6 Steps to Negotiating a Car

I do not advocate for buying new cars all the time when the goal is to retire by 40. The goal is to purchase 1 reliable car that you’ll pay off as soon as possible and use for at least 15 years. Ideally, you should have a sufficient down payment and be able to pay off the car in less than 5 years. 

I bought my first car when I was 23. With 2 years out of college, I was about to start my MBA and needed a car to get to class. Through this, I want to share my experience and things that I did to get the best price and some additional perks that people didn’t know they could negotiate for when buying a new car.

Let’s get started! You’ve done some research; you know what car you want; and you know what others have paid for this car. Time to head into your local car dealer and work your confidence with the salesman.

Steps on negotiating the price

1. The Pre-Work in Surrounding Areas

Part of your research should have been calling every dealer in not just your area, but in other accessible cities. For example, there are many flights from San Francisco to Los Angeles, San Diego, Reno, and Las Vegas. You can talk to those dealerships and find out of how they’re selling for just to see if buying that plane ticket and driving back is cheaper than buying from your area.

2. Get Friendly

Time to put your friendliest face on! No one likes an asshole regardless if you’re buy or he’s selling. Just be nice and smile a lot. It’ll get you further with negotiations.

3. Patience

This sucks the most, but you should never purchase your car the first time you walk into the dealership. You should be learning about their cars, test driving, and talking prices. You should also be talking about what else the dealership can offer. Remember, you can negotiate ANYTHING.

4. Know When to Walk Out

You’ve been at the dealership for a few hours now and the sales guy has talked to you about everything he could possibly talk about. Time to walk out with appreciation. This is very critical, because you’ve established a bond with this guy. He knows where you stand, but you should go home and think about all the different options. Also, make sure you have his contact info as this will be critical to your success. It is highly recommended to bring someone you trust and isn’t invested in the car. Therefore, they know to give you a sign to leave.

5. Research your Options

I’m not talking about other dealerships per se; however, you can talk to other dealerships and tell them what your current dealership is offering to see if they’re willing to not only match, but also offer more. That’s right. They can either bring down the price even more or offer additional services such as free oil changes for X amount of times or free maintenance up to certain years. While some car manufactures do offer standard maintenance package such as BMW, you can also ask for additional years.

Here are some options you can negotiate are:

  • Free rental cars every time you get service
  • Discounts for parts
  • Interest rate (thought it’s better to go through a credit union for the best rates on financing unless the dealership can do a 0% interest rate)
  • Additional set of keys for free
  • Any upgrades for free (stereo, screen, car seat warmers, GPS, etc…)
  • Additional discount for paying in cash
  • Extended warranty
  • Accessories (windshield wipers, car washes, lifetime supply of fresheners, and etc…)
  • Oil changes
  • Weather mats
  • Window tint

Remember everything you can think of is negotiable. This is the time to do your homework, because your sales guy will email, call, and/or text you. You want to know exactly what you need and see if he can work with you.

6. Time to Make the Kill–Gracefully

A few weeks have gone by. You’re armed with offers from other dealerships and you know what price you’re willing to pay with the items that you need. You should also have a few different alternatives (i.e. a slightly higher prices but with x upgrades/# of oil changes) in case your original plan doesn’t work.

Now, you’re at the dealership ready to finally make this purchase. This is the time to achieve a win-win situation. Wait, what? Win-win? But you’re only there for a car. Well, yes, but you also have to remember that every negotiation needs to result in a win-win situation. This means that you’ll flatter him as much as you truthfully can. You should thank him for being patient with you and that he’s been doing such an amazing job educating you. Afterwards, you drop the “win-win” situation–you will tell him that you’ll recommend him to all your friends, family, co-workers, and/or whoever possible. Grab a couple of business cards and store it in a safe place.

Why? He wants to make a sale, but you want a cheap car with perks. Well, negotiation also involves building a relationships in some way, so make sure he’s getting what he needs. For him, that is word of mouth on your behalf. So offering him to “sell” on his behalf will make sure he’ll do his absolute best to get you everything you need.

As you Leave…

Remember to thank the guy and reassure him that you’ll be back either for a new car or with other potential clients. Now, whether you truly mean this or not, you at least got what you wanted and he sales guy feels good about all that’s he done for you.

Lastly, even if you don’t plan to recommend him, the least you should do is take his survey if he requests it.

Bottom Line: Buying a car takes a lot of time, but with the right research and patience, you’ll learn a lot in this experience that will carry you through life and not in just car buying.

10 Smart Strategies to Cheap International Flights for those who Work 9-5

You work 9 to 5 and now need a vacation. So you’re looking on Kayak or Google Flights for some deals, but how do you know you’re looking in the right place and that you’re actually getting the cheapest flights? Here are 9 tips to make sure you are getting the best deals.

Search Engines

Kayak has been my favorite website, but it doesn’t show all airlines especially the budget airlines. I have tried Momondo and Hipmunk, but they’ve usually been just a few dollar difference from Kayak. Skyscanner and Skiplagged were a highly recommended site, but every time I’ve used them, they have been significantly more expensive than anything else but may work for you. Google Flights has mixed reviews. The only time I use them is when I’m looking for what flights have non-stop flights between cities. And of course there’s always Priceline and Expedia, but I never use those. They don’t have as many search results as the ones above. Other than that, I tend to keep my searches in Kayak unless I’m looking at budget airlines, in which I’ll head to their actual website.

Flight Search Tips

1. Setup Alerts

If you’re researching a head of time, then you can setup alerts (daily or weekly) to inform you of prices changes for the specific dates you’re looking into.

2. Fly into Nearby Cities

Let’s say you want to go to Barcelona, but prices on all airlines are terrible, then consider flying into Madrid and take the train or a local flight. Flying into nearby cities will save you a lot even if you end up having to rent a car, take an Uber/Lyft, or train it.

3. Fly to Nearby Countries

Some airport hubs are cheaper than others. If you want to fly to Paris and prices aren’t great, consider flying into London Heathrow and taking the train into Paris instead. The reason? Heathrow is one of the largest hubs in Europe and can accommodate more flights, which means it’s cheaper.

4. Try to Go Off Season

Everyone is off and traveling for summer, spring break, Christmas, and Thanksgiving. So, avoid if you can. Also check the place you’re going to and see what is considered off season and plan around then.

5. Sign Up for Certain Flight Emails

Don’t sign up for every airline, because you’ll never look at it. We have a few carriers that we know are fairly cheap and are usually the ones we take unless for some reason Kayak/Google Flight tells us otherwise, so we subscribe to them. We have subscriptions to Southwest (domestic) and Singapore Airlines (international – mainly to Asia). For Europe, there are enough carriers out there for us to choose from and rarely ever take the same airline, so there’s no need to subscribe. Be aware that you need to be flexible with these as sales come up at any time and you have to be ready to purchase. 

6. Sign up for Travelzoo

Again, you have to be flexible, but I’ve seen some of the cheapest tours ever. The “This Week’s Top 20” is the one you want to pay attention to.

7. Enjoy a Layover

Sometimes it’s just better to fly somewhere and take a layover for a night. In fact, some places are better as a layover (i.e. Singapore) and you can cross that place off your list. Remember, the layover has to be at least 8 hours in between; otherwise, the airport won’t let you out. We learned that lesson while in the laying over in the Philippines. We had 7.5 hours until our next flight and security denied us entry into the country because we were half an hour short.

8. Budget Airlines are Your Best Friend

Check the airports you’re flying into and see the list of airlines they serve and if you don’t recognize some of those airlines, then it’s probably a local budget airline that you definitely want to check out. The more you connect these, the better your price. However, you have to have the flexibility and time to do this.

9. Be Open to New Places

Some of my best trips have been when I was open to places I wasn’t expecting to go to. In 2015, my MBA program took us to Beijing, China for 2 weeks. I decided to travel with my boyfriend (now husband) afterwards. There was a direct flight from Beijing to Uzbekistan, so we toured the silk road. From Uzbekistan, there was a direct flight to only 3 countries (France, Germany, and Latvia). Well…we can go to France or Germany anytime, so we went to Latvia and that was probably one of the most rewarding experiences ever. It was an ex-Soviet Union country that has flourished into an amazing European cultural center with some of the fastest internet in the world (FYI…Skype was created in neighboring country, Estonia). Those were also the cheapest flights we’ve ever flown.

10. Think About You: Comfort

The last tip that I have is really about you as a person and your comfort level. While most of these other blogs will help you find the ultimate cheapest flight possible, they aren’t taking the 12+ hours you have to spend on a cramp flight into consideration. What I mean is that some airlines have more space in economy than others and other amenities that you’re paying a little more for to ensure comfort that may mean a lot to someone who has limited time to relax after arriving to their destination.

For example, it might be great to pay $300 round trip to Europe from San Francisco on Norwegian Air, but you have to remember to pack food and water before getting on, because they don’t serve you anything unless you are willing to pay $5 for a bottle of water. At the end of the day, paying more for food/water isn’t a big deal since your flight was cheap, right? Well, did you take baggage fees into consideration? Wow Air allows you only 1 personal item in the cabin. If you want to use the overhead bins, it’ll cost you $40 each way ($80 round trip for your bag to ride the overhead bin, not checked bag), not to mention if there’s 2 of you using the overhead bin. And they DO check every piece of luggage by tagging them, don’t think you’ll sneak away on this one. Also, did I mention, no TVs? Make sure you pre-download all your Netflix shows on your phone.

What I’m saying is that you do work and I know you’re trying to save as much as possible for your retirement, but an extra $50 here or there for a more comfortable flight won’t kill you. Also, you have limited time and unlike the blogs who can afford to have flights cancel on them, I don’t believe you have that type of luxury or time to deal with these issues. And some of these cheap flights are notorious for cancelling flights if they can’t fill all the seats.

So until we’re retired or have vast amounts of time, we do take our airlines into consideration and will pay a little more for a better international flight. However, we will fly cheap budget airlines with less comfort when the flights are less than 5 hours.

Bottom Line: Think about your how much comfort you need first and then find cheap flights with the strategies listed above. Nothing kills a trip more than a terrible 12 hour flight where you’re ready to head home to sleep in your own bed.


Purchase an Apartment and Retire by 40

Everyone seems to think you can’t buy a place and still retire by 40. I’m here to debunk that, because we’re working on that right now. I also live in the 2nd most (if not most) expensive part of the United States: San Francisco Bay Area where the median home price is $742,000. So if we can manage to do this, then so can anyone else.

Here’s our story

We started looking in 2013 for a place to buy, because our rent at the time was $1,900 for a 1-bedroom. We were busy saving and a friend mentioned that there was a complex near where we were living at the time that were turning apartment rentals into condos to sell. We drove over and found out that there was a huge wait list. Despite that we put our names down for a studio.

For the next few months, we visited the complex office every other weekend to just chat with them. We basically told them that we were extremely interested and would not pass if we were offered a condo. After a few weekends of making nice, they contacted us to tell us that 2 final condos were left despite the fact that we were one of the last people on their wait list. They liked us and knew that we had made such an effort to secure a condo, they had confidence that they wouldn’t be wasting their time.

They told us the condo was 565 sq ft for $241,900 and that was it. No price negotiation, no bidding war, just a set price. If you’re heard about all the craziness in the San Francisco area, then you know what we go through to bid for a dump. No one ever under bids in the Bay Area. The realtors will ask you if you’re joking if you even bother to mention under-bidding.

We signed the contract, secured the financing, and put the 20% down payment. 6 months later, we were all moved in!

How will you do this?

Do not buy a house.

Unless you plan to live in the same location for more than 5 years, the cost of home ownership isn’t worth it. Even if you do live there permanently, the cost of maintenance will take a toll on your savings. Assuming you purchased a house for $200,000, HGTV recommends you keep 1% – 3% of the home purchase price for maintenance, which means at least $2,000 a year dedicated to maintenance. In 10 years, that’s $20,000 that could have been invested!

Furthermore, the larger the space you have, the more you’ll feel the need to buy in order to fill the empty space. Part of retiring by 40 also means keep your stuff to a necessary minimum, meaning only purchasing things that are absolutely necessary and will keep you happy. With a home, you’re more likely to end up purchasing more without thinking as thoughtfully.

Also for some newer developments, you might incur monthly HOA costs.

Instead buy an apartment.

The average 1-bedroom is roughly 700 sq ft. This is just enough space to make cleaning easy and maintenance affordable. You have more space than the tiny home movement, but it’s not big enough where you’ll be tempted to buy a ton of furniture to fill empty spaces.

But what about the higher HOA?!?! Well, it’s always going to be there unfortunately, most apartment HOAs cover more than a house HOA. Ours covers water, sewage, gym, dog poop bags, 24/7 security, pool, club house, all external maintenance, and some basic internal maintenance. So, we’re left with having to pay the electric bill and all the extras we want.

Compare the breakdowns.

Now let the numbers show why buying an apartment is worth your investment.

The Analysis

Assuming you buy at 25 and live another 50 years here, you can see the cost of a house is between $625K to $760K depending on where you live. Property tax is the main driver of the difference. According to the New York Times, the most expensive property tax is in New Jersey at 2.35% and medium property tax is in Missouri at 1%.

If you rent forever and right now, we’re seeing average rent of $800 for most people who are working towards retiring early. Assuming you have a pet, you’re looking at least $515,000 over the 50 year lifetime and that doesn’t even include the fact that inflation happens over those 50 years, which means your landlord will raise rent on you some day.

Finally, no matter if you live in the most expensive property tax state or not, purchasing an apartment is the best thing you can do. Assuming you pay the 30 year loan at 4.1% and never refinance for a lower rate, you’ll pay a total of $445K and don’t have to worry about getting kicked out or your landlord raising rent. Not only that, you’ll be able to live as long as you need to and it could surpass 50 years. Furthermore, it’s significantly easier to rent out a 1-bedroom apartment than it is a house, which means you just turned this apartment into an investment and passive income for yourself if you decide to move.

Facing Annual Rent Increases

Going back to our story, the $1,900 was going to go up to $2,000 the next year. After we moved out, we heard the landlord was extremely happy, because they were only able to raise $100 on us. For new tenants, she decided to charge $2,200. The worst part: there was no washer/dryer unit in the apartment and the building was built in 1970. It’s only real attractions were that it was literally across the bridge from San Francisco and it was in a safe quiet neighborhood.

Bottom Line: Renting is cheap in the sense that you don’t have to pay for maintenance, property tax, and HOA, but the landlord sees this as in investment. They will price their rent to cover majority of the expenses and in a way, you’ll lose out when they raise rent and you’re faced with having to move again or pay the higher rent. With an apartment, you’ll be locked into that price for until it’s fully paid off for and no one can tell you to leave.

Tackle the 6 Most Difficult Minimalism Lifestyle Changes

A few years ago, my roommate and I were talking about our rooms and I can’t remember exactly why we were, but she said to me, “But you’re a minimalist.” Hm…what does that mean? I started to do some research and while “minimalism” sums it up, I like to see it a different way. Blogger Becoming Minimalistic summarizes it in a very nice post called “What is Minimalism?

Minimalism is a lifestyle that we contentiously choose to live.

Why did I choose the minimalist lifestyle?

I chose it because my parents were hoarders when I was growing up and in my adulthood, I couldn’t live like that. Growing up, we had a 1,500 square feet house in a really nice suburban area of Northern California and my parents worked in tech. They had the money to buy happiness for the family. Over my high school years, I hated the fact that I could never find stuff that I actually needed. When I started college, I took the bare minimum. I got through those 3 years just fine. In fact, every time I moved, I packed 1 full car and that was it. I moved every year for 8 years and never wasted any money on a moving company.

What does minimalism mean to me?

It means appreciating everything you have because you only have 1 of it and it’s enough to get you by in life. It doesn’t matter if it was a pair of Christian Louboutins shoes or a pillow; it’s the fact that you bought something that has been thought through and you can explain why you bought it. It also has a place in your home and don’t have to dig through piles of stuff to find it. Furthermore, you can tell someone where it is in your home from memory.

Is minimalism for you?

  1. Are you ok with not having duplicates of things?
  2. Can you part ways with something that hasn’t been used in a long time?
  3. Will you dedicate the decluttering at least once a year?
  4. Can you keep spending in check?
  5. Will you question every purchase?
  6. Are you comfortable in small spaces (i.e. less than 1,000 square feet)?

If you answered yes to most of these questions, then you can start a new lifestyle!

4 simple steps to start minimalism

  1. Take a 30 day cleaning challenge. You can easily find these online such as Popsugar’s 30-Day Cleaning Challenge. This way you have a new house to start with.
  2. Declutter your closet.
  3. Declutter your kitchen by removing any duplicate items that haven’t been used in a while and place into a box.
  4. Take all the remaining rooms, one room at a time, and find at least 10 things to donate.
  5. Continually repeat on a regular basis.

Now for the hard part to tackle

  1. Refrain from buying anything new unless you can mentally find a place for it before walking out of the store or you plan to upgrade/replace something, in which you will donate the old item and replace with the newly bought item.
  2. Stop online shopping unless you know you absolutely need something. My husband has a terrible problem with online shopping and it’s too easy nowadays with the 1-click solution. What we did was get rid of Amazon Prime. OMG…I know…madness! Who doesn’t have Amazon Prime? But, it really helped us, because free shipping is $25 or more; therefore, we really had to think about what we’re buying and why before we could get free shipping.
  3. Try to plan your weekends head of time whether it’d be brunch with friends or hiking with your dog. I know that when we get bored, we’ll just go to the mall to “walk around,” but we all know what that means…
  4. Dedicate yourself to finding a hobby. I love to go running in the mornings, but it only takes up an hour of my day meaning I have a lot of time to potentially online shop or go to the mall. I tried any different hobbies out before I realized blogging about personal finance is what took up over 10 hours a day.
  5. Inventory your stuff. HUH? SERIOUSLY? Yes. It helps you keep track of everything you own and finds duplicate items that you may missed. I keep an inventory of all my clothes on Google Sheets and have a column for “Donate.” When I see something that is a duplicate, I will donate it. It also reminds me that I have a lot of stuff and don’t need to buy more.
  6. Downsize when you can. The smaller the space, the less likely you’ll feel the need to fill it. For example, my parents and I used to live in Chicago, IL with 2,000 square feet. My parents bought a lot to fill the space, but when they moved to California and into a 1,500 square feet house, the extra stuff from the 2,000 sq ft place was unnecessary. In fact, the extra stuff was very cluttering to the point where we ended up donating a lot.

Eventually your newly adopted habits become your lifestyle and culture. It really doesn’t matter if your stuff is Chanel or Michael Kors, there is absolutely no need for 3 wallets from 3 different designers. Buy stuff that you truly love and will make you happy for a long time even if it’s a little more expensive than you would normally pay for, but you’ll never feel the need to upgrade.

Bottom Line: Minimalism is your commitment to a simple lifestyle. You’re constantly thinking about purchases and ensuring that you’ll make full use of it where you actually appreciate the items you have.

Net Worth Update: December 2017

While our journey actually started when we got married end of December 2016, I spent the whole year researching and setting up accounts for us. I didn’t start blogging till end of the year and finally started this in December of 2017. With the Million challenge underway, here is our December 2017 net worth update.

Also note that I originally wrote about how you need to save up for 2 retirements. These updates are to fund our first retirement.

December 2017 Expenses:

Item Cost
Necessities/Dog $229.96
Tea/Coffee $8.25
Eating Out $379.77
Groceries $138.17
Clothes $0.00
Other $113.87
Travel $0.00
Gas $143.26
Monthly Bills (mortgage, HOA, etc) $1522.27
Total Spending $2,535.55

Key Things to Note:

This month has been one of our better months where we cut down on eating out partly because we worked every weekend up to Christmas doing our side gigs. We were also very good about not going shopping. Also, normally our travel expenses are a lot higher as we pre-plan most of our following year’s travel in December, but with so much going on, we decided to put that off. We also have a few friends who want to travel with us, so we’re also waiting for them to sort out their plans before we purchase tickets.

December 2017 Net Worth:

According to Personal Capital, our net worth is $430,350.

Cash $74,745
Investments $90,410
Zillow Home Est $422,277
Mortgage $156,820
Credit Card $262
Total Net Worth $430,350

Key Things to Note:

  • Zillow estimates our condo to be worth $422,770; however, I find that hard to believe…they might be over-estimating by about $50K.
  • Our 12/31/17 CD expired and dumped it into our savings account. Normally, I do not hold that much cash to begin with.
  • Will not be including 401K since we should not be liquidating that until at least 59 and half.

So far, I feel like we’re doing pretty well for year 1. Although, I’m not really sure about including our Zillow estimates into this calculation, because I do plan to continue living there while in retirement and probably rent it out while we’re traveling. So, I feel like the net worth is inflated. What do you guys think?

9 Tips to Reducing your Expenses

Happy New Year! We totaled up our spending and are proud of our first year of marriage! We spent a total of $47,673.40 in 2017 while living in the most expensive area in the United States, the San Francisco Bay Area. This included a 1 week trip to Paris in May, 8 weddings that we attended (all but 1 were in the Bay Area), 1 week trip to New York, and a 1 week trip to Hong Kong/Thailand.

Now how is this possible? Here were some key tips that kept our expenses low.

  1. Coffee – We treated Starbucks/Peets/boba shops like they were a real treat for us. Mr. Hair drinks at least a cup of coffee a day.
    1. Reduce Spend Tip on Coffee: Last year, we bought the Aeropress Coffee and Espresso Maker and hasn’t stepped foot in for a $3 black coffee ever since. As a result, we only spent $229.64 on these places.
  2. Clothes – I focused on my French minimalistic style and only purchased clothing that fit that style. Mr. Hair and spent a total of $2,467.84. Since our closets are built for the most part, we don’t plan to spend as much this year.
    1. Reduce Spend Tip on Clothes: Figure out your style and you’ll spend less on clothes, because now you’ll be more picky about what goes into the closet.
  3. Stuff – We only have 565 square feet to store things in, which means we are very cautious about what goes into this place.
    1. Reduce Spend Tip on Stuff: You should always question why you are buying something and then if we can find a place for it before paying for it, then buy it. This has kept us from buying a lot of useless stuff.
  4. Gas – This will add up a lot if you drive to work. We are lucky in that we only use public transportation and have a commuter transit benefit with the company to purchase as a before-tax deduction, saving us at least a few hundred dollars a year. We spent $953.12 on gas alone.
    1. Reduce Spend Tip on Gas: Search for alternatives in your area. For example, if there is a train station nearby, then bike to the train station and from there bike to work. It may take a little longer, but you can do this 2 times a week instead and save some money on gas while getting your workout in the morning!
  5. Mortgage – This is where we are fortunate enough to have bought in 2014 and live where we live now.  We live just across the bridge to SF on the East Bay side, where rent goes for $2,000+. We paid $17,866.56 and that includes the mortgage, HOA, and property tax for the year of 2017 (about $1,500 a month). Most people in the Bay Area will pay anywhere from $1,500 (an hour away from SF) to $5,000 (to live in downtown SF). The further away you live from SF, the cheaper it will be.
    1. Reduce Spend Tip on Rent: Determine what you can handle (commute time wise), check out the public transportation around the area, and negotiate with the landlord (if possible).
  6. Eating out and groceries – Mr. Hair loves to eat and try new foods. We blew through this budget pretty quickly and spent a total of $8.560.18. We started cooking more at the end of the year and this helped us a bit.
    1. Tip on Life: I would say that there is at least 1 category in your budget that you show allow yourself a higher budget in to keep you happy. For us, that was trying new restaurants.
  7. Travel – We love to travel. This year we took 2 international trips and a hand full of domestic trips. Hotel/Airbnb/flights cost us a total of $5,889.69. You’re probably thinking for 2 people? That’s way to cheap, impossible! Yes and no. At the end of 2016, both Mr. Hair and I got the Chase Reserve. Yes, we each of us paid the $450 annual fee, but got back $300 per person in travel expenses that covered some of our hotels and flights. Each of us also received 100,000 bonus points when we signed up and used some of those points to pay for our hotels and flights.
    1. Reduce Spend Tip on Credit Cards: Find 1 credit card that both of you will make all your purchases from to really reap the rewards that the credit card has to offer. Youtube Video Credit Sifu: Credit Ladder does a great job of breaking down the tiers of credit card that you would most likely be eligible for and then Nerd Wallet does a great job of comparing those cards within the tier.
    2. Reduce Spend Tip on Credit Cards: Having more than 1 card to try to take advantage of rewards doesn’t work if you aren’t big spenders as there isn’t significant spending to make the rewards worth it, especially if you are paying an annual fee.
    3. Reduce Spend Tip on Credit Cards: If you like to travel, we highly recommend the Chase Reserve. It’s a bit pricey, but compared to the major competitor American Express Platinum, we find that the Chase Reverse’s flexibility is better suited for us. We recently came across the Uber Credit Card, made specially for millennials and MagnifyMoney does a great job of demonstrating the pros and cons. We talked about it, but at the end of the day, Chase Reserve suited us much better based on what we spend most on.
    4. Reduce Spend Tip on Travel: Start at least 6 months out and with some basic research which budget flights go out of your airport. Check all the airline carriers in that hub. For example, Oakland Airport has recently attracted many low cost carriers to Europe (Norwegian Air and Wow Airlines) and is most of the time cheaper than flying in/out of San Francisco (SFO); however, it’s cheaper to fly SFO when going to Asia as all the main Asian flights are out of SFO. Then, check for the off-season if you can fly October, January, or February to avoid major holidays and children breaks. Finally, setup alerts on Kayak to notify you, but sometimes the budget airlines that flies out of your airport isn’t partnered, so you’ll need to check those separately. Ideally for the San Francisco Bay Area, round trip flights to Asia are as low as $400; round trip flights to Europe are as low as $300; and round trip flights to South American are as low as $400.

Bottom Line: Devoting all expenses to 1 credit card whenever possible to reap rewards, asking why we are purchasing physical items, and spending on experiences has made our 2017 a good year with friends, family, and adventures.

Cheers to a new year!

How Do I Save For 2 Retirements?

When do you think you’ll live till? 60? 70? 80? According to Fortune Magazine, most people underestimate how long the’ll live for.

American men born today can expect to live 76.5 years, on average, and American women 81.3. But those numbers reflect life expectancy at birth and are dragged lower by people who die young. By the time you are in your fifties, you have already outlasted everyone born the same year as you who passed away under untimely circumstances.

This means the life expectancy is higher than originally thought at 76.5 and 81.3 for men and women respectively. So if you plan to retire by 40, then you need to fund the “first” 25 years of your retirement and then your “second” 25 years of retirement for a total lifespan of 90 years. So how will you fund both retirements?

Here are some key strategies to take into consideration.

First Retirement Funding: You should be funding your first retirement through your paychecks (after-tax income). When people talk about their savings rate, they are referring to amount saved divided by amount paid in your checking account from your employer (or Net Pay on your paycheck stub). 

You should be aiming to invest and save $1 million assuming the 4% withdrawal rate. This means for the next 25 years, you should be withdrawing 4% from your $1 million nest or spending no more than $40,000. Obviously there are some years that are more bullish (market is doing really well like 2017, for example), and you can afford to spend a little more than $45,000. However there are some years that will be bearish (market is doing badly like 2008, for example), and you should refrain from spending anymore than $35,000. Ideally, the average spending of your 25 years will roughly $40,000/year. Also, the $40,000 should be sufficient to take care of 2 people, so you may not need as much saved if you are saving for 1 person.

Assuming you start at age 25, saving for a million sounds daunting and seems almost impossible within 15 years (you’re looking at saving $66,666 per year) . Not many couples can afford to save that much nor earn that much in Net Pay per year. This is where investing comes in. So how much do both of you combined need to save so that you can use the savings to invest?

Average ROI Years  Monthly Savings  Annual Savings
5% 15  $                 3,741.26  $            44,895.12
6% 15  $                 3,438.56  $            41,262.72
7% 15  $                 3,154.94  $            37,859.28
8% 15  $                 2,889.84  $            34,678.08
9% 15  $                 2,642.66  $            31,711.92
10% 15  $                 2,412.71  $            28,952.52

Now this sounds a little more do-able, right? While I do show an average 5% return, that’s not typical. That means for the last 15 years, the world economy has slowed significantly or has had a really really long recession. Most people look at an average of 7% on their overall 15 year investment. This also means that you have a reoccurring schedule to take the savings and invest. Check this post for those who are just starting out in early retirement and learning to invest for it.

Test out other scenarios using this website if you find that maybe you need less than $40,000 a year to live on (saving for 1 person as opposed to 2), which in that case will reduce how you much need to save. For example if you only live on $25,000 a year, then $25K x 25 years = $625,000 in total savings and investments combined.

Second Retirement Funding: Focus on employer’s and your contributions! I’m assuming that you will be employed for the next 15 years while saving for the First Retirement Fund. Most companies offer some sort of 401K matching, pension, profit sharing, and etc… In those 15 years, you need to maximize your contributions. If you’re lucky and your company offers a pension and/or profit sharing, you can reduce the amount of 401K contributions. Also, there are so many opinions on social security and whether or not it will still exist by the time we are eligible for retirement, the best you can do is don’t rely on it.

Now, figure out the percentage that you need to contribute to your 401K. How do you determine your contribution rate to achieve $1 million by 65? Assuming you started contributing at age 25 with a $0 balance, you can see below the percentage need to contribute. Slash the percentage in half if there are 2 of you contributing.

Average ROI Years  Monthly Savings  Annual Savings  50K Salary  60K Salary  75K Salary  90K Salary  100K Salary
5% 65  $                 1,666.67  $            20,000.00 40% 33% 27% 22% 20%
6% 65  $                 1,500.00  $            18,000.00 36% 30% 24% 20% 18%
7% 65  $                 1,333.33  $            16,000.00 32% 27% 21% 18% 16%
8% 65  $                 1,208.33  $            14,500.00 29% 24% 19% 16% 15%
9% 65  $                 1,000.00  $            12,000.00 24% 20% 16% 13% 12%
10% 65  $                     875.00  $            10,500.00 21% 18% 14% 12% 11%

Remember the chart does not include the company matching. So if your company matches up to 4% and you make $75,000 a year, then you only need to contribute 14% for a 7% ROI. If your company also offer pensions and/or profit sharing, then your contributions are even less!

These two strategies need to happen concurrently during those 15 years you are working. While it sounds painful and you aren’t left with money to spend at the end of each month, you are investing in the next 50 years of life to find financial independence. Also, you get used to living frugally and find that after you retire, you can continue this lifestyle that will clarify the important things in life. Good luck!

Why Should You Invest in ETFs?

See the 5 Easy Steps to Start Investing post to learn more about getting started.

ETFs (exchange-traded fund) are baskets of stocks within a type or “theme.” For example, the ETF “IVV” or “iShares Core S&P 500” top 10 holdings are companies such as Apple, Amazon, JP Morgan, and ExxonMobil. The common denomination is that they are all part of the S&P 500. Basically instead of choosing 1 stock, you are choosing 1 basket of stocks that help quickly diversify for you instead of relying on 1 stock at a time and having to figure out which stocks to buy. A fund manager is actively managing the ETF for you.

So today, I wanted to go through an analysis of all the iShares ETF. You can easily download basic data for all 347 ETFs that iShares manages and analyze their portfolio to prove why investing in ETFs work.

Key Findings:

  • 23/347 (6.6%) of ETFs have seen an overall negative return since inception. Only 4 of the ETFs are U.S. based ETFs (REM – iShares Mortgage Real Estate Capped ETF, IYZ – iShares U.S. Telecommunications ETF, IEZ – iShares U.S. Oil Equipment & Services ETF, and ITB – iShares U.S. Home Construction ETF). The remaining 19 have been in global developed or emerging markets.
  • 33/347 (9.5%) of ETFs are less than $10 million in net assets. Altogether they have averaged a 11% return since inception; however, do some research into these before investing.
  • 4/347 (1.2%) of ETFs have had a negative return YTD (1/1/17-11/30/17), which based on the names below, shouldn’t be much of a surprise if you’ve listened to the news every once in a while.
    Ticker Name Net Assets YTD Return (%)
    IYE iShares U.S. Energy ETF 1,137,061,390.16 -1.71
    IYZ iShares U.S. Telecommunications ETF 374,870,149.06 -11.21
    IEZ iShares U.S. Oil Equipment & Services ETF 237,126,197.61 -18.13
    QAT iShares MSCI Qatar Capped ETF 55,402,078.34 -14.41
  • The overall average return YTD (1/1/17-11/30/17) for iShares is about 17.8%. If you had invested in all 347 ETFs with equal amounts (assuming $1000 in each one for a total of $347,000), you account would reflect $408,766 or $61,766 return on investment (and this doesn’t even include the dividends associated with some ETFs). Not bad at all for doing absolutely nothing in 2017.


Again, keep your portfolio diversified and above, it shows where the major growth is happening. For the developed world, health care, industrials, small cap, and technology are at least a 10% annual growth rate. In the emerging markets, stick to large to mid-sized cap for at least a 8% return.

Basically, you can see that while there is risk involved with investing, the overall returns outweighs the negative returns. There are only 23 ETFs or 6.6% of the ETFs have had negative returns since inception, but that doesn’t mean that on a yearly basis they have always had a negative return. In fact, REM (iShares Mortgage Real Estate Capped ETF), who had an overall -2.49% return since inception, had a great 2017 and it brought in 18.51% return YTD (1/1/17-11/30/17) meaning if you invested $1000 in REM starting 1/1/17 and withdrew completely on 11/30/17, you would withdraw $1,185, not see 2.49% less of you $1000.

Obviously this means that you timed the market, but even the long-term shows good outcomes. Going back to REM (iShares Mortgage Real Estate Capped ETF), the inception date was 5/1/2007. Well, we all know what happened to the real estate market in 2008, but if you invested started 2009 instead, it’s been a positive return overall. Also, these are rare events that happen once or twice in a lifetime, which means that it should not discourage you from investing.

In the chart below, you can see pretty much the entire ETF portfolio has positive returns (last 3 ETFs do not have data).

ROI since Inception

I encourage you to download the spreadsheet and see if there is anything interesting that stands out to you. I truly believe 2018 will be another great year especially with the corporate tax cuts that will help companies do even better.

Bottom Line: Do research will only help you make better decisions, but overall you should see some sort of return on your investments even if there was a Great Recession. Make sure you diversify your portfolio and you’ll be fine.

9 Steps to a Better Dressed You!

After spending hours scrolling through Pinterest looking up black, white, gray, and pale pink fashion, I realized my style was “French minimalist.” It’s amazing how everyone looks so elegant and so well put together with some very basic and simple items. So, I finally decided to move forward with it and took the first step in organizing my closet: created 3 piles.

  1. Love it and my style! Keep it! (Pretty much anything in a shade of black, white, gray, or pale pink)
  2. Want it! Maybe! (Expensive clothing that I don’t usually wear or really liked)
  3. Hate it and not my style! Donate it! (All other colors and/or itchy items that I couldn’t stand)

For anything in the “Love it and my style! Keep it!” pile, I bought new white wooden hangers to hang my clothes with (and I threw out all the plastic, ugly hangers). For anything in the “Want it! Maybe!” pile, I boxed it up and put it aside and after 3 months, I donated anything I know I could do without. Lastly, I donated all the items in the 3rd pile.

I remembered about half my apartment was covered in clothes that I didn’t normally wear or were too expensive for me to donate even if I absolutely hated it. Boxing those items really helped me feel better about donating it, because I didn’t miss it nor feel guilty about not wearing it every time I walked into my closet. After making the donation, I felt a billion times better and my closet actually looked gorgeous with the shades of color fading into each other. How beautiful would your closet look if it was something like this???

12-28-2017 12-09-26 PM

I went from who knows how many pieces of clothing to 67 items (not including workout clothes or coats). I absolutely love all 67 items and can easily mix and match pieces without having to check the mirror a billion times or second question myself about what the F I’m wearing!

Want to make your closet look like Pinterest and figure out your style??

  1. Start with Pinterest and pin any fashion items that you gravitate towards. Doesn’t matter what items, if you like or love it, then pin it!
  2. Organize your pins into styles and determine which styles have the most pins (french minimalist, bright colors, neutral colors/tones, luxury clothing…).
  3. For the category with the most pins, spend a few more days searching that exact category and see if you really love the style or if it was just a phase. Repeat steps 1-3 as needed to determine your style.
  4. Go into your closet and pull items that reflects that particular style and use it as the base for the “Love it! Keep it!” pile.
  5. Donate any items that you straight up just hate.
  6. Box up anything that you had a hard time parting with and don’t worry about how much money you originally spent on it. Wait 3 months before going back and then determine if you can part with it. Donate it immediately!
  7. Buy some really nice hangers to showcase how much you care about your new style!
  8. Admire your new closet!
  9. Lastly, this is the absolute hardest to be disciplined on, but only buy new clothes that reflect your new style and invest in basics!12-28-2017 12-20-56 PM

Happy decluttering!

10 Most Effective Income Streams (Passive & Active)

I work a normal 9-5 job and lucky for me, it usually stays 40-45 hours a week. Assuming I sleep 8 hours a day for those 7 days, that’s 56 hours a week, leaving me with 67 hours of leisure or “anything I chose to do” time. Here are some things that I’ve actually done to make money within those 67 hours.

Passive Income (This usually means taking money to make money):

  • Investments and Dividends – This is the obvious one that everyone talks about. No need to get into details. Expected rate of return: 7%
  • Peer-to-Peer Lending – I recently discovered this one. Sites such as Lending Club or Prosper allow you to act as a bank for loans by building a portfolio (diversify) of “notes” you will invest in or you can choose your own notes to invest in. You will receive monthly payments of principle and interest and the site will take a cut (both sites take a 1% cut).  The site takes reasonable action on collection notification when the customer is delinquent on its payments, but do be aware, you are taking a risk and may not be paid back in full for your investment. So if they don’t get paid, you won’t either and the site won’t take the fee. I just started a 3 year experiment with Lending Club that you can check out here. Expected rate of return: 5% – 7%
  • Rental Income – While I don’t invest in buying multiple complexes to rent out, I do have a place of my own that will eventually be rented out. Since I don’t have the experience yet, I won’t comment on this. I’ll eventually have a post on being a landlord in California. Expected rate of return: Unknown. Depends on where you live.

Active Income (This usually means having to actually work for it whether at home or not):

  • Blogging – For the longest time, I didn’t really understand how people were making thousands of dollars by ad affiliates if they didn’t have a strong subscription base. After some research, most people use their blog as a platform to sell products. In most cases, the product is an online course that they have specialized skill in, a tool that was built, or consulting work. Most people have stated that ads make up a small percentage of their blogging income. Expected Income: Unlimited
  • Youtubing – I haven’t tried it, but I’m sure it works hand-in-hand with the blogging.  Expected Income: Unlimited
  • Online Tutoring – I recently started this as well. You literally tutor online. You can work from almost anywhere that has internet. They have a rigorous screening process. How rigorous? Expected Income: At least $50 a week (requires 5 hours commitment per week)Capture
    • Step 1: Application process to ensure you meet the qualifications (live in US or Canada, have a valid SSN/SIN, can work in US or Canada, fluent in English, and be a college sophomore or higher including have a degree from an accredited US or Canada University)
    • Step 2: Decide what you want to teach by passing subject exams. These are not easy exams. Most require at least a 80% pass rate with 50 questions and all exams are multiple choice. Sometimes there isn’t a high enough demand in one subject, so you need to pass 2 subject exams to move onto the next step. They allow you retake the exam after 24 hours if you don’t pass.
    • Step 3: Prove you can tutor in a Mock Session. Download their application and choose an hour session with a qualified Tutor who will pretend they are the student so they can get a feel if you’re able to tutor. Ensure your application works as well as audio and microphone. I believe they allow you to retake the mock session if you don’t pass.
    • Step 4: Go through a Background Check. This is pretty standard for any job.
  • Call Center Rep – I’ve never actually tried this and I can’t really comment on this one, but there are companies out there who outsource their call center to folks like us who can work from home. Expected Income: Roughly $20/hour, but requires usually 10-20+ hours commitment a week)
  • Craigslist Gigs – I know this sounds super shady, but this is how people in California do things. We find our roommates on Craigslist. So if you’re confident, Craigslist’s section on gigs is absolutely amazing and untapped. What can you possibly find on here that is worth your time?
    • Casino Game Dealer – My husband and I have been doing this for over 3 years now. We are pretty much Blackjack Dealer pros and good enough to work in small town casinos, believe it or not! They also train if needed and there’s opportunity to learn other games for higher pay such as craps and roulette. Most clients are corporate events, fundraisers, or birthdays. This has allowed us to travel to venues we would never normally go without having to pay lots of money to enter. For example a few years ago, a client had their holiday party at the Academy of Sciences in San Francisco. The normal entrance fee is $35 per person, but since we worked that evening, we quickly walked through the museum during our breaks and didn’t have to pay the $35. In fact, we were paid that night instead!  Expected Income: Usually $20 – $30/hour with higher pay during the December holiday season
    • Catering Staff – Similar the Casino Dealers, you can be attending events and getting paid to serve food to guests. I haven’t tried it, but I’m sure this requires a lot less training than the Casino Dealers. Expected Income: Usually $20 – $30/hour with higher pay during the December holiday season
    • Bookkeeping – I have seen many small companies/individuals who cannot handle their own bookkeeping and offer to pay people to take care of this from their own home. If you know some basic accounting, this will be easy money for you! Expected Income: Usually $20 – $30/hour

Why commit part of your 67 hours to another stream of income? Uncertainty.

In today’s world, no 9-5 is for certain anymore and you could be laid off or your job could be eliminated at anytime for whatever business reason. While there is 6 months of unemployment checks coming in, let me tell you from past experience…”funemployment” gets boring FAST. There’s only so many jobs you can apply to in one day and only so much TV/sleeping you can possibly do before you’re bored to death. Theses extra streams of income not only bring in additional money during unemployment, but it also keeps you active in the community and in life. It gives you a sense of purpose and motivation after 3 months of fruitless job search. In fact, some people have turned these passions into a full-time job and quit their 9-5 to work on these things that may bring greater joy in their life.

So, if you are interested in learning more about any of extra streams of income above, please leave a comment!