The State of the Money

A collection of statistics that paint the picture of personal financial situations in the US.

Last updated: 9 Feb 2020


44% of Americans don’t have cash to cover a $400 emergency.
43% of student loan borrowers are not making payments.
38% of US households have credit card debt.
33% of American adults have $0 saved for retirement.

[American Psychological Association]

“For the majority of Americans (64 percent), money is a somewhat or very significant source of stress, but especially for parents and younger adults (77 percent of parents, 75 percent of millennials [18 to 35 years old] and 76 percent of Gen Xers [36 to 49 years old]).”

[Visual Capitalist]

The U.S. ranks 14th globally in terms of financial literacy.
With a 57% literacy, the U.S. beats Botswana (52%) but gets edged out by countries like Germany (66%) or Canada (68%).
Only 16.4% of U.S. students are required to take a personal finance class in schools.
76% of millennials lack basic financial knowledge.
Between 2009-2015, Americans got worse at answering five key personal finance questions posed by FINRA – a major U.S. financial regulator.

Four of five adults say they were never given the opportunity to learn about personal finance.
70% of millennials are stressed and anxious about saving for retirement.
22% of millennials feel overwhelmed about their finances.
13% of millennials feel scare.

60% of Americans say they know someday they will need to be more financially secure – they just don’t know how to get there. This number increases to 70% for those between the ages of 18-39 years old.


Hey! If this is your first time here and you like this content, subscribe so you can get updates. I put a lot of effort into these articles, and I would appreciate it if you shared this with someone that could benefit. My goal is to make financial concepts simple so that you have the frameworks and fundamentals you need to make proper decisions.

I just came across something absurd.

Take a look at this Fund from JP Morgan:

It’s an “Equity Index Fund.” Because it’s an index fund, there are certain qualities that you would attribute to this fund. Just based on the name.

Now, JP Morgan is a very well known company. I know many people would love to have JP Morgan on their resume. When it comes to financial products and services, I sure would look at a large, well-established company like JP Morgan as a trustworthy establishment.

The trusted name in Finance

As of right now, JP Morgan has a market cap of $435 billion. That’s the amount of value the world says JP Morgan is providing.

That’s why I was shocked to come across this fund.

Let’s check it out more.


What is the fund designed to do?

Ok, awesome. I know the S&P 500. Seems like this would be a great fund for a long-term investment in the market. People keep saying I should invest in the market to save for retirement.

Wow! A group of people with a combined 78 years of industry experience managing this fund. That’s incredible. I can assure that my money is in good hands.

All right. Pretty good ratings from Morningstar. Morningstar is another well-known, renowned name in the financial industry, so their ratings give me confidence that this is a great S&P 500 fund. Well, it’s not a 5-Star fund – it is tracking the S&P 500 index after all, not exactly a high-growth fund. Still, a consistent 3 stars is pretty darn good.

I’ve never heard of Lipper before, and I’m not sure what these mean. Is “Rank 103/115” good? Or is that one of the worst? Well, the higher the percentage, the better it is, usually. I can’t imagine two 23-year financial industry pros are managing a fund that’s not amazing.

So, everything looks pretty good. Plus, the guy who came by to tell me about this fund was, oh my, he was just such a great guy. So friendly. I think I’ll invest my money into this fund.

What could go wrong?

It’s a lemon

A lemon? How could that be?

The reviews, experts, and ratings would make anyone feel good about this fund. Besides, $5.28 billion is currently invested in this fund.

I don’t know the full story behind this fund, but to me, I would imagine that the people who own the $5.28 billion in this fund would not have chosen to place their money in it if they knew what you’re about to learn.

You know, I was thinking that the fund managers and salespeople for this fund may just be ignorant and have blind belief that JP Morgan is out to do what’s best for their clients, but after writing it out, it didn’t make any sense. Do they knowingly withhold information and education that, if presented, would cause them to lose nearly $60 million in yearly revenue?

Would you withhold information to keep $60 million?

The fund is a copy of the S&P 500

Ok, well we already knew that. The description said so very clearly. Let’s not spend too much time on this.

Take a quick look at the top ten holdings for each

OEICX Top Ten Holdings

S&P 500 Top Ten Holdings

Now take a look at the sector breakdown:

JP Morgan was nice enough to provide the stats for the index right there. Thanks!

Wow, the value for OEICX must be in the zero-point-something percentage differences there. What else do brains with 78 years of collective finance experience do all day?

It doesn’t even match the S&P 500

What? Since it’s literally an “S&P 500 Fund,” it would have to perform at least as well as the index itself, right?

Check it yourself:

You won’t find this chart in the sales brochure

Just so we know that the portfolio visualizer tool I’m using doesn’t have weird data, I checked the performance on JP Morgan’s page for the fund for the same time period:

How the heck does the JP Morgan fund perform so badly? How does it net you over $100,000 LESS than the index itself?

It’s the fee. It’s not hidden. It’s not tricky to find. It’s there in plain sight on the fund’s webpage.

Take the CAGR of the SP500 (7.53%), subtract the fee, you get pretty close to the CAGR of OEICX. (6.36%).

There’s no trickery here.

Frankly, it’s not exactly a lemon because 6.36% CAGR is still pretty good.

But my question is: who would put their money into this S&P 500 fund that severely lags the the S&P 500 when they can just invest in the S&P 500 itself?

The fund we used in the performance comparison (SPY) has an expense ratio of 0.09%, and that’s not even the least expensive one you can find.

What gives?

Why does OEICX exist?

Why have people invested $5.28 billion in it?

Why does JP Morgan exist?

What do you think?

Not just JP Morgan

Of course not. I just happened to pick on JP Morgan here because I came across their fund. Don’t you think that other big financial institutions, ones that we trust with our money, are doing the same thing?

Look, it’s not even difficult to see that OEICX severely underperforms. You have all the information you need to make that judgement on their own website. If we are falling for such an obvious scam, what else are we falling for that’s maybe not so obvious?

Better question: How are they able to get away with stuff like that?

I’ll offer two plausible reasons, but I really want you to think on this more.


OEICX is an S&P 500 fund offered through many workplace 401(k) plans. When an employee sets up his 401(k) at work and chooses which fund to put his money in, he gets surface-level information about the fund. He sees that it’s an “Equity Index Fund” that is “designed to track the price and dividend performance of the S&P 500.” He’s heard about the S&P 500 and decides that it’s the fund he wants.

It could be the only S&P 500 fund offered in his plan because 401(k) plans typically have a limited number of options. Without a second choice that looks similar, there is less reason for him to dig deeper to seek more information.


A client has hired a JP Morgan Financial Advisor to help manage her portfolio and choose the right investments. The advisor suggests that she have a large chunk of her portfolio in stocks, and that a great way to do that is through investing in the S&P 500. She’s presented a colorful JP Morgan brochure and agrees that OEICX, a fund “designed to track the price and dividend performance of the S&P 500,” is a good choice. Of course, she is given a fund prospectus, but hey, she hired a financial advisor so she wouldn’t have to spend time reading all that jargon. Besides, she trusts him.

Both of these scenarios happen all the time. Yet, at the end of the day, what do people know? Long-term investors in OEICX still made money, albeit much less that they could have made if the knew what to look for.

It takes about one minute – often less – to find the fee for any fund.

It takes less than ten minutes to compare the historical performance of any two funds.

Is eleven minutes of anyone’s time worth over $100,000?


But you have to know to do it.

Should people be mad?

I want to add here that JP Morgan clients who invest in OEICX may be very happy paying the extra fee because they get other benefits, like quarterly steak dinners, invitations to exclusive networking events, and a dedicated person to call that’s always on top of their money. It may be worth it. But I can’t imagine that you couldn’t purchase low-cost ETFs from other companies on their platform.

There’s nothing intrinsically bad going on here, because the client has always had all relevant information available to them. While the implication may be that with OEICX you’ll get S&P 500-similar returns, it’s not JP Morgan’s responsibility to do the client’s due diligence. They have quotas to fill.

But let me ask you this:

If everybody knew what you now know about OEICX, what would happen?

Would OEICX gain any new investors?

Would current investors in OEICX move their money to a lower-cost fund?

Given that people want their investments to perform as well as possible, the ideal theoretical logical end result of this information would be:

  1. The near immediate removal of all $5.28 billion of fund assets from OEICX.
  2. The fund managers would then be asked to appear onto MSNBC to explain why the fund collapsed in such a short amount of time.
  3. If they didn’t get suicided first, they would reveal to the world that OEICX is simply a copy of the S&P 500 that performs much worse because JP Morgan charges a hefty fee.
  4. JP Morgan would then have a heck of a time trying to retain their customers and rebuild trust in their name.
  5. Every other financial institution pulling the same shtick would be scrambling to cover their tracks before all of their customers start investing how much they’re paying in fees. But for most, it will not be possible because the information is too easy to find. Besides, you can’t legally hide the expense ratio from investors.

We could call it the Feegate scandal.

The landscape of the financial industry would change.

Is this going to happen?

You could share this post to everybody that you know, and ask them to share it to everyone that they know (while subscribing to RF of course), so on and so forth, and eventually all OEICX investors would know what we know.

What would they do?

Would they pull their money?

Reviewing the scenarios

Both of these scenarios assume that every single person, whether invested in OEICX or not, knows what you now know.

Would OEICX gain any new investors?


If you disagree with me here, please explain why:

Would current investors in OEICX move their money to a lower cost fund?

You would think so. But most people would not.

Why’s that?

Let’s say that an investor invested $100,000 in OEICX way back in 1991 and left it there. his investment would have grown to $1.09 million. That’s nearly a $1 million gain.

Today, that investor reads this post realizes for the very first time that his money could have grown to $1.75 million had he invested in the 0.09%-fee fund. He’s angry, and wish he knew this information when he first invested.

His first thought tells him to pull out of OEICX completely and move his money to a lower-cost fund. But then he remembers Capital Gains Tax. His $1 million gain would be taxed by the IRS.

If he moves all of his money at once, he’d have a tax bill of $200,000 (20% of $1 million).

If he moves it over a couple years, he’d have a tax bill of $150,000 (15% of $1 million).

The amount that he loses to taxes would not be made up by the increased performance of the new investment in his lifetime.

So he chooses to leave his money in OEICX. It’s done well for him, and he was happy with it before he found out about the outrageous fee. No point in crying over spilt milk.

Any new money, however, will but put in another fund. That’s for damn sure.


(1) It seems that the reason low-performance high-cost funds like OEICX have so much money invested in them is because at some point, an investor trusted someone or something enough to not do the most basic level of research.

(2) The someone or something advertising this is either blissfully ignorant or a half-truth teller. Could you sell OEICX?

(3) The tax code essentially controls your money through negative incentives, and offers no do-overs. Whether you invest in something that makes you $10 or $1 million or $1.65 million, you’re locked in. And when you realize a gain, the IRS demands payment.

It really begs the questions:

  • For whose benefit is the tax law written?
  • What does a lobbyist do?
  • Does JP Morgan employ lobbyists?
  • What does “lock-in” mean?
  • Can your money be held hostage?
  • When were capital gains (income) taxes introduced?
  • Why should you be penalized for moving your money from one fund to another (similar) fund?

What’s the solution?

You might be a bit angry at the system, and, after reading this, you may have less trust in big financial institutions like JP Morgan.

You might call for the industry to change, to be more transparent, more regulations, or even changing the tax code to remove the exclusion of stocks in the 1031 Exchange Rule.

But you’d be missing the point.

OEICX exists because of us.

JP Morgan is there because we allow it.

The choice has always been, and will always be, ours.

Awareness is Power.

Corona Crash Opportunity [Updated 24 March 2020]

One of the best times to make changes to your portfolio is when the market is down across the board. You can avoid paying capital gains tax altogether, and actually get tax benefits if you sell a holding at a loss.

Instead of feeling down when you see red numbers in your portfolio, view them as indicators that you can move money around without paying the tax man.

The IRS allows you to use capital losses to reduce your taxable income, up to a certain amount ($3,000 in 2020). Any excess losses can be carried over to the next year.

For example, if you realize $10,000 worth of losses this year by selling during this market pullback, you can deduct $3,000 from your taxable income this year, $3,000 in 2021, $3,000 in 2022, and the last $1,000 in 2023. If you’re in the 24% Federal tax bracket each year, you’ll pay $2,400 less in federal taxes over the next four years.

Just make sure that you haven’t bought and won’t buy the exact same stock within 30 days of when you sell. Doing so would break the IRS’s Wash Sale Rule and you won’t be able to get the tax benefit.

So if you’re an index ETF investor, you can get right back into the market by buying a different, but similar ETF.

If you have an OEICX in your portfolio, now may be a good time to switch it out.

I hope you enjoyed this article. If you have any questions, or comments, please leave a comment, or contact me directly.

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Finally, please review the Disclaimer.

Tax Gain Harvesting – Penny Pinching for the Early Retiree?

Taxes are a penalty for doing well. I’d rather receive a hefty penalty than no penalty at all.

– Redacted

When I first heard about Tax Gain Harvesting, I was super excited to have come across another strategy to increase my investment returns. The strategy works best if you have an income small enough that it does not trigger long-term capital gains tax, so I stowed it away in my mind for when I early-retired.

When I finally early-early retired, my mind started bugging me to execute this advanced strategy and write a post about my experience.


After looking into the details, I decided I didn’t want to, even though my income this years makes the strategy feasible.

I’ll get to why that is. First, let’s understand what is Tax Gain Harvesting.

What is Tax Gain Harvesting?

It’s the reverse of Tax Loss Harvesting.

The idea behind Tax Gain Harvesting is to increase the the cost basis for your asset to reduce future taxes when you realize the gain.

In English, it’s something you can do to be able to tell the IRS that you made less profit so they don’t tax you as much.



Investment asset: car
Your yearly income: $40,000

Two scenarios: One without Tax Gain Harvesting to serve as a baseline for the second, which will include Tax Gain Harvesting.

Scenario 1: No Tax Gain Harvesting

In 2015, you buy a car for $1,000. This is your cost basis for the car.

In 2019, someone offers to buy your car for $16,000. Amazing.

You sell. Your realized gain is $15,000.

Because you have owned the car for more than a year, the IRS considers this a long-term capital gain (LTCG) and taxes you according to your income for the year:

Long Term Capital Gains rate for single filers in 2019

Taking your earned income and adding in the capital gain — which our taxation agency also consider income — your income is $55,000, putting you into the 15% LTCG tax rate. You owe $2,250 on your LTGC from selling the car. (15% of 15,000).

You get to keep $12,750 of the gain from your car sale.

Note 1: We are not including income tax on the $40,000 you made this year. Yet.

Note 2: If you live in a stealy state, like California, you will have to pay additional state tax. California taxes capital gains as regular income. So in this case, you’d have to pay the Franchise Tax Board tax based on whatever bracket $55,000 income put you in.

Scenario 2: With Tax Gain Harvesting

In 2015. You buy a car for $1,000. This is your cost basis for the car.

Each year, you check in on the value of your car. You find that because the company stopped making them, and people are crashing them left and right, the value is going up.

In 2017, you find that you can get $4,000 for your car. Because the value of the car is likely to continue rising, you decide to Tax Gain Harvest.

You go on unpaid leave for two months because you want your to be low enough that you can be in the 0% LTCG tax rate. Going on leave for two months allows you to reduce your income for the year to $33,333.

You sell your car, then buy it back immediately for $4,000. This is your new cost basis for the car.

Your earned income of $33,333 plus the first realized gain of $3,000 from the car puts your income at $36,333, low enough to qualify for the 0% LTGC rate. Therefore, you do not pay tax on your $3,000 gain.

In 2019, someone offers to buy your car for $16,000. Amazing.

You sell. Your second realized gain is $12,000 because you reset your cost basis to $4,000 in 2017.

Because you have owned the car for more than a year, the IRS considers this a long-term capital gain (LTCG) and taxes you according to your income for the year.

Deja vu?

In 2019 you’re back to making $40,000, so your total income ($40,000 + $12,000) puts you into the 15% LTCG tax rate. You owe $1,800 on the $12,000 gain you made on the car sale.

After all is said and done, you get to keep $13,200 of your gain from the car transactions.

Note: You could also have gone on unpaid leave for four months in 2019 when you sold the car a second time to get into the 0% LTCG tax rate to keep the full $15,000 gain.

Example analysis

You are probably getting the idea that Tax Gain Harvesting is not really worth the effort, because the additional amount you get to keep from the car sale is pretty small. You’d get to keep $12,750 without TGH, and $13,200 with TGH.

Only $450 more.

If you had lowered your income in 2019 to meet the 0% LTCG tax income requirement and kept $15,000, you would have been able to keep $2,250 more.

In my opinion, the amount is too small to justify all the extra stuff you have to do to sell and buy your car, like transfer fees, getting a smog check, visiting your local DMV, and the time you gotta spend on making sure all the paperwork is done properly. With all that factored in, it could easily eat up your margin. Plus, If you accidentally get a raise at work, you’d be screwed!

Plus, you must earn a lower income in the year that you do the harvesting or else there is nothing to gain. But the very fact that you must lower your income makes the whole exercise moot. In scenario 2, you made around $7,000 less one year so that you could save $450 on taxes. If you skipped work when you sold in 2019, you’d be out even more.

I know the numbers are getting hard to keep track of, so here’s a table showing each scenario. I added scenario 2b where we took a four month leave in 2019 as well.

A loophole to consider overlooking.

Personal Example

Since I had no income last year, I thought about doing Tax Gain Harvesting. Ever since I first read about it on Mad Fientist’s site, I’ve been eager.

Well, I decided not to.

Here’s why:

I was setting my sights on harvesting $35,000 worth of investment gains so I would be well within the qualification income for the 0% Long-Term Capital Gains tax.

I have VTSAX in my portfolio, so let’s pretend, for simplicity’s sake, that I had a bunch of VTSAX purchased mid 2016 at $54.48/share.

On December 17, 2019, VTSAX was priced at $79.14/share.

On December 17, I would be able to harvest 1,419 shares to stay within my harvest goal.

Math: $35,000 / ($79.14 – $54.48) ≈ 1,419 shares

To harvest, I would sell 1,419 shares, then immediately buy back 1,419 shares at VTSAX’s current price.

My income from doing this is just under $34,993.

  1. I pay zero federal income tax on the transaction.
  2. I pay $712 in CA state income taxes. Stealy state, remember?

My tax basis for those 1,419 would be reset.

  • I previously owned 1,419 shares at $54.48/share
  • Now I own 1,419 shares at $79.14/share.

At this point, I just wait for the investment to grow. Let’s say 40 years, and that the investment grows 9% CAGR.

After 40 years, I would have 1,419 shares at $2,485/share.

  • Because I tax gain-harvested, my gain would be $2,405/share.
  • If I had not tax gain harvested, my gain would be $2,430/share.

So basically, tax gain harvesting would save me just around $35,475 over 40 years.

Math: 1,419 shares ∙ ($2,430 – $2,405) ≈ $35,475

Sounds pretty good, right?

But, remember how California stole taxed me $712 when I tax gain harvested?

Investing $712 at 9% CAGR for 40 years is $22,363.

In California, Tax Loss Harvesting only saves $13,112.

Add in the extra cost for the more advanced version of tax prep software to deal with the forms for buying and selling stock, it’s worth even less.

Add in the time you spent preparing everything, making sure the strategy was executed exactly, and the worry about if you get a year-end bonus…. You get the point.

But here’s the real kicker. Provided that my 1,419 shares would be worth $3.5 million, my little tax gain harvesting exercise provides, at most, 1% additional growth at the end of 40 years (0.3% if you live in a stealy state).


Would I be better off clipping 15%-off grocery coupons today?

By the way, I’m also not counting the eventual LTCG tax I’d pay when selling the shares in 40 years. Including that would make the numbers even worse!

So why would anyone want to do Tax Gain Harvesting?

What I’ve outlined in the examples should appear absolutely absurd. Sure, theer is money to be “made” here, but there is a point you will get to in personal finance where enough is enough, and you have more important things to do than worry about getting an extra 1% on your portfolio over your lifetime.

You’ve heard the saying: 20% of the work gets you 80% of the way there.

In this case, if 20% of the work is developing good money habits, saving and investing consistently, it gets you >99% of the way there.

Like I said, I first read about Tax Gain Harvesting on Mad Fientist’s site. In his article, he explains the real reason someone would want to do Tax Gain Harvesting: To set the stage for Tax Loss Harvesting.

The IRS allows you to reduce your annual income by the amount of capital losses you have year, up to a cap (currently $3,000). If you lose more than the cap, you can carry over the extra amount to next year’s return.

This is much more valuable because you’re reducing the part of your income that is in the highest tax bracket. If you’re in the 37% federal tax bracket, you save $1,110 each year you max out your $3,000 allowable loss.

Pretty powerful.

Still, for this to make much sense, two things need to align:

  1. Your income would have to be low enough that you’re in the 0% LTCG each time you harvest gains. Otherwise, you’re eating away at the margin you’ll maybe get from your harvested losses.
  2. The shares you have must decrease in value in order to be able to harvest losses.

If you’re regularly saving and investing anyway, you could probably find shares you already own to sell should the market tank. Tax Gain harvesting in preparation for the eventual loss harvesting opportuinty is essentially another way of timing the market.


When it comes to personal finance, being “normal” may put you be better than looking for advanced strategies or IRS loopholes to exploit.

20% of the work gets you at least 80% – often more – of the way there. Writing about advanced strategies may be a cool thing to write about, but the theory may not translate well to real life.

If you come across an advanced sounding strategy that sounds really cool and shiny, make sure to read the comments.

Poor Blake

At this point, I feel that I should say, ask your financial professional if Tax Gain Harvesting is right for you.

I hope you enjoyed this article. If you have any questions, or comments, please leave a comment, or contact me directly.

Subscribe to my newsletter for latest post updates and more!

Finally, please review the Disclaimer.

Roth vs. Traditional IRA: Which is better?

“I just read an article about Roth IRA and Traditional. It was good, but… I still don’t know which is better for me”

– Several

Hey! If this is your first time here and you like this content, subscribe so you can get updates. I put a lot of effort into these articles, and I would appreciate it if you shared this with someone that could benefit. My goal is to make financial concepts simple so that you have the frameworks and fundamentals you need to make proper decisions.

Question: Why do we need another article on this topic? There are a million!

Good point. I’d like to attempt to save you some time here. Please look up “Roth vs Traditional IRA” and read whatever article looks appealing. If you know which is better for you, no need to read this article.

. . .

. . .

. . .

. . .

. . .

. . .

Back? Yup, OK. Thought so.

Now you know why we need another article.

Because I’m putting this debate to rest once and for all.

But first, a rant!

Skip rant

As you probably saw, many who take on this topic provide a bunch of data ABOUT the accounts, skirting around actually answering the question and providing understanding. While the account details are important factors to consider in your decision, I believe the fundamentals are more important to understand first.

When deciding between buying an SUV and a sportscar, the gas tank size isn’t the first piece of information you go looking for.

I searched “Roth vs Traditional IRA” and Nerdwallet has the featured article. I clicked on it, and almost thought I didn’t have to write this post.

Ok. Super simple right? Off to a good start.

Makes sense. It’s based what tax rate you will have in the future. No idea what that will be though, because we do not know what the future will bring.

Hm. Read my mind. Good things there are other ways to decide.

Wait. What? The IRS rules on eligibility may decide for me? I thought the decision was based on my future tax rate. Now it’s saying it’s based on my current eligibility? Do I still have to think about the future?

Well that makes it a lot easier actually. I just have to study the table to see which account I can contribute to….

Well, looks like the traditional IRA it is because I make too much to qualify for a Roth contribution. Won’t get any deduction though, darn. But, pretty easy I suppose.


The heck is going on here?

This is why we need another article on this topic.

Four reasons that I can think of:

1) When people bring in all this technical information to start off the comparison, you can see how confusing it gets. I myself got confused reading through the article, and I’ve been studying this stuff since 2014.

2) All this technical details makes us feel like we’re getting educated, but it’s really just distracting us from answering first question we set out to answer, and we may end up making a decision without answering that question. What was that again?

3) As you saw with that backdoor Roth IRA twist, the technical details may not even freakin’ matter! Let’s say you decide that the Roth IRA is the best option for you, but you make too much to qualify. You can still get money into a Roth IRA. That’s where the details come into play based on the very nature of the task.

CNN: The Leader in Fake Financial News

Now, just because you can, it doesn’t mean it’s the best choice. This is called availability bias. When we want to answer a question, but the most important data is not available (in this case, knowledge of future tax rates), we place a disproportionately high importance on the data we do have available, even if it’s useless.

Conclusion made based on available data

4) Personally, I think this one is the worst one: when people DO make a decision for you. They often inject their own opinions into the evidence they use to back up their conclusions.

For example, some people who say Roth IRAs are better will say, “Taxes are BOUND to go up in the future. Who wouldn’t agree? Look how low they are now! Look how high the national debt is. What a mess! Taxes must go up, right? Roth IRA is better! People who put money into Traditional IRA are not paying attention!”


I never want to see another Traditional vs. Roth IRA comparison article written after this one. If you find one, tell me about it.

End Rant

Roth vs. Traditional IRA: Which is better?

Ok, I have a little surprise for you.

We are not going to talk about the differences between the Roth IRA and Traditional IRA accounts because that does not truly help. We’re going to talk about Tax Deferred and Tax Advantaged money vehicles.

Tax Deferred vs. Tax Advantaged: Which is better?



  1. It’s the question behind the question, and
  2. You are smart enough to find the info you need on income limits, contribution rules, deductibility, and other technical stuff that becomes important once you understand how each works and decide where you want your money.

If you skipped the rant: The technical details are important. I’m not saying to ignore them. Figure them out before you contribute. What I’m saying is that they don’t provide any value in making the decision before the basics are understood. If what you learn causes you to change your mind, it’s easy to go back to basics and start down another path.

So let’s get into it.

Understanding the Vehicles

A major benefit you will get from this is an understanding of how several other account types work. Because there are more places you can put your money than a traditional and Roth IRAs. Who knew?

Here’s a list:

Tax DeferredTax Advantaged
401(k), 403(b), 457(b)Roth IRA
Traditional IRA, SEP-IRA, SIMPLE IRA529 College Savings Account
Qualified AnnuityMunicipal Bonds
Pension planCash Value Life Insurance
Health Savings Account (HSA)Health Savings Account (HSA)*
Long Term Care Benefits
Disability Insurance Benefits
For USA only. Your country has different names for these things.
* An HSA, if utilized to pay only medical expenses, has the benefits of a Tax Advantaged account for withdrawals. It acts like an IRA otherwise.

All tax deferred (advantaged) accounts work fundamentally the same way, though each has their own set of rules.

For example, in order for a 529 Plan to be truly tax advantaged, you must use the money withdrawn from the account to pay for educational expenses. If you try to use it to fund your retirement, it you’d call it a tax disadvantaged account.

The fundamentals of how each account treats your money is the foundation from which the technical details about the account can be built.

A picture is worth 1,000 words. And better than me explaining it in words.

Two are worth 2,000.

* And of course, there are exceptions. That’s why the asterisk at the withdrawal step. In order for each #4 statement to be true, you must follow the rules for the individual account. That’s where the technical details of the specific account you’re using comes into play.

It may seem like the Tax Advantaged vehicle is better because the only income tax paid is all in that tiny rectangle in the beginning.

That’s not necessarily true. We can see this by putting some numbers on the diagram:

Of course, this is assuming that the income tax rates do not change at all, ever. Not likely to be the case.

What follows:

  1. If you expect to have a lower tax rate in retirement than you do today, money is best kept in a tax-deferred vehicle.
  2. If you expect to have a higher tax rate in retirement than you do today, money is best kept in a tax-advantaged vehicle.

Good. Now you know how each type of vehicle works, and what scenarios cause each to be better.

But you knew that already…

So, what the heck? Tax Deferred or Tax Advantaged, which is better?

It depends on what your income tax rate will be in the future.

So, I cannot tell you.

That’s the honest answer. And you were able to see for yourself without being inundated with useless technical information.

It’s what Nerdwallet said right in the very first paragraph of their article. The big difference between a Traditional and Roth IRA is when you pay the income tax.

Do you feel like you wasted time here?

Really, the biggest purpose of this post was to get you to think for yourself. Honest to God. Personal finance is not complicated. It only seems complicated because it seems like finance bloggers want to generate clicks.

I’ll cover other topics like Non-Deductible IRA, Backdoor Roth in a future post. They won’t be too difficult to understand given the foundational understanding you now have.

I still want to know which is better for my situation, Tax Deferred or Tax Advantaged.

What I can tell you are that there are two factors which will determine what your income tax rate will be when you retire and want to start pulling the money from your accounts. One factor you have next to zero control over, the other you have total control over.

They are:

  1. How much the government feels it can get away with taxing us.

Completely arbitrary. Individually, we have very little control over what our elected officials decide to do. Which really isn’t how elected officials are supposed to work, but I digress.

Who knows what this will be in the future? It seems that most people think tax rates might go up because of our staggering national debt, irresponsible politicians, and wasteful spending.

But they might go down. The debt might get paid off. We might end the Fed. We might elect non-corrupted politicians.

Who’s right? Only time will tell!

  1. What type and how much income you will have when you retire.

You have total control over this. What sort of lifestyle do you foresee for yourself in your retirement years? Will you keep working or stop as soon as you can? Will you have a business, rental properties, or other assets that bring in taxable income or just a big fat pile of savings to live off of? Will you live a more lavish lifestyle that requires a higher drawdown of your retirement accounts or will you tend towards minimalism? FatFI or LeanFI?

Some people believe they will have more income coming in when they retire. Others believe they will have less. It’s really up to you to decide this for yourself.

An easy way to diagnose this is to evaluate what sort of lifestyle you’re living today. If you’re doing the bare minimum required to scrape by, you’ll probably have less money in your retirement accounts, less income, and in a lower tax bracket as a result.

If you’re working your butt off, saving like crazy, and always looking for more ways to provide value to your fellow human, you’ll probably pay more taxes in old age. And, well, it probably won’t matter where your money is because you’ll have plenty of it.

I’m super worried, but I just want to optimize as much as possible

Fair. No matter how we end up living our lives, the first factor is almost completely out of our control.

What we can do to hedge our bets is Diversify our tax situation.

To show what that means, we’ll do a fun little experiment here.

Recall above the diagram of $100 going into both the Tax Deferred and Tax Advantaged vehicles to show that it doesn’t matter which vehicle you choose if tax rates remained the same. You’d end up with $1,950 at the end of the day either way.

For this example, we’re still going to assume that tax rates stay the same. But what happens when you have less income? Less taxes!

If you split up the $100 you made between a Tax Deferred and Tax Advantaged vehicle, your overall effective tax rate will be lower. So on both ends, you’ll pay less in taxes.

Of course, it’s not the ultimate solution, but diversifying across vehicle types does give you the added benefit of having flexibility when you want to make withdrawals in retirement.


0) Think for yourself.

1) First, understand how the different type of vehicles work, then build on top of that the technical details of the account you’re investigating. This fundamental vehicular understanding is useful in understanding many other account types as well.

2) There is no solid answer to the question. Anyone who claims that any account type is deterministically better is wrong. Unless they are a time traveler delivering a message from your future self, they may have an unconscious bias or a hidden agenda.

3) You can diversify your taxes by spreading money across different vehicle types. It may not provide any long-term benefit, but the flexibility it provides you may come in handy.

I hope you enjoyed this article. If you have any questions, or comments, please leave a comment, or contact me directly.

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Finally, please review the Disclaimer.

FIght for your life

A monk was sitting with his friends at a table full of sweets. Cake, brownies, cupcakes, cookies – all kinds of confectionery. Everybody was indulging. Except the monk.

His friends said, “come on, have a little bit. It’s really good. It’s a special occasion. How long has it been? You used to have the BIGGEST sweet tooth of anyone I know!”

The monk said, calmly, “No thank you. I have no desire for sweets. I have enjoyed them for many years, and I have had enough.”

Everyone looked at him like he was crazy, and continued to indulge.

One, who was feeling guilty, asked, “How do you do it? You know, I really want to lose some weight, but I love sweets so much I can’t resist when they’re in front of me. What’s your secret?”

The monk smiled. “Keep eating.”

The New Drug

I had been afraid to look at how my net worth changed over the past year. I left my job over a year ago to “do whatever I wanted,” and since then have not had any stable income. Between selling stuff I had lying around and a few jobs I did for fun, I earned $1,859.42.

My total cash outflow for 2019 was $73,157.14. Higher than it had ever been before. I moved out of my parents house to my own apartment. I bought nice new furniture. I went on several trips, both domestic and international. I attended events. I bought personal development programs. I got a life coach. I bought a new suit. I spent as if I had all the money in the world.

I’m sure you can see why I had been afraid to look at the change in my net worth. I used to check it every month while I was working to see incredible gains. +$3,000, +$7,000, sometimes +$10,000 every MONTH. I knew that wasn’t happening in 2019.

Last Saturday something told me to face my fear.

This is what I saw:

Brought to you by the Trump economy

Now you’re thinking, “Wow, no income, such high spending, sizable donations, and it INCREASED! That’s amazing. How did you do it?”

Yet I looked at this chart and felt something completely different. I felt pain. The pain of could have, should have, would have.

I should have continued working so I could have saved and invested more and I would have had more than half a million bucks by now. I was really tempted to do the calculation to see how much I would have had had I not made such a big mistake.

I can’t tell you how many times I beat myself up for leaving my stable-income, good-benefits, plenty-of-challenges job. I thought it was the biggest mistake of my life, that I’d never recover and get my life back on track. Family and friends echoed that thought. I believed it. I believed them. I thought I should ask for my job back. I thought I could get a similar job so I wouldn’t become unemployable. I thought I could be good at something completely different. I started applying for jobs, doing some new things, attending events, workshops, and trainings in attempt to “light the fire” within me.

Nothing worked. The real issue was this: I was not being honest with myself about who I wanted to be.

All my life I had been sitting on this branch by the stream of life, watching it go by. I didn’t need to take responsibility for my actions because I was a product of my environment. For each mistake I made, I had a justification and someone or something to blame. Why should I be at fault? I was just doing what I was told to do, or what I saw other people doing. It was the accepted thing.

Plus, everybody said it was the safe thing to do. “Life is hard. The world is brutal. You’ll be safe here. Don’t let go!” While deep down I wanted to, I was way too afraid to let go. I felt it was inevitable, I just thought I’d delay it as much as possible. Why not wait?

But when I made the mistake, the biggest mistake of my life, I wobbled and fell off the branch. I hung on for dear life, trying to resist the flow of life. My arms had no strength to pull me back up. Not that they’re weak – they’re stronger and bigger than they’ve ever been before. But I had no strength to perform that particular action.

I had two options: Hang on for dear life for the rest of my life; or let go.

How sad was I to believe that life had reached its peak at 27. How sad was I to think that I’d spend the rest of my life trying to rebuild what I once had. Maybe enough twigs would float over in my direction so that I could build a little raft so my arms could relax.

The biggest mistake of my life is ahead of me. I can’t wait to see what it will be.

There are so many things that people wish they had the time and money for. People want to travel, start a business, go back to school, support their families, buy cars and houses, and just take time for themselves. The things they lack are time, which they don’t have because they have to go to work, and money, which they don’t have because they don’t know where it all goes.

That was me in the beginning. I was someone who knew nothing about money other than how to make it. I taught myself how to implement the steps to building wealth, and in short order I was full of myself as my investment account was.

Financial Independence is not difficult to achieve. Wealth is not difficult to build.

I can take someone who knows nothing about money and set them on the path to financial freedom in a few months.

But there’s a problem. A BIG problem.

One that I ignored, then threw myself from the ladder.

Most people are running away from something. They want to become financially independent so that they don’t have to go to work. They don’t have to wake up early. They want to become wealthy so their children don’t have to struggle as they did. They don’t have to pay down their debts anymore. They don’t have to choose between their money or their life.

Money is not about that.

I, along with many others who have reached Financial Independence, have realized this the hard way. Money will not change your life. It won’t fix it. So many people believe that once they are rich, they will no longer have “have to‘s” in their lives, and they can be happy.

No, money won’t change your life. It will enhance your life though. Including the problems.

Read between the lines of each person’s story I linked to just above. All of the problems they talked about experiencing after reaching Financial Independence were present in their lives before they reached Financial Independence.

Saving is the opiate of the Financial Independence movement. I was addicted for four years. It numbed the pain, gave me something to live for. I didn’t have to face my problems because I was doing the accepted thing. Who thinks saving is bad? When I got off, I went through withdrawals. What was I worth when the 80% of my income I was saving became $0?

I see a lot of people getting on saving. The media portrays the lifestyles of the rich and wealthy and perfect in every regard. Now, they are turning the Financial Independence movement as a way to live a rich, wealthy life and stop working in a short amount of time. This is partly because some of the biggest names in the FIRE movement have painted such a rosy picture in blogs, podcasts, and on social media without being honest about the dark side of Financial Independence. They may not know how, and that’s okay. But there are several stories just like mine popping up every day.

You know, the funny thing is that I read some of the stories about the dark times people went through once they achieved financial independence. My ego didn’t let me get the message. I thought I would be the exception.

I thought I knew who I was.

Now I know there are some of you who still think you’re not saving enough. You know you would be better with more money. You may even be in awe that my net worth increased after a year of doing whatever I wanted. You may want to know my secret.

There’s only one thing I can tell you.

Keep running.

March 2020 Update

I’ve never lived through a recession. Many who lived through the 2000 and 2008 market crashes told me, “You have no idea what it’s like. Just you wait. See how you feel when your portfolio gets cut in half.”

Always wondered how I’d feel.

I gotta say, it’s pretty underwhelming.

Real Estate Wealth Expo 2019 San Mateo

These past two days I was at the Real Estate Wealth Expo in San Mateo.

I bought tickets about a month ago because a buddy of mine was planning to attend, and he invited me to join him. This was the ad he sent me:

Normally, this is not something that I would have bought tickets for.

  • Change your life forever? In 2 days? Yea… right.
  • 90% sold out? 80% discount? Yea… I’ve seen this marketing technique before.
  • Cash and Prizes? Yea… after you take all my info so you can spam me.

But because this is the year I do things I normally wouldn’t do, I just bought the tickets and put in on my calendar. I had some things planned on the second day, so my plan was only to go for the first day. Only $69 dollars for VIP anyway, how good could it be?

The morning of the event, I just did not want to get out of bed. I stayed in bed as long as I could to still get there on time. While I was getting ready, I did a quick GoogIe search for “Real Estate Wealth Expo” and clicked on the link that I knew would give me a reason to get back into bed:

Can you guess which one it was?

“Oh no, it’s going to be one of those things,” I thought.

As I skimmed through the article, which was mostly Twitter posts she sent while at the Expo – means she probably was on her phone most of the time, two things stood out.


I agree. It sounded too good to be true that I found such a compelling argument by a popular Internet wealth influencer to get back into bed.


Not something I expected to see in the comments. If it is a pyramid scheme, I better go check it out and report back. I wouldn’t want anyone to get wrapped up in a pyramid scheme.

I got myself ready, threw my water bottle and notebook in my bag, and went out the door.

As I drove up to the parking lot, I saw the sign that put the price of parking at $20.

“Oh boy, what a con. They bring you here and then slap you with a parking fee!”

The guy in front of me driving into the parking lot made a quick escape through the bus entrance to make his exit to find free street parking. I wanted to follow suit. Fortunately, I felt defeated enough that I accepted that the TCO of the event had risen $109.

Also, it was about that time, and I didn’t want to be late.

So far, the intro may have made it seem like the following will be a critical review telling you not to attend this, or a similar type of event.

Far from it. It was one of the most amazing things I’ve ever experienced. Money well spent. After the first day, I cancelled everything so I could attend the second day. I couldn’t believe the tickets were only $69! I would not hesitate to go again, even if it’s all the same speakers.

I include my thoughts leading up to the event to give you perspective. If I had listened to any one of those thoughts telling me not to go, this article would not exist, and you would not be benefiting from it.

I’m acutely aware that I’ve been living my entire life with a negative mindset that has kept me from embracing all that this world has to offer, and so much of what I have been learning about myself in the past year was reinforced by the words coming out of the instructor’s mouths.

If nothing else, I want you to take this away from this post: If you have an opportunity to try something new, something that your friend invited you to, something that may sound too good to be true, something that requires you to make a sacrifice in another part of your life, something that makes your emotional shields go up: do it.

At worst, you’ll have a great story to tell.

This is not going to be a review of the event.

If you came here trying to decide whether it’s worth it to go, your answer is here:

It’s worth it.

You don’t even have to be in real estate to benefit from the event. Less than 20% of the speaker content was related to real estate.

This is going to be the things I learned and insights I gained from listening to people who were up on stage in front of thousands of people. There was so much value delivered. I didn’t capture everything, but I have done my best to give you as much as of the event as you can get without having attended.

A few notes to help you through the following material:

  • These are straight from my notes. They contain speaker quotes, general notes, and my own interpretations of things. Just because it’s listed under a person’s name does not mean it came from their mouth. And, just because it’s on this page, doesn’t mean that I agree with it. Like all things – let these words go in one eye and out the other.
  • Don’t pay much attention to the name of the speaker, what they’re about, or their claim to fame. Pay attention to how you react to what is said.
  • One point may not be related to the point directly above or below it.

Naveen Jain

The only way to predict the future is to create it.

There are a couple things we could do that would truly improve the state of the world in an instant:

  1. Share everything that you are doing with as many people as you can, all the time.
  2. Forget money. Our society has become obsessed with money to the point that most of us are completely addicted to money. It’s unhealthy
  3. Do something to help 1 million people. If it changes one life, great. Now, change 1 million.

5-Whys exercise I did on why I was afraid to share on social media:

Why don’t you share?
> Fear of what people will think and say

Why fear?
> Because I don’t want to burn bridges and lose friends

Why not?
> Because people will not want to give me opportunities if I say things they don’t like to hear

Why do you think that?
> My dad’s way of thinking. My dad taught me to tell people what they wanted to hear, even if it was a lie, because you want people to like you. He gets angry when I disagree with him or tell him things he doesn’t want to hear.

There’s the source. Forgive him for it so you can be free.

Grant Cardone

What was your childhood dream? The thing you wanted to prove to the world, your parents, your friends?

For me, it was that money does not make for a peaceful life. Growing up, I knew my family had plenty of money. It didn’t matter, there was still family drama, anger, and deceit. Lots of people believe that more money will solve all of their problems. But it wont.

HOWEVER: Money is just about the only thing the supermarket will take in exchange for groceries.

10X Rule

Think this way:

  • I am a business
  • My kids are a business
  • My household is a business

Want: Freedom
Not: Money, Investments, Retirement Accounts

Think about what things are going to do for you.
Great business Idea? What’s it gonna do for you?
You gotta help yourself before you help others, otherwise nobody’s getting helped.

Money Mindsets

The money you make is not yours. No such thing as your money.

I want you to get rich.
Get FU Money.

Acknowledge people when they do good, even if it’s in secret. Nobody’s getting hurt by an acknowledgement.

Get rid of poverty mindsets (see below)

Marketing & Sales

Get known.

Marketing 101: “HEY!”

Whatever you do, you need a lot of customers. You’re not going anywhere big with a small list.

Study companies, not people. Successful companies have this figured out.

Marketing rules:
1) Whoever spends most, wins most. Think Coke, McDonalds.
2) Brand yourself first
3) Money follows attention

Get rid of poverty mindsets. They are keeping you poor.

Poverty mindsetRich mindset
Eat all of your foodDon’t beat yourself up like your mother used to
Save for a rainy dayBecome recession proof
A penny saved is a penny earnedWhat? You had to earn the penny to save it
Don’t waste moneyYou already know you need to waste money
Spend less than you earnSpend more to earn more

You can have the greatest product or the worst product. Doesn’t matter if you have no attention. By looking at the Kardashians, we know that attention is way more important than having a good product.

I spent the first 50 years of my life suffering. Nobody knew I was suffering. But I did.

I was suffering because I was living below my potential.

You stop suffering when you reach your potential.

You reach your potential when you return to God.

Tony Robbins

Money makes you more of whatever you already are.

I’ve heard so many people say that and I know it to be true.

You gotta measure that which you want to improve.

Tony put on some music and asked us to jump up and down. It felt exactly like being at a rave. That’s when I realized: it can feel like a rave anywhere. It’s a state of mind.

You mood, your perspective, your whole state of being changes when you are energized. That thing you “feel” when you’re jumping up and down, don’t let it go when the music stops and you sit down.

Someone who waits until they have a certain amount of money to live the life they love.

ENEMY: Complexity

FRIEND: Momentum
(In the right direction)

There’s a flow to momentum that looks like this:

You start by seeing the potential to solve a problem. You get all excited about it, then take action to make something happen. Your concerted effort produces a result, which leads you to become more certain that what you’re doing is good for the world. You believe that your work can help more people, so the potential increases.

We do each of these things daily. We see a lot of problems that can be solved. We are put in situations that require action. We see the results of those actions. we believe that we can change something.

So what stops us from building any momentum?


Fear steps in at any point in the process and kills it. Grew a belief that you found something to help people? You may fear that it’s not going to help anyone else, or that you don’t have enough time to do more, or whatever else.

You might try to see if something works. When you try to do something, you’re coming at it from the perspective of expecting to fail. Either do, or do not. The result will let you know if it’s going to work.


There are three common questions that can arise at any point in the process and destroy the building of momentum.

>What am I going to focus on?

We lack intentional focus. We are often all over the place with our minds, having a million ideas for things to do that nothing gets our full attention. In writing this post, I’m guilty. I’ve checked my phone, social media, YouTube a number of times since I sat down to write.

If we don’t choose a focus, our brains will do whatever it can to make it feel like things are getting done. The world is always asking for our attention. It can occupy us with the mundane for eternity and beyond.

>What does this mean?

We have a tendency to look for meaning in everything that happens. We love symbolism. We want to have an answer for everything because we don’t like not knowing. We’re so good at BS-ing that we can come up with the wrong answer to a question and have people believe it for thousands of years.

Saying “I don’t know” is incredibly freeing. It’s often the honest answer to the question. It also requires that the ego be set aside.

>What are you going to do about it?

Especially when something negative happens, we ask this question of ourselves. We feel as if we aren’t capable of producing a positive outcome, so we can’t do anything about the things that happen to us: life happens to us.

Forget everything you’ve learned.

It’s no good.

LEVELS OF MASTERY of anything that you do.

  1. Cognitive Mastery – An intellectual understanding of what you’re doing. This is when you understand it yourself. Gained through repetition.
  2. Emotional Mastery – When you link up with what you’re doing emotionally. As in, you see the effect it has on another person.
  3. Physical Mastery – When you do it so consistently that basically no effort is needed; you can do it in your sleep. It has become part of your identity.

You have to grow into your self.

Quick check to see if you consider yourself a victim:

Why did you fail?


Most people choose A.
Most people are victims.

The antidote for victim mentality?

If you think about it, you are personally responsible for the state your life is in. Many people think their lives are in such a bad state that they wouldn’t dare claim responsibility. It’s much easier to blame something else for your problems.

A side note, I highly recommend this book on the topic.


  1. An ideal customer. Not your current customer; but IDEAL. Think about who would do well even in a poor economy?
  2. An irresistible offer. There should be no hesitation in the customer’s mind that they are going to benefit from your product or service. When they buy, over-deliver and make them clients for life.


In order to influence someone, you must know their existing influence.

There are two forces at work in every person:

  1. STATE, their moment-to-moment mood. Sad, happy, confused, angry, fearless, fearful.
  2. BLUEPRINT, their long-term plan of where the person believes they are going.

If you understand the person’s STATE and BLUEPRINT, you will understand any action he takes and behavior he exhibits.

Start by experiencing how your STATE influences your actions and behaviors.

This should be nothing new. You already influence your state in many ways: by drinking alcohol; watching a sad movie; going on a run. It was interesting to realize that I could change state by just jumping up and down, waving my arms around, and thinking a certain way.

Next, understand how your BLUEPRINT is influencing your life.

Most of us have a blueprint that looks something like this:

If you were given this blueprint, you were led to believe that you needed to have certain things in your life before you could truly enjoy every moment of it.

Even though this is an old, outdated blueprint proven to be incorrect — both by modern science and ancient philosophers — many people are still following this. Understand this and you realize (1) why you see so many miserable people all over the place and (2) why you feel empty inside even though you have all tho components for a happy life.

There is nothing that the world can give you to cause you to enjoy life.

The real blueprint for our life looks something like this:

We are blessed every day.

All that you need to enjoy life is already within you. It’s up to you to find it by shaking off the traumas that have you stuck following the outdated blueprint. You’ll begin to realize what your purpose is, and you’ll begin to walk on clouds. The perfect things for you will be added into your life as necessary.







It’s a science – that’s all it is. Here are the forces that go into this:

FOCUS – Absolute clarity and commitment
With a concrete focus, your mind locks on to anything that will help you achieve it.
Example when you have your mind set on buying a certain car, you start seeing it on the street way more often.
If the focus is strong enough, it’ll happen no matter what.

MASSIVE ACTION – with massive emotion
There’s a feeling that goes into everything. If you believe in what you’re doing, you’ll lead others into believing in what you’re doing.
Have you ever tried selling something you don’t believe in yourself?

I didn’t get any notes for this one.


There is nothing worse that achieving your goal, looking around, and saying, “really? That’s all?” You may never want to set another goal again.

Success without fulfillment is the Ultimate Failure

Technically Screwed -   /ˈteknək(ə)lē skro͞od/ 
The state achieved by reaching your goal and it's not what you expected and you don't really want it.

The way to avoid this is to set a goal that, when you make progress on it, gives you happiness. If each step along the way makes you miserable, the outcome will also make you miserable. Reaching the outcome is simply the final step in the progression.

Everyone’s life is either a WARNING or an EXAMPLE


  1. Decide not to suffer and live in a beautiful state no matter what. Yes, it sounds like a gimmick, but you have to find your own why.
    You could say, “Life is too short to suffer” or “We are blessed everyday”
  2. Anticipate what will bring suffering. Get to know yourself.
    For example, you find that you typically get overreact and get angry when you can’t find your wallet or keys and are rushing to get out the door.
  3. Decide what you’re going to do instead. It’s no big deal.
    Like, instead of getting angry, play a game of Find the Missing Items. You need to find your stuff before you leave, so why not have fun with it instead? It’s all about your perspective. Change your perspective. Trade EXPECTATIONS for APPRECIATION.
You see what you want to see

Part 2 Coming soon…

Financial Independence or Bust

Financial Independence has turned into a cute buzzword often used in clickbait article titles, so we’ve lost the appreciation for how important it is to the continuation of our way of life.

Another one of the most underappreciated things today is our republic and the basis upon which it was founded. You can see this clearly in the way the younger – and even the older generations – have disdain for our great country.

My father came to this country to build a life. His father told him that there was no future for him in India, that he would go to the United States. Even though he had studied in the United Kingdom, my grandfather was adamant that it was not the place to be. Whether he had incredible foresight, an angel told him, or he just got lucky, it was amazing advice.

I can understand his thought process. In India, you die as you are born. The caste system prohibits any social mobility, even if you work hard, smart, and have the ability to do bigger things. If you are unlucky enough to be born as an untouchable, you will always be an untouchable. You can be rich, but even a poor Brahmin will receive more respect than you will.

Your fate is sealed.

Unless, somehow, you manage to escape and come to a place of freedom, such as the one we take for granted every day.

It’s no wonder that millions of people are willing to risk and leave everything behind to come to this country. Many risk their lives, their family’s lives, and fortunes in order to come here. Most who come will face extreme hardship, and may even continue to do demeaning jobs, but they know that as long as they are here, a better life for their children is possible. That’s what’s important. That’s why they do it.

How this relates to Financial Independence

Can India change? Can the people rise up and abolish the caste system? Can the street sweepers get better equipment and working conditions? Yes, it sure is possible. It would take a collective effort, plenty of planning, and much risk to make it happen.

You have to ask yourself though: who are the right people to lead the charge in such a change?

If your livelihood depends on whether you show up to work, whether you love or hate what you do, you’re not likely to be willing to take such a risk. It is also unlikely that you will be able to convince your coworkers to go along with your crazy idea because, well, they too have mouths to feed. Nobody wants to bite the hand that feeds them.

You may think that because they have nothing to lose they would be the perfect candidates to rise up and make the change. But they would be coming from a place of desperation, full of anger and resentment, and that never works out well. Just take a look at the French Revolution.

Now what if… what if they could walk away at any time. What if they worked not because they needed to, but because they wanted to? Imagine how the dynamic of the whole situation would change if there were enough Financially Independent people with the ability to say, “Hey, this sucks. I’m out. I’m going to get another job.”

We tend to look down on people who do menial jobs, like garbage men, restaurant workers, taxi drivers, factory workers. We think that they are not very smart, that they didn’t make much of their lives. The street sweepers in India definitely feel like they are worthy of nothing, that they don’t deserve any respect. But these menial professions are an instrumental part of society’s fragile fabric. If they all walked away from their work together to pursue other endeavors, we’d be begging them to come back, giving in to whatever demands they have. I suppose that’s the role a worker’s union is supposed to play.

It’s difficult for the mass population to realize how much power it holds when it’s living paycheck to paycheck.

It’s difficult to speak up against evil when doing so may devastate our ability to provide.

It’s difficult to stand up if your bank account is empty.

Financial Independence creates lasting change

Imagine that a bunch of the wealthiest people in India got together and decided that they would no longer stand for a caste system that oppresses people based on the situation of one’s birth. They decided that they were going to do whatever it took to bring Freedom to all the people in India.

It almost sounds too good to be true, especially in India. But that’s exactly what happened in 1776.

Our Founding Fathers came to the realization that they had to separate themselves from the oppression of tyrannical evil, that it was so important to the future of humanity that they put everything on the line to make it happen. They did not have nothing to lose, they had everything to lose – and many lost everything.

They did not have to do it. They were not scraping by, living paycheck to paycheck, worrying about their families’ future. They could have simply sat back and enjoyed their riches and successes for the rest of their lives.

I never knew this about the Founding Fathers until I came across this Paul Harvey clip:

Not only were our Founding Fathers Financially Independent, they were Financially Free. And so, they acted based on what they believed was right, not out of need or desperation to pay next month’s bills.

Because of what they did, because of their sacrifice for the greater good, because they were willing to put their lives, fortunes, and honor on the line, freedom was born.

If we are not ready to do what the Founding Fathers did in 1776 again, we will lose the republic. If we lose it, we will have to shed blood to get it back.

And if the republic falls, where will we go?

I wouldn’t bet on India.

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How to save without thinking about it

Hey! If this is your first time here and you like this content, subscribe so you can get updates. I put a lot of effort into these articles, and I would appreciate it if you shared this with someone that could benefit. My goal is to make financial concepts simple so that you have the frameworks and fundamentals you need to make proper decisions.

Is there something that you should be saving for, but aren’t because you’ll just start tomorrow? Keep reading.

I’m going to show you how to save money without having to think about it all the time.

There is too much financial advice out there that tells you to cut back on things like your morning coffee, bagel, night out, whatever, in order to save more. While the thought is genuine and sounds good, the problem with this is that when you try to follow through, you end up not saving anything and feeling bad because you know you should be saving.

I know from personal experience.

One of my readers said,

“I could also definitely be saving more if I [______] less but that clearly that isn’t happening even though I tried cutting back this year.”

(her thing is raving, but I’d like you to fill in the blank with some thing or activity that you really like. We’re all in the same boat here)

I was curious about what she did to try cutting back. She said,

“When I got this job I was excited I could afford all the [______] so I went a little crazy last year. I literally [______] every weekend from last weekend of August through October. Then I [______] another 4 times in November. So I cut back significantly this year in comparison. Now I do like average 2 maybe 3 a month. But financially it’s about the same probably since I buy my boyfriend’s [_____] too since he pays for like 80% of all dates and outings.”

Oh, yea. I know that feeling. The feeling of how great it will be to buy all those things and do all these activities from all the cash that will be coming into my bank account from the new job or raise I just got.

But, the world has a funny way of evening things out. As soon as I thought I was going to get ahead, something (manything) comes up and I wonder where all that money I was supposed to have went.

Please don’t beat up dogs

Worldly advice

At this point, most of the advice you’re going to get is to (1) keep a budget and (2) avoid lifestyle creep. Great theoretical advice. Sometimes I think that the people giving this advice don’t actually follow it, just like how the people that design SF streets don’t actually drive on them.

(1) I believe keeping a budget is a must, but it does not guarantee that you will save for that thing you want, even if you have it as a line item.

For example, one reader, who already keeps a budget, said this:

I feel like i’m overspending every month and don’t have a good savings. I do [keep a budget], but it’s like, a lot of my own self control/discipline, which is kind of hard to have when it comes to budgeting.

You can always move money around in a budget, a good benefit that can also work against you. If you overspend in one category, you can easily move money from your savings category and – that’s right – just start saving again next month.

(2) Getting a new job or getting a raise makes us feel like we’re suddenly flush with cash, so we make changes in our lives that immediately consume the increase, often more, in income we just worked so hard for.

But you cannot avoid lifestyle creep. As you enter adulthood, you will take on more responsibility. You will move out from your parents house. You will start paying your own bills. You will start a family. You will find those drones you are looking for. That’s just life.

There is no way that you can keep your expenses the same as you progress through life. Imagine starting a family and being adamant about staying in the apartment you share with three other housemates because you want to avoid lifestyle creep. You won’t have a family for long.

The good news is that we can create a system does not require our constant self control or discipline.

Righteous advice

The things we want to do, we don’t do. But the things we don’t want to do, we do. Keeping this fact of human nature in mind, we design a simple system that will allow us to save without thinking about it.


Glad you asked. I’ll show you the concept, then how to implement it.

But first, the most important thing you must do is realize that whatever you want to save for is so important to you that you’re just gonna do it. There’s no way you’re not gonna do it. If you’re not sure about what it is, it’s the thing you’re not saving for that gives you the heebie-jeebies when you think about it.

The thing could be retirement, education funds for your children, a down payment, early retirement, a new car, it doesn’t matter. Whatever your reason for saving, this method will work.


The way that most people try to save looks something like this:

They try to save whatever is left at the end of a month of willy-nilly spending. It’s not certain that there will be any left. If money is not manually moved from the account, whatever is left may end up being used in the future. It’s not a good system. Actually, it’s not a system at all.

Instead of saving as an afterthought, our mindset should be to save before we spend:

Of course, we will end up having less money to spend than before, meaning we will have to cut back on some things. If your reason is strong enough, this will be no problem.

A nice thing about this is that we can still go out do willy-nilly spending with what we have left after we’ve saved.


With a strong reason and understanding of the concept, let’s look at how to put it into practice. I’ll also show you my personal, real-life example of how I put this into practice, with numbers and everything.

The best way to put the concept into practice is to build an automatic system that puts your savings out of sight, out of mind. You could log into your bank account every month and manually move money into a savings vehicle, but since we are already struggling with discipline and self-control, we know that’s not going to last long. We want something that we can set and forget.

In it’s simplest form, your personal financial system looks like this:

You are in control of every aspect of this system: money comes in based on your skills, abilities, and investments; money goes out based on what you decide to do with your money. You should know how much money is coming in and going out. If you do not know, you’re flying blind, hoping that Money In is greater than Money Out. See prerequisites.

Let’s look at the the personal financial system in a slightly different frame. Your setup may not look exactly like this, so please apply your imagination.

Ignoring other accounts for simplicity’s sake.

We often live by the balance we see on our bank account. In my past life, I would make decisions simply by looking at my checking account balance. If it looked healthy, I’d go out, buy drinks, get steak. If it was getting close to zero, I’d have Top Ramen.

When I was feeling motivated to save, I would transfer some amount into my savings account. This didn’t happen very often and the shiny objects in the storefront took priority.

The other problem was that the money in the savings account was earmarked for different things at different times. Sometimes I said it was for a down payment. Other times for buying a car. I would use it in an emergency without replenishing the money. Its purpose depended on how I was feeling that day.

Anyway, we’re here to learn the way to save without thinking about it, and here it is:


Slight change from before. Let me explain what’s going on here.

Okay. Your paycheck goes into a staging account.

A no-fee online checking account makes most sense for the staging account.

Okay. From the staging account, you set up an automatic monthly transfer into a savings vehicle that happens a day or two after you get paid.

It is not necessarily a savings account, because the timeframe of what you are saving for will determine which vehicle you use. For example, if you’re 30 and saving for retirement, you’ll want to use a vehicle that gives much higher return than if you are saving up to buy a new laptop in a year.

Okay. From the staging account, you “pay yourself” a certain amount every month into what I like to call a spending account. You use this account to pay rent, utilities, food, credit cards, withdraw from ATM, everything.

A no-fee checking account makes most sense for the spending account. You may want to choose an bank with ATMs in your area. In most cases, the checking account you already use is perfect.

Okay. The yellow enclosure is what you see and deal with on a day-to-day basis. The amount that you “pay yourself” is your new income, because that’s all that you see coming into your account.

The wonderful part about this is that you can go about living your life without worrying about saving for that important thing because you’re taking care of business before you even get your money.

That’s all there is to it.

So simple, right?

Next, I’ll go over some questions you may have at this point and then show a personal example.

Question: how much should I be saving?

You can determine the amount to transfer from staging account into the savings vehicle by doing some basic math.

For short-term goals in low-to-no-return savings vehicles:

For long-term goals in high-return vehicles, you’d want to include interest in your calculation. You can use a nifty savings goal calculator.

To get $1 million with 8% growth, you’d only have to save a total of $241,560. The rest is interest. Wow, math.

Question: how much do I need to pay myself?

To find out, start a budget, get to know yourself, and figure out how much you truly need each month to live.

If your spending exactly matches your income, you are going to have to cut back. Since you’ve implemented this system, this will be no problem, because you will cut back automatically due to your artificially lowered income. You don’t have to think about it anymore!


Here’s the system that I set up two years ago. It follows the principle of the example we just saw, though it’s a bit more involved.

The yellow enclosure is what I saw and dealt with on a daily basis. I lived as if I was making $1200/month (I was living at home at the time… not recommended). I didn’t have to check up on any of the savings amounts because they would get to where I wanted them to be when they were needed.

I also had about $500 each month that was accumulating in my staging account because it wasn’t allocated to a savings goal. I guess I didn’t have anything to put it towards at the time so I just let it sit. A smarter thing to do would have been to save for another thing or increase the amount for something I was already saving for.

I was also paying all of my credit cards manually back then and recording the payments in a spreadsheet. Duplicate effort from the budget. A waste of time.

This system kept chugging along with minimal maintenance. Most importantly, when I got raises at work, the amount of money I was “making” didn’t change. More would just build up in the staging account. When I had a new thing to save for, I’d just set up a new savings vehicle and corresponding transfer.


If any of these apply to you, I recommend that you do not implement an automatic savings system at this time because it will not last long.

  1. You have debt. Aside from a mortgage, if you are in debt the only thing you should be saving for is a starter emergency fund before paying down all of your debt in full as quickly as possible. You should not use this method to do that.
  2. You are spending more than you make. If you’re spending more than you make, automating your savings will hurt more than it will help. You first must stop the leak. It makes no sense to save for something because you’ll eventually have to use those savings to keep yourself afloat.
  3. You do not know how much you spend. Start a budget start tracking where every dollar is going. You should make sure that you’re not in situation 2.
  4. Your income is very unstable. The risk you run is that your staging account will dry up. While the system works well with W2 income, it may not be initially be a good fit if your income greatly fluctuates from month to month.

While I won’t cover these here, I will make posts on how to pay down debt faster and make budgeting as simple as possible.


  1. Find a reason to save.
  2. Figure out how much you need to save each month to save for that thing you want.
  3. Set up a system which saves the money before you get your hands on it.
  4. Stop worrying about not saving for that thing.
  5. Share this post if you found it helpful.
  6. Live good together.

I hope you enjoyed this article. If you have any questions, or comments, please leave a comment, or contact me directly.

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Recipe: Creamy Chicken Over Rice

This would not be proper financial blog without delicious food recipe because everyone know that making meal at home is cheaper than hiring restaurant to make it for you.

Eating out is actually double whammy to your financial situation, because you also need to take into consideration food quality.

Say you have $10 to spend on food. If you go to restaurant, perhaps you get food with quality score of 4/10. Maybe the restaurant uses vegetable oil for cooking, the ingredients are a couple days old, or the chef was having bad day.

Take same $10 to grocery store where you can pick healthier, better quality foods, you can probably make something with quality score of 7/10. Not perfect, but better than restaurant!

In order to get food with quality score of 7/10 at restaurant, you will need to go to nicer restaurant and pay more money.

Now you might be thinking, “well hey, food is food, and $10 is $10. It’s the same thing. What does it matter that the quality is better if I’m full anyway?” Good question, but remember: eating too much low quality food will bring disease later in life, and treating disease is an expense. So eating good quality, healthy food is sort of like staying out of debt.

Creamy Chicken over Rice

This is a meal my mom used to make. It’s very easy, delicious, and nutritious.

I will show you how to make six hearty servings. I wouldn’t recommend you to make less, because you can always store what you don’t eat for later.


CaloriesAround 1250 per serving
PriceAround $8 per serving¹
TimeAround as long as it takes to make rice
Difficulty levelLow. Very easy to make
  1. My calculation. Note that I live in one of the most expensive cities in America.

Ingredients (6 serving)

  • Rice, 2 cups dry
  • Chicken thighs, 3.5lbs
  • Heavy whipping cream, 2 pints
  • Bullion, 1-2 cubes
  • Garlic, 0-10 cloves (you pick)
  • Broccoli, 1 head
  • Carrot, 2 big stalks
  • Bell pepper, 1 (you pick color)

Equipment 6 (servings)

  • Cutting board
  • Knife
  • Baking dish, size 4.5L
  • Oven mitts, 2
  • For rice making (you pick)
  • Garlic crusher (optional)
These are all the ingredients


First, start making rice. You will do the rest of the things while the rice is cooking. I won’t go over the steps of making rice here.

Second, put oven to 400°F. While it’s heating up, do steps three to five.


Third, put chicken into baking dish and spread evenly around. I like to ask the butcher to cut the chicken into small pieces. If you want, you can leave the chicken pieces whole and cut them on your plate just before you eat them.

Fourth, add garlic and bullion to the chicken.
Peel some garlic cloves and sprinkle on top of chicken. If you don’t have garlic crusher, just use knife to make really tiny pieces.
I’m skipping the bullion this time because I got my chicken thighs pre-marinated from the butcher.

Fifth, put heavy whipping cream onto the chicken. It should be only slightly peeking out.

Ah, yes, like this

Sixth, put it in the oven at 400°F for 20 minutes.

While it’s cooking, do step seven.

Seventh, use knife on vegetables.

It’s super effective

Eighth, wait, because it doesn’t take 20 minutes to do step 7.

Ninth, take the thing out of the oven and disperse the vegetables evenly around in the cream.

Tenth, put it back in the oven at 400°F for 10 minutes.

Same as before…

… only less time

After the time is up, I like to turn off the oven, open the door and let it sit for a little bit of time.

Your rice should also be done around now, and the dish is ready to serve.


Serving to live bodies at the dinner table

Put the stuff on the table and let people have at it. Provide a big spoon so people can scoop the chicken and pour the cream onto the rice – it tastes really good that way.

Storing it for later

The forever-alone option is to share what you have made with future you. A hearty-sized meal for me is 1/6 of what I just made.

I first distribute the rice evenly between six containers, press it against the bottom so it makes a rice layer.

Then, do the same with the chicken and cream. I use a big spoon-like thing to move the contents.

Today I’m eating one and saving the other five in the fridge for later.


To reheat, put the food in the oven at any one of these heat-time combinations:

  • 220°F for 60 minutes
  • 200°F for 80 minutes
  • 170°F indefinitely, but at least 100 minutes

While you can probably raise the temperature to get it ready faster, I’ve found that these combinations cook the food evenly such that no part of it is cold.

If you microwave it, might as well have just gone to a restaurant.

That’s all, folks

Hope you enjoyed the meal. When you make it, leave a comment on how it went!

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The 5-Year Business-As-Usual-Scenario

A few years ago I drew something out on my whiteboard. I don’t have the original, but it looked something like this:

It was to visually help myself answer the question, “where do you see yourself in five years?” I never understood how to answer that question because at any point in my life, five years ago I could not have imaged where I currently was.

If you asked me at 18 where I would be at 23, my guess would be completely incorrect.
What I could do was get a sense for what my life would be like in five years if I kept doing everything the same. I called this the “5-Year Business as Usual Scenario.’

When I drew the picture, I was 24, working at a large enterprise software company, commuting two hours per day, living in my Dad’s basement. If I had continued to do exactly that, in five years I would have been living at home at 29. I doubt that my Dad would have encouraged me to go fend for myself given how much he wanted me to move back in with him. I really didn’t like that image.

So in order to change it, I had to be the one to make a change. My #1 goal in life at the time was Financial Independence, so the changes I made revolved around that. I wanted to cut down on my expenses and kill my commute since that would allow me to save more. I drew up a comparison of how much more money I’d have in my pocket when I didn’t have a commute to create evidence for what I wanted to do.

Wow, commuting is expensive

Less into the COMPOUNDER, but more into my time-value pocket!

By 25, I had a job that I could walk or bike to, and had a slightly higher salary. Conveniently, my mom and sister were living abroad for a year, so I made a deal with her that I would live there in exchange for property management to get her some rental income.

It was a temporary situation because they would be coming back after one year, so I didn’t really think about the 5-year BAUS. My plan was to keep living like I was broke, working hard, and then rent a place together with my girlfriend when my mom came back.

I felt like a baby living at my mom’s, even though she wasn’t there. The pictures of baby me all around, the poem I wrote once for homework, and old memories around every corner did the job for her. I would say that this part of my life was the closest I’d been to living in hell. Things in my mind keeping getting worse and worse. I felt like I kept hearing signals from the universe that I was going down the wrong path in all parts of my life. Eventually, I reached a tipping point where I had to do something or I’d never be able to recover.

I know it sounds dumb, and looking back at it, there’s no reason as to why I should have been going so crazy. But in the thick of it, I could not clearly see what to do.

Just before turning 26 I got myself to believe that I had to push the reset button on my life. In a short span of time, I broke up with my girlfriend, found my own apartment to rent, left my job, and “retired.” I was trying to do something symbolic with the end of my first 25 years of life. What I didn’t know at the time was that forcing things to happen is not the right way to deal with situations.

Now, at 27, I have the scariest 5yBAUS I’ve ever had. No job, no girlfriend, no prospects, and a much higher cost of living. Add onto this a lack of motivation to make money because four years of chasing Financial Independence got me a pretty sizable investment account. The fear of failing at whatever I do next is still lingering in my mind. It may never go away. And the thing is, I’m extremely comfortable. I could live like this for at least five years without having to make any money, and that’s why this BAUS is so scary to me.

Is this my future?

It’s the exact same way I felt when I was able to do my job in my sleep. I knew something had to change otherwise I’d blink and five years would have gone by. The only difference is that now I’m not making any money.

Loop complete!

Of course, there are things that could happen which would force me to adapt. For example, if my roommate decided to move, I would have to move. If I stayed in the same place, my rent would triple or quadruple due to the after-effect of rent control. If I depleted my investments and still had no income, I would have to move back home, or preferably out on the street. I hear they take pretty good care of the homeless in San Francisco.

So of course, something needs to change here. It’s obvious that I need to get a job. I need to rebuild my emergency fund, and restart the debt management machine, so that’s what’s going to happen.


Today, I see the five year BAUS a useful gauge for how my life is going. Any time I get too comfortable, I get uneasy. It’s very difficult for me to relax when my life has become easy because I believe there should be some type of challenge to overcome all the time.

The problem with the 5y BAUS – and why I don’t recommend you use it to make any major life decisions – is because it assumes that nothing happens unless you make it happen. It’s a fun game to play with friends, but it is an extremely dangerous way to go about living your life.

Let me give you an example. At my last job, I thought I had to do something because I thought I wasn’t growing. I could do it in my sleep. I was literally on autopilot. I took it upon myself to do something, and I ended up quitting my job for some pretty stupid reasons.

About six months after I had quit, an old colleague messaged me saying that she had referred me to a recruiter and given me a glowing recommendation. It was the same person who had referred me to my last job. The recruiter messaged me as well. I was so excited. She asked if I was still working at the company she had referred me to. I said I was not. No response. No response from the recruiter either.

I’m not sure why they both stopped replying to me. My guess is that she didn’t want to refer me into a role if she thought I would just end up leaving the job after a year or so. Of course, she doesn’t know the full story, but I cannot blame her for perceiving the situation as it seemed. I might have gotten fired for all she knew, and she has her own reputation to protect.

It was an important life lesson.

It could have been an opportunity:

Let’s say I was still (sleep)working at my last job. Would she still have referred me? Yes. Would it have looked better that I was still gainfully employed? Yes. Would the recruiter wanted to recruit me? More likely.

Would that event have woken me up?

Would that event have changed my 5yBAUS without my doing anything?

There are always things in life that are not apparent to you. You cannot predict them. It would have been impossible for me to know that my old colleague would have referred me to another recruiter. Looking at your life right now and projecting what it would look like in five years is an interesting thought experiment, but acting upon it may screw up your life’s natural progression.

So here’s my advice, realized after five years of trying to get my life to look better in five years: Just relax. Don’t fret over the state of your life. Live. If you’re comfortable, enjoy. If you feel like you’re sleeping, enjoy the sleep. Something will come along and wake you up.

Just make sure not to hit snooze too many times. You might be late.

I hope you enjoyed this article. If you have any questions, or comments, please leave a comment, or contact me directly.

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