Loading...

Congratulations everyone! According to this chart below, everybody is rich in America! Our assets are at the highest level compared to our income in all of history thanks to tremendous asset price appreciation.

Anybody who bought stocks and real estate between late 2009 and 2015 is sitting mighty pretty. When you’re sitting mighty pretty, you tend to spend more frivolously and take on debt to buy things you don’t really need. But at some point, a percentage of the population gets carried away, commits financial suicide, and brings the rest of us down with them.

I’m really hoping the good times will last for several more years. After all, it’s more fun making money hand over fist than losing money. I’m just kind of worried that with cash-out refinances reaching pre-crisis levels, we’re bound to repeat our mistakes from the previous financial crises.

How To Tell If You’re Rich

There is a qualitative side and a quantitative side to being rich. If you’re two standard deviations higher than the median household income of $59,000 and the median household net worth of $100,000, you’re considered rich. At a two standard deviation, you’re richer than 97.8% of all Americans.

I think the qualitative side of being rich is much more interesting because being rich is more of a feeling after all your needs are met. Feeling rich also comes from a temporary state of mind. It’s just like experiencing spikes of happiness due to a promotion, a raise, getting into your school of choice, hitting a home run, or getting married, followed by what is hopefully a sustainable level of contentment.

The first time I felt a little bit rich was a couple years after I bought my own place in 2003. The initial years were a little nerve-wracking due to the assumption of $425,000 in debt. But after two years, I felt like everything would be OK since I continued to get promoted. I felt rich because I finally owned a piece of America. No longer was I a price taker in an ever rising rental environment.

The second time I felt rich was when my company agreed to let me go with a severance payment and all my deferred cash and stock. I felt like I had won the lottery because I would have gladly left if they just gave me my deferred cash and stock that paid out over the next five years. But they decided to give me a six-figure lump sum check when I left as well, which has almost doubled since 2012 because I invested it all of it in the stock market.

The third time I felt rich was about three years after I left Corporate America. Again, the initial years were a little worrisome despite the severance because I wasn’t sure whether I had made the right move. But by 2015, I knew we were home free as Financial Samurai grew so my wife joined me in early retirement. Having the freedom to choose how we spend 100% of our time was priceless.

The fourth time I felt rich was when our passive income finally reached a level that could sustainably provide for the lifestyle we wanted. Before then, we were only generating about $80,000 a year, which doesn’t go far if you want to raise a family in San Francisco. It was after hitting $200,000 that I felt I could finally slack off a little bit without worrying about falling too much behind.

The most recent time we felt rich was when our son was born. He is a miracle baby because we had tried for several years with no luck. His birth helped crystalize all the effort we had put into studying, saving, investing, working, and taking risks. Since my wife and I are both pretty frugal, using our wealth to provide for someone feels wonderful.

How Rich You Should Feel Based On Net Worth And Income

Given I can’t tell you how to feel, let me introduce to you a simple chart that tells you how you should feel based on a simple net worth-to-income multiple. You can use the average income you’ve earned over the past three years. Or you can separately plug in your personal ideal income where making more brings you no additional happiness. That ideal income figure for us is $300,000 a year for a family of up to four.

Eventually, you will reach a point where you will no longer want to work for anybody or hustle as hard because your wealth is making more money than you need. For example, during a bull market you might see a 10%+ appreciation of your investments for the year. If your net worth is $1 million and it was 100% invested, you might begin to start second-guessing the necessity of working at a $100,000 a year day job.

Hence, it follows that starting at around 10X your average income, you’ll begin to start imagining what being rich really feels like. You’ll start to daydream about what it would be like to actually work at a job you enjoy. Perhaps you might even get enough courage to try becoming an entrepreneur.

When you hit 20X your average income in net worth, you finally begin to actually feel rich. A lot of folks believe that you’re financially independent once you reach 20X your average annual expenses. But I never felt this way because expenses can dramatically increase if you have health issues, experience some type of accident or natural disaster, start a family, or your parents need senior care assistance.

Once you’re over 50X your average income, you are unquestionably really rich, even if you don’t believe it. At 50X, you’re no longer second guessing your spending habits because you likely won’t be able to spend all your money before you die. You only need to return two percent a year to sustain your lifestyle, while the risk free rate of return is currently at 3%.

Having more money no longer brings any sort of happiness. You also begin to feel guilty for having so much. As a result, you give more of your time and money away to institutions and people that need your help the most.

Hoarding Can Be A Disease

Jeff Bezos from Amazon is worth over $100 billion. When asked what he plans to do with his money recently, he said he wants to use his wealth to go to space. Jeff has the incredible ability to ignore the poverty plight within his own Seattle community. Instead, he’d rather hoard as much of his wealth as possible while he is still alive. Yes, he’s revolutionized the way we shop and made consumption cheaper and easier, but come on now.

Given we can only pass down ~$11 million per person death tax-free, hoarding so much more than $11 million, let alone billions, makes little sense as the government will first tax you ~40% and then proceed to squander much of your money.

Therefore, the best strategy for feeling rich is to determine your ideal income for maximum happiness and accumulate at least 20X that income figure. Once you get there, spend your time figuring out as many ways to help other people as possible. The more you give, the richer you feel.

Related:

What Income Level Is Considered Rich?

Scraping By On $500,000 A Year

Readers, when did you start finally feeling rich? At what multiple of average income or ideal income do you think you’ll finally feel rich? What does being rich mean to you?

https://www.financialsamurai.com/wp-content/uploads/2018/05/How-to-tell-if-youre-rich-even-though-you-dont-feel-like-youre-rich.m4a

The post How To Tell If You’re Rich Even If You Think You Aren’t appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Sometimes I go to bed thinking how good life is. From the joys of breathing in clean air to the freedom of making money anywhere there’s internet access, life is pretty great. Sometimes I even go far as to think I’m rich. But then reality smacks me in the face.

Since I turned 40, we’ve been proactively trying to figure out ways to use money to improve our lifestyles. We finally tried out professional cleaners after spending the last 19 years cleaning up after ourselves. So worth it! We now frequently use food delivery apps to bring some of the best cuisine San Francisco has to offer right to our doorsteps. What a life saver after a long day’s work.

So when my iPhone case cracked after I dropped it one evening, it should have been no problem to spend $100 to fix the thing at an electronics shop down the street. They take walk-ins and their turnaround time is only 45 minutes. It’s the perfect amount of time to do some grocery shopping for the family or get a haircut next door. I used them once four years ago and was pleased.

But this time, I decided not to use them because embedded in my iPhone usage plan was a Apple Care policy that I had used once before. The $120 policy states that in case of a cracked screen, I can go to any Apple Store or certified dealer and fix it two times in a two year period. Each time I go, I still have to pay a $29 fee. In other words, if I’m fortunate or unfortunate enough to fix my iPhone twice in two years, the total cost is $120 + $29 + $29 = $178 or $89 for each fix.

The Endless Saga Begins

I went online to book myself an appointment at one of the Apple Stores closest to my house and the next available appointment was a week away. Even though I had major crackage that required me to tape the screen to prevent shards of glass from cutting my finger, I decided to wait a week and keep trying for a better time around the city. As a heavy phone user who is running a website, waiting a week is a big deal.

The next day I checked online again and was able to snag a 7:40pm spot at a store 5 miles away the very next day. Score! Given the Apple booking system said this was a same day turnaround and the store closed at 9pm, I figured it was worth going. When I got there, they told me that they couldn’t fix the phone in 1 hour 20 minutes and that I would have to leave my phone there overnight. No thank you. That was one hour of time lost.

Then I decided to go online again to see if I could get another appointment somewhere reasonably close by and found one in the city 10 minutes away from the high school where I was a high school coach. The appointment time was 2pm three days later and I had to go pick up the kids at 3:00pm for a 3:30pm match.  When I dropped the phone off at 1:45pm, they said I could come back any time after 3pm to pick up my phone.

After getting some lunch, I drove to the high school, picked up some kids to drop to the courts at 3:10pm, drove back to the Apple Store at 3:20pm to pick up the phone as guided. Of course when I got there, they said they were running behind, and that I’d have to wait until 4pm or later to pick it up! Not wanting to be too late to a big match, I drove back to the courts by 3:45pm, coached the players to victory until 5:30pm and then drove back to the Apple Store to pick up my phone during rush hour.

Bottom line: My decision to use my paid for warranty and not just pay $100 to the electronics store 5 minutes away from my house wasted 2.5 hours of my life and gave me unnecessary stress and frustration. If I was rich, I would have without hesitation paid the $100. But instead, I took a gamble with customer support.

It’s Hard To Not Maximize What You Have

Just the stress of being late for the start of the tennis match because it took me 15 minutes to find parking would have been worth the $100. I missed the player and coaches introduction because of my tardiness. But I just couldn’t bring myself not to use my Apple Care warranty because I had already paid for it.

Having a warranty seldom makes sense for the consumer, which is why retailers and manufacturers love to sell them. Whenever I can use a warranty, I feel like I’m winning. When I got my phone, I didn’t want the warranty, but Apple was running some sort of special that included it so I acquiesced.

The other thing I hate is having unused inventory. For example, I started feeling completely wasteful living in a four bedroom, three and a half bathroom house in San Francisco with just my wife and I. The house could rent for $8,500+, a price we would never pay ourselves. Therefore, we rented out the house and downsized to a cozier three bedroom, two bathroom house. With the three of us now, it feels great to maximize the space in our home, especially since both of us are stay at home parents.

If I was rich and smart, I would have spent even more and gotten one of those mobile phone fixing companies to come by my house and fix it on the spot. Alas, I’m not rich enough to waste money or hold unused inventory. After a lifetime of frugality, old habits are hard to break.

Always Make Some Lemonade

Despite wasting an hour driving to and from the first Apple Store, I did some positive things like picking up my favorite burritos from next door to feed the family. I also spent time asking for some iCloud usage help that had been bothering me. Finally, I picked up a longer phone charger since my old one was frayed.

And of course, I’ve decided to share my story on Financial Samurai, which may help bring about new discussion, more traffic, and more advertising revenue. It’s nice to use Financial Samurai as an insurance policy against wasted time.

To conclude, here are some tips to consider:

* Never believe “same day service” even if it’s advertised in writing. Drop your item off at the store as early as possible so the technician has more time to fix it.

* Nobody is ever on time because there’s a lack of respect and operational efficiency in this world. Identify the people and organizations that are perpetually late and cut them out of your life.

* If you’ve got to go somewhere, figure out what else you can do while you’re there to make your trip more productive. Every time I go downtown to get my teeth cleaned, I reach out to one of my advertisers to see if they can take me out for some steak lunch and talk business.

* Figure out if you have more convenient alternatives and calculate the cost of your time and happiness. If your time and happiness is worth more than the alternative cost, spend the money. If you can’t get yourself to spend money to save time and minimize stress, this is when you know you are not yet rich.

Related:

The Top 1% Income Levels By Age

Top Top 1% Net Worth Levels By Age

Retire By A Certain Age, Not By A Specific Financial Figure

Readers, have you ever wasted your time and happiness because of an unwillingness to spend money? If so, I’d love to hear your story. 

https://www.financialsamurai.com/wp-content/uploads/2018/05/Heres-When-you-know-youre-still-not-rich-yet.m4a

The post Here’s When You Know You’re Still Not Rich Yet appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

While doing research on different types of vacation jobs to try once my son starts going to pre-school, I stumbled across a Money Magazine article highlighting the hottest jobs in 2040. My son would be 23 by then, fresh out of college and ready to take on the world. Perfect!

When I graduated from college in 1999, the hottest jobs were in investment banking and management consulting. Even big law was considered in high demand. Now, all those fields are snoozefests. To be able to work at tech companies to feed people’s narcissism is now all the rage.

Given it’s graduation season, I thought it would be great to highlight these wonderful, future jobs and suggest a couple more for good measure. After all, some of you will ignore my advice of attending public school and spend boku bucks attending private grade school and college even though everything can be learned for free nowadays.

Let’s see whether all that time and money spent will be worth it!

The Hottest Jobs Of The Future

Here are some of the hottest jobs in the future according to Money Magazine.

1) Virtual Store Manager – When someone e-mails to ask for their money back after they ate everything in the package, it’s your job to make him happy.

2) Robot Mediator – When the robots start fighting over which one gets to be commander of the revolution, it’s your job to remind them who’s boss.

3) Robot Trainer – When the robot that has replaced hundreds of jobs already needs a software upgrade to replace a hundred more human jobs, it’s your job to ensure it will do so.

4) Drone Traffic Controller – When there are hundreds of drones dropping packages on your head and spying on your every movement, it’s your job to make sure they stop flying after 10pm.

5) Augmented Reality Designer – When housing is so expensive, all you can do is rent a studio and play with your virtual reality girlfriend or boyfriend, it’s your job to get the users excited.

6) Micro Gig Agents – When a 12-year-old prima donna YouTube vlogger asks for only green M&M’s, it’s your job to take them out of the bowl and book her a gig on Financial Samurai’s YouTube channel, which will be created in 2028.

The Hottest Job Of Them All

I don’t know about you, but spending K-12 plus four years of college to do one of these jobs sounds depressing as hell! OK, the Augmented Reality Designer doesn’t sound too bad, but the others do.

If these are the hottest jobs in the future, then I believe the 7th hottest job in 2040 is going to be Psychotherapist for treating all the sad people out there. There will be millions of disenchanted young adults who realize they didn’t have to go to college at all.

The 8th hottest job will then be Physical Therapist for treating all the chronic back, shoulder, butt, and leg pain that goes with being angry at life. If you haven’t experienced any chronic pain yet, you will, especially those who endlessly strive for money and prestige.

We know that automation and artificial intelligence will likely eliminate millions of present-day jobs. We just have to get ahead of the game.

One way is to make as much money as possible now so that you won’t worry about a future job loss or a deadbeat child. Another way is to guide your children towards science and technology because, by definition, science and technology are what will disrupt our future.

But the best way is to build a business with a strong brand that will last throughout our lifetime so you don’t have to rely on too many other people to determine our fate. I’m pretty sure the best job in the future will still be the one where you are your own boss.

There Is Still Hope To Change The Future

According to a forecast from the Institute for the Future (IFTF), 85% of the jobs in 2030 haven’t even been invented yet. Therefore, there’s still time to plan and change the course of time.

The key is to work on universal skills and attributes that are requirements for any job: speech, writing, teamwork, empathy, knowledge, thoughtfulness, and execution.

According to the World Economic Forum, the top 10 skills to get a job in 2020 are complex problem solving, critical thinking, creativity, people management, coordinating with others, emotional intelligence, judgement and decision making, service orientation, negotiation, and cognitive flexibility.

For all you parents out there stressing about your children’s grades and getting into the best schools, you can now stop stressing. Except for perhaps becoming a Pyschotherapist, college won’t be necessary to do any of these hottest jobs. You can learn all the job skills you’ll need for free online within three months before the robots take over.

Plenty of well-educated people are doing jobs today that don’t require a college education. For example, Google is famous for hiring the smartest people to do the most mundane things like selling Adwords to small businesses. Despite dying souls, they stay because the pay and benefits are too great to leave.

It’s absolutely worth finding a job you love to do with your one and only life. Perhaps you’ll never be able to find a perfect match. But at least you should be able to find an organization which employs people you admire and enjoy. Working with great people is half the battle, no matter how crappy the job is.

Time to get excited about the future!

Related:

Would You Accept $1,000,000 To Go To Public School All Your Life?

How To Get Rich: Practice Predicting The Future

Readers, what do you think the hottest jobs of the future will be? If a great job is the end game, doesn’t this list make attending college obsolete? What do you think some great jobs will be in the future? Anybody working at a job that leverages what you learned in college?

The post Top Jobs Of The Future For Your Million Dollar Education appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Unfortunately, sometimes dreams don’t come true. In my quest to simplify life, I was blinded by the belief that the rental property I bought in 2003 would also be eligible for the full $250,000 / $500,000 tax-free profit exclusion if I moved back in tomorrow and lived in it for the next two years before selling.

I believed this to be true because I sold a rental property in 2017 that was eligible for the full $250,000 / $500,000 tax-free profit exclusion given I only rented out the property for 2.5 years after living in it for 10 years prior.

With this new rental property I’m considering selling, I lived in the property for two years (2003, 2004), and then have been renting it out for the past 14 years. Even if my family moved back into the rental for two years, we’d only be able to get a prorated tax-free profit exclusion equal to the length of time we lived in the property divided by the entire length of ownership.

In other words, our tax-free profit exclusion would equal 4 / 18 = 22.2% X $720,000 = $160,000. That exclusion amount is capped at a maximum of $250.000 / $500,000 under § 121. $720,000 is simply the potential selling price minus the purchase price, excluding all costs ($1.3M – $580K). 18 is the number of years we would have owned the property if we moved back in for two years starting today.

Earning tax free profits of $160,000 is better than a poke in the eye, but certainly not as enticing as earning $500,000 in tax free profits as a married couple. At a 27% effective tax for federal and state, I would save around $43,200 in taxes.

And to clarify, in the above example, I’m not limited to 22.2% of the $250,000 / $500,000 number. I’m limited to 22.2% of the gain. That gain is then limited to $250,000 / $500,000. Therefore, at a 27% effective tax rate, I can have a gain of ~$1,851,851 before I max out the $500,000 tax free profit exclusion as a married couple.

Examples Of Using IRS Code 121 To Exclude Home Sale Profits

To make further sense of the tax free exclusion, I invited Amy, a law partner, blogging buddy, and fellow property owner who went through this same exercise to elaborate. She spoke on this subject before when I first considered selling this rental property several years ago, but I forgot. This is why it’s so important to make sure you write out your thesis and explain it to as many people as possible BEFORE making a large financial move. 

Internal Revenue Code § 121(a) says: “Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more.”

For an owner who buys and moves into the property, lives there for at least two years, and later sells it without ever renting it out, the exclusion is simple. You get all of it. But for owners who have turned their primary residence into a rental for some portion of that time, the nuances of § 121 become important.

Here are some examples illustrating how it works:

Background facts: Bob buys a place on January 1, 2003 for $500k. It’s now 2018, and he is planning to sell it for $900k. He’s trying to figure out how much capital gain he will have, and whether he should move back into the property for tax savings.

Scenario 1: When Bob bought his house in 2003, he moved in right away. He lived there until January 1, 2016, and started renting it out after that. He plans to keep it rented until he sells it.
So long as he sells it before January 1, 2019, all of his use is “qualified use” under § 121. The last three years of rental property usage is included in “qualified use” under § 121(b)(5)(C)(ii). That means all of his capital gain is potentially eligible for the exclusion.

His total gain is $400,000, but it’s subject to the $250k/$500k caps in § 121. If he’s single, he can take the $250k exclusion, and he pays capital gains tax on the other $150k. If he’s married, he can take the full $400k exclusion so long as he OR his spouse meet the ownership requirements and so long as both he AND his spouse meet the use requirements for the property.

To the extent that Bob ever took depreciation deductions on the property, either for “home office” or other business use while he lived there, or depreciation he took for having the property as a rental, that amount of capital gain must be recognized and taxed (“recaptured”) under § 1250, irrespective of the capital gains exclusion we’re discussing here.

We could spend a whole day going on about that code section, so for now, we’re going to set that issue aside. Just keep in mind that with each of these scenarios, you first pay capital gains on the depreciation recapture, and then you run the math on the exclusions applicable under § 121.

Scenario 2 (A tricky one): Bob bought his house in 2003 and moved in right away. He lived there until January 1, 2016, and started renting it out after that. But it’s mid-2018, and he’s worried he might not be able to sell it before January 1, 2019. So, to make sure he doesn’t fall short of the 2-out-of-5-years rule, he kicks his tenant out and moves back into the property on July 1, 2018.

Well, Bob just shot himself in the foot. The exception for the 3 years of rental property usage only applies if it’s after the last date that Bob used the property as his primary residence. By moving back in, he turned that 2.5 years of rental property use into “nonqualified use.” Now he has to prorate his gain. Assume he sold on December 31, 2018. His “qualified use” ran from January 1, 2003 through January 1, 2016 (13 years), plus July 1, 2018 through December 31, 2018 (half a year), and his “unqualified use” was 2.5 years. So 13.5/16 years are “qualified,” and about 84% of his gain is potentially excluded. $400,000 capital gain x 84% = $336,000. The remaining $64,000 of his gain is subject to tax.

But we’re not done yet. Of that $336,000 potentially excluded capital gain, Bob can take only $250k of it if he is single. If he is married (and if both Bob and his spouse meet the use test), he and his spouse could take the full $336k exclusion.

If Bob continues to live in his old rental, then his prorated capital gains inclusion will continue to grow, but never back to 100%. For example, if he lived in the property until Jan 1, 2022 (for three more years) after moving in on July 1, 2018, his exclusion would be 16.5 / 19 years, or 87%. The best thing Bob should have done was kick out his tenants with enough time to sell before Jan 1, 2019 to get the full exclusion and not move in before then.

Scenario 3 (the tax law changed on Jan 1, 2009): Now let’s assume that Bob rented out the property early on and moved in later. Bob bought his house in 2003 and rented it out immediately. Starting on January 1, 2009, the tenants moved out and he moved into the property. He’s now considering selling the property today.

All of Bob’s $400k capital gain is potentially excluded. All rental property activity prior to January 1, 2009 is considered “qualified use.” This new proration portion of § 121 kicked in on January 1, 2009, so all rental usage before then is a freebie, so long as you meet the 2-out-of-5 rule before you sell. If Bob is single, he can take a $250k exclusion. If he is married (and if both Bob and his spouse meet the use test), he and his spouse could take the full $400k exclusion.

Example 4 (another tricky one): Similar to Example 3, but Bob moves into the property even later. Bob bought his house in 2003 and rented it out immediately. Starting on January 1, 2014, the tenants moved out and he moved into the property.

Now we’re back into proration territory again. Bob’s qualified use consists of the 6 years he owned and rented it from January 1, 2003 until December 31, 2008, plus the 5 years he lived in it from January 1, 2014 until December 31, 2018. The rental period from January 1, 2009 through December 31, 2013 (5 years) is unqualified use.

So 11/16 years are qualified use, and about 69% of the gain is potentially excluded. $400,000 capital gain x 69% = $276,000. Of that $276,000 potentially excluded capital gain, Bob can take only $250k of it if he is single. If he is married (and if both Bob and his spouse meet the use test), he and his spouse could take the full $276k exclusion, and the remainder would be subject to capital gains tax.

You can see more details from IRS’s website.

Go Through The Numbers Carefully

I’m sure a number of you are still confused after these examples. Just read each scenario multiple times and ask for clarification and you’ll eventually get it.

The bottom line: in order to qualify for the full home sale exclusion under the Code Sec. 121(a) two-out-of-five year ownership and Use Rule, the non-qualifying use (rental property, office, etc) after the owner leaves his principal residence can’t exceed three years. After three years, you must prorate the exclusion by taking the number of qualified years divided by the total years of ownership if you have lived in the property for two out of the last five years. If you don’t meet the 2/5 rule, you get no exclusion at all. Not even proration.

For those of you who’ve owned rental property for a long time (i.e. 10+ years) and are sitting on large gains, it doesn’t seem worthwhile moving back into a rental to try and save on taxes. Instead, the best move is to hold onto your rental property for as long as possible to avoid any selling costs and capital gains tax or do a 1031 Exchange and buy a new rental property with the proceeds.

After going through this exercise, my family is definitely not going to downgrade our lifestyle by moving back into our two bedroom rental just to save maybe $43,200 in capital gains tax as a married couple. We want to live life to the fullest now.

Sometime in the future, we may put the condo on the market once our tenant’s lease runs out and do a 1031 Exchange into a more expensive property in Honolulu. We’ll rent out the Honolulu property for at least one year to legitimize the property as a in-kind rental. Then in 1-4 years we’ll move into the property and make it a primary residence, just in time for our son to go to pre-school or kindergarten.

Or, we’ll just keep both properties, hire a property manager, and save diligently in order to buy a Hawaii property when it’s time to move. I’ve always felt the best to buy property to enjoy rather than to rent out. The only issue with keeping both SF properties is that I’ll need to find some way to save $1M more since I won’t have the proceeds from the 1031 Exchange.

Guess I can’t slack too much with Financial Samurai!

Related:

Buy Utility, Rent Luxury: The Real Estate Investment Rule To Follow (at this moment, it seems more prudent to rent in expensive cities like Honolulu than buy)

How To Pay No Capital Gains Tax After Selling Your House For Big Bucks (don’t forget capital improvements increase your cost base)

Readers, if you want to provide more examples and clarification, please do. This tax stuff is confusing, but together, we’ll figure it out. Sorry to get your hopes up in an earlier article. Since I purchased my rental property in 2003, the tax law changed, which is a risk everyone must calculate. Please always consult with a qualified tax professional. Thanks again to Amy for trading a dozen e-mails with me until past midnight to get this article out the next day. 

https://www.financialsamurai.com/wp-content/uploads/2018/05/Tax-free-profit-exclusion-needs-to-be-prorated-for-long-term-rentals.m4a

The post Tax Free Profit Exclusion Proration For Long Term Rentals That Turn Into Primary Homes appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

So far, I’ve eliminated most stressors due to financial independence:

  • Commuting to work
  • Working with people I don’t respect
  • Sitting in mindless meetings
  • Working in an occupation that started getting boring after 13 years
  • Dealing with unreasonable clients
  • Worrying about how to afford raising a family in an expensive city
  • Having to respond to endless e-mails
  • A rental house with maintenance issues that consistently attracted rowdy tenants

My last stressor I can eliminate is getting rid of my SF rental condo I bought in 2003 for $580,000. I dislike working with the HOA board, who is made up of grumpy old retirees who seem to have nothing else better to do than to grandstand. They hate landlords. They also hired an incompetent property manager who only responds to the board, instead of all homeowners they work for.

In 2017, a similar unit across the hall sold for a surprising $1,360,000. The unit had about ~$40,000 more in upgrades than mine due to a remodeled kitchen, but everything else is the same. The buyer was a 26 year old associate in banking and his girlfriend.

The problem with selling my property is that I would pay a 27% marginal tax rate on the gains. We’re talking a potential ~$200,000 tax bill. Further, I’d lose out on $4,200+ a month in rental income and a place for family to stay close by if ever needed.

One solution to minimizing the tax bill would be to move back in tomorrow, live in the condo for the next two years in order to get the $500,000 tax-free profit exclusion, and then sell. Some of you real estate investors are likely facing the same dilemma. Let’s talk it out. 

Be Aware Of Depreciation Recapture Tax

Depreciation is a non-cash expense you get to deduct from your rental income to minimize your taxable rental income. For example, you might have $10,000 a year in rental income after all expenses, but pay zero income taxes because you have $12,000 in depreciation. You don’t need to worry about paying it back until you sell the property.

Because depreciation is an accounting tool that lets you “use up” the value of your asset, the IRS expects that you will sell it for less than the depreciated value. If you sell your asset for more than its depreciated value, which is almost always the case, the IRS requires you to pay tax on that gain. This tax is called “Depreciation Recapture Tax” and is also referred to as Section 1250 recapture.

The tax rate on recaptured deprecation is 25 percent. Consider a rental property that you bought 15 years ago for $580,000 and plan to sell for $1,300,000. Your analysis shows that $400,000 of the value was in the depreciable building and $180,000 was in non-depreciable land.

You would have a $720,000 capital gain on the difference between the original purchase price and the selling price, taxable at 20 percent in the 2018 tax year ($144,400 in taxes). In addition, the $14,545 per year depreciation that you claimed based on the asset’s 27.5 year life, which adds up to $218,181, is taxable at 25 percent as recapture ($54,545).

This leads to a total tax bill on the sale of $198,945 before taking into account the cost of selling the place and all the renovation expenses.

I don’t know about you, but paying almost $200,000 in capital gains tax just to get rid of tenant, maintenance and HOA stress seems like a hefty price to pay.

Yes, you would walk away with around $1,100,000 in the bank if you sold the property. The money could be invested conservatively at 3% – 4% to generate $33,000 – $44,000 a year in passive income compared to the current $36,000 a year net rental income you gain.

But still, is it worth it?

The Math And Sacrifice To Move Back In

If my family moves back into our 1,000 sqft, 2 bedroom, 2 bathroom condo we will be losing 920 sqft of indoor space, 220 sqft of deck space, a bedroom, an office, a yard, and a hot tub.

What we gain will be a lovely park view with a maintenance-free massive yard right across the street. The park has two renovated tennis courts and a great playground for our boy. The condo is in a central location making going downtown and coaching high school tennis easier as well.

Given the condo capital gain is more than $500,000, we would save around $135,000 in taxes if we moved back in for two years and then sold. Further, the condo has no mortgage, only ongoing HOA, utilities, maintenance, and property taxes to pay.

Meanwhile, we could either leave our current primary residence empty for that two year period, foregoing ~$6,000 a month in rental income, or $144,000 for two years. Or, we could hopefully find a nice family to rent it out partially furnished. But then there’s the stress of dealing with tenants again.

The other thing we could do is sell our beloved primary residence today for what we believe to be over a $500,000 tax-free gain, reinvest the proceeds, move back into our condo rental, sell it in two years to take advantage of another $500,000 tax free gain, sever all roots in San Francisco, and buy a sweet blogging pad in Hawaii before our son goes to kindergarten in 2022.

The final option would be to sell both SF properties tax-efficiently, reinvest all proceeds passively into real estate crowdfunding, bonds, and dividend stocks, and move back in with our parents in Honolulu rent free. Of course we’d pay for all maintenance, utility bills, and property taxes if we move in. The investments could potentially earn $15,000 – $20,000 a month passively and we’d save almost $6,000 a month in homeownership costs.

Every Two Years Is A Blessing

I knew there would be a lightbulb moment when I wrote, How To Pay No Capital Gains Tax After Selling A Property For A Huge Gain. This decision we face is very real as we’re trying to optimize our lifestyles today by minimizing stress.

We think raising our son in family-friendly Honolulu while caring for my parents now that they are in their 70s is an ideal set up. Our boy won’t go to pre-school for another 1.5-2.5 years, so the time is now. Yet, we’re hesitant to move given we’ve been in San Francisco since 2001. Life is comfortable with our network of friends.

Not having a single property in San Francisco seems foolish 20 years from now. I’m certain San Francisco will become a mainstay international city where people from all over the world decide to come. It’s already happened in places like Sydney, Vancouver, New York, Singapore, and London. But it’s most important to live in the present.

Honolulu property should do OK over the long-run as well. But it won’t perform nearly as well as San Francisco property because the local economy isn’t nearly as strong as the Bay Area’s economy. Honolulu property prices are dependent on tourism and investors who’ve already made their money elsewhere.

Moving Back Into A Rental Review:

* Calculate your actual tax savings to know what you’re playing for.

* Find the difference in rental income you could potentially earn renting out your primary residence and subtract the rental income lost from moving back into your rental.

* Write down a list of all the non-monetary pros and cons of making the move.

* Consider whether a 1031 Exchange is a better option.

* Ask yourself whether you want to live in the now or in the future.

If you’ve actually taken such action to save on taxes, please share your story. Would you be willing to downgrade your lifestyle by moving back into your rental for two years to save $135,000 in taxes? Or would you simply hold onto your rental property forever so you never have to pay any capital gains tax at all?

Note: There is a poll embedded within this post, please visit the site to participate in this post's poll. https://www.financialsamurai.com/wp-content/uploads/2018/05/Moving-into-a-rental-to-save-on-capital-gains-tax.m4a

The post Moving Back Into A Rental Property To Save On Capital Gains Tax appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

One of the things I learned after leaving Corporate America is that entrepreneurship is much harder than a day job. When you have to be the marketer, the creator, the accountant, the publicist, and the customer support, you often wonder how you can make any decision to move your business forward.

But after over a year of being a full-time parent, I’ve come to realize that being an entrepreneur is a walk in the park in comparison!

As a stay at home dad to a newborn, you realize why sleep-deprivation is an effective torture technique used by the CIA. You experience mini-heart attacks on a daily basis because there’s always a close call as they learn to crawl and walk. You endure pain in your knees and back because you constantly get down on their level to make a connection. Your patience is tested as you read the same books, work on the same dexterity exercises, and use the same hand signs over and over again. Then of course there’s the diaper changing, temper tantrums, and crying.

Despite all the difficulties of child raising, I wouldn’t trade the initial years for the world. The joy you get from seeing your little one smile and waddle into your arms when you enter the room is priceless. There’s also an incredible sense of satisfaction helping your baby reach milestones. 

Two Years Of Full-Time Parenthood Seems Like Enough

Now that I’m in my second year of full-time parenthood, I’m beginning to plan ahead. Whereas the typical dad in America might stay at home between 2 – 14 weeks, I told myself that I would stay at home for at least 104 weeks, with the aim of going for 260 weeks until he goes to kindergarten.

Pediatricians say the first two years are the most important developmental years in a child’s life. A child’s brain triples in size from birth to age two and reaches about 75% of an adult’s brain size. Therefore, to be present as much as possible during these first two years seems like a good idea. If he becomes a problem child, at least I gave it my best shot.

Today, however, I’m really not sure if I can last much longer than two years as a stay at home dad. I’ve begun to experience occasional heart arrhythmia from the pressures of simultaneously running a business and helping care for our son with my wife. I’ve also gained another five pounds from the lack of exercise and constant food delivery. Finally I’ve begun to feel the full force of being a sole provider now that our investments are no longer easily providing a healthy return.

Some friends, who have older children, tell me parenting gets easier and more rewarding as children grow. But I can’t count on them being right. Instead, I’m counting on them being wrong so I can hopefully be surprised on the upside.

I need to find some way to unwind before having some type of breakdown. The solution I’ve come up with is taking a year long vacation by going back to work. All my male friends find fatherhood to be relatively easy because they have full-time jobs.

Several mothers I’ve spoken to have found relief in going back to work after three months, although they say they struggle with guilt. But after two years of being a stay at home dad, I don’t think I’ll have much guilt at all, especially if my son goes to pre-school.

Source: Census Bureau

Full-Time Work As A Way To Decompress

Here are eight reasons why going back to work could be the perfect vacation from parenthood.

1) A long and peaceful commute. Although commuting was the #1 reason why I hated going to work, since leaving work in 2012, ridesharing costs have come down by over 50% since. No longer do I need to wait for a super crowded bus that is hardly ever on time. I like the idea of sitting peacefully by myself in an Uber or Lyft for 30-40 minutes each morning and evening. During this time, I could daydream, sleep, or consume mindless information on my phone.

2) Easy work objectives. When I worked in banking, there was constant pressure to bring in the most revenue and be ranked in the top 3 with every single client. That’s all I knew for 13 years. When I did some consulting for some fintech startups, I realized this type of pressure was not normal. Despite working in a fast-paced startup environment, I found people at the three startups I consulted for to be much less high strung with much lower objectives. As a result, I believe I can go back to work at most places and not feel the same amount of pressure that I felt in banking.

3) Nice water cooler conversations, holiday parties, and work boondoggles. Nobody works 100% of the time during the work day. There’s a lot of long bathroom breaks, smoke breaks, coffee breaks, lunch breaks, and company outings. I’m always envious of friends who get to go with their work team to a Giants or Warriors game in the middle of the day. I love attending holiday parties and watching colleagues get drunk and making a fool out of themselves in front of their bosses. One time a guy got so drunk he professed his love for his female boss in front of a dozen folks. It was hilarious! Seriously, who doesn’t love having fun on company time while also getting paid.

4) Endless meetings to relax the mind. Some organizations have so many meetings it’s hard to get anything done. Combine so many meetings with water cooler conversations and work boondoggles, it’s no wonder why I found it much easier to get 3X more done in the same amount of time working for myself at home. Getting 1X worth of stuff done at work would be a peace of cake. I’d use all the endless meetings and extra time to zone out and recharge my mental health. I might even go work out for an hour a day as well.

5) A better social life. As an extrovert, I enjoy spending time with people. I have a feeling it’s much harder being a stay at home parent as an extrovert than as an introvert. My wife has the amazing ability to stay at home for an entire week and not go stir crazy. I, on the other hand, start getting grouchy after about one day of being at home. Joining a workforce elevates my chance of having a better social life. I should be able to make new friends and attend the random weekend BBQ or house party. I love those.

Related: The Key To A Longer Life: Fear Being Alone

6) Optimization of work. Even with blogging, there’s a diminishing level of return. It feels wonderful to work online for 1-3 hours a day and get 90% of the benefits. After the third hour of blogging, blogging no longer becomes fun. By going to work for 10 hours a day and earning a steady paycheck, I could easily maintain Financial Samurai before and after work just like the old days. Maximizing the day brings me joy.

Related: Why Blogging Is The Best Business On Earth

7) More appreciation for family. Distance always makes the heart grow fonder. But if you’re with someone 24/7, you will naturally take that person for granted. By being gone most of Monday – Friday, I’ll appreciate my Saturdays and Sundays with the family more. I’ll plan more fun things for all of us to do. With me being gone most of the week, my wife will appreciate more of my efforts during the first two years of our son’s life as well. She’ll also become more independent. Finally, my son might miss me more and be more excited to spend time with me.

8) Financial relief. The obvious benefit of full-time work is getting a steady paycheck and healthcare benefits. It was relatively easy providing for just the two of us, but something about having a baby increases your level of financial responsibility to new heights. Having an extra income and insurance source would certainly create more relief, especially if the stock market and real estate market begins to seriously roll over.

We pay $1,625 a month for health insurance as a self-employed family. Then we pay another $120 for dental insurance. That’s nuts! How is this even a reasonable amount to pay when all of us are all relatively healthy? If we stay in San Francisco and have another child, $300,000 a year in gross income might be necessary.

Find The Right Vacation Job

Getting a job at a startup, in banking, or in management consulting would not be a vacation job. Instead, a “vacation job” is one that’s at a huge organization where profits are plentiful. The larger the organization, the smaller your impact. Given management has lower expectations of you and has so much money, your stress will be lower. At a startup, one wrong decision could mean the death of the business.

Organizations that have long-term objectives instead of quarterly objectives are also wonderful. Working for a small-cap public company is probably going to be incredibly stressful because they’ll always be wondering which gorilla will launch a competing product and eat their lunch. Conversely, working at a large private organization could be just the ticket.

I don’t want the term vacation job to be pejorative. I’m simply describing a vacation job as something fun, meaningful, and that can be easily accomplished based on your skill set.

Here are my vacation jobs guesses that would best suit me:

* Venture Capitalist: You get paid well, don’t have to risk any of your money, work reasonable hours, don’t have to build a business, get to attend a lot of social functions, and aren’t judged on performance until the end of the fund’s life (5-10 years). A lot of venture capitalists don’t even have firsthand experience building a business.

* Quant Fund Manager: The computer does all the investing for you once you’ve developed the proper algorithms. So long as you are performing in-line or better than your index, all you’ve got to do is press a button once in a while and you’re golden.

* Index Fund Manager: Your job is to simply stay on top of any changes in a particular index and copy the changes in your index fund. You literally don’t have to think of any new ideas or make any hard decisions because your investors are investing in your fund for the low fees. But you can easily try to market yourself as an Index+ investor with a sexy edge if you want.

* Sports Broadcaster: It would be amazing to be a sideline reporter for every major tennis open. I can easily watch tennis for eight hours a day and talk about tennis for another four hours. Ah, now you know another reason why I’ve been practicing my oral delivery through my podcast.

* Fintech Startup Board Member / Advisor: As someone who lives in San Francisco, worked with dozens of fintech startups since 2009 and organically grew a personal finance site to 1M+ organic pageviews a month, I’d be a good fit for many startups in the financial technology space. I’m connected, have operational expertise, know how to grow a business, and have a platform they can leverage.

I’d love to know if you have a vacation job or know of anybody who has a vacation job. All ideas are welcome. By planning ahead, I hope to increase my chances of landing that perfect gig.

Related:

A List Of Career Limiting Moves To Blow Up Your Future

Family Or Career? You Only Have To Sacrifice 5 Years Of Your Life

Readers, what are your thoughts about going back to work to take a vacation from parenthood? What are some negatives about work and leaving my son behind after he goes to pre-school I’m not considering?

https://www.financialsamurai.com/wp-content/uploads/2018/05/Taking-a-vacation-from-parenthood-by-going-back-to-work.m4a

The post Taking A Vacation From Parenthood By Going Back To Work appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Recently a long-term CD of mine expired with a 3% interest rate. Although it would have been much better had I invested the money in the stock market years ago, I’ve always aimed to consistently invest 5% – 10% of my net worth in risk-free to near risk-free investments so I’ll never have a liquidity crunch. Taking advantage of a bull market is what the other 90% – 95% of my net worth is for.

Once you’ve got a nice buffer, you’re more free to take on risks in your investments, career, or business. And sometimes, those big risks pay off in spades. Think about it. What type of moves would you make if you knew you wouldn’t end up in abject poverty thanks to your savings buffer?

Maybe you’d be more willing to negotiate a raise and a promotion without fear of rebuke? Maybe you’d be more willing to join a promising startup for less pay, but more equity upside? Or maybe you’d have more courage to negotiate a severance to start your own business.

In my case, having risk-free investments gave me the confidence to leave my job in 2012, buy a 3rd SF property in 2014, and start a family in 2017.

Ideas For CD Proceeds

When it comes to investing, it’s important to compartmentalize your money for maximum purpose. After all, if there is no objective, then there’s no reason to delay consumption now instead of waiting for some future greater reward.

The purpose of CD money is so that you can:

* Sleep better

* Have guaranteed money up to $250,000 / $500,000 per individual / married couple

* Keep up with inflation

* Maximize your cash return

* Always have a slug of cash coming in if you set up a CD ladder

* Better cash management for large future expenses e.g. buying a house, paying for college, etc.

Nobody is buying a CD to get rich. Now that we’ve gotten the purpose of CD investing out of the way, let’s discuss some logical reinvestment ideas for your CD proceeds.

1) Online cash savings account. Although savings accounts still are pitifully low and haven’t followed the Fed Funds rate upward, you should be able to earn at minimum a 1% return with an online cash savings account. Online banks provide higher rates than banks that have a massive bricks and mortars presence due to lower overhead costs. There’s always some reputable bank out there that’s looking to build up its deposits by providing higher rates. At the moment, it looks like CIT Bank has one of the highest money market rates at 1.75%. It’s up to you to look around online.

Below is a chart of the latest US Fed Funds rate progression. Given the Fed Funds rate is on the shortest part of the duration curve, your online savings rate should mirror the Fed Funds rate. Alas, most banks will delay raising their savings rate so they can earn a higher profit off of their customers. The analogy is akin to a rise in oil prices. Gas stations will raise prices in lock step with a rise in oil prices, but will be much slower in lowering gas prices when oil prices fall.

2) Highly rated municipal bonds. Despite multiple financial crises since 1970, municipal bonds rated A or higher have a 0% – 0.05% default rate. With no federal and state taxes to pay on the coupon, municipal bonds are more attractive to income earners in the highest income tax brackets. You can buy a muni bond ETFs like MUB and VTEB.

3) US Treasury Bonds. Given the dollar is the world’s currency and the US treasury can alway print more money to pay off debt, US treasury bonds are considered risk-free. If you hold a 10-year Treasury bond for 10 years, you will get your annual coupon and full principal back. Below is the five year historical chart of the 10-year Treasury bond yield. If you buy a 10-year treasury bond today, you will get a 2.96% annual coupon. You can buy Treasury bond ETFs like IEF and TLT.

4) Another CD. If you don’t indicate you want your CD proceeds to be deposited to another account, the bank will give you a grace period and automatically re-enroll you in the same duration CD at whatever rate they are currently offering. Beware that this is generally a poor choice as the terms are sometimes less favorable given rates have been declining since the 1980s.

When I locked in my CD at 3%, it was USAA that was offering the highest rate. They are one of my favorite companies since I’ve been using them since 1994 when I first got my driver’s license. Now, their 1 year CD rate is only 0.71%, 5 year CD rate is only 2.13%, and 7-year CD rate is only 2.17% despite rates having moved back up to where they were.

Looking at CIT Bank again, they have an interesting 11-month CD rate at 1.85% with no pre-withdrawal penalties after 7 days the money is deposited. That’s so much better than other ~1-year CD rate I’ve found. I wouldn’t lock in longer term rates just yet. Just search the web for the best rates from reputable financial institutions.

5) A business arbitrage. Whenever you find an opportunity to spend a dollar and get more than a dollar in return, you should spend until the marginal revenue equals the marginal cost. The most common business arbitrage is hiring an employee for X and having the employee produce X+. No employee would continue to have a job if s/he didn’t produce more than they cost. Another common business arbitrage is advertising online. Due to sophisticated data analytics, it’s very easy to see what type of return you can get from an advertising campaign, especially on fake news platform, Facebook.

Related: The 10 Best Reasons To Start An Online Business

6) Yourself. Given your investments should largely be a pleasant tailwind for your path to financial freedom, the biggest investment you can make is in yourself. Your main source of income is likely from your job or business. Therefore, it behooves you to invest in yourself to become a better employee or entrepreneur.

The best investment someone can make in themselves is to learn how to be a better communicator. Once you become an expert speaker, writer, and presenter, opportunities start flooding in. Intelligence is highly overrated. Learn how to make people feel like they are the only one you are talking to. Learn how to capture the imagination of your listeners. Make people feel like there’s a deep connection so they become your or your product’s greatest advocates.

Related: Emotional Intelligence: The Key To An Easier Life

7) Pay down debt. No matter how low the interest rate, I’ve never regretted paying down debt and neither will you. For example, it feels absolutely wonderful to no longer owe the bank $815,000 after I sold my rental house last year. When I paid off my MBA loans, I felt like a weight was lifted off my young shoulders.

Here’s my FS-DAIR framework if you’re wondering how much of your free cash flow you should use to pay down debt and invest. Any interest rate at 10% or higher is highway robbery and should be paid down with great focus.

Stay Conservative Most Of The time

For a long time, I wondered how I’d reinvest my CDs once they started coming due since nterest rates had fallen drastically over time. Sometimes, you can afford to take more risk if the conservative alternatives are not attractive.

In early 2014, a $400,000 4.1% CD expired and interest rates were still low back then. Hence, I decided to take more risk by investing $250,000 of the proceeds in a fixer that was asking $1,250,000. Taking on leverage to buy a single concentrated asset is certainly not a low risk endeavor. However, I felt strongly that panoramic ocean view homes in San Francisco would rapidly rise in value. Besides, I had two other CDs in the wings, including this one that just expired to bail me out just in case things went south.

In 2018, I no longer feel strongly about coastal city real estate or the US stock market. My risk-free / low-risk asset allocation has also fallen towards the lower end of my target 5% – 10% net worth allocation. Therefore, I plan to reinvest 50% of this CD’s proceeds in municipal bonds, 20% in an online savings account, 20% to pay down my Lake Tahoe vacation property, and 10% in the stock market if we see another 5% – 10% correction.

Although higher interest rates have created a headwind for riskier investments, those of us who need conservative investments with dependable income should be rejoicing! Remember, stay disciplined with your asset allocation!

Related Posts:

Ranking The Best Passive Income Streams

How Much Savings Should You Have Accumulated By Age

Readers, do you have any CDs? How are you reinvesting the proceeds?

The post Reinvestment Ideas From An Expiring CD: Stay Mostly Conservative appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Let’s say you don’t have the capacity to build a business to boost your wealth like the richest people on Earth. You can always just buy a business instead. The following post is by John, an early 50s retiree from ESI Money, a blog about achieving financial independence through earning, saving, and investing (ESI). He recently purchased Rockstar Finance, a leading curation site for the best personal finance articles.

One of the main questions I’ve received since I bought Rockstar Finance is simply, “Why?”

Sometimes it’s phrased as, “I thought you were retired” or something similar, but at the heart the meaning is always, “why would someone buy a business after he retired?”

Since Sam talks about owning web businesses and the various options to pursue after retirement, I thought a guest post on Financial Samurai would be the perfect place to explain my reasoning.

Background

For those of you not familiar with my history, here’s a quick summary:

  • I retired in August 2016 at 52 after a 28-year career in business. I was actually financially independent in my early 40’s and should have retired then, but that’s for another post.
  • I didn’t really know what to expect when I retired, but I discovered there were several positive surprises awaiting me.
  • After a year a series of events conspired to allow me to buy Rockstar Finance. I decided to proceed and finished the transaction in December 2017.

Now that we’re all on the same page, let’s get to the details.

What is Retirement?

Recently I did an interview and was asked, “How do you define retirement?”

My response was as follows:

I define it as the freedom to do what you want.

Back in the day retirement was generally defined as 1) you quit work and 2) you indulged in leisure activities like golf, bowling, traveling, and so forth until you eventually died.

Today I think “retirement” is getting rebranded, especially by those of us doing it earlier than the traditional age, to mean something else. Or perhaps I’m not “retired”, I’m just “financially independent.”

Whatever you call it, I don’t work for an employer and spend all my free time on what I want — some of those things being investing and running a couple websites and some of them being more leisurely like traveling, reading, and so forth.

This is the gist of my answer for the “why?” question.

The definition of retirement is changing, even for those retiring at a more traditional age. People are living longer. And they are remaining in better health longer. So while retirees at 65 used to sit back and take it easy, these days they are having hips replaced and running marathons.

Today’s early retirees are just an exaggeration of this trend. They have even more time, energy, fitness, and so on for activities. Some of their interests are recreational and some are work-related. The only difference now is that the work is something they choose to do versus something they have to do.

Here are the mains reasons why I bought a business after retiring.

Seven Reasons I Bought A Business

Let’s dig in a bit and examine why I took the plunge:

1. I needed something enjoyable to do.

I remember my pastor used to say how he was never retiring because he’d be bored to death. He had plenty of hobbies, but felt that there’s only so much time you can spend in recreation.

I used to think he was full of it. After all, who wouldn’t want to sit around and just chill for the last 20 years of their life?

Uh, me. I wouldn’t.

Once the stress of 28 high-power work years melted off (which took about six months), I realized that I needed something enjoyable to do with my extra time. In my case “enjoyable” and “challenge” go hand-in-hand. Owing a business seemed like a perfect solution for both.

You don’t have to go far to see that I’m not the only one who thinks this way. For example, look at the author of this blog. Sam is certainly wealthy enough to retire now and do absolutely nothing.

And yet, if I’m not mistaken, he still:

  • Actively manages his rental properties
  • Coaches high school tennis.
  • Consults with businesses now and then.
  • Volunteers as a foster kid mentor.
  • Publishes regularly on Financial Samurai.
  • Spends at least 40 hours a week taking care of his son.

I’m probably missing one or two things but you get the idea.

You could classify at least three of the above as “work.” So I’m not the only one who has created jobs for myself after retirement. And I think as time goes on and retirement is further redefined by a younger set of people we’ll see that some sort of job, business, or side hustle will increasingly become part of the equation.

Also consider the traits that it takes to become financially independent at a younger age and you’ll notice that many of them are also qualities often required for business success. In that light a post-retirement business or money-making hobby seems very natural.

If retirement is truly about “the freedom to do what you want” and business is enjoyable to you, why would you NOT want to own a business after retirement?

2. I needed something to keep me sharp.

You’ve heard the phrase “use it or lose it”, right?

Well, that’s what appears to happen with your mind. And retirement can be especially hard on the brain.

A major British study which tracked 3,400 retired civil servants found that short-term memory declines nearly 40 per cent faster once employees become pensioners. It appears that the lack of regular stimulation takes a heavy toll on cognitive function and speeds up memory loss and dementia, researchers warned.

Yikes! This is scary stuff! It turns out that I not only wanted a mental challenge but I need one too.

Yes, you can keep you mind active from other sources. This is why I also read more than ever, write a ton of articles, listen to podcasts, and do my daily chess puzzles. They all help, for sure. But there’s something unique about running a business that challenges the mind in an awesome and beneficial way.

Sure, my own blog could fill some of this need for me, but it wasn’t enough on its own — I needed a more complex business to challenge me mentally. Turns out that Rockstar Finance was just the right fit.

3. I was looking for a great way to invest some cash.

Because I generate more than enough income from my website and rental properties to cover our living expenses (with zero drawdown of assets), I was starting to accumulate quite a bit of cash during retirement.

I had thought about re-deploying some money into buying more real estate, but the two markets I was considering (my current city and the one where my properties are located) are too, too hot for my taste. Prices are simply CRAZY!

My cash kept piling up in a “high yield account” (an oxymoron if there ever was one) earning a whopping 1%. It was killing me to watch it sit there. I had a load of money earning virtually nothing.

So I decided to take money that was yielding 1% a year and turn it potentially much more. Assuming the asset itself wasn’t going to lose value, it seemed like a no-brainer. Even if the value of the site went to $0 it would not impact my lifestyle one bit. So why not?

Generally sites are valued at two times annual profit. If a site earns $50k a year it’s value is somewhere in the $100k range.

I ended up paying five to six times earnings and I still felt I was getting a good deal. The reason is that I estimated what I thought the site could make each year, discounted it a bit, and then paid roughly two-times THAT annual profit. In addition, I knew I could use Rockstar to drive traffic to my own site. My best guess is that ESI Money will earn an extra $10k this year simply because of both the traffic and relationships that Rockstar has. This is all gravy and was not part of my estimations.

It seemed like a great way to take low-performing dollars and transform them into high-performing dollars. Five months later, it appears this estimate was correct.

Sam’s note: below is an income statement I put together guesstimating what a site like Rockstar Finance could or is making. If ESI Money bought the business for $100,000, he would make back his entire capital in just 2.6 years, assuming no revenue or profit growth. After 2.6 years, he would earn a 39% annual return for his efforts.

Related: Real Estate vs. Blogging For Maximum Returns

4. I wanted to help personal finance bloggers.

Most people outside the personal finance blogging community don’t know this, but I began blogging in 2005. Yes, 2005. It was a looooong time ago.

Eventually it was discovered I ran that blog by people at work. I was the president of a company at the time. To say it was a bit awkward to have my money life open to all 800 employees is a bit of an understatement.

I still have that site but now simply post basic money stuff there. A few years after being outted I re-started my blogging escapades with ESI Money.

As a result of being around so long, I have made a lot of blogging friends and I love the personal finance blogging community. In particular I like helping new, motivated bloggers achieve their dreams and become better faster. Rockstar Finance gave me a platform to help others like never before. It’s very rewarding.

One service we created at Rockstar was a VIB (very important blogger) program where site owners sign up (for a fee) and receive various benefits relating to site traffic and revenue generation. The program just started on March 1, but we have already seen some tremendous results. The future is very promising and I’m thrilled to be part of helping bloggers reach their goals.

At some point in your life simply giving back to others is the reward in and of itself. Owning Rockstar is a way I can do this on a much bigger scale.

The first blogger I helped out by purchasing Rockstar Finance was J Money from Budgets are Sexy. He is the founder of Rockstar who sold to me. He wanted to free up some time since he and his wife were about to have their third child. I was excited that this extra benefit was part of the sale — that I could pass along funds to a good man, help expand his legacy, and be part of his plan to achieve one of his life goals.

5. I wanted something I could pass along to my kids.

As I was considering buying Rockstar, one thing that kept going through my mind was that this site was something my kids could run one day.

My daughter is a very good writer and my son has some amazing creative skills, so both of them already have traits that would help them.

Now whether or not they want to take it over is another thing (they will need to learn quite a bit about money in the meantime), but at least this gives them something to think about.

There are many advantages to a web-based business and if one of my kids decided to rise to the challenge, they could own a site that can be run anywhere in the world, would pay them more than they will likely earn in their jobs, and would only require a handful of work hours each day.

They could literally “retire” (at least from working for the man) at a very young age.

Sounds great, right?

Related: How To Stop Worrying About Your Child’s Future In This Brutally Competitive World

6. I wanted something that wasn’t too much.

Piggy backing on the above comments a bit, Rockstar Finance is a perfect retirement business for me because:

  • It only requires 3-4 hours each day. Yes, I have help (Steve from Think Save Retire runs the operational side of the site) but the revenue supports that. My commitment is a few hours a day on average — just enough to be enjoyable but not too taxing.
  • The hours are flexible. I can work 7 am to 11 am, noon to 4 pm, 9 pm to 1 am, or any combination of hours I like in a day. I often work more on some days and hardly any on others (we went to Grand Cayman for nine days in January and I worked on the site maybe an hour during that time.) BTW, Steve was in Mexico at the same time, so we were pretty much on auto-pilot. But we had done the work in advance, so it all ran like clockwork.
  • The business is location independent. If I had wanted to, I could have done everything site-related in Grand Cayman that I do at home. The internet was great down there and I had my laptop, so I was good to go. Don’t tell anyone, but I may just test it out next year — my nine days could turn to three weeks if it all works out. Or if Sam would just buy that place in Hawaii, I could stay for free, and that would be even better! :)

When people hear that I bought a business in retirement I think much of their angst is because they assume I spend 40-50 hours per week in an office somewhere chained to a desk. No, it’s nothing like that. If it was, I would not have bought it.

7. I wanted to give more.

I’ve talked about the balance between doing all you can to retire early versus slowing down that progress by giving along the way.

It’s an issue that everyone needs to sort out for themselves, of course, but we decided to simultaneously give and save. In fact, we gave away 26% of our gross income while saving for early retirement. The world is a tough place for so many. We feel blessed to be where we are and want to help as many in need as possible as soon as possible.

I’d like to ramp up our giving in retirement and Rockstar gives me a great opportunity to do so. In fact, Rockstar has always had a large charity component as part of the site, and I want to lean into that heritage. This Christmas season we’ll turn it up a notch or two in this area, so stay tuned.

Buying A Business Can Be The Perfect Solution

In the end, retirement is about freedom of time and doing what you choose to do. Buying a business fit the bill for me. I hope you find the same in retirement.

Along those lines, what do you think you’ll enjoy doing when you retire? Or what do you enjoy doing now if you are already retired? If you’ve ever bought a business, I’d love to hear how that went.

– John, ESI Money

The post Why I Bought A Business After Retiring: The Rockstar Finance Acquisition appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Ever wonder how net worth compositions change the wealthier you get? Look no further as I stumbled across this great chart from VisualCapitalist.com that highlights how much each asset is as a percentage of net worth at various levels. If you want to get rich, it’s good to study how the rich allocate their money.

Notice how red (primary residence) quickly shrinks the wealthier you get while blue (business interests) quickly grows. The key to creating great wealth is to therefore build a business or acquire a significant share of equity in a business.

Net Worth Composition Discussion

Let’s discuss each asset class in a little more detail. I think most Financial Samurai readers or people looking to achieve financial independence are targeting net worth amounts between $500,000 – $10,000,000. Therefore, my commentary is tilted towards this net worth range.

Liquid: As your net worth grows, you don’t need to maintain the same percentage of liquidity to survive through difficult times because the absolute amount of your liquidity increases. The only reason you would need a large percentage of your net worth in liquid assets is if you are highly leveraged. Shoot for 5% – 10% of your net worth in Liquid assets.

Related: The Need For Liquidity Is Overrated

Primary Residence: Notice how there is no asset category for Rent because Rent is a net worth drag. Everybody needs to figure out the right time to own their Primary Residence to at least stay neutral inflation. I’m surprised the Primary Residence category doesn’t take up an even greater percentage of net worth in the $100,000 and $10,000 net worth levels. During the financial crisis, so many Americans got obliterated because their Primary Residence was such a dominant portion of their net worth. I’d get your Primary Residence down to 10% – 30% of your net worth.

Related: Why Real Estate Will Always Be More Desirable Than Stocks

Vehicles: Like Primary Residence, the Vehicle percentage also declines rapidly as one’s net worth grows. Vehicles are the most common net worth killer in my opinion. For some reason, Americans have a love affair with cars and trucks. With the median price of a new car at about $36,000 after tax, the typical American is spending the majority of their ~$59,000 gross household income on a car. Please don’t spend more than 1% – 5% of your net worth or 1/10th of your gross income on a car.

Retirement (Pension/IRA/401k): Only a minority of Americans are now eligible for a pension. But for those who do have a pension, its value is much greater than you might realize. Given the contribution limits to a IRA and 401k, it’s hard for Retirement to grow into a significant portion of one’s net worth.

What’s interesting about the data in the chart is that those with a $1,000,000 net worth have the largest percentage of their net worth in Retirement. Therefore, if you’re amenable to finishing work as a “run of the mill millionaire,” you should strive to max out their pre-tax retirement plans for as long as they work and treat it as bonus money once you are eligible to withdraw funds penalty free.

Related: How Much Should I Have In My 401(k) By Age?

Life Insurance: The fact that Life Insurance is one of the designated asset classes in the chart shows its importance in financial security. Many employees get Life Insurance as a default benefit from work. But often the amount is not enough to fully cover all liabilities. Term Life insurance is cheap before the age of 35 if you are healthy. I highly encourage readers to lock in a long-term policy before a health issue occurs that jacks up your rates.

Related: How Much Life Insurance Do I Really Need?

Mutual Funds: I’m surprised Mutual Funds has the largest weighting for those in the $10,000,000 net worth level. If Mutual Funds are defined as actively run funds with high fees, then digital wealth advisors should channel their efforts towards these high net worth individuals.

Stocks: It’s also interesting to see how Stocks increase as a percentage of net worth the wealthier one gets. Perhaps there’s a higher level of knowledge or conviction as wealth grows. But I suspect the real answer is that wealthier individuals have a greater percentage of net worth in their company stock.

Related: The Benefits Of Stocks Over Real Estate

Fixed Income: Despite the Fixed Income Market being much larger than the Stock Market, it’s surprising to see how little the Fixed Income weighting is across all wealth tiers. One can make the assumption that Fixed Income is an uninspiring tool to stabilize wealth, and can be considered a Liquidity+ investment.

Related: The Case For Bonds: Living For Free And Other Benefits

Managed Assets (Trust): It makes sense that the $10 million and $100 million levels have the highest percentage attributable to Managed Assets. It used to be that you could pass down all your assets estate tax free up to $11 million. But due to tax reform, that number has doubled to $22 million.

Real Estate (rentals/vacation properties): Notice how Real Estate has the largest weighting for those in the $1,000,000 net worth group, but drops off with higher wealth levels. In other words, Real Estate is one of the easiest ways to boost wealth to $1,000,000, but becomes less desirable as time goes on due to maintenance, hassle, and ongoing property taxes. I used to think Real Estate was the best asset class on Earth until I discovered web properties.

Related: A Guide To Buying And Managing Rental Property

Business Interests: Finally, we arrive at the key to building a fortune.

The new CEO of Uber reportedly got a compensation package of around $200 million. He didn’t have to come up with the idea, raise funds, and grind away for years for that type of money. All he has to do is be a good ambassador until he can sell all his stock after the company goes public. The current CEO of Google just sold stock worth $131 million and is getting another $340 million package.

Or, you can go the hard, but extremely satisfying route of creating your own business. The business doesn’t have to be based around a revolutionary new product. Instead, you can simply build a business around a lifestyle like Financial Samurai.

In 2010, I asked myself whether I’d rather own a lifestyle business that one day pumped out $250,000 a year in free cash flow with only 3 hours of work a day and minimal stress or shoot for a 20% chance of getting a $25 million payout by working 14 hour days and experiencing maximum stress for three years. I decided the lifestyle business was the way to go because money doesn’t buy happiness once you make more than $250,000 a year in an expensive ity back then.

When you own a business, not only do you collect its profits, you can also sell the business for a multiple of its profits. This is where the illiquid portion of Business Interests comes in. I’ve been approached a number of times since 2014 to sell, and each time I pass because I want something to do, especially now that I’m a stay at home dad.

Related: Top 10 Reasons For Starting An Online Business

A Different Mindset

I was speaking to a very wealthy entrepreneur the other day, and he said the greatest skill one can have is figuring out a way to hire talented people willing to dedicate their lives to making YOU rich. Of course you will have to properly compensate them, but it is these people who have confidence in themselves, but not enough confidence to make themselves rich through entrepreneurship who you want working for you.

Know your worth. If you are starting to get frustrated with the lack of efficiency at the office or you beginning to tell yourself that you can do it better, then give it a go. Make a better mousetrap.

When I started Financial Samurai in 2009 I found ZERO personal finance blogs written by people who worked in finance. They were all written by people trying to get out of debt or by engineers trying to optimize their content for credit card sign ups. What an opportunity to fill a void!

The people who get really rich are those who ask themselves, “Why not me too?” They believe they deserve to be rich and take action to make it happen.

Related: Sorry Bankers, Techies, And Doctors, You’ll Never Get Rich Working For Someone Else

Readers, how has your net composition changed the wealthier you’ve become? Why don’t more people build a business online given it’s so cheap and easy to start nowadays? Why do some of the most decorated resumes settle for making someone else rich rather than spending all their time making themselves rich?

The post Net Worth Composition By Levels Of Wealth: Build A Business Already appeared first on Financial Samurai.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

In the debate between stocks versus real estate as a better investment, a common issue that comes up is real estate’s lack of liquidity, and therefore inferiority.

For example, reader Nate writes, “I prefer equities because real estate doesn’t provide a sufficient illiquidity premium to merit the leveraged risk and transaction cost. If stocks provide a better return with better liquidity and bonds provide a similar yield with better liquidity (and collateral), why take on the illiquidity at all?”

As someone who believes it’s best to invest in stocks and real estate for as long as possible, having an investment that can be easily sold could be a detriment to one’s journey to financial freedom. Think about all the folks who wigged out between 2008-2012 and sold equities or real estate back then. They’re kicking themselves now!

In 2012, I tried to sell my old rental house for $1,700,000. The worst of the downturn was behind us and I felt I had dodged a bullet. I had recently engineered my layoff and figured it was better to downsize rather than to continue holding a ~$1,100,000 mortgage.

I signed a 30-day exclusive listing contract with a real estate agent friend. I agreed to pay him a 5% commission. He and his wife came over to stage our house. We got a standard inspection done and pulled a 3R report for our disclosure statement for about $500. My agent ended up hosting three open houses and around 10 private showings.

Our best offer was a verbal offer with no number, just an indication they were willing to offer “much less than asking.” I told them to bugger off and pulled the listing after 30 days.

If I could have just pressed a button to sell for $1,700,000 for a reasonable flat fee, I probably would have. But praise all that’s good in the world the real estate market was so illiquid that I saved myself from myself. Even though I’m sure I sold the property too early in 2017, I take solace in the fact that at least I got an extra million bucks five years later.

Why You Likely Never Face A Serious Liquidity Crunch

Just like the fear of running out of money in retirement is overblown, the fear of being illiquid in case you lose your job or lose a significant amount of your assets is overblown.

Just reading this post makes me confident that you have the wherewithal to protect yourself from any liquidity crunch. Here are some reasons why I think Financial Samurai readers will be just fine.

1) You have multiple types of insurance. With health insurance, homeowner’s insurance, rental insurance, auto insurance, short-term disability, long-term disability, life insurance, and an umbrella policy, it’s hard to succumb to a financial disaster unless you are not insured.

Sadly, medical debt is the #1 reason for bankruptcy in America and not poor spending habits. The New York Times reported that 20% of Americans under 65 with health insurance had trouble paying their medical bills over the past year. Of those, 63% claim to have used up all or most of their savings to tackle their healthcare expenses. To counteract egregious medical debt, make sure you thoroughly understand what type of health insurance benefits you are getting for the monthly premiums you are paying. And to further protect yourself, let’s talk about point #2.

2) You have a savings buffer. Everybody knows that it’s important to save for an unknown future. Therefore, every financially competent person saves and invests as much as possible to protect against uncertain future expenses. My recommendation is to save between 5% – 10% of your net worth in low-risk assets such as CDs, AA-rated municipal bonds, US treasuries, and cash. This way, you’ll be able to survive long enough until the good times return.

The only people who don’t save are those who believe they have a bright future. They have either built a business with massive profit upside or they’re on the fast track towards superstardom at their respective companies. In such cases, they’ll never need any savings.

3) You’re well diversified. I don’t know any financially competent people who have 100% of their net worth in stocks or 100% of their net worth in real estate. The same goes for having 100% of their net worth in any other asset class. Even if you did tie up 80% of your net worth in your primary residence, that still means you have a 20% buffer to sell before you need to tap your savings or take out a home equity line of credit.

Below is one of my recommend net worth allocation frameworks for self-starters who are willing to work on their X Factor.

4) You’re not too proud to hustle. The invention of Upwork, Uber, Lyft, TaskRabbit, Thumbtack, Craigslist, Etsy, ebay, Amazon, and WordPress make it possible for you to make extra side-hustle money if you find yourself in financial despair.

The other day we hired a person from TaskRabbit to install a wireless doorbell and several fire alarm systems in hard to reach places. He made $85 gross in one hour and had four jobs to do that day. Several years ago I gave over 500 Uber rides that made me roughly $30/hour gross on average and sometimes $100/hour net due to driver sign-up income.

There’s probably thousands of dollars worth of clutter in your house you can sell on Craigslist. And if you’re really gung-ho, you can try to sell your craft on Etsy, buy and re-sell products on eBay or Amazon, or start a website like this one.

Earned $100/hour one week during my Uber driving days

5) You’ve developed multiple streams of income. There are an endless number of investments that provide passive income in case you lose your job or your business blows up. Given you’ve been diligently saving and investing for years, you should have some passive income to hold you over until you can find a new main source of income.

It took about 12 years after college for me to generate a livable passive income stream. After 17 years, the passive income was finally enough to provide for a family of three in expensive San Francisco. Therefore, it’s highly feasible that if you start generating passive income early, by the time your company decides to age discriminate by laying off 40+ year old workers, you’ll be just fine.

6) You negotiated a severance or received a severance. Even if you didn’t have the foresight to start investing in passive income generating investments early on, you should at least be able to negotiate a severance. Standard severance packages range from 1-3 weeks per year you’ve worked plus 2-3 months of base salary according to the WARN Act for employees at larger companies.

If you work at a company with deferred stock and cash compensation, a good severance negotiation will allow you to keep your unvested compensation. In other words, you have the potential to earn WARN Act pay, a severance payment, and deferred compensation to hold you over until a recovery.

7) You’re eligible for unemployment. What’s awesome after you receive or negotiate a severance is that you’re eligible for unemployment benefits. Conversely, folks who get fired or quit are NOT eligible for unemployment benefits because they left due to cause or voluntarily.

In many states, you get to receive unemployment for up to 26 weeks. In California, maximum unemployment pay is currently $450 a week. In addition to unemployment pay, your unemployment agency will provide job search help and career training. During severe economic times, unemployment benefits may get extended due to federal government assistance e.g. 99 weeks during the economic crisis.

8) You can slash costs and downsize. No rational person facing a liquidity crunch will keep spending and living like they once did. Instead, you will easily slash all extraneous costs and subsist on ramen noodles and water for as long as it takes. Not only will you reduce food costs, you will completely eliminate all vacations, all entertainment, all new clothing, and all non-essential items. You’ll sell everything you haven’t used in a month on Craigslist. If you own a home, you will either rent it out and downsize into a studio apartment. Or, you will start renting out rooms for extra cash.

Related: Housing Expense Guideline For Achieving Financial Freedom

9) You’ve got a vast support network. Let’s say worst comes to worst and you’ve completely run out of money. Since you’re a good person who has always focused on helping others, people will GLADLY line up to help you out. Maybe they’ll give you an interest free loan or hook you up with a job at their company. People absolutely love to help those they like, especially those that have brought some type of joy into their lives.

10) You’re not too proud to live in mom’s basement. If for some reason you were a completely selfish ass all these years, surely your parents will unconditionally take you into their home and provide for you and your family until you can get back up on your feet.

The stigma of living with your parents as an adult child has subsided. As a parent, if my son is down on his luck, you bet your buns of steel I’d gladly accept him back so he can at least save on rent and build back his savings. I’d love to use this time to reconnect with him.

Related: How To Get Your Parents To Pay For Everything As An Adult

If You Are Financially Incompetent

I realize it’s easier to say “liquidity is overrated” during a bull market or if you’ve got your finances in order. Bad things happen all the time, no matter how much we plan ahead for the future. I thought I was rock steady until I got obliterated in 2008-2009, hence the start of Financial Samurai.

If you feel you can’t afford to get your finances together or you simply don’t have enough time before doom comes knocking on your door, the one thing you must do is start treating people right ASAP. Get involved in your community through your local church or school. Volunteer at organizations whose mission it is to help the less fortunate. Become a mentor. Ask your bosses or colleagues whether there’s anything you can do to help without expecting anything in return. Connect with people on LinkedIn before you find yourself unemployed.

I will gladly help anybody who was kind to me in the past. My closest friends will never starve because I will never let them starve. We’ve built a support network where if one of us stumbles, we will all do our part to lift that person up.

If I one day stumble, I know there will be at least one reader out of the millions who’ve visited Financial Samurai since 2009 who will lend a helping hand. That’s simply the way the world works.

Readers, do you think the need for liquidity is overrated? What are some things you will do before being forced to sell your primary home or investment? Share a situation where you faced a liquidity crunch and were forced to sell something you didn’t really want to. 

https://www.financialsamurai.com/wp-content/uploads/2018/04/The-need-for-liquidity-is-overrated.m4a

The post The Need For Liquidity Is Overrated If You Are Financially Competent appeared first on Financial Samurai.

Read Full Article
Visit website

Read for later

Articles marked as Favorite are saved for later viewing.
close
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview