Where I Don’t Sweat The Small Stuff

Before we entered into the 1 percent territory, we would closely watch our spending.  We would be careful on how much we spent on groceries, we would sacrifice our comfort to reduce utility bills, we would eat in as much as we could, and would not travel much.  I even got to the point where I would think twice before I ordered a drink at dinner or  I would order chicken when I really wanted steak.  Over time, this level of scrutiny took away from our enjoyment of life.  Now, I’m not chastising anyone who currently does this.  Everyone is in a different situation and it may make sense for someone (particularly someone in debt) to track their spending.

When we first got married, we had decent incomes, with growth prospects.  Nowadays, we find it far more prudent to enjoy life and to focus a lot of that money-saving energy to growing our incomes by performing better at work.  Don’t get me wrong, we still track our spending, but we don’t splurge.  We own 2 smartphones that cost a penny each, we don’t own an iPad or any tablet, we own 1 flat screen television, and we haven’t flown on a plane as a family in years.  We don’t live extravagant lives by any stretch of the imagination, but we stopped tracking our utility bills, grocery bills, gas bills, etc because they’re necessities and because we don’t splurge on these items.

The Small Stuff List

  1. Groceries – we buy what we need and consume what we buy with minimal waste (at least we try to).  I don’t bother with worrying about the grocery bill
  2. Utilities – we installed a programmable thermostat, but won’t sacrifice our family’s comfort to save a few bucks.  We manage energy as best as we can.
  3. Gas – we have to travel to work with no reasonable public transportation option.  I haven’t look at gas prices in years since there is absolutely nothing I can do about it.
  4. Dining out – we don’t dine out often, but like to enjoy taking the family out to each every now and then.  We probably dine out 2 times a month and order-in 5-6 times a month
  5. Entertainment – we haven’t seen a movie in years so the most we do for entertainment is pay for our cable bill plus a few $1.00 movies from Redbox.  We also go on small trips to Sesame Place and other kid friendly areas, but since we don’t do it very often, it’s not worth tracking
  6. Grooming – we need stuff to look presentable.  Haircuts mostly, but also make-up (for the wife of course).
  7. Medical – our children need to see their pediatrician as well as specialists.  There is no way we would sacrifice medical care for ourselves or our children so we don’t track this spend.
  8. Taxes – what can I say?  It is what it is.  We take appropriate steps to reduce our tax liability, but when bill time comes, we pay it and forget it.

Everything else including cell phone bills, cable TV, insurance, mortgage, etc. are all fixed costs so they’re budgeted with no surprises.  Everyone’s situation is different, but if you’re making a decent income and you’re not splurging on the small stuff, then pay the bills and forget it about it.

How do you track your spending?

Identify Your Talents Early

I have an acquaintance who is my age (almost 35) and has just recently finished medical school.  He is currently in his residency program and will not finish until 2013 when he will be close to 36 years old.  Because he didn’t identify his talents early, he spent 8 years attaining an undergraduate college degree because he switched majors several times.  After college he worked odd jobs, but then decided to go to medical school.  He didn’t score high enough on the MCAT test to go to a medical school in the states, so he went to a medical school in the Caribbean.  He came back to the states, but lost a few years taking the step 2 exam.  I applaud him for ultimately choosing a good career, but the opportunity cost is something that he will never recoup.

What I’m trying to illustrate with the story above is what happens when you are not focused and not future-looking at an early age.  I often hear many stories of parents who tell their children that they can be anything that they want to be.  While I agree with this philosophy to a degree, many people end up unhappy because they cannot make ends meet while pursuing their dream of becoming a rock star.  We then often wonder why people who are not good at math become accountants, people who are not exceptional at basketball pursue the NBA, and people who can’t sing audition for American Idol.   These children are the ones who spend more than 4 years to obtain a 4-year degree, supported by parents for years after college, jump from job to job, and seem to go through life aimlessly.

As humans, we are not good at assessing ourselves.  If we were, then we would fail at nothing, but we fail…we all fail from time to time.  The key is to not underestimate or overestimate our abilities and talents.  I fail constantly and am not perfect, but I try not to think of myself more highly than I really am.  I am an optimist, but realistic in my optimism.

So, how do we get better at assessing our talents?

  1. The first step is to get an objective view your yourself by seeking council from a family member, friend, or mentor.  Ask them to be brutally honest about your key talents and your areas of improvement.
  2. Write down what your good at and what you need to improve.  For the items that you’re good at, try to match them up with careers that will maximize your strengths.  Share this list with a family member or friend for an objective review.
  3. Assess your personal situation.  Are you willing to move to another city away from family?  Are you willing to move to another country?  Do you want to or plan to get married in the near future?  Do you want to have kids?  Yes, nothing in life is certain, but knowing what you want out of life will help you plan better for it.
  4. Create a mission statement.  What do you want to accomplish in life personally, professionally, spiritually, etc?  Create a road map on how you plan on getting there.

Life is too short to waste.  I try to live each day like its my last and ask if the world is a better place at the end of the day because of my contribution.  Of course its hard to say “yes” everyday, but it is a good barometer on how I’m achieving my long-term goals and helps me stay focused on this journey.

24 Ways to Be A 1 Percenter

Many envision the 1 percent of income earners in America as someone who either inherited the money or is on the top floor at an investment bank on Wall Street, but there are several ways to become a 1 percenter.  Some ways are quick, and some take decades.  Some are based on luck, and some take hard-work and dedication.   Add to the list in the comments!

  1. Start a business
  2. Sell your business (think Instagram or OMGPop)
  3. Work several jobs
  4. Go to medical school and specialize
  5. Climb the corporate ladder
  6. Win the lottery
  7. Gamble
  8. Work at Wall Street
  9. Invest in real estate
  10. Go to Hollywood and become a famous actor/actress
  11. Be a famous musician
  12. Play on a professional sports team
  13. Work for the government
  14. Join the c-suite (CEO, CFO, CIO, COO)
  15. Inherit a fortune
  16. Invest in the next Apple Inc.
  17. Find a treasure at a garage sale
  18. Marry a rich spouse
  19. Divorce a rich spouse
  20. Sue someone rich or a corporation
  21. Catch a valuable baseball then sell it
  22. Register a domain name in high demand and sell it
  23. Live on an oil field
  24. Discover lots of gold

Feel free to add to the list!

10 Examples of Wastes of Money

Before I get any comments or e-mails regarding the list below, what I have listed  below reflects my own personal opinions.  I truly believe that what one person considers a waste of money, another person may truly see the value in the purchase.  Case in point, our next car purchase will be used, but it will be a luxury brand.  Call me a snob, but it’s just something that I value more than someone else.

However, below is a list of things I would not purchase at this time nor see the value in any of the products relative to the  price of each item.

  1. LASIK Eye Surgery – I have been using contact lenses for the past 17 years without issue.  Most recently, I have switched to contact lenses that are approved for continuous wear for 30 days.  You can even sleep in them!  So essentially, I only touch my eyes 12 times a year to replace old lenses.  To pay $2,500 for the luxury of not touching my eyes once a month is just not worth it to me.
  2. LED TV – I believe the resolution on these TVs are also available on LCD models so the only difference I see is the thickness (or lack thereof) of the TV.  I just don’t see any value in saving an inch or 2 in thickness versus a standard LCD TV.  Until they phase out LCDs, I’ll continue to purchase them.
  3. Premium Cable – We just don’t watch much TV.  We watch enough shows from basic cable, that I don’t see the value in watching even more TV
  4. New Cars – Let someone else pay for the first few years of depreciation, which is often accelerated.  We’ve made the mistake of buying new cars and will never do it again.  The value extracted from used cars far outweigh the price difference in buying a new model.
  5. Newest Gadget – it took me a few years to buy a smartphone and a few more years to  buy a tablet.  I just don’t have any desire for the newest gadget
  6. Organic Produce – the latest scientific data shows that there is no real benefit to organic produce or anything organic for that matter.  I’m not sure I can justify paying more for a head of lettuce just because it wasn’t sprayed with a pesticide that easily washes off.
  7. Warehouse Club memberships – warehouse clubs (Sams Club, BJ’s, Costco, etc) offer bulk items at competitively low prices.  However, there are some items at these stores that are more expensive than buying from a regular grocery store.  Additionally, if you have a small family, you’d have to purchase a lot of items just to recoup the savings from the annual fee.  I just don’t see the need at this point for our family of four.
  8. Life Insurance on children – Unless you rely on your children for income, there is no need to pay premiums for life insurance on your children…period.  Since insurance companies are in the business of calculating risk, the risk of a child dying is highly unlikely that these types of policies are a cash cow for insurance companies.  Skip the insurance if offered
  9. Designer clothes for babies – this is self-explanatory.  Unless you have cash to burn, babies and toddlers grow so fast that they end up wearing clothes just a handful of times before they grow out of it.  I don’t see any value.
  10. Extended Warranties – products were better in the 90’s than they were in the 80’s.  Products are better now than they were 10 years ago.  Additionally, most products come with 1 year warranties.  Also, after 1 year the cost of the most up-to-date, current model is probably the same price as the old one was a year ago.
I know there are probably more out there, but this is what I put together from the top of my head.  What do you think?  Do you see any value in the above items that I’m missing?  If so, please comment below and let me know!

A One Percenter’s 7 Best Financial Decisions

Just the other day, I posted my 7 biggest financial mistakes.  These errors in judgement have cost me around $100,000 over the past 14 years or so.  My attitude towards these mistakes are that I can’t change the past.  Sure, it hurts to think about them from time to time, but I am optimistic about the future.  I tend to focus on the future because I can control what happens to me, to a certain degree.

However, to balance the costly mistakes over the past several years, I wanted to highlight my better financial decisions that I believe outweighed the costly mistakes and have allowed me to be in a decent financial position for the long-run.  So, here are my best financial decisions:

  1. Choosing a College Major:  I knew early on in high school that my talents were in math and science.  I’m only 5’9″ so I was never going to be an NBA star.  I had no interest in the arts, literature, history, or political science at the time.  I was lucky enough to have parents who stressed the importance of an education and the importance of choosing a major that will be in high demand.  I eventually chose to major in Pharmacy.
  2. Knowing future career potential:  There are several options as a pharmacist in terms of work setting.  Broadly speaking, one could work in the retail setting, the hospital setting, or the pharmaceutical industry.  I never felt a desire to work in the retail or hospital setting so I’m glad I not only chose a path with a high career potential, but also chose a setting that I love…corporate America.  I feel that if you apply yourself, network, and make your goals known, the possibilities are endless.  This has led me to significant promotions and job changes.
  3. A career in high demand:  The demand for jobs in each of the settings for a pharmacist vary widely.  It was once believed that the demand for pharmacists will remain high due to low college enrollment coupled with an aging society.  However, over the past decade, more and more pharmacy schools opened and enrolled a significant number of students.  As a result, the demand for pharmacists in the retail setting has diminished.  The same goes for the pharmaceutical industry.  The industry is going to very tough times and as a result are laying off 10’s of thousands of workers.  However, I have continued to expand my skillset, so that I can continue to pursue industry positions in several different types of roles.
  4. Setting aside retirement at an early age:  As soon as I got my first job, I opened up a Roth IRA and began contributing to my 401k.  I always knew the power of compound interest and knew that if I can shovel as much money as I can at an early age, it would pay off in the long-run.
  5. Multiple Income Streams:  Though I only have 1 job currently, I invested in 2 real estate properties over the past 6 years in the hopes that these would generate income once the properties are paid for.  Although I may gripe about the rental properties, they have proven to be a valuable asset in my portfolio.  I also have a signifant investment portfolio that I can shift to dividend paying stocks if I ever needed the cash as another income stream.
  6. Continue to invest in up AND down markets:  I’ve had too many friend and family reommend pulling my money out of the market and parking it in money market accounts.  I’m thankful I didn’t heed their advice because I would have missed out on significant gains since the market bottomed out in late 2008.  Additionally, I knew people who were too scared to invest in the market during that period and beyond so they stayed on the sidelines missing the opportunity to buy investments at rock-bottom prices.  I take a slow and steady approach so I continued my 401k and IRA contributions.
  7. Invest in age appropriate investments:  I was never scared of the market and could always handle market fluctuations.  Thus, I have always had my investments in very aggressive accounts.  I am still invested in aggressive accounts, but will continue to shift this allocation as I age and my situation changes.  Because of these early aggressive investments, I have seen significant gains over the past several years.

There are probably a few more good financial decisions that I’ve made, such as buying a home close to family which saves on day care costs, but I decided not to include these because I know that not everyone has that luxury.  The ones I described above are decisions that I believe everyone can make with careful planning and personal relfection.  I also did not include things I did not do, such as taking on more debt than I can afford, because the list of things I did not do would be exhaustive.  This could include things like, I did not become a drug addict, or I did not gamble.  Anyway, what about you?  What decisions have you made that were financially rewarding?

What College Degrees Will Increase Your Chance of Reaching the 1 Percent?

The ingredients for wealth are not easy to distinguish. It turns out that education is a good predictor of wealth. Gallup conducted an analysis of their survey demographics and found that 1 in 4 from the top 1% have a four-year degree and 1 in 2 have a graduate degree. Obviously, education can increase your chances of reaching the 1%, but when I see data like this I’m always thinking about philosophy majors.

Before deciding that business was the right choice for me, I spent a little time as a philosophy major. It was a fun degree because you never needed to be right about anything. You just needed a better argument. While there is use for this talent in the real world, any employer is going to want results over theories, which explains why the primary employment outlet for a philosophy graduate is very limited. For the most part, you land a job in academia or write a book.

Realizing this future employment problem as a sophomore, I switched majors and went into economics. Was this a smart move? Are my friends who stuck around in philosophy just as likely to reach the top 1% as I am with my economics undergrad and an MBA?

If you’ve ever wondered which four-year degrees increase your odds of making it to the top 1%, I’ve got the top five below and philosophy is not on it.

Health Care

If you are in medicine and want to reach the highest wage bracket in America, you’ve picked a good degree. Nearly 1 in 8 graduates with a health care degree count themselves among the top wage earners. Apparently, doctors are still getting rich these days and that’s a good thing if you ask me. Would you want to go into surgery with a low-paid doctor whose poor compensation makes him unhappy in his work?


I did mention that I was here to brag didn’t I? Those with economics degrees fall in the number two spot with 1 in 12 economists earning a top 1% wage. I suppose understanding how to maximize efficiency and income comes handy for building wealth. Plus, the world needs economists to tell them 6 months after a recession that a recession did in fact officially occur.

Biochemical Studies

I’m glad to see that people are still paying lots of money to stop aging and end cancer. 1 in 14 biochemical engineers are numbered in the top 1%. I don’t suppose this slot requires much explanation, since we tend to expect smart people to make a lot of money.


I don’t mean to offend the many zoologists reading this blog, but I didn’t expect to find your major ranking number four with 1 in 15 zoologists earning the big salary. I’m hoping one of you can fill me in on your secret. Could it be that it is not a popular study, but there is high demand? Generally, you make a lot of money when you are providing your expertise to a human. To my knowledge, animals still lack the ability to compensate for services.


Who says you have to marry chemistry and biology to get into the top 1%? 1 in 15 biologists have made it without all the mixing of various fluids in beakers. Wait, don’t you still need chemistry for a biology degree?

Surprisingly, philosophy did beat out pharmacists and accountants towards the bottom of the list and that’s worth taking note. While demand for some majors increase opportunity to become wealthy, no major is completely unrepresented. Ultimately everyone, even philosophy majors, have a shot at earning higher wages.

How about you? Is your major near the top?

7 Financial Tips For Young Adults

Oh, the things I would change if I could be 18 years old all over again!  The first thing that comes to mind is that I would’ve not worn colored jeans and flannel, but financially speaking, I would’ve done things a bit differently.  Over the years, I have made some good decisions, but I have also made several bad ones. This list is geared for people in their late teen’s or early 20’s.  It will not apply to folks older than the 30’s.

  1. Choose a career that is in high demand and that you “love” – I put love into quotations because realistically its difficult to find a job that you will love AND that pays well.  That’s not to say there aren’t jobs that you will love, but is that job in high demand?  Will you have a job when you graduate?  Is that job at risk of being obsolete in 10 years?  My wife and I are both in the healthcare field which is currently in high demand and has one of the highest growth potentials of any other field.
  2. Assess whether college is right for you – if you are an entrepreneur, maybe college may not be a good investment of your time and money.  If you have good ideas, you may be able to provide something of value and build it without going to college (think Mark Zuckerberg, Bill Gates, Michael Dell, etc.).
  3. Continue learning – turn off the television and pick up a book (or better yet, subscribe to this blog :)).  I failed at this in my teens and through my 20’s.  I never really read anything and preferred MTV over CNN.  Over the last 3-4 years, I’ve made a stronger attempt at reading more and learning more about things that interest me.
  4. Save aggressively for retirement – When I had a part-time job in college, I put money away in a Roth IRA.  When I got my first full-time job out of college, I invested money in every retirement vehicle to the maximum (401ks & Roth IRAs).  Investing early is one of the most important financial decisions you will make.  This tip alone has out performed any other tip on our road to the 1 percent.
  5. Invest aggressively – invest your money aggressively, then don’t follow the stock market.  If you do, you will feel down when the market is down, and you will feel a false sense of security when the market is high.  To avoid this, balance your accounts annually, but don’t track the market day-to-day.  From a retirement standpoint, how the market looks today is nothing what it will look like 45 years from now when you’re 65 years old.
  6. Live within your means – Retirement, rent, food, basic clothes, transportation, and health insurance should be a priority.  If you have money left over, then you can think about a cell phone, internet, cable, gym membership, etc.
  7. Work hard, play hard – We are all busy and can get caught up with all the responsibilities of life.  This is a reminder to enjoy the fruits of your labor.  If you follow the tips above, you should take some time to relax.  Take a mini vacation.  Spend some time with family.  Invite some friends over for dinner.  If you don’t, then everything you’re doing is pretty meaningless.

Did I miss anything?  Do you have any additional advice for our younger readers?

My Love/Hate Relationship with Real Estate Investing

My friend over at The Dollar Disciple recently posted a 2-part series of articles on the reasons why he loves real estate.  I agree with all of his points, but I think its also important to balance the positive attributes of real estate with some of the negative experiences that I’ve dealt with. In a previous post, I highlighted some practical tips to consider for someone who is looking to purchase rental real estate.  This post will highlight some of the negative experiences.

  • If your MAGI is greater than $150,0o0, you can’t deduct rental losses:  Being a 1 percenter, I experienced this first hand.  I bought my first and second rentals when I earned significantly less income.  The IRS states that, if you actively participate in a rental activity you can deduct up to $25,000 of the rental loss. To actively participate means that you own at least 10% of the property and you make major management decisions, such as approving new tenants, setting rental terms, approving improvements, and so forth. (No, you don’t have to mow the lawn or answer middle-of-the-night phone calls from tenants about a backed-up toilet.) But this exception phases out as your income rises. If you have modified adjusted gross income over $100,000, the loss you can deduct decreases by $0.50 for every dollar over $100,000. The maximum loss is completely phased out when your modified adjusted gross income reaches $150,000.
  • If you are not using a property manager, you are always on call:  Most of us have enough to worry about with our primary homes, let alone a second or third property.  You can forget about turning your cell phone off, or feeling 100% at ease on vacation.  If your tenant calls with an issue or emergency, you are obligated to resolve it.
  • Evictions:  In this day and age, even people with good credit will lose jobs and subsequently, unable to pay rent.  I dealt with this firsthand.  The hardest part is going to the apartment the day of the eviction with a police officer and a locksmith.  One of the hardest things I had to do.
  • Loss of personal security & privacy:  Even though I use a PO Box and a Google Voice phone number, if someone wants to find you, they can.  Though it doesn’t happen often, if you evict someone, you are their enemy from their perspective.  If they want to harm you or your family, they can find you.
  • Repairs:  Though landlords budget for expenses and repairs, no one can anticipate a major repair.  A water heater bursting, furnace needed repairs, a new roof, toilet leaking are all repairs that have to be addressed.  These types of repairs can be quite expensive.
  • Knowledge of local and federal laws:  There are more laws and regulations being created every day – and a huge volume of them are associated with the private rented sector. Landlords not only need to be aware of the Housing Acts, the Landlord and Tenant Acts and the Rent Acts; they must also be familiar with and observe all the frequently changing regulations for health and safety, gas safety, fire safety, landlord licensing and local authority enforced minimum standards.
  • Vacancy:  Sooner or later your tenant will leave.  Whether you hire a realtor, or do it yourself, everyday that the property is vacant is another day that YOU have to pay for a second mortgage.  We are lucky enough to be in the 1% of income earners in America and living below our means so we could absorb it, but it may be difficult for most Americans.

So there you have it…the downside of being a landlord.  I still think there is value in it, but its a personal decision and depends on your risk tolerance.  Everyone will take the pros and the cons and come up with a different benefit/risk ratio.  For me, I would have to take drastic measures to mitigate the risks I listed before I pursue another rental property.