for him that are not really age-appropriate. That will only frustrate him and you, and possibly set up relationship dynamics that are not what you really want. For instance, mouthing toys through all of age 2 is appropriate, I believe. Sitting in circle for more than 10 minutes is difficult for 5-6 year olds. Just thought I’d let you know. I’m not an expert, but I’m a late-early-semi-retired “single mom by choice” of a first grade boy.
Sounds good. These are just guidelines I’ve Assembled from my research on milestones to hit by age 3. I don’t expect to hit them all at all. But I do expect to be on the ball as a parent to help him work toward these milestones.
Sooner or later, I believe most of our children will reach all the basic milestones by the time they go to kindergarten. It’s up to us to be aware of red flags if there is tremendous delay e.g. over six months or maybe even a year.
I’m just trying not to wing it as a dad. There’s no point in me reading all these books and articles without setting some goals.
You talk about living frugally – did you ever do a post on your budget? Also what do you use to teach your son his communication skills?
I haven’t posted my specific budget.
But you can see the budgets of a family making $200,000 a year and $300,000 a year to get an idea.
For communication skills, we simply just speak to him all the time and act like walking visual aide descriptors e.g. “you are walking on the sidewalk and to your right is a white garage door.” Then we’ll throw in Mandarin, Japanese, and Spanish and see if anything sticks. It’s just a long road of constant communication.
Happy New Year! I am so grateful I found your blog last year, and find your posts so informative, inspiring and entertaining, especially as a fellow Asian-American parent and over-taxed Californian who is always looking to improve on all fronts :)
Thank you for such great content and looking forward to learning more from FS in 2019!
Happy New Year! Thanks for the thorough 2019 outlook. It certainly will be interesting to see how the economy unfolds. I certainly don’t want to go through another recession but if we do I’ll do my best to keep focused on my long term investment plan and avoid panicking.
I like your list of goals. Such a detailed list and lots of exciting targets in there. Minimizing stress is always a good thing and smart on paying down debt. I want to do more of that too especially if the markets don’t do well. Great specific milestone goals for your son too. Clearly you are doing a stellar job in fatherhood.
It doesn’t feel like January to me yet so I’ve got some catching up to do.
All the best to you all in 2019!
Great summary post, Sam. I agree the risk premium isn’t worth it at the moment, and am comfortable with my asset allocation of 46% Equity / 48% Bonds-Cash / 6% Alternatives. My withdrawal rate is below 3%. I’m hunkering down for a while.
Wasn’t aware of your forum, heading over there now to check it out. Best wishes for a great 2019, I applaud the priority you’re giving to being a Dad! #NoRegrets
Hi Fritz, I’m so happy you have a conservative asset allocation post retirement! I was kinda worried about you once the 4Q2018 meltdown started. But with your asset allocation, I’d be able to rest pretty easily…. since I am now b/c it’s similar to my asset allocation.
I do hope to sell down more equities if we get back to 2,800+ on the S&P 500. I did the Monday post the Xi/Trump meetings, but clearly not enough.
Might want to make the entry point to the forum easier to find. Just to check it I have to go searching for that post each time.
Yes, good point. I’m going to put the FS Forum as a menu option. Let’s see if it fits as space is a premium. Or maybe I’ll just nest it.
Hi Sam,
Definitely consider putting the forum as a menu option. That would be a great option. Best of luck in 2019.
I think you are already very forgiving of yourself, at least to the extent that you understand yourself and know how to make adjustments when you want to. I always enjoy your work in part because of the (to me) seeming absurdity of hcol big city life. Kind of like listening to Dave Ramsey’s call in train wrecks makes my prudent financial choices seem the stuff of brilliance. But you make a salient point, it is an undeserved huge audience and you are a savant at prospering in such a challenging locale where things like hma’s, non-negligible property taxes, private k-12 schools and million dollar houses actually exist. In truth I would have had to be a complete idiot, not just a partial one, not to have succeeded financially making big city wages in rural Arkansas. That really hasn’t qualified me to say much of anything to your audience because most of them couldn’t make big money in the sticks and would be bored silly here. I also love skilled writing, and nobody does that better than you.
Yes, actually one of my goals is to entertain LCOL folks about HCOL costs. I know folks get enjoyment in seeing the suffering of others. Look out for some more absurd costly posts from me this year!
But hopefully, there will be more empathy and understanding from LCOL folks too. It almost feels like HCOL vs. LCOL is like Democrats vs. Republicans if you look at the voting map.
Where are you in Arkansas? I’m in Little Rock.
South Arkansas, but my consulting is in Little Rock mostly. And I am kidding about hcol life. All three of my kids are in areas much more expensive than mine, but thats where the jobs are and they like it. There are disadvantages to rural life, I drive a crazy amount of miles which is one of them. I think though if anything, the advantages of rural life are ignored most of the time while the advantages of city life are trumpeted. But there does not have to be enmity between city and country dwellers. I honestly love this site because the posts are thought provoking and informative.
I think setting a goal of a certain amount of spending each month is a great idea as most people who have been frugal the whole time to reach FI have quite a bit of difficulty turning off that switch and actually consuming assets (I know I will have that issue).
I think you have a very well thought out economic outlook and plan for 2019. I think everyone was so used to hitting home runs that they are going to continue to swing for the fences and strike out. Getting base hits over the next year or so will probably be the smarter way to go, and the least stressful.
Look forward to you realizing all your goals especially with the website. It has been a constant source of inspiration in my life and also with my blog.
“I have an opportunity to establish Financial Samurai as a go-to resource for big-city audiences.”
PLEASE keep this goal high on your list. The FIRE space needs an ongoing voice like yours that understands the realities of living in a coastal city. Not everyone can just pick up their lives and move to a town where houses cost less than a well equipped SUV and meals cost $10, and not all jobs can be done 100% remotely while living in these faraway flyover country meccas of frugality.
Thanks!
WAH / SAHD dad in HCOL Seattle. :)
This caught my eye as well, thanks Sam for making this a focus! While I like the idea of being able to go to a LCOL area, the Bay Area offers so much that I may not be able to justify it. It’s great to see a voice that focuses of FIRE in HCOL areas too.
You got it Brian and Dan! At the end of the day, writing about HCOL topics will be easy for me b/c I’m either going to be in SF or Honolulu. It’s easy to write about what I know.
Echo this, keep up the good work with giving a personal finance voice to this population of America. I suspect most of the “FIRE” bloggers are from small towns originally and feel more comfortable moving back to the heartland. For us that grew up in HCOL areas its much harder to leave family, friends, independent films, great restaurants, and the business & personal dynamism that comes with these places that make for great opportunities.
I am in contract to buy a property for $1.2M selling my current home for $700k and putting down $250k while having $200k leftover liquid reserves. $6,000 a month piti. Problem is I have self employed income as a private money lender. Nervous about taking on so much debt in this market. Am I being too scared? Can I handle this?
Yes, you should be nervous, especially if you haven’t sold your current home yet.
But that’s a nice cash buffer.
Donno anything about your income, net worth etc.
If you’re OK losing $250,000 in your house’s value over the next 5 years, you’re good.
So you think the new house will lose $250,000 over next five years? My house is being sold simultaneously. My net worth is only these cash reserves and my $35k IRA and the equity in my home being transferred to new property. I have made over $200k the last 4 years, but if the real estate market drops that could dip as well but I have never made less than $120-$150k 2005-2018.
You know, there are people who live in “these faraway flyover country meccas of frugality” and are quite happy with our way of life. Finding out that someone spent 50k plus on a used vehicle makes me cringe when I can buy a brand new vehicle for that same money. These faraway flyover country meccas you refer to are still part of this great country. Visit us sometime. You might learn something. After seeing this kind of comment, I feel like there is a certain element of snobbery in the comment.
No snobbery intended whatsoever – I deliberately called them “meccas” after all. I visit them frequently and am in awe of the affordability.
If you’re happily set up in a LCOL region I am quite jealous of you! Someday when my kids are older I’m headed your way. Be careful tho, if too many people like me cash out of our HCOL cities and buy homes in LCOL they won’t be LCOL much longer… ;)
Our frugality would probably cause us to cash out when our LCOL area becomes HCOL. With all that extra money from cashing out, we would be able to find a new LCOL area and start the process all over again.
I third this. HCOL is for real. Really brightens my day when I see a Financial Samurari email in my inbox – no matter what the topics or news it brings – I know I will gain valuable insight from you. Keep up the great work. Molly in Seattle.
I’m going to be curious about the dangers of multigenerational wealth that you see…
I was thinking the same thing.
I would like to see this as well.
5% growth would be nice indeed. I’m probably going to take advantage of some nice CD rates and just keep my asset allocation at my targeted levels. Whatever happens after that happens, I’m still young.
The way I see it, if I focus on my health and fitness I’ll easily outlive the next downturn, and the one after that, and so on….
Happy New Year, let’s make it a good one!
Happy New Year!
You remain my favorite long-distance Millenial, even if you rebuff the label. You are also exceptionally capable and talented in a way that very few of your readers are. Quickly discarding your financial playbook as things change is a particular talent. That means readers should not blindly follow your advice – you’re not going to.
You seem like my wife who only gets what he “needs.” And since by her own words she doesn’t “need” anything, her spending is quite muted. In her mind, not “needing” was the childhood marker of success that survives to this day. It’s quite limiting; however, much better than inverse I see in so many of her friends who have mortgaged their lives.
Thanks Bob. Maybe one of my goals for 2020 is for you to classify me as Gen Z! It would be a blessing to feel, look, and sound younger every single year.
I’m impressed with the FS readership. They’ve given me lots of things to think about and elucidated plenty of financial blind spots on my financial journey. I seriously think we have the best group of PF enthusiasts on the web, which is part of the reason why I launched the FS Forum. Folks helping others achieve financial independence is the best!
From what I see, you are a forever Millenial. You will grow biologically older along with your peers; however, you will retain your youthfulness, and in that sense never age.
Excellent set of goals! Who knows what 2019 will bring but you can control how much of an impact you make on it and what you will get out of the year.
Goals, passion, and drive are what enables us to be the best we can be. If there is great enough desire for something, we will achieve it following the roadmap of the goals we set along the way.
Happy 2019!
I didn’t know you had a forum. Thanks for sharing.
And! Thanks for all your writing and your hard work here. It’s very helpful/inspiring, especially to someone who didn’t start saving until later in life (age 40).
Yah, I have to go find the blog post whenever I’m on a different browser since there isn’t an obvious link on the home page…
Yes, it was the first I heard about that too.