​

Financial Samurai

Slicing Through Money's Mysteries

  • About
  • Invest In Real Estate
  • Top Financial Products
    • Free Wealth Management
    • Negotiate A Severance
  • Buy This, Not That (Bestseller)

Don’t Buy Stuff You Cannot Afford If You Want To Get Rich

Updated: 02/15/2021 by Financial Samurai 23 Comments

Don’t buy stuff you cannot afford. It’s a simple mantra to help you get rich.

For some reason, some continue to not pay off their credit card bills every month.  Can you believe this nonsense? Who willingly buys something they cannot afford, and then pays massive interest on something for months, if not years? That’s just silly. Let’s get that 30 pound dumbbell and drop it on your toes.

After your metatarsals are broken, get a really long needle and start ramming them into your eyeballs. Maybe after a while, you’ll realize how stupid it is to live beyond your means.

We have proposed creating government restrictions on what you can and cannot buy, and how much credit you can get based on your high school and college transcripts. If you’re stubborn enough not to see the value of doing well in school, then you are likely stubborn enough to buy things you can’t afford.

The government can be a helpful big brother to save consumers from over-consumption. Listen here, this is only one solution to help protect people from themselves. You are welcome to offer up another novel solution too.



Read More…

Why Did Oil Collapse And How Low Will Gas Prices Go?

Updated: 04/06/2021 by Financial Samurai 25 Comments

Let’s review why did oil collapse back in 2015 and 2016 and see if we can use the information for today.

Finally, oil has gotten crushed in 2015 and 2016 and remains depressed in 2017. We haven’t seen this large of a decline in oil in years as momentum speculators rushed out like someone discovering their Match.com date looks nothing like their picture. Nobody would have guessed oil prices would have declined by 50% over the past 10 months.

Oil Price Collapse In 2014 And 2015

Let’s try and understand WHY oil prices collapsed so much when global economies are largely recovering.

WHY DID OIL PRICES COLLAPSE?

The US and Canada started drilling more! For years, oil prices were hovering over $100 a barrel until North America decided to ween itself off the dependence of foreign oil. Meanwhile, demand for oil in places like Europe, Asia, and the US began declining at the margin as other forms of energy took off.

By late 2014, world oil supply was on track to rise much higher than actual demand. A lot of unused oil was simply being stockpiled away for later. So, in September 2015, prices started falling sharply.

Low prices are excellent news for oil consumers in places like Japan or the US, where gasoline is the cheapest it’s been in years. Low oil prices act like a tax cut for everyone. Unfortunately, oil is big business for a lot of countries like Russia, Venezuela and the OPEC countries.

Amazingly, OPEC hasn’t cut production at all. After a meeting in November, 2014, OPEC couldn’t quite agree on a response and ended up keeping production unchanged. “We will produce 30 million barrels a day for the next 6 months, and we will watch to see how the market behaves,” said OPEC Secretary-General Abdalla El-Badri after the meeting.

Who knows where oil prices will go from here.  Given most speculators are nothing more than momentum investors, you know that many of them who’ve been long oil have lost a lot of money. What happens when you lose a lot of money all of the sudden?  You become shell shocked and end up doing nothing for a while until momentum returns.

It’s really too early whether oil will climb back, but I’m betting money in my Motif Investing portfolio that oil prices will rebound. I’ve got oil exposure in USO and Chevron, for example.

LOOKING ON THE BRIGHT SIDE

I never thought I’d see gasoline prices for under $2.50 again, but here we are in 2015, enjoying some of the cheapest gas prices in recent memory. Perhaps it’s time to get that big gas guzzling SUV again! Lower oil prices should lower production costs for anything that requires plastic and steel as an input. Airfares should also decline as well. We should all be thankful for the decline in oil, but prepare ourselves for higher oil prices in the future.

In 2021, oil prices have rebounded significantly thanks to a global rollout of vaccines. Demand is coming back and the oil collapse is a distant memory. Electric vehicles should be in higher demand with President Biden’s potential $10,000 tax credit for EV vehicles. Further, there is a lot of infrastructure spending as well.

Related: Tax Rules For Buying An SUV Or Truck

And now for some brilliant humor by Iman Crosson which highlights the main reason for why the commodity bubble popped. This is classic.

RECOMMENDATIONS TO BUILD WEALTH

* Manage Your Finances In One Place. The best way to become financially independent and protect yourself is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing and how my net worth is progressing. I can also see how much I’m spending every month.

The best tool is their Portfolio Fee Analyzer which runs your investment portfolio through its software to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was paying! They also recently launched the best Retirement Planning Calculator around, using your real data to run thousands of algorithms to see what your probability is for retirement success. 

Once you register, simply click the Advisor Tolls and Investing tab on the top right and then click Retirement Planner. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth. Why gamble with your future?

Retirement Planner Personal Capital
Personal Capital’s award-winning retirement planning calculator. Are you on track?

For more resources check out my:

  • Top financial products page to find the best products for your finances
  • Invest in real estate page to invest in my favorite asset class,
  • Free wealth management page to manage your money better. 

Financial Samurai has been online since 2009 and is one of the most trusted and largest independently-run personal finances today.

What The Tax Cut Extension Means To You

Updated: 12/03/2020 by Financial Samurai 42 Comments

A tax cut extension was made back in 2010 to help Americans save more money. In 2021, taxes are likely going up to pay for all the deficit spending to counteract the coronavirus.

Tax Cut Extension Celebration

Hip hop hooray! With House Democrats agreeing to not hold the middle class hostage anymore, the tax bill passed 277-148!  It was a landslide victory, but still it’s interesting to see that there were 148 dissenters. 

What’s more amazing is that Democrats weren’t able to lower the estate tax exemption amount of $5 million per individual, and raise the estate tax level of 35%.  Talk about bad negotiating!

The real fun now begins where we all do rough pro forma calculations of how much more disposable income we’ll have in 2011 and potentially 2012! First off, I’m glad to see that everybody will pay 2% less on the first $106,800 they earn thanks to a cut in payroll taxes (Social Security and Medicare) from 6.2% to 4.2%.

From $100,000 to $172,000 (28% Federal marginal tax bracket for singles), you really aren’t going to see much of a change in that money earned after, because the government wasn’t going after you guys.

But, for all you lucky ducks who make $172,000-$380,000 (33% Federal marginal tax bracket for singles), and $380,000+ (35% Federal marginal tax bracket for singles), you’re in for a big treat!

Time To Make More Money And Party

All you’ve got to do is take whatever income you plan to make in 2011, subtract $172,000 and multiply by 3.5% + $2,136 to get your pro forma tax savings! The 3.5% is the estimated average amount the government would have raised the top two income tax brackets by: 33% and 35% would have gone to 36% and 39.6%, respectively.  The $2,136 is from payroll tax savings on the first $106,800.

Example: Let’s say you plan to make $1 million bucks in 2011.  Take $1,000,000 – $172,000 = $828,000 X 0.035 = $28,980 + $2,136 = $31,116.  I’ll take a guess that the millionaire will spend $10,000 on diamond earrings for the wife or a $10,000 home theater system for the husband and save the remaining $21,116.  Not bad for the economy!

What about married couples?

Well remember, the government is sexist and doesn’t believe 1 + 1 = 2.  In other words, the tax brackets don’t double given they believe one spouse should be domesticated and not work.  Hence, instead of using $172,000 in the formula, replace it with the 33% tax bracket income level for couples of $209,250, and you’re good to go!  If the government wasn’t sexist, that number should be $172,000 X 2 = $342,000.

Note, If you make anywhere between $106,801 and $172,000 your disposable income only increases by $2,136.  If you make under $106,800, you’ll save whatever you make X 2%.  You may be more conservative and use lower than a 3.5% savings for your calculation as well.  Everything is a rough estimate, since taxes are complicated.  But, for the most part, follow the formula above and start partying!

Thankfully, the marriage penalty tax has all been abolished for 2021+.

More Highlights From The Bill With Tax Cut Extension

Extension of Unemployment Benefits: The legislation extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits over the next year.

The Child Tax Credit: The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.

The Earned Income Tax Credit: The legislation continues a Recovery Act expansion of the Earned Income Tax Credit worth, on average, $600 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families.

The American Opportunity Tax Credit: A partially refundable tax credit worth up to $2,500 per student per year that helps more than 8 million students and their families afford the cost of collegewould be continued under the agreement.

100% Expensing: The agreement includes the President’s proposal to temporarily allow businesses to expense 100% of certain investments in 2011, potentially generating more than $50 billion in additional investment in 2011, which will fuel job creation.

Tax Savings Recommendation

Start A Business: 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.

The Clubber’s Guide To Saving Money And Having A Good Time

Updated: 04/07/2021 by Financial Samurai 62 Comments

If you’re getting ready to go clubbing again after the global pandemic, here’s a clubber’s guide to saving money and having a good time! I wrote this post back in 2011. No more clubbing for this father of two young children!

In my younger days I used to go out clubbing with friends and regularly drop $100 to $200 a night.  New York City was crazy expensive and we often got bottle service to ensure that we could get into the hottest clubs in the first place.  Each guy almost always had to be paired up with one girl, otherwise you had as good a chance as Obama does of raising taxes in a soft economy than getting in!  Bouncers made it a priority to ensure the inside wasn’t a sausage fest.

Spending a couple hundred on a Friday night isn’t frugal.  However, this wasn’t a point in my life where saving a fortune was a top priority.  Instead, experiencing Manhattan, having fun with friends, and meeting new people were.  A dollar spent while young is more enjoyable than when old since you aren’t making much in the first place.  It’s inefficient to save money when you’re making less money ironically.

As an old man now, who is certainly not in touch with the latest trends in music and fashion, I realize my younger self could have probably saved several thousand bucks going out a year if I wasn’t so carefree.  I worked hard and I felt I deserved to party hard.  The phrase, “one life to live” seemed to pop up a lot!  But, a $300 bottle of Moet that costs $50 bucks at Costco might be a little too much!



Read More…

Three Keys To Motivation And It Has Little To Do With Money

Updated: 01/04/2023 by Financial Samurai 33 Comments

When life is so good in America, it’s easy to slack off. Here are three keys to motivation. None of them have much to do about money.

Here’s a short 10 minute video I stumbled upon which eerily highlights several things I do and why (ie play guitar). The video also touches upon reasons why some people are willing to do things for free. While others strongly consider giving up big salaries to just work on a hobby.

When I first wrote this post in 2010, I was already beginning to try a find away out of finance. This video helped me think of ways to get out. Ultimately, I negotiated a severance after 11 years and left in 2012.

Three Keys To Motivation

I find myself agreeing with pretty much everything the video has to say.  Money has become a secondary motivational factor for me over the past several years. 

Three Keys To Motivation

  1. Autonomy
  2. Mastery
  3. Purpose

Something just happened where I’ve become satisfied in making what I make, oh my! Sure, I have a “make $1 million bucks” goal for 2010, but that’s really just one of those fun, see if I can do it goals.  Autonomy, mastery, and purpose are things I look forward to now.

Progress is a wonderful feeling, which is why I try and play a musical instrument and sing in my free time.  Music also helps fill the void when I’m injured due to sports. 

Going from not knowing the chords and the words of a song, to mastering a tune from memory that’s good enough to record is an unbelievable sense of accomplishment. 

I’ve been working on getting the finger picking of Pearl Jam’s “Just Breathe” for the past month, and I can’t seem to get it right.  But dammit, I’m going to keep practicing because it’s such a beautiful song!

After you have a certain amount of money and experience, you definitely want autonomy.  You’re no longer a fresh college grad that is constantly micro-managed by senior colleagues. 

A sure fire way for a company to lose a star employee is to restrict their freedom and ignore their good work. 

Blogging Has Given Me All Three

Blogging is an incredible example of autonomy. Nobody is going to tell me what to write and that’s so liberating. I’ll thrive and fade with my decisions alone.

Purpose is something that can either be questioned before you start your journey or after. Having purpose is one of the most important keys to motivation. Purpose is why I’m still blogging 3X a week since 2009!

You can be a high school or college student who has no freaking idea what you’re supposed to do in life. 

Or, you can be a 20 year veteran in the workforce who has built a great resume, as well as financial security, but realize you’re middle aged now and wonder if there’s more to life since you’ve already conquered insecurity, be it financial or otherwise.

The purpose of this site was never to make money, even though it now makes a good amount. The purpose was to just create something tangible that serves as a creative outlet for someone who was once creative.  I want to be that kid in pottery class again, molding that wet clay on a rapidly rotating swivel stick.

Finally, after writing 2,000+ articles since 2009, I have mastery. It feels great to be in the top 1% in something.

Readers, what are several motivating factors for you in your life or in your job? Have you noticed money increase or decrease in importance as a motivational factor? Share with us your keys to motivation.

Related:

Three White Tenants, One Asian Landlord

Perpetual Failure Is Why I Continue To Save

Regards,

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

Subscribe to my E-mail feed. Check out the Top Financial Products page to help you achieve financial freedom sooner.

“Capitalism: A Love Story” DVD Review

Updated: 01/04/2023 by Financial Samurai 68 Comments

Michael Moore thinks he is pointing out injustices through his latest documentary, “Capitalism: A Love Story“.  Instead, Michael simply reminds us that life isn’t fair in a free market economy where those who work hard sometimes get the short end of the stick through no fault of their own.

Review Of Documentary “Capitalism: A Love Story”

I find it ironic that one of the wealthiest documentary filmmakers is bashing Capitalism. Despite highlighting that 33% of “young Americans” now believe in Socialism (37% for Capitalism, 30% undecided), it’s hard to argue for a better system. 

It’ll be interesting to see if these young Americans still believe in Socialism by the time they reach their thirties and make some money. Socialism just creates a new set of problems for society. 

Is it really that bad buying a foreclosed property from someone who can’t pay their debt on time?  Property vultures are necessary to provide a floor in many devastated markets or else things go to zero and more people suffer.

There is a sense of self-righteousness when Michael tells the viewer that he can’t fight the system alone and encourages all to rise up. Michael you aren’t alone. Thousands upon thousands of us fight for what we believe in every single day. 

I wish Michael would put his money where his mouth is and donate all his proceeds to helping victims he continues to highlight.

A STRANGE PLACE

Have you ever seen a journalist report from some God-forsaken place where malnourished children are starving in the background? Do you ever think to yourself, instead of jibber jabbering away, why don’t you just shut up and provide some food for the starving children behind you? 

The documentary is kind of like that. Michael mocks ministers, judges, companies, government, and Wall St. He does so to the point where I start thinking, why not just do something other than make a documentary?

There are some important parts to the documentary which made me want to stand up and cheer. Most notably was the 6 day factory worker lock-out which got Bank of America to finally pay them $6,000 in unemployment benefits from zero. 

That made me proud, because people were standing up against a company who just threw them away like garbage. Digging deeper though, why is Bank of America responsible for their benefits just because they got some bailout money? Shouldn’t the company itself be responsible?

TIME FLIES

The problem lies in the timing of this documentary. Nobody could have foreseen that in just one year since Lehman’s bankruptcy, the economy would rebound so quickly. The fear mongering has subsided and a sense of normalcy has returned.

He praises Obama for his promises, which one year later have not all been kept. Making a shady deal with the Senator of Nebraska to get him to vote for the health care bill by exempting Nebraskans for paying is not right.  As a result, after 30 years of Democratic rule in Massachusetts, a Republican takes former Edward Kennedy’s place.

Michael trashes Wall St. for receiving $700 billion in bailout money, making it seem like everybody in the industry had a part in forcing people to buy homes they couldn’t afford. One year later, a majority of the $700 billion has been repaid with handsome returns boasted by the government. 

Are the taxpayers thanking Wall St. for their profits? No, because frankly, as taxpayers, we pay the same amount of taxes regardless of where our money goes!

CONCLUSION

I commend Michael for making another hit documentary about this latest downturn. The snark is entertaining and therefore worth the watch. He makes the viewer think about issues, but he does not convince me that Capitalism is indeed ‘evil” as all his interviewed priests proclaim. 

If Capitalism is truly evil, why is The Church one of the richest institutions in the world? If Capitalism is evil, is Bill Gates also evil for donating billions to fight disease and poverty? No, Capitalism isn’t evil and Michael Moore will profit handsomely once again.

Further Reading

  • BusinessWeek: 10 Best Places To Own Property
  • Why Becoming Debt Free Is Not A Great Idea!
  • How To Deal With A Horrendous Day At Work
  • The Katana: Favorite Posts of The Week Ending 11/15
  • Let “Freement” Reign! Spending Paralysis, Material Lust And Obsession
  • An Ambulance Screams By, Do You Feel Happy Or Sad?

Related: The Secret To Your Success: 10 Years Of Unwavering Commitment

Subscribe to my private newsletter by clicking here. More than 10 years after I started Financial Samurai in 2009, Financial Samurai’s readership has grown to over 1 million visitors a month.

Regards,

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

The Best Financial Advice I’ve Ever Heard From A Comedian

Updated: 01/04/2023 by Financial Samurai 33 Comments

Here’s the best financial advice I’ve ever heard from a comedian.

One of the best things about living in a big city is the diversity of people.  Minorities are actually a 51% majority, leading to an abundance of food, culture, and festivities.  Most importantly, a diverse community teaches us acceptance and understanding of each other.

Canadian-Indian comedian, Russell Peters recently visited San Francisco where I got to see him perform.  He is an absolute riot!  Russell pokes fun at the incredible ability by both Indian and Chinese to drive hard bargains.  It’s interesting to witness what happens when they negotiate with each other!  Keep an open mind, and I hope you enjoy the skit.

Three Key Lessons From The Video:

1) Never discredit the value of 50 cents, because 50c + 50c = $1 dolla!

2) Don’t be afraid to negotiate.  It’s your money.

3) “Be a man!  Do the right thing!”

Readers, what are some of your best negotiation strategies when it comes to buying things from vendors? Anybody big Dollar Store fans?  What are some of your favorite comedic skits? Any other financial advice from a comedian you’ve heard?

Related: The Best Financial Move I Made Is Something Everyone Can Do

Subscribe to my private newsletter by clicking here. More than 10 years after I started Financial Samurai in 2009, Financial Samurai’s readership has grown to over 1 million visitors a month.

Regards,

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

Follow on Twitter @FinancialSamura and subscribe to our RSS or E-mail feed.

The Latest “Did You Know” Video for Fall 2009

Updated: 08/05/2021 by Financial Samurai 8 Comments

It’s crazy how fast time flies. I originally wrote this post in October 2009. It features an intriguing Did You Know video down below about predictions for the future. Fast forward to today and it’s funny how we’re already in the future that the video talks about. And a lot of the predictions came true.

This fascinating Did You Know video is about the progress of technology and social media. It’s definitely something that everybody should know about. This is my first attempt at posting up a video, so I hope it doesn’t blow up my site. Thanks Gen Y Investor for the tips!

For all those who don’t know how to put up a video from YouTube on your site, simply go to YouTube video, copy the HTML code on the right, past it into your HTML tab in your WordPress, click back to Visual, and edit accordingly!

Tomorrow we will reveal our $1,000 giveaway for those aspiring to get their MBA. Even if you don’t want to get your MBA, you might know someone who does so stay tuned!

Did You Know Video, Version 4.0, Fall 2009

Learn More, Make More Money

Here are some additional resources I’ve put together that will help you on your financial journey to earn more, save more, and hopefully double or triple your income!

  • Take advantage of free online financial tools: Free Wealth Management
  • Explore my top financial products recommendations
  • Learn how much you should aim to have saved in your 401(k) by different ages. The numbers could surprise you.
  • Look beyond your salary and start earning passive income. Here are the best passive income streams I recommend.

Further Reading

  • Confessions Of A Protester Trying To Make Things Right
  • “We Are Wall Street” E-mail Fights Back Against Main Street
  • What Percentage of My Income Tax Is Spent On National Defense?
  • First Republican Debate Makes President Obama A Winner in 2012
  • Debt Ceiling Debacle’s Bright Side: Standing Up For What You Believe In

Readers, are you ready for the next 5 years?! What did you find the most interesting in the Did You Know video?

Keigu,

Financial Samurai – “Slicing Through Money’s Mysteries”

If you were forwarded this post, you can subscribe to my newsletter by clicking here. 

n

Top Product Reviews

  • Fundrise review (real estate investing)
  • Policygenius review (life insurance)
  • CIT Bank review (high interest savings and CDs)
  • NewRetirement review (retirement planning)
  • Personal Capital review (free financial tools and wealth manager)
  • How To Engineer Your Layoff (severance negotiation book)

Financial Samurai Featured In

Buy this not that Wall Street journal bestseller

Categories

  • Automobiles
  • Big Government
  • Budgeting & Savings
  • Career & Employment
  • Credit Cards
  • Credit Score
  • Debt
  • Education
  • Entrepreneurship
  • Family Finances
  • Gig Economy
  • Health & Fitness
  • Insurance
  • Investments
  • Mortgages
  • Most Popular
  • Motivation
  • Podcast
  • Product Reviews
  • Real Estate
  • Relationships
  • Retirement
  • San Francisco
  • Taxes
  • Travel
Buy this not that WSJ bestseller 728
  • Email
  • Facebook
  • RSS
  • Twitter
Copyright © 2009–2023 Financial Samurai · Read our disclosures

PRIVACY: We will never disclose or sell your email address or any of your data from this site. We do highly welcome posts and community interaction, and registering is simply part of the posting system.
DISCLAIMER: Financial Samurai exists to thought provoke and learn from the community. Your decisions are yours alone and we are in no way responsible for your actions. Stay on the righteous path and think long and hard before making any financial transaction! Disclosures