Financial Samurai Newsletter June 22, 2024: Vacation 2024

This is a free Financial Samurai newsletter that was published on June 8, 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.

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.

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. Sam's current focus is on investing in artificial intelligence as he is a strong believer in the technology changing our future.

Financial Samurai Newsletter June 22, 2024: Summer Vacation 2024 Edition

Greetings from Laie, a town of roughly 5,000 people on the northern side of Oahu.

Staying in this small two-bedroom, two-bathroom single-family home on the beach is a great getaway for a couple or a family with one child. But it’s a little tight if your second or third child is not a good sleeper.

This living arrangement reminds me that there simply is no perfect house unless you have hundreds of millions of dollars or more. Even then, I know a couple of ultra-wealthy friends who would love to have more land.

I’ve been climbing the property ladder since 1999 and have put together a comprehensive post on everything you should consider before buying your next house—things you might not even think of.

So far, I don’t think there is a single physical asset that can compare to owning a nice primary residence. Once you buy one, you’ll feel like all your hard work was worth it. A nice house will also motivate you to keep pushing forward, much like becoming a new parent.

See: In Search Of The Perfect House In A Big City

You Can Only Live in One Place at a Time

Owning a vacation home is a luxury I do not recommend for most people to pursue. You will not use the property enough to make it a better value than renting. Upkeep will be an ongoing headache since you don’t live there. And the property’s value will be the first to go down in a recession, given nonessentials are sold off first.

Just like how I came up with a vacation spending guide the other week, here is my vacation property philosophy and guide. The mental burden of having a vacation property becomes less appealing as I age.

The Problem With Owning Beachfront Property

For over 20 years, I dreamt of owning a beachfront property. I imagined waking up to the sound of waves gently crashing on the shore and seeing palm trees swaying in the breeze. It would be so peaceful.

Now that I’ve done it here in Laie, I can see how much maintenance goes into keeping up a home that is constantly battered by seawater. Instead of having a vacation property, make a vacation property your primary residence if you can. Or buy a primary home that feels like a vacation property instead!

Economy Plus for the Win

The last time I flew to Hawaii was in December 2021 to see my parents during COVID. I decided to fly first class with a flatbed for the first time. The flight cost $1,700 compared to about $600 if I flew economy.

Given it would have been my first flight since 2016 and the fact that I was in decumulation mode, I figured why the hell not? The concern of a premature death was constant. And just like having a Toto bidet, I thought I’d never go back to the old ways of TP and economy class.

But there was no way I could justify paying for first-class tickets for our family of four. No way are my kids flying first before they get their first job and realize how expensive it is. So we compromised and decided to all YOLO in economy plus.

My wife and two children sat in one row of three seats, and it was spacious. I’m sure to my kids, economy plus felt like first class given their small sizes. I had to sit in the aisle seat in the row behind. 

To me, I couldn’t tell the difference between economy and economy plus until a couple from Ohio next to me said they were so much happier in economy plus. They took a flight from Athens to San Francisco.

Hard To Change The Way You Spend

As I was waiting to go to the bathroom on the airplane, I peered into first class and saw their comfy seats and wide-screen TVs. But instead of feeling envy, I felt wonderful saving money.

Sure, I only had my iPhone to watch Netflix on, and my seat couldn't recline much. But being able to save $200 an hour on a five-hour flight by sitting in Economy Class felt like a huge win!

With the ~$1,000 in savings per household member, I'll be using the money for food and excursions instead. Once you've been frugal for so long to achieve FIRE, it's hard to justify splurging consistently, even once you get there.

See: Stop Frugality From Leading To Lifestyle Deflation

To Do Item Before The Next Newsletter

Before the next newsletter drops, take a moment to reflect on your current lifestyle and ask yourself if you're spending appropriately. 

The 70-year-old Ohio couple sitting next to me mentioned that this was their first trip to Hawaii and that they hadn't flown in 15 years, despite having lifetime pensions. They said they had been discussing going for the past five years and finally got around to it.

Don't wait too long to do the things that you want. Your window of opportunity is much smaller than you think. I hope you enjoyed my latest Financial Samurai newsletter!

To Your Financial Freedom,

Sam

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Listen to the Financial Samurai podcast on Apple or Spotify. There's a new episode on FANG FIRE where I interview Andre who got laid off from his ~$500,000/year job a year ago. We talk about his activities, his emotions, FOMO, and how he's making things work with a wife and daughter in SF.