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Financial Samurai

Slicing Through Money's Mysteries

How Higher Taxes Saved Me A Boatload Of Money

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When the state of California raised the sales tax by another 1% on April 1, 2009 I was pretty pissed.  What kind of government expects their residents to pay a whopping 10% tax on everything they buy?  Pedro doesn’t want to pay $200 in taxes on his $2,000 60-inch LCD TV.  Nancy shouldn’t have to pay $300 more on her $3,000 diamond encrusted bracelet.  And I certainly don’t want to spend $5,200 in taxes on a handsome $52,000 BMW!  That’s just ridiculous!

We the people of California deserve our luxury items just like every other parrot-brained consumer in America.  Who’s to dictate what we can and can’t waste our hard earned money on?  Certainly not some bureaucrat in Sacramento counting all his money under the table, no way!

GOVERNMENT WANTS YOU TO SAVE WHILE THEY SPEND

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Making Money Is Easier Than Building Relationships

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Anybody can sell their services but not everybody can build and sustain a fruitful relationship. This is why making money is easier than building relationships. How many sets of friends have you had over your lifetime? How many acquaintances have come and gone? Too many in my mind.

The other day, I became dismayed by one blogger who just focused on taking advantage of the Yakezie Network to make money. He was more active in our financial opportunities than building relationships with fellow Members. 

We’re talking no retweets, no posts highlighting any Members, and very few comments anywhere on the network. I was so disappointed, but also cognizant of the fact that it’s hard to resist the mesmerizing green.  We had a heart to heart and I think he’s really going to make an effort over the next several months to be perhaps one of the best Members hopefully.



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Small Business Owners Encouraged To Fire Employees Before Tax Hikes

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Small business owners rock. The Bay Area is full of entrepreneurs and small business owners making the work work. The pandemic has made the value of online businesses more valuable. The simple reason is that you can’t shut down an online business!

I originally wrote this post on August 26, 2010, a year and two months after starting Financial Samurai. I was dismayed at higher taxes.



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When Rich People Call You Cheap, It’s Just So Annoying

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Do you know what’s really annoying? When rich people call you cheap. Rich people have all the money in the world! Of course they don’t work about the little things.

I ran into one of my golfing buddies the other day while waiting for a colleague. Greg the golfer is an every day fella who so happens to be worth north of $20 million dollars. 

I don’t know exactly how much he makes a year, but it’s likely at least $3 million during normal economic times.  He’s a powerful man who deserves everything he earns, but sometimes he’s just vexing.

We got to catching up about the latest gossip on tour when he asked me if I wanted to grab a coffee at Starbucks.  I told him I was good, largely because coffee hurts my stomach. Not to mention I’m supposed to be waiting for my colleague at this exact spot and time to attend a meeting. 

Greg responds, “Of course not, you are so cheap!” in a snide, but joking sort of way.  Unfortunately, every joke has a meaning, and being called cheap is one of the most annoying things to ever hear.

When Rich People Call You Cheap

When we go golfing, Greg likes to spend $20 for a sleeve of Titleist Pro V balls, whereas I go for the $8 sleeve of Pinnacles.  Sure, the Pinnacles are harder, and provide less spin control, but I’m no pro, but neither is Greg! 

The absurd thing is, I’m a 10 handicapper who regularly shoots in the low-to-mid 80s, while he’s a 20 handicapper who often times breaks 100.  Some would even call him a hacker!

When we talk about vacations, he mentions the private jet he takes to Bora Bora, and I think, how nice. He then goes on to discuss the wonderful stay at the Four Seasons with his own outdoor hot tub and infinity pool overlooking the ocean. 

Thanks for making me so envious Greg! My staycation this summer can’t compare, I know.  But, we still have fun all the same.

What really irks me is that Greg jokes about my spending habits when he’s worth so much more. A $5 overpriced latte to me is literally like 50 cents to him. And you know what?  I still wouldn’t spend 50 cents on a cup of latte because it turns my stomach into a squeezed towel! 

I’ve grown up just drinking water because my parents never ordered any drinks when we went out. They taught me that beverages have the highest markups and to not be silly with money. Besides, all the sugar and junk they put in these concoctions is so bad for our health.

Different People, Different Desires

I don’t understand the folks who stand in line at Starbucks every morning AND afternoon forever waiting for a stupid cup of coffee.  When I see a 20 person line, I keep walking because time is precious. 

I don’t get the people over 30 who still go out at night and spend $15 for a vodka tonic, when you can buy a whole bottle for $20 bucks, and make 25 of them on your own. The time for clubbing was in your 20s!

I place very little value on beverages which aren’t good for me.  Is this so bad?  Apparently to very wealthy folks who have no concept of money or time think so.  If you ask me to pay a premium for athletic shoes, electronics, and fruit I’m very happy to do so. 

Good shoes prevent injuries and provide extra performance during grueling competition. I prefer an Apple over a PC because of the interface, aesthetics, and customer service. Meanwhile, if I find a delicious white puree mango, I’ll literally spend a hundreds of dollars and buy them all!

Everybody spends money in different ways largely because preferences differ.  ou can call people cheap, but that’s just ignorant because you are assuming someone else values something just as much as you do.  Instead, be cognizant of what matters to other people and respect their financial decisions. 

The next time Greg calls me cheap, I think I’ll just test his pride and bet him $100 a hole straight up, no strokes. Might as well take advantage of the rich, right!

Related: How Much Do The Rich Invest Their Wealth

Recommendation To Build Wealth

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

Personal Capital Retirement Planner Tool

Updated for 2021 and beyond. When Rich People Call Me Cheap I try harder!

The Reply Button Is There For A Reason: Email Efficiency Is Important

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Graphic by Hime

The following is a guest post by Hime, one of Financial Samurai’s first readers.  Hime is a manager at a strategy consultant firm who likes the violin and going on unplanned adventures.  Hope you enjoy!

All right everyone, how many times have you read an email and said to yourself “I don’t feel like replying now I’ll just do it later” only to have that email disappear into the deep abyss and completely forget that you left the sender hanging?

Come on, I know you’ve done that at least once.  If you do that more like every third email – CLUNK!  That is me hitting you over the head with an oversized rubber hammer as I resist the urge to shake the stubbornness out of you.  Think I’m overreacting?  Maybe a little but I am trying to save your career and relationships so please pay attention!

DON’T LEARN THE HARD WAY

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The Carrot That Makes You Jump Through Hoops

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Needs the carrot that makes you jump through hoops. Otherwise, it’s too easy to get lazy, get out of shape, and do nothing.

I started Financial Samurai in 2009, and I’ve been writing 3-4X a week since. I’m constantly looking for motivation to continue because life is too good in America. If you’re wondering, the secret to success is being competing for 10+-years in a row!

It’s crazy to revisit this post I wrote in 2010, more than 10 years later. However, it is absolutely clear to me now that people are successful stick with things.

The Carrot To Make You Motivated

One of my best friends is blessed with skinny genes.  At 5′ 3″ tall, she weighs all of 105 pounds.  When we go out to eat, she doesn’t just order a glass of iced tea and salad with dressing on the side.

She goes all out with mash potatoes, creamed spinach, BBQ oysters and then a nice juicy ribeye for a main course!  I gawk in amazement at her appetite while secretly groaning at trying to keep up towards the end.  After all, shouldn’t she eat 40% less than me if she weighs 40% less?  Guess not!

Despite my friend’s envious genetics, she isn’t exactly iron woman when it comes to sports and outdoor activities.  After three miles on a 10 mile bike ride, she’s pooped and waves at me to take a break.

Meanwhile, I’m going “lah, lah, lah” in my head, not even breaking a sweat as I soak in the glorious views of the Bay.  I let her catch up and we take a five minute pit-stop where she catches her breath as I go do some stretches and sit-ups.

The Gimmick



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Crap! Taxes Are Due Soon!

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When I was thinking about what to write in this week’s Katana, I suddenly shouted out, “Crap! Taxes are due soon!” This is the first year where I actually owe money to the government and I’m not too pleased. For all intents and purposes, I should be happy that I got a free multi-thousand loan for the year. But, it just feels off.  A typical personal finance blogger will argue that it’s stupid to celebrate a tax refund. But, I’m telling you to go right ahead. Tax refunds are good for most people because most people can’t save for cookies!

Taxes Are Due Soon!

Even though taxes are due soon, I’m waiting until the absolute last moment to file. Why? Because I constantly find errors in the way I’m doing my returns. There’s no doubt in my mind that every single tax return submitted by an individual has at least one error, or sub-optimal input. I generally go over my taxes at least three times before submitting them. It’s in my nature to double and triple check everything when it comes to money.

Doing your own taxes forces you to learn a tremendous amount about your finances. It heightens your awareness, leading to better financial decisions. You learn about things such as deduction limit phases outs, rental property amortization, and alternative minimum taxes all too well.

Once you understand how much income leakage there is, you’ll join the side which wishes for a fair flat tax and a smaller, more efficient government. Too many people just blindly follow what their accountant tells them to do without fully understanding where their money is going. That’s irresponsible.  

#1 Tax Tip

My #1 tax tip for everyone is to do your own taxes at least once. Even if you make mistakes, which you will, you’ll be a better person because if it!

Readers, how many of you do your own taxes? Are you freaking out that taxes are due soon? With tax software making things relatively simple nowadays, why not try it out on your own if you don’t now? Taxes are typically due April 15th each year, give or take a couple days if it falls on a weekend.

HIGHLIGHT POSTS FROM AROUND THE SPHERE

“Beware Of The Four Horsemen Of Personal Finance” by Len Penzo, who finally joins the crew.  One of the wittiest PF writers around.

“How I Paid Off Over $70,000 In Debt And Quit My Job” by Eventual Millionaire highlights her journey in becoming debt free and reaching financial freedom.  Love reading triumphant stories!

Further Reading

After “Doing Anything You Can To Survive“, I’d like to touch upon topics of discrimination and why it exists. Are we a product of our upbringing and how we were raised? Do old habits die hard? Hope you all can join in on the discussion as these topics pertain to all of us. Here are some additional posts for further reading.

And one last reminder: don’t forget – taxes are due soon!

Keigu,

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

Follow on Twitter @FinancialSamura

Charles Farrell of “Your Money Ratios” Speaks About Retirement And Investing,

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As I wrote in my review of “Your Money Ratios”, Charles’ book sings to me. Charles has the ability to simplify complicated financial topics for the average reader to understand. His book is seriously one of the best books I’ve read on personal finance in a long while.

One of the keys to progress is learning from experts in their various fields.  Charles is gracious enough to answer some follow up questions I’ve been burning to ask after reading his book.  This will be a two part post due to the 2,800 word length of the interview.  In part I, we discover Charles’ motivation for writing his book, strategies for early retirement, and his conservative and debatable 50%/50% investment split between stocks and bonds.  In part II, we discuss the much maligned 401K, personal income taxes, why Social Security will survive, and why the flat tax is the right way to go!  Please enjoy!

WRITING “YOUR MONEY RATIOS”

Question: Was there a particular lightning bolt reason why you decided to write this book? For aspiring authors, what suggestions do you have to get your worked published in this ultra competitive field of business?

Answer: I wanted to write a book that would help average readers understand the most fundamental and critical relationships among one’s income, capital and debt, and how those things must be managed throughout your working career to build financial independence. So I took what are often quite complicated topics and figured out a way to present them in a very simple format that anyone can follow. I would like more people to enjoy the benefits of financial independence, and I hope this book does that.

As far as writing, all I can say is write about what you believe in. Hopefully, if you believe in it strongly enough, you’ll develop some expertise and then seek out ways to spread your ideas. Try to develop some niche that is reflective of your expertise. So I developed the ratios and they came out of my background in tax, finance and also working with individuals.

Think about what you do that is a little different and try to focus on that unique nature of what you do. It is a tough slog because the field is very crowded and often the least valuable information gets the most press. But you have to accept that reality and still push ahead. And then you need a little luck. Your message has to somehow get into the hands of people who appreciate and understand it. And that is hard to predict, which means you need a little luck to get it out there. So if you are going to pursue that path, I think you need to accept those realities of the marketplace.

EARLY RETIREMENT

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The People Asked To Get ROCKED & A Boulder Drops On Their Heads

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Feel The Pain And Like It
The Rock Of Gibraltar, Only Backwards

Anybody want to guess what happened on Wed, January 19, 2010 right before the market fell off a cliff? The people got rocked.

If you guessed Obama delivered a politically charged speech to rally for his own support and crucify others, you’re right! 

On Wed, January 19th, Obama went on national TV to tell the world, “we want our money back” and “if they want a fight, a fight is what they’ll get.” The “they” of course, are “greedy rich” people.  The markets immediately started to sell-off and the S&P 500 is now down about 6% since.

Good old fashion class warfare is never good for the economy, neither is continuous political jibber jabber. Do you ever remember a president being on TV as much as our current president? 

The risk of overexposure is very real, and the record low approval rating for any president at this point in his term shows this.  The State of The Union address is supposed to be an opportunity to unify the people.  Besides the typical feel-good rhetoric, what I heard was a continued attack on others, protecting personal interest groups, and maintaining giant silos.

YOU SO CRAFTY NEBRASKA

Did you know that Nebraska is the only state in America that won”t have to pay for new Medicaid recipients if the bill passes?  What makes Nebraskans more special than other Americans? 

The answer lies in a special deal the president brokered with Senator Ben Nelson to buy his vote!  If Nebraska did have to pay for new medicaid recipients, Senator Ben Nelson wouldn’t have voted for the bill!  Good for Senator Nelson for looking out for his people. 

But tell me honorable readers, how is this legal, and not frowned upon by the rest of the country?

I am absolutely for health care reform.  We have an expensive system with 40 million + people who don’t have insurance for whatever reason.  We live in a society where if there’s a drug that costs $100,000 to extend your life by 6 months, everybody feels they deserve to take it, but nobody is willing to pay for it.  Fine. 

Since everybody wants the best and most expensive health care, let’s spread the burden among everybody, and not just to the non-Nebraskans!

THE PEOPLE ASK FOR THEIR MONEY BACK AND LOSE BILLIONS MORE INSTEAD

I wonder if the angry mob knows that the more the government is against capitalism, the more we all suffer.  With the market down 6% in a week, the people have lost over $40 billion in equity from their 401Ks, IRAs, and general stock investments.  Essentially, anybody with anything to invest just got a nice black eye.

The funny thing is, the angry mob got what they deserved.  They asked for our president to come down hard on every financial institution, instead of just targeting particular people in power, and the mob is sharing in the pain.

CONCLUSION

What used to be an absolute certainty about Obama’s second term now looks tenuous at best.  The “wealthy” were instrumental in his candidacy, and now their support is gone.   If the unemployment figures do not improve over the next 12 months, there’s no doubt Obama will also start losing the middle class.

It’s sad, because I along with millions of Americans really wanted Obama to succeed.  He has fantastic oratory skills and knows how to galvanize people into action. 

Obama was going to change dirty politics and turn our ship around.  What we’ve learned from the Massachusetts Senate change (which was consistently left for 30 years until Ed died) and the low approval ratings is that the public aren’t mindless idiots.

The people realize that buying votes is wrong and that punishing innocent people at non-TARP banks while protecting AIG and the auto industry who haven’t’ paid back anything is a double standard.  The people of America are speaking.  The question is, are the people in charge of America listening?

Related: The Best Time To Retire Is Under A Democratic President Like Joe Biden

Readers, please read more about the deal Obama struck with the Senator of Nebraska regarding the health care bill.  It sickens me to my stomach that he talks about doing the right thing when he’s doing something else.

Do you think Obama knows what he did was wrong?  If so, is he thinking that the means justify the ends?

If the employment picture doesn’t improve, do you think Obama will get re-elected?

Why does the government want to punish everybody making over $200,000 and not encourage and reward them instead?

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