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Monthly Archives: August 2007

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Money & Feng Shui

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Okay, for those you traditional types you might want to run away, now is your opportunity, that said, you’d be better off to read on.

According to Feng Shui, our energy and lives are affected by the physical space that we occupy. This is certainly true when it comes to money. This means that you’ll want to keep your money bugua, or corner of your house or office, clear of clutter and include positive elements to encourage prosperity.

For beginners at feng shui and bagua maps, hold this map when you stand with you back against the wall that contains the main entrance. The prosperity corner will be on the back left of the room.

Our place isn’t filled with lots of do dads to keep the feng shui, but what we do have tries to bring positive energy into our lives.

Just before I left to Ukraine I planted a Jade plant and put it in our money bugua. Jade plants are called “money plants” in Ukraine and I thought we could use something in that corner.

My sister just wrote me letting me know that she could use some prosperity in her life. I let her know about the Jade plant and offered to buy one for her, to share my prosperity, when I come to visit Oregon after Hawaii. She replied to let me know that currently the Jade plant she does have is sick and dying on the front porch. Definitely in need of some help in that area. I’ll keep you posted as she makes progress in this area of her life.

Best wishes,

Miel

It’s Good to be Cash Flow Positive

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Hello All,

I thought I’d take a break from our current postings on Miel’s impending departure to Afghanistan to talk about another aspect of our financial lives.

In addition to having high powered lifestyles, we also own a modest investment property in Washington DC. If you have real estate, you probably know that as an asset class, it can have its ups and downs. Houses and apartments tend to break down, toilets need fixing, sinks leak, neighbors complain…a huge variety of things can happen to your property. All of them usually end up costing you.

Well, this August has brought some good news. About two months ago, we raised the rent (a modest 5%, from $1,125 to $1,185) and it appears to be paying off. Provided that the rest of the month goes well, we’ll be able to book a $93.00 pre-tax profit this month. Ninety three dollars a month isn’t really that exciting, but given our cash flow over the past 6 months, it’s something to feel positive about.

The past six months have been rocky, in March and April, we got nailed with two repair bills ($450 and $125.86) and in July we were savaged by a back tax bill of $792.93. While the back tax bill was entirely my fault, it still stings to cough up the cash to the city. So, to make a long story short, we’re booking a pre-tax profit of $152.90. Some of this will be withheld for taxes, but it feels good to be cash flow positive.

Tax Implications of Living Abroad

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Given my upcoming job in Afghanistan, we are sorting out the tax implications of this. We are still looking into the full details of tax implications, but according to sources thus far it appears that while the first $82k is tax exempt our investment income will be taxes at a higher rate. This may mean that we do some shifting of our portfolio so we don’t have a pay out of investments, currently much of James’ monthly expenses are paid for by stock dividends.

Other sources seem to say that it might make no difference. We are currently checking in with our tax accountant but if you know any further info we’d love to hear from you. It looks like expats are being hit harder than ever one way or another, but it might still be better than here, we’ll keep you posted.

We’ll let you know what our tax gal has to say about the situation. Anyway you hack it, we’ll need to make sure that we aren’t getting hit by the AMT or any other nasty taxes. Given that our effective tax rate was only 9% last year, we’d like to keep it that way!

Cheers,

Miel

P.S. I’ll be doing my best to avoid death and taxes in Afghanistan!

P.P.S. I’m also getting used to blogging in other languages. I’m currently in Ukraine, but am close to the Polish border, with a Polish internet provider. Thus blogger switched from Ukrainian to Polish. I’d have to say that Polish is easier than Ukrainian. Good thing I blog enough to do it on autopilot! Just another part of living abroad I suppose!

A Matter of Perspective

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Hello All,

The New York Times is running an excellent article about wealth in Silicon Valley. Evidently, many wealthy entrepreneurs in that part of California don’t perceive themselves to be rich. This is because if you have three to five million you’re the veritable poor cousin to hedge fund managers and CEO’s of tech companies who are pulling down hundreds of millions a year.

Click here for the debauchery.

Best,

James

Money Makes the World Go Round…

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and in some parts of the world that means Cash Only.

Your average modern American can for nearly all purposes give up the use of cash. Unless you are like my mother, who only recently got her first debit card, you likely use plastic (debit or credit) for most of your purchases. Besides, since when did cash give you those handy frequent flyer miles?

I certainly make an effort to keep some cash on hand for various needs, like splitting the check or going to my favorite kebab place. Most of the time that doesn’t mean for large purchases…

Unless, of course, I’m traveling for work in areas that don’t take visa or american express. Sometimes cold hard cash is the way to go. Back in January I had my highest figure ever on hand, at a whopping $26k in USD in the hard of darkness, aka the Democratic Republic of Congo.

Currently I’m in Ukraine and am having to deal with the joys of cash. Luckily my hotel in Lviv takes a credit card, but I’ll be headed to more remote locals and paying for a week’s worth of training expenses. This includes salaries, hotel, meals, and transportation for eight folks. Thus I now have around $6k to shell out over the next week.

Given that the exchange rate is better in the city (I was out in the village yesterday and they tried to jack me on the exchange rate) I’ve changed over my cash to local currency. These days with the USD as it is, I’m not likely to loose money on the deal. The most annoying part is that the cashier didn’t have any larger bank notes and give me a thousand USD in notes worth two bucks each. Talk about a wad. At least the ATM was more gracious in giving me more manageable chunks of cash.

Walking around with a wad full of cash don’t necessarily make you any more of a target for theft than Carrie Brandshaw when she was held up for her Minalo Blahniks on Sex and The City. If anything, it makes you more cautious, which isn’t a bad thing.

At of this makes me consider how much cash I’ll have to be carrying for the training activities for my new job in Afghanistan. Plastic might work for some things, but I imagine that my practice in carrying large chunks of cash will likely pay off. The big stuff is yet to come.

Wish me luck!

Miel

Retirement Real Estate

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Buying real estate as a retirement investment has been something on my mind lately. In May we visited our family’s cabin near Lake Tahoe. James’ grandfather bought the place back in the early sixties, enjoyed it with his wife until they passed on, and then passed it on to their children. I found this to be an inspiring way to consider making investments, enjoying retirement, and passing a piece of heaven on to your family.

James’ moms have bought a piece of property in Baja California with our Aunt and Uncle to build a place for retirement. They also bought a place in the Puget Sound that they rent out now and could eventually use if they wanted. James’ mom Carol shares a place in Hawaii with James’ brother Adam. Not bad places to hang out in my book.

On the flip side, my grandparent’s bought a place just outside of Yosemite back in the day but didn’t manage to hang on to it for whatever reason. My mom also had a piece of property in Oregon that I grew up on but sold it for another place. Now another family owns the place for their own future retirement and is nice enough to let us visit.

While there are many reasons why people don’t hang on to real estate, it makes me consider what a value it is when you do. Lately I’ve been considering that once you max out your retirement a next good step is to find a piece of property or affordable place that you might be able to hang on to for development later in life.

We all know that the world isn’t getting any bigger and there will only be more and more people. This only leads to more and more valuable real estate. Just think what a great value this combo is. You have the option of a nice place(s) for retirement, an option to sell for retirement expenses, or you can hand it down to your family.

I’m currently in Ukraine in the beautiful city of Lviv. It makes me want to buy a nice little apartment to hang on to. Perhaps it goes back to my time as an exchange student in Finland, where I dreamed of having my own little summer cottage. A girl can dream! We’ll keep you posted on any great finds we come across to buy.

Cheers,

Miel

Book Review: Getting Started – The Financial Guide for a Younger Generation

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This posting takes a look at Brian Jones’ book Getting Started: The Financial Guide For The Younger Generation. The author, Jones is a professional financial planner and partner at a small financial planning and wealth management firm in Fairfax, Virginia. His biography lists a background in public administration and he holds a graduate certificate in financial planning from Florida Tech*.

After having read the book and discussing it at length, we are recommending that our readers AVOID purchasing Getting Started. In fact, it the worst book on personal finance that we have read to date. While writing a full length book is always a difficult endeavor, and we applaud Mr. Jones’ efforts, the book falls short in several regards.

1) Poor Quality Advice: The first chapter of Getting Started is devoted to a discussion of cash flow. It focuses primarily on lifestyle modifications (e.g. cooking at home, using coupons) as a means of improving one’s cash flow. This ignores many other reliable methods of increasing one’s cash flow such as obtaining salary raises or purchasing income producing stocks. This lack of a frank discussion of other options suggests that Jones’ advice provides readers with a false sense of their financial choices.

2) Content and Tone: When reading Getting Started, the reader often comes away with a sense that one is being lectured at by a pedantic schoolmaster. Many of the examples of the book are drawn on the authors own personal experiences, this when compounded with tone of work means the reader must actively make an effort to grasp the content, a situation not unlike being trapped talking to someone you don’t like at a cocktail party.

The book additionally relies on the heavy use of bolded quotes and inserted pictures reminiscent of the 1970s. While the pictures and quotes are undoubtedly intended to increase the accessibility of the text, they leave the reader with the impression that they are filler for the book’s poor quality content.

3) Poor Quality Writing: Finally, the book suffers from poor quality writing. Many of Jones’ paragraphs lack a basic structure such as a topic, introductory and concluding sentences. In many part of the text the author tends to ramble, or move incoherently from topic to topic.

We again, we admire Jones’ enthusiasm for personal finance, but we DO NOT recommend reading Getting Started. The book’s poor quality advice, pedantic tone and bad writing make for an uninformative and unpleasant read. Instead, we recommend that you pick up a copy of Personal Finance For Dummies or Making the Most Of Your Money. Both of these latter books provide sound advice by seasoned professionals.

Best,

James&Miel

*The Florida Tech graduate certification in financial planning is now defunct.

Need v. Want

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From my perspective a lot of wasteful spending of money comes down to need versus want. This is particularly the case with clothing purchases. Surely this screams self sacrifice to many of you, but consider how freeing it is to make a conscience choice about whether your purchase is a need or a want. Chances are, a great deal of expenses would fall into the “want” category. Here are couple of ideas of ways to think about the issue.

In a consumer driven world consider what good adopting the less is more philosophy would be on a large scale. You can start at home with this fun reminder glass, but you might only want it and not need it….

While this can be used for just about everything in our lives, I’ve used the example of clothes shopping to illustrate this point. Consider whether it is that you need something or want something. Many people make purchases that we don’t necessarily need. Here are some questions to ask yourself:

  • Think about your actual needs before you head out to go shopping, not just shopping for shopping’s sake (if you like shopping for entertainment then leave your money at home)
  • Give yourself a budget and stick to it
  • Don’t buy something just because it is on sale
  • Make sure you look and feel good in the item
  • If you hesitate about whether you need this or not, you probably don’t
  • Make sure that it works with items you already have – mix and match is a great way to build a wardrobe
  • Consider how much you will wear this – is it worth it?
  • Consider how you will feel when you go through your closet to de-clutter, will this be an item you won’t really need but hold on to because you spent the money on it?
  • If you go shopping with friends, make sure that it is your style and not your friends
  • Don’t buy under the pressure of friends – sometimes shopping alone is better for your wallet
  • De-clutter – consider that you might actually have too many clothes rather than not enough

My inspiration for writing this was a friend visiting my closet the other day and wondering in awe at how I could be such a minimalist. When it comes down to it, it isn’t as if I have no clothing. It is more a matter of being very strategic with what I buy. I guess it comes in part from having that style in packing.

From my perspective it is much more freeing not to have excess clothing staring at you out of the closet. Chances are that it won’t make it easier to get dressed in the morning. While this approach might seem like a sacrifice to some who like their shopping, it might even feel freeing to lighten your load. According to the principles of feng shui, just de-cluttering your current closet will make room for the new.

Just think of how much money you could save by shaving off a couple of hundred dollars off your shopping bill each year. Every little bit helps.

Cheers!

Miel

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