Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large.

A million dollars now

This video of how to become a millionaire on a low income came up on my YouTube algorithm. The obvious too long didn’t watch is to spend less than you make, and consistently invest that difference into the stock market. After a few decades of that, a person will generally have a million dollars in net worth.

That’s all well and good. I’ve been doing a version of that since I’ve started working. However, I don’t think being a millionaire at retirement is what people are looking for. What we all want is to be a millionaire now. It cannot be argued that it’s better to have a million dollars in our thirties than in our seventies. The opportunities to use that million dollars is vastly more in our youth than in golden age.

Take traveling, for example. A younger person will have more energy to tackle a European grand tour, with many hikes and arduous transit days, than a retiree. What about home ownership? A millionaire retiree likely already has a home. An early working adult could really use that million dollars to secure a roof over his or her head.

A restaurant recently opened near me that operates until 2:00 AM. I remarked to my friends that this would have come in handy during our college years. Then I realized we wouldn’t have the money for it then. We have the money for it now, but none of us are staying up late into the morning hours voluntarily anymore.

It seems the timing of money and when we can best use it has an inverse relationship. Warren Buffet would surely trade in all of his billions to reverse his age (hypothetical, of course). Parents who are able to give money to their children should not wait until they themselves die to leave an inheritance. The children need money the most when they are starting out in their careers.

Don't blame the system

This video popped up on my Youtube feed talking about how credit card companies are criminals for charging such high interest rates. But that’s a bit disingenuous. People aren’t forced to deal with credit card issuers. You absolutely do not need a credit card! Cold hard cash will always be king. There’s also the debit card too, if convenience is what you are after.

I’ve had and still have many credit cards, and never have I paid a penny of interest. (Good move by President Trump in directing the Treasury to stop minting pennies.) Credit cards are a fantastic financial tool, so long as the monthly balance gets paid in full. The issuers can charge the most usurious interest rate, and it wouldn’t affect me one iota. That’s how everyone should be using the cards. Visa and MasterCard more than make enough money on swipe fees.

It’s wrong to call something predatory when both parties came to an agreement. The customer borrows money from the credit card companies, with the promise to pay it back. Interest will be charged if payments are late. It’s not the issuer’s fault if the customer did not read the APR fine print. The issuer is not evil because the customer cannot fully pay the balance in a timely manner. It’s hugely infantilizing to obviate responsibility from fully grown adults.

Again, credit cards are not necessary to living. People did just fine before their invention. Whatever life emergency that people use the cards to cover should instead be covered by an emergency cash fund. Don’t have one? Eat only rice/beans/chicken/lentils (a completely nutritious meal for very cheap) until you’ve saved enough. Sorry, DoorDash is no longer in your vocabulary.

If you’re in credit card debt, it’s time to reevaluate your expectations of what is truly necessary in life. The Amazon habit is too difficult to quit? Better increase your income, then.

I know. Right to privilege jail. Right away.

Stock up, stock down

San Francisco is seeing the first big rain storm of the season. I am somewhat regretting not replacing the tires on my BMW M2 before this. The stock Michelin Pilot Super Sport tires are on the final few thousand miles of usable life. (Current mileage of the M2 is 20,214.) These high performance summer tires are not the best in the rain when new, so it’s downright sketchy when the grooves are worn down. I’m definitely not turning on the performance modes in these wet conditions.

The reason I haven’t yet replace the tires is because I am cheap. I want to delay the inevitable $1,500 charge to replace all four for as long as possible. That doesn’t mean I’m avoiding driving; like a good Chinese immigrant I simply wish to maximize the usage out of a product. I paid for the tires, did I not, in the original purchase price of the BMW? This is the equivalent of adding water to a near empty shampoo bottle in order to use every last bit of it.

The reason I’m being so unreasonably stingy (I don’t make bad money) is because our workplace is facing a fiscal crisis. While I am confident in my abilities and what I contribute to the job, I simply do not have the seniority years to feel completely secure. In the event layoffs do happen, and I am affected, I want to be fully financially prepared. That means stashing away money and squeezing out the utility of things I already have. Black Friday shopping for the dopamine hit will not be in my vocabulary.

Just because a university is a non-profit doesn’t mean no profits. Students pay tuition, staff and faculty have to earn a living. You can’t idealize your way out of hard numbers, especially when cuts have to be made. Under-utilized classes should be the first to go.

In turn, Universities should lean on majors that are popular. For as long as I’ve been at San Francisco State (since 2007), nursing is an impacted program. Meaning: demand outstrips supply. Why does this remain so? The nursing major should have expanded to accommodate the demand long ago. Leverage the popularity and competence to make SF State a known destination for nursing (and whichever other in-demand programs). Give the students what they want!

Capitalism is not without faults. So long as that’s the system we are in, that’s the system we have to work around.

Unforgiven

As a person employed by a university, I am perhaps not the most unbiased opinion in this whole student loans forgiveness issue. My job depends on the college system continuing on to be a revolving door of incoming students turning into graduates. Should the value of a college degree crater into oblivion, well, I better go find something else to do.

The students are the paying customer, that is of no doubt. And in grand American tradition, they pay in credit. How else can anyone afford to attend college when room and board for a year is the equivalent of a used car. I managed to avoid student loans because one, my family was poor enough to get me all sorts of State and Federal grants, and two, I lived at home.

I’d have signed loan papers too had I needed to pay $900 per month just to share a tiny dorm room with a complete stranger. Probably a guy named Mike from Souther California.

Students graduate with a tremendous amount of debt weighing down their financial future. Unlike other debts, students loans do not get wiped off in a bankruptcy. I wonder what were they trying to prevent when that was implemented. Seems to me they don’t want people to declare bankruptcy upon graduation to shed the school debt. The graduates can take the credit hit because they’re just starting their adult career anyways.

Piggybacking off that, I think student loan forgiveness will create negative incentive for universities. There would be no motivation to control costs (like building a lot more student housing) if there are no consequences for the students down the road. Don’t worry about the tuition increase! Borrow all you want from the government! Uncle Sam will wipe it away eventually!

We need to look at the whole thing holistically: how to lower the total cost of college, so that whatever students has to borrow can be repaid timely and responsibly. Numbers getting too large (and inescapable) is how we got into our current mess.

Can you though?

As a car enthusiast of over two decades, I am extremely familiar with stretching our dollars in order to buy cars. People spend money on eating out, we spend it on cars. If I weren’t a car enthusiast with a penchant for switching (brand-new) rides every three years, I would have immensely more wealth in investment accounts right now.

Obviously, they don’t give out medals for having the most money going to the grave. In this life you got to spend your money on something. It’s all about balance.

What my brother is planning to do is very far off balance. He’s put in an order for a car that is three times his annual income. Fair enough: he’s been saving diligently for as big a downpayment as possible. And apparently, with “exotic” cars, there exist banking services that would finance them for far longer terms than the typical mainstream vehicle. That is how my brother plan to “afford” this supposedly incoming car.

I’m sure the man-maths are working overtime to justify this move. However, the mistake is trusting the numbers on paper are static. Just look at recent inflation: gas, insurance, and maintenance costs have increased dramatically. The monthly fixed costs seem to be going ever higher. I guess my brother can save on gas by not driving the car, but then… what the heck is the point?

Then there’s the variable costs, with life being the variable. Pinching every possible penny to afford a car means any surprises down the proverbial road - and there’s always going to be surprises - will put my brother into the negative immediately. Can he afford an unscheduled wheel and tire replacement (unfortunate encounter with a pothole, let’s say) when he can barely afford the monthly payments? The only way the math is going to work is if life goes absolutely perfect. That’s simply not possible.

I’ve told my brother all of this, of course. Hopefully it’s enough to steer him from an enormous financial albatross.

Do your job

My Youtube rabbit-hole this past weekend was personal finance videos. In particular, this episode of Caleb Hammer’s Financial Audit struck emotional resonance with me. The person having her finances checked over by Caleb is child of Chinese immigrants. Her family migrated over to America when she was eight years old. So did I! But unlike her, I am not swimming in credit card debt.

But like her, I bore the burden of supporting Chinese parents who did not know the English language, and were wholly unfamiliar with American culture. Whatever childhood we had were arrested abruptly, and we had to become essentially adults soon as we learned English. Any interaction with the outside world was automatically thrusted upon me. Can you imagine needing to go to the hospital, and it's your kid that has to communicate with the staff and fill out forms? Actual adults were suppose to do that!

I couldn’t ask my parents about anything. They simply did not know.

Needless to say, a lot of my proclivities and neuroticism stem from that period. Because I had to shoulder so much more burden than any typical kid, I absolutely detest anyone who cannot put their own weight. Nothing annoys me more at work than people who cannot do the one job they’re suppose to do. Me having to pick up the slack takes me right back to my childhood of performing the adult duties that my parents could not.

Another thing stemming from that time is my inability to ask for help - even when I totally can and should. Because I never could ask anyone for help back then. There was nobody to share that burden. So the adult me ends up trying to do as much as possible, by myself. Not because it’s the best way, but because I simply have not developed any better.

Obviously, I don’t blame my parents. It is, indeed, what it is.

I almost moved out?

One thing I’ve always had in mind is that when I do move out of the house, it has to be some place extremely close to work; close enough to get there in around 15 minutes, whichever the method of transportation. Living in the Bay Area I’m quite familiar with the horrid commutes many people have, and the last thing I want is to join that party. If my living situation is going to change, then decreasing the amount of time it takes to get to work is a must-have criteria. Otherwise, I don’t really see a point: there’s no good to having my own place if I’m miserable from the daily commute.

Problem is, obviously, it’s extremely expensive to rent a spot in San Francisco, much less on the west side of the city where the university is. And let’s not even speak of actually buying a house in the area, a downright impossibility, unless the housing situation changes dramatically, or I hit the lottery. That being said, I browse the rental ads on Craigslist periodically to gauge the market, and to see if anything will pop up that’s reasonably affordable, with superb proximity to work.

Last week, one such place did materialize. A mere 10 minute walk from campus, it was a newly refurbished in-law studio renting for $1,600 a month, all inclusive. Squeaking in at just under the 1/3 of income rule for a lease, the place was eminently affordable, somewhat to my surprise (I guess the market has soften a bit). Of course, the most alluring attribute is the closeness to campus; to be able to simply walk to work is an absolute dream. There’s a mall with a Target and Trader Joe’s only two blocks away, so it could not be more convenience in terms of living necessities, too.

Later that week I went and saw the place (it was indeed lovely), and then started on viability calculations before I officially apply. Unfortunately, the math did not rule in the favor of leasing: I can afford the place, but due to rental costs, I’d be saving very little every month (if at all) - house poor, as they say. The problem is the big financial purchase I made this January: my Porsche 911 GT3. Had I bought a way more sensible sports car, one that doesn’t cost four-figures to keep every month, I think I would have handed in the application this past weekend.

I did think about selling the 911, though that has its own conundrums and difficulties. I unconditionally adore the car, and letting it go would leave a huge gaping spot in my car enthusiasm. The GT3 is suppose to be the ‘forever car’, so selling it after only one year of ownership would be devastatingly irresponsible. Porsche cars hold their values well, but that doesn’t mean they don’t depreciate: my 911 have loss about $20,000 in value since January, a real, tangible decrease if I actually sell the car. Not to mention I’ll never get the five-figure in taxes I paid when I purchase the car back. Some States let you offset the tax if you trade for another car; communist California sadly doesn’t.

It seems I have to see that process through with the 911 until I can make another huge financial move. I wouldn’t call the car an albatross, but I think it would be wise to accelerate paying off the rest of it so I can have some flexibility. New years resolution for 2020, perhaps?