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Financial Samurai

Slicing Through Money's Mysteries

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Should I Go To Grad School? Get Rich Or Die Trying!

Updated: 07/15/2020 by Financial Samurai 25 Comments

You’ve got your undergraduate degree and now you’re debating if you should go to graduate school. I’ve been in your shoes. I too wondered should I go to grad school? It’s a big commitment. Tuition can get quite expensive, especially if you quit working full-time to go to graduate school. However, earning a graduate degree can boost your career and really increase your earnings potential.

I’ve decided to dedicate time this month on graduate schools, specifically the much loved and vilified graduate degree, the MBA. Let’s start off with a layup as to why getting your graduate degree is a good idea, if you want to make more money.

Go To Graduate School To Make More Money



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Twelve Non-Recourse States Let You Walk Away From Your Mortgage

Updated: 06/27/2022 by Financial Samurai 122 Comments

Twelve Non-Recourse Stats That Allow You To Walk Away From Your Mortgage

Refinancing now may be smart as mortgage rates are low but may head higher as the economy recovers. However, if you are struggling to pay your mortgage you may be considering walking away. If you do, there are non-recourse states where you can walk away from your mortgage without the bank coming after your other assets.

Let’s say you are so underwater on your mortgage that you feel it doesn’t make sense to continue paying anymore because you don’t think value will ever recover.

This happened a lot during the financial crisis in 2008 – 2009. Homeowners just gave up because banks were so stubborn in allowing underwater homeowners to refinance. As a result, many homeowners just stopped paying altogether.

Have you ever wondered why there have been so many foreclosures in states such as California, Arizona, and Nevada? I’ll tell you. They are non-recourse states.

The 12 Non-Recourse States

The following are the 12 non-recourse states where you can walk away from your mortgage and not have the lenders come after your other assets. Of course, each state will have some different methods of trying to recoup bad debt.

  • Alaska
  • Arizona
  • California
  • Connecticut
  • Idaho
  • Minnesota
  • North Carolina
  • North Dakota
  • Oregon
  • Texas (yes for home equity loans, first and second mortgages could be pursued for recourse)
  • Utah
  • Washington

If you so happen to own property in one of these states, and have substantial assets elsewhere, you can legally hand over the keys to the bank and exonerate yourself from the mortgage with no penalty against your other assets!



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We’re Ignorant Idiots! Please Tell Us Why A Flat Tax Is Not Fair

Updated: 11/11/2018 by Financial Samurai 483 Comments

Flat Tax Argument

Let’s all move to France! 35 hours a week, pensions, the good life.

Can someone please give us a rational argument why implementing a Flat Tax system in America is not fair? We don’t know if we can continue posting without thoroughly understanding this issue first. From a percentage basis, each person pays an equal amount of their income towards taxes, and from an absolute basis, richer people pay more!

Why don’t we just start taxing people according to height? The shorter you are, the more you have to pay! Brilliant idea, thanks.  Here’s a commentary from a site that really got me thinking about the word “comrade” and the phrase “melt your pots for bullets.”

Those of you rich folks in the top 39.6% tax bracket (~$400,000 and higher) need to stop whining. You don’t get to whine. I hope this administration taxes the beejesus out of you all…it’s time you paid your fair share and get with the program. It’s only fair the wealthy pay more out of their millions and billions of dollars to subsidize the rest of us who need it the most. We are struggling in this recession and it’s time to fix the problem – by taxing the rich!

Gee whiz, last I checked, we live in America not North Korea. Why people believe it’s fair to tax one class of citizen a higher percentage than another confuses us. Is this not a pure form of discrimination? Fine, let’s agree that anybody below the poverty line of $25,000 for a family of four ($10,000 for a single person) are exempt from all income taxation.

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The Government Passes A Renters Tax! Time To Pay Up

Updated: 01/04/2023 by Financial Samurai 38 Comments

In good old fashion political jockeying, the House finally agreed to a budget and unknown to many, they also passed a Renters Tax!  The idea is for all Americans to participate in our simple tax system and shore up our huge deficit.  The new law states that starting October 1, 2011 all renters shall pay a Renters Tax equal to half the value of their rented home as determined by the government every year.  Landlords equally pay the other half.

Example: A nice 3 bedroom, 2.5 bath property is assessed at $500,000.  A taxation of 1.2% = $6,000 must be paid once a year.  Since the renter benefits from living in the home as well as the public parks, roads, libraries, and schools, the renter writes a check for $3,000 to the local state county tax board.  Meanwhile, even though the landlord does not enjoy any of the benefits of living in the home, s/he receives rental income, potential long term asset appreciation, and the option to move back in at his or her choosing.  As a result, the owner pays for half the annual property tax by sending in a check as well.  Perfect equality.  Both renter and owner have “skin in the game” and look to better their surrounding community.

THE GOVERNMENT BELIEVES WE SHOULD ALL PITCH IN TOGETHER

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Nature vs. Nurture: How Important Are Parents To A Kid’s Success?

Updated: 08/16/2021 by Financial Samurai 65 Comments

Nature vs. nurture is an ancient debate about determining a child’s future success. Success is often defined in terms of money, career, and status. Personally, I think there is an unhealthy desire for prestige and money that is ruining many people’s lives.

I think it’s much better to get rich and then get off the radar. Being famous is often a prison of your own making! But that’s just my thoughts after working in finance for 13 years and leaving for good.

Let’s rewind to 2011 when Amy Chua and her tiger mom ways was a big hit after her book came out. Her kids were still in grade school.



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Don’t Be Afraid To Make New Year’s Resolutions

Updated: 04/07/2021 by Financial Samurai 43 Comments

There seems to be a camp that believes that New Year’s resolutions are a waste of time. Are you kidding me?  If you have no resolutions for the next year, you’re going to have a very unfocused way of making progress in whatever you want to do. There’s another camp that says you should have very few resolutions so that you succeed in achieving your goals.

Well that’s fine if you have a difficult time tying your shoelaces and juggling more than several things at once over 365 days. Wow, 365 days……. did you know that people have built billion dollar companies and cities in that time period?  You do right?  Well, what’s stopping you from making resolutions?



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Deep Thoughts On Twitter: Cold Food And Suffering

Updated: 04/03/2021 by Financial Samurai 19 Comments

If you ever find yourself in a bizarre situation or want to get some interesting answers to a question, turn to social media. I recently got some deep thoughts on Twitter over cold food and suffering. Here’s how it all went down.

I clicked the 2 minute super nuke button on my microwave before leaving to park my car. Moose was left outside after a late night of partying. And I didn’t want the parking crazies to give me a lovely $70 ticket for blocking my own driveway.

Two minutes should have been enough sizzle time to keep my food toasty before I got back. Eight minutes later (checked and read the mail too), I came back to ravish my leftover Pad Thai. Oh, how disappointed I was my food was cold.

Amusing And Deep Thoughts On Twitter

And so I tweeted:

“If room temperature is considered warm, why does my food always get cold? #Deepthoughts as I ponder the meaning of life while writing.” via @FinancialSamura

My question was sincere, in the moment, and with no time to think.  I got a couple sincerely interesting responses.



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The Ultimate Solution For A Fair Income Tax Policy In America

Updated: 04/07/2021 by Financial Samurai 79 Comments

Do you want a fair income tax policy in America? So do I! I wrote this post on July 28, 2010 when I was working crazy hours. My hope was to make big bucks and be free sooner, than later. The potential to pay more taxes was disheartening.

Let’s review what was going on back then. Let’s also discuss how we should proceed w/ President Biden planning to raise taxes on households making over $400,000 a year. Man, I was really frustrated back then. But not any longer!

The Ultimate Solution For A Fair Income Tax Policy

With the Bush tax cuts set to expire next year, there’s going to be a big debate during the mid-term elections this November!  But, should there really even be a tax debate?  It’s obvious that we should NOT raise taxes on small business owners and higher income, hard working Americans in a nascent economic recovery!

Everybody knows roughly 47% of Americans pay no federal income taxes. Hence, the ultimate solution for tax legislation is to strip away tax voting rights for the 47% of Americans who pay no tax! Seems fair no? They still get to enjoy the benefits of other people’s contributions. 

If you’re one of the 100+ million Americans who pay no income tax, isn’t it good enough to enjoy free public schooling, nice roads, friendly firemen and police officers protecting your neighborhood?  Being thankful is a great disposition to have.  Being greedy is not.

An Example Of A Family Making $120,000 Paying No Taxes:

“Say you’re married with salary income of $120,000, 401(k) contributions of $12,000, two under-age-17 kids, and a college student with $4,000 in education expenses. Assume you also bought a home this year that qualifies for the now-defunct $6,500 credit for existing homeowners. Finally, assume you’re eligible for the $1,500 credit for energy-efficient home improvements. Believe it or not, your 2010 federal income tax bill will be zero even if you only claim the standard deduction.

Your tax bill of $11,950 is completely wiped out by $13,300 in credits ($2,000 child credit, $2,500 education credit, $6,500 home buyer credit, $1,500 credit for energy-efficient improvements, and the $800 Making Work Pay credit).

In fact, you’ll get a $1,350 check from the government. Some of your credits are refundable ($13,300 of credits – $11,950 of tax = $1,350 of free money),” writes Bill Bischoff of SmartMoney.

2017 Marginal Federal Income Tax Rates
Assuming Trump doesn’t lower them. This existing tier doesn’t reward work ethic. It punishes!

VOTING TO RAISE TAXES ON OTHERS WHEN YOU PAY NO TAXES IS LIKE……..

If you vote to raise other people’s taxes, please pay more yourself. Otherwise, it’s like:

* Dr. Phil writing a book and telling someone to lose weight.

* Suzie Orman telling you to invest in the stock market when only 2% of her wealth is invested in equities.

* A recent college graduate teaching you how to be rich.

* A hardcore vegetarian who wears leather shoes.

* A priest who preaches acceptance but expects you to burn in hell when Armageddon comes if you don’t convert.

* The United States implementing economic sanctions against emerging countries for polluting.

* A boss who tells you to work hard but goes and plays golf every other day and takes long lunches.

* US Treasury Secretary Geithner saying raising taxes is “the right thing to do” but cheats on his own taxes.

A Fair Income Tax Policy Is All We Ever Want

Some may argue that voting is a fundamental right as decreed by the 15th amendment of the Constitution.  I agree, go ahead and vote on whether the government should implement a flat tax on those who pay nothing. It’s only fair.  Just don’t go around pretending as a non tax payer, you have the right to vote on persecuting others to pay for your own free government benefits.

It’s so obvious to any rational person that if you pay no taxes, you can’t possibly be able to vote for people whose agenda it is to raise taxes on others.  Yet, millions of non tax paying Americans continue to support tax increases for the rich, who may very well be the ones who help keep the millions who don’t pay taxes employed!

Friendly Americans who pay no taxes, please have a heart and enjoy your spoils and stop punishing others further.  For the 53% of Americans who do pay taxes, let us decide what is the right level of income taxation to help support the economy and you guys.  We might vote to raise our own taxes and dis-incentivize ourselves to work hard.  So be it.  At least we get to vote on our own destiny!  Thanks!

Track Your Net Worth For Free

The other action item wealthy people do is track their net worth. You can only truly optimize your wealth if you know where all your money is going! Sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. I’ve been using them since 2012 and have made much wiser financial decisions since. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.

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. Input various expense and income variables to see how you stand. Your goal should be to get to a 90% probability of achieving your goal. Try it out yourself for free. Your future is too important not to take it seriously. You don’t want to end up old and not have enough money because there is no rewind button!

Retirement Planner Personal Capital
Is your retirement on track? Check for free after linking your accounts

Tax Savings Recommendation

Start A Business. We might never get a fair income tax policy. As a result, starting a business is one of the best ways to shield your income from more taxes. You can either incorporate as an LLC, S-Corp, or simply be a Sole Proprietor (no incorporating necessary, just be a consultant and file a schedule C).

Every business person can start a Self-Employed 401k where you can contribute up to $54,000 ($18,000 from you and ~20% of operating profits). All your business-related expenses are tax deductible as well. Simply launch your own website like this one in under 30 minutes to legitimize your business. Here’s my step-by-step guide to starting your own website.

Start a simple business to pay less taxes and contribute more to pre-tax retirement accounts
Start a simple business to pay less taxes and contribute more to pre-tax retirement accounts. Instead of paying taxes on $100,000 in income, you’re only paying taxes on $12,000 for maybe a $2,000 tax bill, or 2% effective tax rate.

Related: How To Pay Little Or No Income Taxes For The Rest Of Your Life

Book Review And Giveaway: “Secrets Of A Stingy Scoundrel”

Updated: 02/19/2020 by Financial Samurai 24 Comments

Author: Phil Villarreal was a syndicated film critic (one of the best jobs on earth) and is a general reporter for the Arizona Daily Star.  Phil contributes to OK! Magazine and blogs at becauseitoldyouso.com.

Publisher: Skyhorse Publishing, Inc.  244 pages in soft cover.  $12.95.

Summary: “Secrets of A Stingy Scoundrel” is a hilarious book that has been reviewed by many personal finance sites already.  Hence, I’ll take a slightly different approach.

First of all, Phil is one proud cheapo who is potentially helping millions of Americans (if they buy his book) save thousands of dollars a year.  Second of all, the breadth of stinginess is impressive, with nine chapters: Personal, Eating, Relationships, Household, Finance, Leisure & Entertainment, At The Workplace, Corporate Cataclysm, and Gross, Mean and Just Plain Wrong.

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Why Becoming Debt Free Is Not A Great Idea!

Updated: 08/21/2021 by Financial Samurai 51 Comments

We Don't Need No Medicine!

I’m pleased to bring you a guest post by faithful reader and commenter, Larry Ludwig (bio below).  He writes a thought provoking piece about challenging the norm of becoming debt free.  You’ll be smarter after reading this, guaranteed!  Enjoy, and as always, feel free to debate away!  Rgds, Financial Samurai

You’ve heard the financial gurus like Dave Ramsey perform pasectomies on his show and Suze Orman with her numerous “I have 50k in debt” guests.  The gurus all say, debt is bad, credit is evil, and being debt free is nirvana, yada yada yada.  While I do think as a whole Americans have too much consumer debt, the goal of being completely debt free is actually a terrible idea. Let me be specific: buying things that depreciate with debt is bad, that big screen TV, new clothing or car.  Most of the financial gurus do not make this distinction and make all debt to be “evil”.

I believe Rich Dad/Poor Dad Robert Kiyosaki has said it best, “There is good and bad debt and being debt free is more risky than having good debt.”.  Now before you go off on my recommendation of Robert and his questionable background, I believe his statement is sound and correct.

The primary reasons are:
•    Opportunity Cost
•    Asset Allocation
•    Inflation
•    Tax Deductions
•    Arbitrage
•    Leverage

Why Being Debt Free Is Not A Good Idea



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