Engineering Passive Income Streams to Fund the Life You Want | BP Money Podcast 46


Welcome to BiggerPockets Money Show
#46 where we interview Sam from Financial Samurai. It’s time for a new
American Dream one that doesn’t involve working in a cubicle for 40 years
barely scraping by. Whether you’re looking to get your financial house in
order, invest the money you already have or
discover new paths for wealth creation, you’re in the right place. This show is
for anyone who has money or wants more. This is the BiggerPockets Money
Podcast. How’s it going everybody I’m Scott Trench. I’m here with my co-host
Mrs. Mindy Jensen. How are you today Mindy? Scott I’m doing fantastic as always I am
so excited for today’s show I’ve known Sam for about six years now through the
blogging conference that everybody who listens is sick of hearing VidCon and
his story just always makes me smile from being super frugal while working in
a fairly prestigious job to engineering his own lay off with a huge payout his
story is just really fun to listen to and you know I want to remind everybody
that we’re listening to a guy who is post financial independence he no longer
has a formal job he made smart money decisions his whole life and he is just
sharing his experiences so I think it’s fascinating and I I know that you’re a
big fan of financial samurai Scott yeah I’ve read financial samurai for years I
think he’s got some greats he’s got some very well
dated driven posts and some great personal perspective as well Sam’s the
epitome of a guy who’s just done it right high school college great job out
of college smart investing decisions taking chances
getting lucky having a couple of those backfire but overall seeing the rewards
of smart decision making over and over and over and over the course of a long
career and now at 41 he’s he’s retired he does exactly what he wants and what
he thinks is best for him and his family and I mean what a payoff what an awesome
story yeah and this episode runs really long so it’s worth every minute I really
really enjoyed listening to Sam let’s bring in Sam
okay so Sam from financial samurai welcome to the bigger pockets money
podcast Thank You Mindy thank you Scott excited to have you I have known you or
known of you for at least six years I know that your blog has been around
longer than that but for those of us for those of you listening who are not maybe
not familiar with the financial samurai can you walk us through where your
journey with money begins because I really love your story well to start my
parents are we’re in the u.s. Foreign Service so I grew up overseas in
countries like Malaysia Philippines Japan and Taiwan and Zambia and so when
I was growing up I was really aware of that I cotta me between the wealthy and
the not wealthy especially in Malaysia when I was in Middle School
you know I would have friends we were very very poor family of five living in
a studio and then we were living in diplomat housing provided by the
government and it was much nicer so it’s from a really young age I you just
realized wow there’s so much poverty and wealth out there at the same time
coexisting and I decided when I was a kid that I didn’t want to be poor I
wanted to be comfortable I wanted to be rich and so it was from middle school
onward that I really try to think more about money and my parents were always
really really frugal for example we would go out to a restaurant and my dad
would always scold me for trying to order a drink because he would say hey
that’s like the highest margin product at a restaurant so just have some lemon
water son and you know save us some money and be smart about it and that was
that was one of my first memories as a kid about money after that I came to the
United States for high school in college I went to the College of William and
Mary in Williamsburg Virginia so it was the South not the deep south
and there I was you know a minority there was there’s only like 5% Asian
folks there whereas when I was living in Asia we were majority and after studying
economics and Mandarin I decided to join Wall Street and join Goldman Sachs in
New York City in 1999 so going into going from the middle school is when you
kind of started thinking about this you know to get as you get it to get a job
at Goldman Sachs out of college requires a pretty big commitment through high
school and college right to be getting pretty good grades and
that’s got to be something that you’re kind of gunning for throughout both of
those things is that and was that a goal of yours going into high school as a
result of your kind of experiences growing up and in middle school and
earlier so in middle school my goal was to be a businessman because I would go
to these random events and parties that my parents would take me to and we go to
these really nice house parties with like pool and some views of the hills
and the city lights and I always asked my dad what are these guys do for a
living and he said well they’re businessmen one produced a beverage
drink and then other produced instant noodles and another was a chicken farmer
so the chicken farmer you know we checked out his factory before is not
not really a sexy place but you know he drove a Jaguar it was I was like wow dad
this is so cool meanwhile my parents are so frugal that they owned a paintless
1976 Nissan Datsun I remember this to this day because I stole the car
one midnight evening with my buddies and we took it out for us and had like you
know it was like 1:00 a.m. and the hubcap fell off and the hub fell out cuz
those monsoons monsoon season and Kuala Lumpur Malaysia and when we returned you
know we stopped would try to look for the hub cab it disappeared it went to a
monsoon drain and when we returned and you start the car back at around 2 a.m.
I was just waiting for a whipping because there’s no hubcap and then a
week went by and parents didn’t say anything because they too did not
realize a hubcap was missing on our car there’s a real benefit to you know
owning cheap inexpensive things yeah that’s my philosophy Theo nice things
got a straddle with other nice things so you just don’t know anything nice you’re
perfect yeah answer your question you know I never I want to be a businessman
but you know and my parents were like okay you got to study hard in high
school otherwise you’re gonna screw screw your life up and I remember a
ninth grader telling me on the bus one day hey look you have until the eighth
grade to mess around once you start a ninth grade your your grades start
humilating though enjoy the last year of eighth grade but you know skip cracking
the books in ninth grade and when I came to the states and for high school I mean
I did okay I was fine you know it wasn’t a spectacular GPA or SAT and I went to
the College of William and Mary which was a fine state school tuition was
$2,800 a year back then but I knew you know in college like stock market looks
really cool international equities because we lived abroad or 13 years of
my life looked really cool and I felt like I basically won the lottery because
I I went to this career fair and one of the recruiters picked out my resume and
then oh seven rounds and 55 interviews later that I was able to get the job
wait it took you 55 interviews to get the job at goldman sachs just it was 55
interviews was crazy so I was invited to the super day which was about eight
interviews all day you know six seven hours and I thought oh I think I did
pretty well and they invited me back and then I met the entire team on the
derivatives desk and then the US sales trading desk and then they said come
back and you need to meet more people and read this one thousand-page book
called stock options as a viable investment by Nate McMillan I remember a
thousand-page book and they asked me one question out of that book and they said
you know not the right guy but hey we like you so let’s just try to find a
spot for you so I kept on interviewing around and then finally I met with the
international equities folks the Asian equities desk and the emerging markets
desk and they finally said okay welcome aboard so it’s really cool so your
career starts at Goldman Sachs which is which is a kind of stereotypical way to
start a career that’s going to be a successful financial and the income
front can you describe kind of like what that
what that was like and how that kind of what your kind of your view with
accumulating personal wealth and early retirement how that kind of shaped out
over your career there sure so so I I was interviewing in 1998 when gold
medals private and I finally got the job in 1999 when they had just went public
so all the partners there were suddenly worth
tens of millions of dollars maybe hundreds of millions of dollars I’m not
sure and I just remember you know meeting with my classmates we call them
classmates and there were some really wealthy kids you know I think one kid
was the son of the Canadian Prime Minister at the time
another kid was the son of one really senior Chinese government official so in
other words I realized there was a lot of nepotism and wealth already
established by the people these companies at least back then recruited
but you know I wasn’t one of them you know my parents worked in the government
middle class we live in a town house and we had in 1976 Datsun right so I knew
that I was really behind and so I was like okay I gotta get my crap together
because I feel like I won the lottery and so I lived in a studio with another
friend from high school for two years and we just really buckled down whereas
my classmates were their parents are buying them condos or they’re living in
really nice places and after the first month of working I realized I couldn’t
last because we were getting in around 5:30 a.m. and then we were leaving
around 7:30 8 p.m. sometimes 10:00 p.m. every single day right so that really
was a grind on your body and for me I just couldn’t take it and I knew right
then and there I was really miserable and I knew that I couldn’t last 20 30
years in a typical you know career path like my parents did so I figured I
better might as well save as much as possible
now in order to give me options in the future and that was when I realized it
was important to forecast your misery and that’s it’s like the best way to
forecast your happiness if you can forecast ahead how miserable you will be
in 5 10 15 years whether it’s with your relationship or with your job or with
your business then you can take steps really concrete steps to free yourself
on that misery I think that’s a yeah what a great saying that is a great way
to put it because it’s really easy to forecast your your happiness oh I’m
gonna be happy five years great that’s awesome Padma
kids being miserable for I never heard of phrase that way that’s brilliant yeah
I’m glad I’m glad you liked it let me think about all the people you know ten
years from now they wake up and they wonder hey where’s all my money where
did it all go and I think it’s because they didn’t forecast their men this year
and realized hey ten years later you might love your job the first three
years but man if you do the same thing ten years in a row or maybe 15 20 years
you’re probably not gonna like it as much but if you didn’t afford to ask
that then you’re probably not gonna save as much or build as much passive income
so so quick question here you know that the the hours of an investment banking
at Goldman Sachs are legend 80 hundred hour work week Senor what you’re
referencing there is along those lines 5:30 to 10:30 and you’re saying
literally every day of the week including Saturdays and Sundays not not
every day so Saturdays maybe we would only work like six to seven hours but I
was in equities which is different from M&A corporate finance so I was dealing
with the markets but I was dealing with the Asian markets so their markets would
open up during our night times and Sunday afternoon evening would be Monday
morning in Asia so you’d have to always be on it can literally be a 24/7 job but
it was much more fun than corporate finance and M&A and working on pitch
books and stuff gotcha and and how long into it did you kind of
come to that realization was that a month in or five months in a year oh I
mean this first month it was brutal to get in by 5:30 you know we we stayed
until 7:30 because well one we wanted to stay after our bosses left because those
it would be like bad if we left before them since we were costing him didn’t
didn’t know anything but to the cafeteria at 85 Broad Street I remember
clearly opened up I think it was 7:30 and it was free food so then we go and
eat free food and we gorged ourselves like like we were hibernating and then
we take you know some fruit and some little small boxes of cereal and put in
our bag and then have some free breakfast in the morning nice
okay so how long did you work at Goldman Sachs I did it for two years and then I
got a new job in San Francisco at a competitor and it was interesting
because this is 2001 the Nasdaq started rolling over and was March 2000 and I
was worried and a lot of people were worried about their job security
especially as second year financial analysts so a recruiter called my desk
and there they were talking to the VP and one of the VPS and she said oh I’m
not interested but you should talk to my colleague who covers the west coast
because I was covering the West Coast clients who are investing in Asia and
she said yeah I talked to my colleague and I talked to the recruiter and then
so I took you know a couple sick days and I flew out to San Francisco men with
a different firm and they recruited me which was great because Goldman ended up
not renewing many I would say most of our third year analyst option and then
they ended up letting go or just not renewing I would say 80% of my class
over the next couple of years like nobody could survive so some of the very
special few would go from analyst associate whereas most people just got
cut and they had to go to go to business school or do something else
what was your financial position kind of graduating college and then what about
how did that change in terms of your personal situation net worth and all
that kind of stuff coming out of the Goldman Sachs two years so my financial
situation was I remember I had $3,000 after I graduated college one because I
decided to go to William and Mary really purposefully because it was only twenty
eight hundred dollars in tuition a year my sister had gone to Smith College
which was 25,000 a year and I knew what my parents were making kind of and I
knew that we weren’t rich because we had old cars and we lived in a little town
house so I graduated with no debt I had $3,000 from savings and from
summer jobs working minimum-wage jobs and I saw so much wealth around me and I
figured while I’m so far behind I decided to save save save but I had a
lucky break so if you’re around in 2000 you may have
invested in some random internet stocks and I was on the trading floor and so I
had a lucky break I invested three thousand dollars in a company called VCS
Y which was a penny stock and all it was was a child I’ll pat on the homepage
this mm is pretty cool and it was like you pressed different numbers to try to
get to different pages and it was supposed to be a Chinese internet stock
so this is the beginning of the Chinese Internet boom and I was on the trading
floor Goldman Sachs so I said hey so I bought I bought the stock I talked to my
other buddies at different trading desks and they bought the stock and then
suddenly at RIT you know it’s spread like wildfire and the stock went from
like $3 a shared $160 a share now yeah so it was it was crazy it was
something like that in Weston see it wasn’t within six
months okay anyway what I remember is that it was it was a three thousand
dollar investment that went $160,000 in six months and all I guess I’m thinking
was man I wish I had five thousand dollars something and you know so
obviously greed was speaking and then it went to 160 I was feeling amazing and
then started fading rapidly because everything was selling off and I sold it
for like a hundred fifty thousand or something like that
and so yeah so it was really good in it and then everything collapsed right calm
bust everything but I didn’t reinvest the money because I was transferring
jobs to San Francisco so I wanted to keep cash so that was kind of a lucky
break and then I realized well you know what that was scary and that felt unreal
so let me try to convert this funny money into real assets and so that’s
when I really started looking into real estate and trying to get something that
wouldn’t go poof overnight and so that’s when I bought my first place in 2003 in
San Francisco so with that you know you have you have $150,000 that you generate
in a really high of investment and that kind of allows
you to build your you know make that first investment San Francisco
what were you accumulating what was kind of your accumulation rate while working
at those first two years so I don’t remember exactly but I know we didn’t
get paid well believe it or not my first year base salary was $40,000 and I
remember when I got to offer later I was like wait that’s it forty thousand which
is not a lot in Manhattan so that’s why partially we lived in a studio and it
was eighteen hundred dollars or eight something like that seventeen eighteen
hundred dollars for the two of us but what I would do was I would again I
would max out my 401k I would live like a popper I would save and invest a
hundred percent of every single bonus literally a hundred percent because I
wanted options I wanted out so you know first year we didn’t make a lot it’s
forty thousand base maybe there was like a ten twenty thousand stub bonus and
then the next year our base was only like fifty five thousand and you know
maybe we had like a thirty to forty thousand bonus
it wasn’t massive but obviously when you’re dead young it’s pretty good
oh well so awesomes i mean it’s just that’s just pure hustle for the first
two years there plus of hundred fifty thousand dollars but but like the
majority the fundamentals what you do what you were doing we’re going to work
it was just a lot of a big slog and then you also have your lucky break through
an advantage that you kind of spot with your job synergistically right there are
synergies but you have to take all I had was three thousand dollars to my name I
mean obviously you know starting to make money but forty thousand dollars after
taxes in Manhattan is not that much even in fact that and so you have to take the
risk you know three thousand wasn’t a lot you know absolute terms but as a
percentage of my total network which was maybe four thousand dollars then it
wasn’t a lot I was going all-in with what I had and and then you just kind of
recognize you got to recognize luck you got to recognize when to get out and you
got to recognize how to make your money last or as long as possible yeah I think
it’s great so you come into San Francisco you buy a
place your situation I think it sounds like changes what what’s your financial
what’s your income and investing approach look like after you move I
think I got a raise to like eighty five thousand dollar base and I got a
promotion to associate which is cool because I could skip the business school
route or go skip the full-time business school route but I remember continuously
being frugal because I went on Craigslist and I found a 2-bedroom
1-bath really dumpy place at the edge of Chinatown in San Francisco which was it
was a pretty rough neighborhood so I remember her it was just really
loud really noisy and it wasn’t that expensive it was actually cheaper
it was $1600 for the two of us so I got a raise and then I lowered my rent by a
couple hundred dollars a month total and then my girlfriend moved in and then she
contributed a little bit as well so I lowered it even further but I was pretty
focused on not renting for my entire life because you know I was at 1600 for
the two-bedroom so I was paying $800 and we finally moved to one bedroom was like
16 $1,600 we were there for like a year then we just hated our neighbors he was
just like this drunk guy he always played house music until 2:00 a.m. it
was like that methodical non-stop bass sound when I
had to go to work at 5:30 and so I was like you know what let’s go buy a place
and I’ve got some gains and some savings from that stock and from the bonuses
let’s go buy a place oh well like a day after my 26th birthday in 2003 I bought
a two-bedroom two-bathroom condo for bucks a five hundred eighty thousand
dollars and that’s good I thought it was cheap back then actually what you do at
that did you like it would you move in just you and your girlfriend or did you
have a tenant or roommate I was renting out the other room or how’d that work it
was just my girlfriend and I and it was not that expensive
it was 2,300 gross plus property tax but then after the deductions and everything
goes maybe like no two thousand bucks which was kind of on par with almost on
par with what we’d want to rent for like $2,000 a month was our cutoff where if
we had to we wanted a nicer place but we didn’t want to spend more than $2,000 a
rent and if we had to do that then we were going to go buy place so that was I
remember that was the line in the sand and San Francisco’s so much cheaper back
then than Manhattan and it’s still so much cheaper than Manhattan right now no
matter what the media says because the media says Oh San Francisco is more
expensive in New York City but I’m comparing more apples to apples San
Francisco seven miles by 7 miles and Manhattan had it’s ridiculous it’s like
it’s still 30 to 50% more expensive okay so do you still on this property now I
do I do like paid off the mortgage I think in 2015 and it’s good I’ve got
some tenants there they paid about $4,300 a month in rent they haven’t
bothered me in four months which is great yeah yeah it’s there it’s now I
look at it as a piece of diversification and kind of an insurance for when my son
if he grows up inside someone to live in San Francisco I can’t imagine what
rental prices will be in 24 years but it’s kind of an insurance that hey
here’s a place and you know pay for everything or pay for the cost of
maintaining the place and give me some rent as well yeah you said it’s renting
for $4,500 a month right now 43 42 43 okay and it’s already paid off so is
there an association fee yes it’s like 600 so the net the net is probably about
3,000 a 3100 it just goes into your pocket that you can live that can
contribute to your living expenses yeah so we kind of earmark that maybe to make
it fun or more purposeful we earmark the income from the rental property of that
condo to actually yeah paving is paying off
picking off our our property today our mortgage today we have a mortgage on our
primary residence right now but that’s because it’s we locked in 2.5% yeah so
you said that New York is more expensive than San Francisco is that why you
didn’t buy in New York I mean you were making $40,000 a year was there anything
even affordable I’m not that familiar with New York I know there’s five
boroughs and I don’t understand what a burn yeah well I mean again I was 22 to
24 years old in New York I didn’t have a big base income I didn’t have a lot of
credit history and my parents weren’t rich so yeah I had the hundred fifty
thousand dollar gross windfall before taxes and I definitely would have tried
to buy in New York I was looking at this awesome place two bedroom two bath 1,300
square feet double balcony facing the Chrysler Building it’s like on 22nd and
Madison it’s amazing 700 yeah 799 I remember and I thought man that’s a good
deal and if I bought that it would be I don’t
know 2.5 million today for sure for sure but again I wasn’t gonna last at Goldman
because you know I was like the the public school guy that just snuck in the
back door and you know the market was falling falling apart so I had to leave
I won the San Francisco and then it took like a year year and a half to figure
out where I wanted to live and then and then I bought the place in 2003 okay so
what is that property worth now that condo in San Francisco so here’s the
thing so so my neighbor last year sold which is the same layouts sold for it’s
livid its remodeled a little bit better than mine sure it’s all for one point
three six million so maybe mine let’s say it’s worth 1.3 million so if you
take $3,100 net that I make from it times 12 that’s thirty seven thousand
two hundred and then you could divide it by thirty one point three million
dollars that’s only two point eight percent so if you think about it that
way it’s actually not great rental income 2.8 percent net return and he’s
got to maintain the property and deal with tenants is less than what you can
get on the risk free rate of return for the 10-year bond yield right now
at three point one five percent so you can invest money and a ten-year bond
yield do nothing relax and earn three point one percent and it’s federal
federal income tax free no state income tax free and you just have to pay
federal federal income tax but you get appreciation on it and if you ever
wanted to you could theoretically move back into the property for two years and
so for a huge chunk of that tax free right yes you might get appreciation
historically in San Francisco is increased by six to seven percent a year
for sure yes you could move back in and get a prorated exclusion but I’m never
gonna move back into that place with you but I’m just saying overall compared to
the heartland of America where I’m definitely moving a lot of my money to
you know heartland real estate you can get ten percent and and you can do it
maintenance free no because you can invest in real estate crowdfunding so I
think there’s like a obvious arbitrage going on where you take your expensive
coastal city money and you plow some of that into heartland real estate get the
higher net rental yields and live passively and then go rent rent in
places like San Francisco New York Honolulu because even though rent on an
absolute level is high it’s great value compared to the the cost of buying the
place I think that’s a great insight I think that’s fantastic so what happens
after you buy this place like what’s kind of the next period how you know it
seems like this is where you start having a nice financial cushion you’ve
got a real estate investment and you start to go a little better can look
what happens next for you so 2003 was a great time I bought this place I was
going to see business school part-time at Berkeley finally that was like 20
hours a week on top of 6070 hours of you know work a week so that was brutal but
I finally graduate in 2006 or something and things were going well got promoted
and I ended up buying another property two years later in 2005 because I felt
you know this property’s just not good enough for me you know I don’t know
something like that and I was doing well in my career so I went in up buying a
single-family house in the north end of San Francisco for
1.52 million and I remember putting three hundred thousand dollars down
which was all my money at the time again this is another theme going trying to go
all in remember those three thousand dollars for that stock now it’s $300,000
in for the down payment with this house because I felt I needed a house even
though I didn’t have a family I needed a house and so I bought the place and I
was immediately sweating bullets afterwards because I had a 1.2 million
dollar mortgage and then of course a couple years later well I bought in 2005
and then about 2007 you can really start seeing the cracks in the housing market
and then things got crushed in 2008 2009 but the story is not over yet
in 2007 I bought another place a Lake Tahoe vacation property because I got
promoted to VP and I was on top of the world I was making more money than I
ever thought possible so I was like you know what not only do I need a
single-family home that I don’t need I need a vacation property Lake Tahoe for
my family that I don’t have because I like to snowboard and so I bought that
because I was like wow this is good value the original buyer is water for
like eight hundred ten thousand and they sold it to me for only seven hundred
eighteen thousand I was like wow this is great great great deal and then of
course financial crises happen and that property ended up losing I would say
forty to fifty percent further in value which is crazy because everybody started
foreclosing on their loans and I was the only idiot who’s like well I’m not gonna
do that that’s like dishonorable and sorry that yeah thank you for saying
that I understand people who why they did because they’re so under and they’re
like you know there’s no hope ever but I didn’t lose my job and so I was like
well let me just own up to my obligations okay I want to clarify my
thank you you had a job you could I’m assuming that you can still afford the
payment on the house and it was still worth to you
the payment what bothers me is not the people that lost their job and then had
to quit paying because there was no money to pay their mortgage you know I
that sucks but the people who could still afford to pay the mortgage but now
the house is so upside down oh I’m just gonna walk away works well that’s how it
works I mean if you do know Carl Richards from the New York Times I do I
mean that person a he’s you know New York Times columnist he’s got a book on
you know teaching people how to be financially independent all that stuff
but he wrote a big op-ed piece saying how he foreclosed on his home
strategically during the crisis and yet after that he was able to get book deals
and the column and everything so it’s interesting in America do we really not
you know do we really not like him who Welch on their debt or do we praise them
for being strategic so I made a mistake but paying I don’t think it’s a mistake
because that’s that’s part of my culture to just you know obligate be
irresponsible but it’s interesting to see his rise to the top after not paying
his debt I I think it’s I think it’s good perspective and I think that you
know regardless of your opinion on bankruptcy protection the fact that
there is bankruptcy protection you can do that is a good thing for the country
overall because the alternative is kind of like a perpetual servitude in some
ways you know like you never you can never pay off the debt you’re just
completely hopelessly out of this situation
so I love the law itself and the protections it offers to people to give
them a chance to go around but I agree that there’s something a little that’s
like you go bankrupt or you foreclose and you lose your asset because of
irresponsible ability to handle your financial situation maybe that’s not the
right way to you know give advice to other people or suggest some practice
you know and that was an example I have so many examples where I knew that I
could make it in America if he could or close on his property and be able to
write two bestsellers and be employed by the New York Times and get a huge fall I
knew that that was a great example where anything bad happens to me because not
that I didn’t I didn’t do that but I could succeed as well so I always find
these funny stories and funny idiosyncrasies and
society that motivated me to do better like you know the Yahoo I don’t know
president who crushed his company and lied on his resume by God 100 million
dollar exit package or the latest guy from CBS les Moonves who got a 150
million dollar exit package for being a serial predator over the past thirty
years of his career and I was like wow that’s amazing so I’m trying to tell my
readers and my listeners hey this guy I got a hundred 150 million oh a severance
package why can’t you negotiate a sevens package
and you’re a normal person you know believing yourself well let’s talk about
this for a second suit so over the course of 2003 – you know this 2007 now
you go you see the property value what’s your income trajectory looking like
what’s your career looking like during that period so I got promoted to VP I
think that was in 2007 so that’s why I bought partly why I bought the vacation
property and then I made the huge air of extrapolating my career and my income
for the next ten years so my forecasting was wrong sorry it was I failed to
forecast my misery there and so you know when you’re a VP you probably make I
don’t know back then I was like 150,000 days 200,000 be something like that and
then had a bonus but then everything went away there’s like you know terrible
bonuses their bonuses down 50% 100% and everybody’s getting fired right and so I
quickly realized I made a huge financial mistake with the vacation property the
single-family home was like yeah it was kind of it went up and then I went down
and maybe it was down maybe five to ten percent where I bought it but was not
that big of a deal but I remember sitting in my living room I was thinking
man I have spent so many years doing the right thing saving and investing taking
calculated risks working 70 80 hours a week and I lost thirty thirty forty
percent of my net worth in like six months that took ten years ready to
build and so I was like you know what I’m gonna start financial samurai I’m
gonna start this site as a way to get over my my my fears
my my grief of losing so much money so quickly and I thought about starting
financial center in 2006 but I have just graduate from Business School no I who
has time for that no economy is so good but once an economy melted down I
thought you know what now is best time ever to not pick up smoking and not pick
up drinking but use writing as a way to you know help myself out I like it I’m
not gonna drink or smoke I’m gonna write instead I like that those are your three
choices what we’ll say in 2007 the economy rebalance and so I was like
financial samurai is getting going when do you like what’s the what’s the
build-up to you exiting your career so the build-up is financials number I
started in 2009 just not okay when basically the bottom of the market
literally the bottom of market July 2009 if you look at the chart I started it I
hired some dude from Craigslist to help me set it up and spend like a thousand
bucks then or something and it was kind of painful but I didn’t know what I was
doing so I got some help I said you know what the hardest is to get going so I’m
gonna hire someone who knows what he’s doing to help me get going and then I
had once I started I had so much fun you know I was just writing and writing
probably 3 to 3 to 4 times a week just about everything from investing to
getting your finances right to the crazy San Francisco real estate market to the
downturn to people losing their money they’re just so fun that it was it was
so easy to do and it’s so easy to connect with people so by after about a
year it started making some shekels and then after a couple of years it started
making a decent amount of money like not huge amount of money but it was like
several thousand a month and so I remember in October 2011 my wife and I
were in Santorini Greece and so financial samurai had been running for
two years and we were walking around for 3 3 hours you know hiking up the hill
riding the donkeys and looking at overprice you know shops to buy some
overpriced scarves and I told her I was gonna go have a beer so I went to this
amazing bar at the top of the crater overlooking the water 78 degrees
and there it was Wi-Fi access right 2011 so I had my phone so I whipped out my
phone and I checked my emails and there was this guy who basically said hey Sam
I would like to advertise on your site and I said okay I’m in Santorini what do
you want me to do and he said hey can you put up this link to some random
product on your home page and I’ll pay you I think it was like 1,100 or 1,200
dollars and I said Oh $1,200 sounds good cuz this beer is like $10
it’s killing me and so he sent over the code I copied and pasted the code onto
my website and I said hey it’s up and then within 30 minutes he transferred
over $1,200 all over PayPal and I was like wow this is awesome
and so I immediately ordered another beer and that was my lightbulb moment
October 2011 or hey this is so fun there is life after finance I’m bored
out of my mind doing this for 13 years and everybody who works in finance is a
bad person according to Main Street so I want to
get out and do something else but I still had one fear and that was the fear
of obviously losing a steady paycheck so I came up with the idea of engineering
my layoffs and engineering my layoff is simply a way to negotiate a severance
and a win-win scenario for the employer and the employee
to get out and so you have money in your pocket for a nice nice long financial
runway so you can do whatever you want yeah yeah you’re prompting the question
here we’re waiting in anticipation what how do you how does one engineer laughs
and what was yours Wow well thank you for asking
I wrote a hundred fifty page book on that but the the essence is you have to
understand that if you are employed you provide more value to your employer than
your cost otherwise you’d be unemployed all right so that’s 101 basics so a lot
of people they think the honorable way is to say hey boss I love this place see
you later smell you later I’m gonna give you my two weeks notice and that is
exactly the wrong thing you got to do because you’re
drive your boss crazy and scrambling to find your replacement and so I knew as a
producer I generated revenue for the firm that I had value and I knew that if
I left or if I gone a competitor that would be a net negative for them so I
had talked to other people who actually got laid off during the financial crisis
and I understood what they got in terms of severance and basically I had a
conversation with my boss when I got the courage to say hey you know what I’d be
okay without a job if I had a severance and I said hey look I’m looking to exit
and I’d be willing to transition my accounts to the junior person I hired a
couple years ago so we can have a seamless seamless transition in return I
would love to get all my deferred compensation of stock and cash I would
like to get my investment the company made for me and during the financial
crisis which had a seven-year vest unbelievably and I would like to get a
severance and I admit initially he was like wait what are you talking about but
as he thought about it and I sold as I sold him on the idea that look I was no
longer as hungry as the guy that I once was when I joined ten years ago and
we’ve got this great replacement who is younger who is hungrier he warmed up to
the idea and so the key is really to recognize what your company’s needs are
what your boss’s needs are and have an honest conversation about how to
negotiate a separation agreement that’s a win-win for all instead of just
quitting and leaving your boss in the lurch nowadays there’s you know back
then I guess social media wasn’t as huge but nowadays you can torch reputations
over social media so every single company out there is afraid that some
ex-employee is going to badmouth them about some product some inside
information or something and so I think companies are well aware now that they
need to treat their employees right if they want to continue along you know the
business operation lines so this is a different you know most people I think
are not leaving their jobs unless they have something else lined up or other
options and sounds that use the term financial runway which i think is a
great term for that and you’re saying Hugh had us all built up in advance
prior to coming into this you were ready to go and that’s from a position of
power you were ready to kind of have this negotiation rights this is not for
someone that’s like like most people go in like I need a job but I’m going to
switch jobs and this job’s gonna pay me five grand more a year somebody give my
two weeks notice and go take that one you’re saying this is a different
approach here right well so this is a different but similar approach you know
every single job is just kind of a step into something else whether it’s early
retirement traveling around the world spending more times your kids being a
stay-at-home parent or finding another job or going to business school the
bottom line is never quit get laid never quit get laid ha right another
great tagline I never could get laid anyway so the idea again is if you want
another job don’t be a fool and quit on Friday and start a job on Monday if you
want and if you have another job lined up you also want to negotiate with the
other employer hey let’s let’s let’s start in a month or two months so I can
have a wonderful vacation and that gives you the buffer to negotiate with your
existing employer hey let’s work on a transition here where I do XY and Z and
you give me a severance and you know XY and Z like you know deferred stock
options or whatever it is there’s always an ability to negotiate and what I’m
trying to teach people and tell people is you have more power than you realize
as an employee you know it’s always I think people feel Oh it’s David versus
Goliath the big corporations have lawyers and HR people and they’re afraid
of their bosses what I’m trying to do is tell you guys look when you get out of
the office you guys are all equals right this is not like high school and you’re
afraid of the bully or the popular kid or whatever this is you guys are all
equals you actually have more power than you realize in today’s social media
internet world and you know we’re you know doing the right thing is really
really important so it’s about having the conversation and being a wise
negotiator because the easiest way is to quit that’s the easy way right you break
up with someone you text them hey I don’t
but the hard way is to see them face to face you know buy them a beer and then
say I don’t like you and then leave them bill right so that’s ok so I want to
take this idea and kind of use it with the in the context of people who are in
financial independence like let’s say I was gonna quit my job I don’t want to
quit my job but let’s say that I was going to what are some things that I can
do and negotiate on with my company that because there aren’t layoffs happening
right now right now bigger pockets is hiring you can find our jobs available
bigger pockets are complex jobs you know so we’re not in the layoffs and when I
think it would almost they don’t this sounds so mean I don’t mean it to be
mean like I think it would almost be easier when there are layoffs hey I’ll
go to no but what’s something that you know that you can do when you can’t what
or when layoffs aren’t happening you know I I love the idea that you know
transitioning it to the the younger guy or you know around the new person yet
being around to smooth it over or whatever what are some other things you
can offer your employer when you’re trying to engineer your own yeah let’s
say let’s say you’re let’s your outstanding employee or let’s say yeah
your own company is not letting anybody go at the moment cuz it’s booming well
number one no manager wants an employee who doesn’t want to be there you have to
tell the Telegraph hey look I you have to say your value proposition
but in Reverse you know everybody’s trying to sell themselves and why they
should get hired you need to sell yourself on why you should get laid off
just think about it in reverse because and if you don’t want to be there this
is what happens you start taking sick days or you might talk to take all your
vacations oh my gosh god forbid in America you take all your vacations but
it’s a faux pas in America you might take your Family Medical Leave Act which
is by law what is required you know every employer allows
or you might want to talk about getting taking a sabbatical so you put these
seeds in your employers mind that hey you know what actually they really don’t
want to be here and there are hungry people who want your job let’s figure
out a solution my wife I helped her engineer layoffs at 34 in 2015 as well
and they were really scared that she was just gonna leave and because she
basically stayed on one of the strategies was look I want to leave I’ve
been here for nine years I want to do something else okay instead of five days
a week I’ll work two or three days a week in
exchange the business doesn’t fall down you know everything runs smoothly we’re
gonna give you time to hire people from New Jersey to come to San Francisco in
exchange you’re gonna give me full pay so if you only work two days or let’s
say you work three days out of five days you suddenly work 40% less but you’re
getting paid the same it’s kind of like getting a 30% raise there so I’m using
this as an example to show hey times are okay
if you’re a great employee you still have options because once they realize
you don’t understand want to be there they’re not gonna want to keep you there
at the same time they don’t want to insult you and make you angry so it’s a
really delicate balance and also no manager wants to lay anybody off it’s
the worst conversation you can ever have to tell someone they’re no longer needed
so you can help them help you reach that topic a lot of good things happen
because it’s not money out of their pocket
it’s a corporation’s pocket now they want some harmony there no I think it’s
great and I think I think that you know maybe one of the things that is more
difficult here is it sounds like in your position you were a power player at your
company you’re producing revenue you leaving was a hit to like very tangible
value that that your firm could kind of attribute to your career what you’d kind
of produce there what if you’re more of like a like a
you know frontline customer support or you know in my early and earlier and
marketing like how how how does that negotiation different or what is that
kind of it’s not really different because the fundamental reason why
anybody has a job is because they produce more value than they cost it
doesn’t matter what they do yeah they might some might make more because they
produce more revenue or more valuable some might make less but it will always
be that case that there is a margin where the employer gains more of a
benefit than you call and that is why every single employee can ask for a
raise but most people don’t because they’re afraid and so it’s about
believing and what you what you’re worth and so for example if you’re employed by
BiggerPockets and you’re doing this podcast maybe you guys can do some
numbers on the growth of the podcast numbers see what kind of revenue it
generates the traffic figures how much time you you know you spend and then you
say hey guys look at this trajectory but hey my salary has been flat for the past
twelve months it’s time to follow that line upward ah
okay I’m gonna Sam I’m gonna call you and we’re done here
Scott you scheduled a meeting with you tomorrow Thanks so you know whatever the
case again know your worth because if you have a job you’re worth more than
what your salary is that was really true that’s really awesome and so I’m gonna
ask you in a minute where you can discover your worth is
there any place like online that you can go but I wouldn’t address this too
specifically the ladies I don’t know about men because I’m not a man but
there is this common theme among a lot of women who they don’t push for
themselves they don’t advocate for themselves they don’t want to you know
put it out there there’s guys who do that too but I’m not talking about that
I’ve talked about the ladies right now and you know this is this is really
important and you know you are worth more or you you’re worth something so if
you’re working for a free stop and you know look at look at your salary look it
I worked at a job for four years I never had one raised because we were having
financial problems well but I was still bringing value and you know I could have
used this podcast twelve years ago when I was working there so thanks a lot for
for being 12 years late to the block party
but okay so let’s talk about where you can look up what your net worth or not
your net worth what your worth is it you know are there any I know there’s like
Glassdoor is there anyplace else that you could look like and that there’s big
discrepancies and you know different jobs in different areas and whatever but
you know to give a general idea if you’re making thirty thousand dollars a
year but the the going salary in your area is eighty thousand dollars a year
you should have a conversation oh yeah I mean obviously I think a rough rule of
thumb is if you go on the open market to do your same job elsewhere you can get a
twenty-five or thirty percent raise immediately I would think that’s a
that’s a standard whatever you do you know more or less it’s about there and
for my case you know I was helping my I was coaching my wife engineer her
layoffs she was always the one who’s uh you know I’m happy I don’t want to look
at elsewhere she was and I just said look and you are worth more than you
think let’s go so talk to your competitors
just have a conversation they want to know just as much as you do have open
dialogues can you give me some guidance on how much you get paid you know and
when you’re talking to some competitor yes you can look online but all those
online figures all seem funny enough really light
they’re always lighter than reality so talk to people talk to people and find
out what your competitors are getting paid and if you are not getting paid
that then you’re getting underpaid it’s the market it’s it’s efficient market
but people are inefficient because of fear and because of laziness and they
just don’t want to rock any boats and you’re you’re gonna regret in five ten
twenty years that you didn’t fight for yourself as hard as you should that you
did in you know you weren’t as direct as you should because nobody cares more
about you than you so perfect well so let’s go let’s go three years so I’m
think of mr. a 2012 you negotiated this for yourself what happened from after
that so 2012 in the spring I negotiate a severance I got I think it was three
months of worn act pay which is called worker adjustment Retraining
Notification pay it’s a law a lot of people confuse the mandatory worn act
pay of one to three months as a severance which it’s not it’s the law
and then I got a severance you know sermons check and then I got
over the next five years mine had deferred cash and stock compensation
every single year for the next five years so my last severance associated
payment was in the spring of 2017 so I knew that if all else failed if I
miscalculated my passive income figures if the you know the markets rolled over
again if financial samurai never went anywhere I could live off my servants
for the next five to six years Wow and from there you know I was like well my
wife still didn’t want to leave so I told her look she’s three years younger
than me so I said if I’m still alive and we’re still okay after two years you
know you’ll be you know you’ll be what 33 we’ll consider negotiating servants
for you as well and for the first year she’s like no I love my job and the
second day I was like oh I hate this and third year she got passed over and she
was really pissed off and then and then we said all right let let’s go let’s
negotiate she’s 34 year 34 34 and a half years old let’s you know we believe in
equality so I left at 34 and a half and I was like let’s do it let’s do 34 and a
half as well and so we you know during that time and we basically traveled
around eight weeks a year we’ve checked off all our bucket lists did all that
and I negotiated we negotiate sevens in 2015 and then basically we try to start
having a family and just building financial samurai living free and our
son finally came in 2017 awesome well congrats Congrats on all of those
things particularly particularly miss Teresa wasn’t and your son that’s
awesome so in transitioning here you kind of
followed the standard financial advice of you know live extraordinarily food
really unlike forty fifty thousand dollars a year and only spend four
percent of your income each year is that correct
I’m kidding opposite of your income or four percent of your net worth I’m sorry
yes yeah no what happened here so basically
when I left I had eighty thousand dollars a year in passive income and
that was from real estate dividend stocks CDs savings and just some random
private investments so I knew eighty thousand dollars a year in passive
income would allow me not to starve in San Francisco further my house housing
by that time was not that expensive and then my wife worked right so I was like
well I’m gonna get on her health kick here
I’ll go first she’s three years younger I’ll go on her health care so I knew
that eighty thousand plus health care plus my wife were fine and then of
course there’s the severance so I either looked at the severance so what I did
actually was I reinvested the entire severance check into the stock market in
2012 again nice timing yeah I mean cuz I saw I thank you I thought it was just
free money it was like wow this is like winning the lottery and let me just
invest the money it was a six-figure home some into the stock market and I
said okay I’ll live frugally passive income I tried oh this is the thing I
tried so hard not so hard I put my house that I bought for 1.5 to 2 million on
the market in 2012 for one point seven two seven five million and I said you
know what I’m unemployed now or retired I need to live more frugally
so let’s sell this house while the market recovered right cuz it was like
probably worth only like one point four one point four five during the depths of
the crisis but I think I thought maybe I could sell for one point seven you know
maybe a two hundred thousand dollar gross game
gross gain and I thought okay we’re gonna sell this house is it going
21 hours square foot house 3 bedroom 2 2 and iPad Plus 1-bedroom 1-bath bonus
room too big for us there’s only two of us and we’re gonna go rent a two-bedroom
one-bath place like the place that we rented back in 2003 at the edge of
Chinatown for like you know twenty four hundred a month and live really really
frugally $2,400 a month might not sound like that little but it was its little
for San Francisco for two people as well and so I put the house on the market you
know Facebook had just gotten public I was like you know there’s gonna be all
these multi millionaires they’re gonna snatch this house in a jiffy and so my
tennis buddy was my listing agent and he was horrible he’s a terrible agent he
would like show up after like a tennis match in shorts and a sweatshirt hey
guys this is the house I was like you’re terrible you’re like so not professional
anyway so we showed it multiple times like you know 15 times private party
goes off market but still kind of on market but off market and nobody put in
an offer and my agent friend said oh I got some whispers for way under asking
you know like maybe one five one six I was like screw that forget that I’m just
gonna hold on to the house and thank goodness I did because 2012 was
literally the beginning of the real estate market taking off in San
Francisco and so we lived in that house until 2014 and I still had a really
frugal mindset mind you so I was just I had like a CD that came due it was a
large CD it was like four hundred thousand dollar CD it was a seven year
CD earning 4% and I said you know what what should I do with the CD and so I
was looking at properties on the west side of San Francisco which are which is
actually much cheaper it’s like 40% cheaper and I found this fixer-upper for
1.25 million but it had panoramic ocean views on both levels I was like wow I’ve
never seen the ocean before and I’m in San Francisco it didn’t make sense and
so we basically took that property down and rented out the old house that I
tried to sell in 2012 and that was the house
that gave me a lot of headache because it became like a party house there’s
four to five dudes all the time you know you think about tech Bros in San
Francisco well I swear to God like 90 plus percent
of the prospective tenants we’re all guys and they’re all these is all dudes
so you know given I’m an equal-opportunity person I rent it out
to all dudes and you know they threw parties and they ran on the roof across
neighbor and I got complaints and they tore up things that was just ridiculous
but I was getting eighty eight hundred dollars a month of rent for a
three-bedroom house so it was four bedroom three nap bath really okay
which is a lot right cuz I would never see this is what she for think about I
would never pay eighty eight hundred dollars a month in rent for my house and
when I realized that I was like I’ve got rented out because I’m not willing to
pay that much for my house although I’m just this is like economic waste right
so I rented that out for several years until my son was born in 2017 I was like
there’s no way I can not there’s no way I can be a good dad and still have to
deal with these crazy tenants who are not paying on time wrecking the house
and everything and so I was like you know what my original plan was to own
this property forever you know it would be kind of like our insurance policy for
all of us just in case because I believe in twenty thirty years and this property
would be more expensive but I just couldn’t it was like a war of attrition
I could not survive the you know being a landlord and I could not survive paying
twenty three thousand a year in property tax alone for this house and so I said
okay let’s try again let’s try again and I I did a pocket listing again and I
told the agents tting agent new listing agent more professional this woman hmm
and I said if I can get two point five right so remember I try to start with
one point seven and I I didn’t get anything it was up to 30 days so I took
it off because I was embarrassed and I was mad and I said if I can get two
point five I will sell this house and I’ll I’ll forget my dreams of owning
a nice single-family home in the north side of San Francisco she said okay I
think we might be able to get it let’s let me ask around
and so in one week we got an interested party who office all the time we have
for today’s episode sorry and then so I was like okay two
five come on baby to five doesn’t that sound good to me it’s not a ridiculous
two five nobody wanted to buy five years ago for one seven and then she goes Sam
I’ve got an offer okay what is it well I’m gonna be happy with this I said okay
tell me – six sounds like what – six and here it is in writing I think wow that’s
amazing and I said huh and then I talked to my
wife and I was like man I really feel bad selling it selling this property I
mean you know I want it for my family and all that
and so we rejected them and we said how about two eight because we actually
didn’t want to sell the house but we were all so stressed out of our minds as
new parents and so long story short they came back and forth then they fine you
know we went back for and they finally agreed to 275 Wow and they were terrible
on hitting their contingency deadlines they failed the financing contingency
the inspection contingency everything went late but forty five or fifty days
later we closed and that was the end of my single-family home that I bought in
2005 you made 1.25 off of that gross yes yes okay and you well so that’s an
interesting number I wrote down 1.25 for the fixer with the panoramic views of
the ocean was did I write that number down right yeah that’s what I’m about 20
14 so in 2014 I bought a house for 250,000 or about 20% less than I
purchased a house for in 2005 when I was 28 years old
right so so the fixer-upper was 1.2 to 5 million and a 14 and how many beds the
baths and all that 3-bedroom 2bath just a really standard 1900 house nothing
fancy so you know everything is relative right so in 2014 I spend less than I
spend in 2015 2005 yet my net worth is much higher so and I just because I
realize I so the key again is don’t go and let obviously your lifestyle and
your expenses inflate with your network there has to be some kind of break I
love it what is your what is your kind of situation right now and what are kind
of your plans for the future going forward from all this yeah so basically
I reinvested so I walked away with 1.8 million from the 2.75 million after fees
and all that stuff because I was paying down the mortgage all these years as
well so I reinvested 1.8 in 30 percent basically it was like 30 30 30 30
percent bonds 30 percent stocks and then the rest in real estate crowdfunding so
that was my shift I shifted I so I did five hundred fifty thousand of 1.8 into
real estate crowdfunding to take advantage of higher rental yields and
lower valuation markets and so far it’s been good so far it’s been good although
you’re seeing cracks in the real estate market but whatever happens I feel fine
because you know the house that I sold for 2.75 I had eight hundred fifteen
thousand dollar mortgage so by selling it I at least deleverage by eight
hundred fifteen thousand and I then diversified the proceeds from one single
expensive home in San Francisco to bonds stocks and real estate crowdfunding at a
lower valuation so I feel fine I think things are gonna be ok
I feel I’ve always I’ve always feel a little bit nervous that there’s gonna be
another downturn again because you know again I lost thirty to forty percent of
my net worth in six months in the last downturn and I don’t want that to happen
again that’s like rule number one after you become unemployed
is never lose money again I think that’s Warren Buffett’s rule number one never
lose money rule number 2 see rule number one exactly and there’s more at stake
here I have a you know my wife doesn’t work I have a child to take care of I
have no job and and the net worth figure is much larger yeah but you’re in bonds
I’m surprised to see you say your 30% in bonds from that the reinvestment right
million in bonds because you are fairly young and you’ve got a lot of growth
potential although after the week the stock market has had yeah according to
the end of October after the week the stock markets had maybe that looks a lot
smarter well I I can’t time mark or anything but I can properly asset asset
allocate based on my risk tolerance and even though I’m 41 years old I am
investing like maybe a traditional 60 year old again because I’m not willing
to go back to work to make a full-time income because I don’t want to miss out
the first five years of my son’s life before he goes to kindergarten so after
he goes to kindergarten I told my wife and we can go get full-time jobs if we
want or need to when he’s in school most of the day but before then we’re like ah
let’s see if we can go all in and be parents
you know I’ll write on financial samurai keep that thing alive and we’ll see what
happens and because I don’t I feel that you know I have a saying and I’ll teach
my son this never fail due to a lack of effort because effort requires no skill
you know I never had much skill or talent in you know much of anything but
I really wanted to try really really hard because my biggest regrets all the
time were if I looked back and I didn’t give everything I had and so as a parent
I don’t know exactly how to be a parent because there’s no manual there’s all
these books I’ve read but I don’t really know so I want to look back and just be
just in case my son turns into a problem child or something
I can say hey we did our best or in this in this time
and there’s nothing more we can do maybe we could neglect them a little bit more
and maybe it would turn out better but I think we didn’t want to regret not not
doing our best in that case okay before we transition to the famous
four questions I would like to know one less thing
what is your passive income now a passive income now is about two hundred
fifteen thousand it’s a two hundred twenty-five thousand something like that
a year oh so that’s not bad no it’s great I mean it’s good from from eighty
thousand in 2012 and the passive income is obviously generated from active
income from financial samurai I’ve continued to basically plow the large
majority of revenue from financial samurai into passive income investments
but also we’ve had a huge bull market since 2012 it’s not you know it’s not
skill it’s just hey the markets are up huge and again remember the San
Francisco real estate market it was up like 80 percent since 2012 and I sold in
2017 and then I converted that 1.8 million into more passive income so I’m
really trying to just continue to continuously build passive income if you
check out my site I have a post that says three hundred thousand dollars in
San Francisco is a middle-class lifestyle and people might scoff at that
but if you look if you read the Department of Housing and Urban
Development they say a hundred thousand per kid is low income and all the
reports after I published that post all the reports say hey look you need three
hundred thousand dollars a year to afford a home in San Francisco and I go
through the detailed budget of where that $300,000 goes and it goes pretty
quick not just the taxes but if you don’t win the no San Francisco Public
School lottery system which we think you won’t win because it’s a lottery system
and nobody wins the lottery then we’re gonna have to go to private school in
private school is twenty to fifty thousand a year after tax so it’s always
good to have goals so we’re at like two hundred twenty thousand now and our goal
is to get to three hundred thousand by by the time our son doesn’t win the
lottery and has to go to private school probably in four years so one of the
things I think it’s interesting about just your commentary in general here at
a high level is you know yeah you planned initially on the fairly frugal
lifestyle and your income and assets expanded and now that you have the
situation you are retired you have lots of assets you’ve millions and millions
of dollars and $100,000 in passive income and you’re still worried because
you’re thinking hey this is my kid this is my lifestyle I want exactly what I
want I want the absolute best situation here and I’m gonna continue going after
things and creating a situation that’s capable of sustaining exactly what I
want and I think that’s an interesting commentary if I’m picking up on that
correctly because I think a lot of people go into this with I’m gonna live
at this expected level of income and lifestyle forever and I made my needs
and wants may change after as life goes on and will probably increase in terms
of that it’ll definitely increase if because of just inflation but you know
what happens is once you have a kid you will love your kid more than anything in
the world and two things will happen one you I think you’ll wish you had your kid
earlier so he or she can be a greater percentage of your life because you
think about your life and your mortality more but to you know even if you can
afford or you can’t afford things you know you have two options for your kid
the problem is this is why tuition is so inelastic it’s so expensive because they
know that parents are gonna be like well for ten thousand more are we really
willing to sacrifice or risk our kid not getting the best so this is a thing that
I think a lot of parents struggle with at least here in San Francisco and maybe
New York and a lot of the bigger cities and it’s such a grind so the grind and
the rat race go from work to how to best provide for your kid and that’s one of
the reasons why I want to get out of sandwiches it’s one of the reasons why I
left at the north end of San Francisco where it’s a wealthier neighborhood and
I moved to the west side which it’s a very middle-class neighborhood you know
the price that I bought 1.25 million was under the median
price in San Francisco again everything is relative right and it’s just a much
more middle-class neighborhood does i jus want to get out of that grind I
don’t want to go downtown I don’t want to hang out with people who are gonna
get you know talk about their next tech startup and their billions of dollars is
just annoying and so I hope by if we can go to Honolulu it’s a really family
atmosphere right we we have the word Ohana we have multi generations living
under one roof and it’s one of the highest child per capita populations in
the country maybe it is the highest whereas in San Francisco were the lowest
there’s a different different stage in my life and I’m gonna have to try to
figure out how much to give and how much not to give to allow my kid to be
independent and not be spoiled rotten it’s a real challenge and I hope that
based on our frugality and our lifestyles us growing up and we’re still
really frugal and he can learn you know to only believe that he deserves only
what he’s earned and I think if he can believe in that and some other
principles I talk about all the time like never failing due to lack of effort
because this effort requires no skill I think he’ll be fine but it’s I don’t
know I’m a new parent so I’m just gonna do my best that’s really all that you
can do it doesn’t get any easier as they get older sorry to spoil no I’m sure
it’ll be quite a journey okay so this was super fun I’m very glad you were
able to come on the show with us we just have a few more questions for you before
we let you go today I know we’ve gone really long because you just had a lot
of really great information to share so the next portion of our show is called
the famous four questions these are the same five questions that we ask all of
our guests the last one is the easiest task the easy for you to answer the
first one is what is your favorite finance book yeah so besides how to
engineer your lay off make a small fortune busting goodbye written by me
and should be read by everyone having a favorite finance book my
favorite book is healing back pain by dr. Sardo SAR and oh and it’s a
wonderful book that talks about what the hell is going on with the explosion and
lower back pain and chronic pain like sciatica and it’s because the society
has just gone crazy and we’re all so stressed out and that hey this is how
you heal this chronic pain I remember I had chronic pain for a couple of years
and I it was terrible I couldn’t even sit down I read this book and two months
later I was back pain free and I’ve been pretty much back pain free for at least
10 years never before but you know what I have had some pain in like not chronic
pain because it did go away but I mean when you’re in pain you can’t really
focus on anything else no being chained 3 is super important health right
feeling good you get that down you can do a lot more with your life very – what
was your biggest money mistake bit against money mistake was what I
mentioned in the podcast buying a Lake Tahoe vacation property in 2007 I
thought was like a 10% discount and went down another 40 to 50% but I still own
it and I didn’t Welch on my debt and I’m excited excited excited to take my boy
to touch the snow this is something that I’ve been dreaming about for 11 years so
I’m excited to take them they’re awesome – exactly a big money mistake to me in a
day yeah what is it worth now it might be worth seven hundred thousand but
probably not it’s probably still under what I bought it for thankfully what
happens is that you know as you get older you get wealthier hopefully it
just becomes a smaller and smaller percentage in your net worth
so therefore the mistake gets smaller and smaller as well look at that okay
what is your best piece of advice for people who are just starting out okay
the best piece of advice I can give is if the amount of money you’re saving
each month doesn’t hurt you’re not saving enough love that I like that a
lot I do heard that yeah it’s like if you’ve ever had braces
you’re not feeling the pain in your teeth and it’s not doing it that’s a
great here’s the most difficult and famous for what is your favorite joke to
tell it parties oh man gosh I should have prepared for this
because I think you guys gave me a heads up I don’t have a joke oh my gosh I have
really bad jokes I can’t I can’t say I’m not perfect that’s okay I have people
who send me jokes yeah I just got it I got a someone just sent me a joke
today’s jokes alright this is this one comes from
Vaughn who emails me a joke fairly regularly now this joke I like taking
photos of myself staying next to boiling water my doctor says I’ve got selfie
steam issues I’m really bad I just can’t you talked about drugs they’re terrible
jokes pass I don’t know yeah I’m gonna work on that though so you think I don’t
go out much anymore cuz I’m a stay-at-home dad and so I don’t have to
entertain anybody anymore pretty soon he’s gonna be telling you these terrible
jokes no I don’t remember who sent this in and I can’t find it in my email I’m
sorry for you who sent it in what do you get when you cross an elephant with a
rhinoceros hmm a big animal LF I know there you go terrible terrible horrible
joke my daughter just had one it was really funny I need to remember it she
gets she actually has a lot of really good jokes when they come out of her
mouth they’re funny when they come out of Scotts mouth they’re even funnier
where can people find out more about you you can just go to a financial samurai
sa em you are AI calm and I’ll be there and you can see all my articles and go
the about page and that’s the best way and actually I have a forum I haven’t
told anybody really except for my newsletter guys because I’m really too
busy but financial samurai calm forward-slash forum
with s please definitely go check out potential samurai calm he’s you’ve got
incredible dated driven posts going for years and I’ve used the resource for
many years myself personally so it wasn’t it’s been a huge privilege to
chat with you today and get to know you but and definitely recommend that all
the listeners go and check it out cuz there’s some really good data a really
good perspective on your site thank you very much and I’m gonna work on my jokes
it was really a privilege to you guys as well it’s like literally nobody asked me
to do anything so whenever someone says hey come on more okay sure Julie I’m
just like out here in no-man’s land in San Francisco no-man’s land in San
Francisco yeah there’s just nothing as far as the eye can see out there don’t
even have an internet out there there’s nothing here literally I mean I wish
there was a bigger community of people in the finance space whether it’s New
York and it’s the Heartland and maybe Portland or something but nobody here
for some reason yeah the the Portland has a big the
Heartland definitely just well I think it’s because it’s so much cheaper to
live yeah but Portland I guess it was not that expensive but now it’s getting
more expensive Portland has a really good good you know personal finance and
also you know location independent lifestyle type folks so that’s pretty
cool oh well should we get out of here for this episode we said thank you so
much Sam for coming on and share your story and we’ll talk to you soon
thanks a lot all right that was Sam from financial samurai dot-com would you
think Mindy that is a whole life lived in half of
the time so now he’s got the rest of his life – yeah kind of do more stuff it
sounds like he’s you know not gonna stop which I think is very interesting you
know a lot of talk in the media lately about financial independence and you
know what are you gonna do afterwards or why do you want to just quit your job
and and I think that the this has been said several times you know by a lot of
different people but the the the drive that gets you to the point of financial
independence is the drive that isn’t going to allow you to just sit around
watch TV and do nothing for the rest of your life and Sam now has a little boy
to keep him on his toes no I mean you can tell that he this is a Sam is a
wealthy man he’s a guy who’s made strong smart choices over a long career and you
know for all the retired stay-at-home dad all that like this is a man who’s
gonna become wealthier and wealthier over time and is not going to you know
end up thirty years from now was less well off than he is today I mean he’s a
smart high level view of finances he understands what he needs to do to
advance its position and I think that frankly more people need to think like
him in order to get ahead I mean he what was a theme that I was picking up from
him was a ferociousness about standing up for himself and his interests you
talked we talked about the severance package those kinds of things like why
aren’t you sticking up for your interests the way that Sam does and and
putting yourself in those positions that to get lucky the way he is I like what
he said in the show nobody cares more about you than you yep
so start caring more about you stand up for yourself that’s absolutely right and
there’s nothing wrong with standing up for yourself when you’re being picked on
by a bully you stand up for yourself you’re taught to stand up for yourself
well stand up for yourself in all areas of Finance as well and put yourself in a
position of power right you know I I observed earlier you know maybe you’re
you know marketing specialist one or something you’re just starting off in
your career you know the power that Sam had was built up over the course of him
applying this mindset consistently right it’s not it’s not know Sam’s unrelatable
or ahead of my career a different career you know had a different position it’s
how do you put yourself in a position of power like Sam over the course of a
career and put yourself and make those smart investments and you know look it
was a combination of living frugally investing aggressively and going all-out
for his career that kind of got him ahead you know what’s unrepeatable about
that like Evert doesn’t take skill right yeah I was just quote there he had a
great one yet a great one don’t fail never fail due to a lack of effort
because the effort takes no skill I really can’t add to any of that Scott
that’s just like but on so I am going to say from episode
46 of the bigger pockets of money podcast this is a Mindy Jensen and Scott
trench and Scott has to catch played so goodbye

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