Tax Consequence If My Wife Stops Working

Low Probability + High Return Hedge Strategy

Gen Y Finance Guy Financial Analysis 4 Comments

In a prior blog post, I alluded to a new strategy that interests me. It’s one that most will probably not agree with, which makes me like it even more. Please understand that what I’m about to write is not a recommendation for you, nor should it be considered financial advice. Ever since reading Nassim Taleb’s book “The Black Swan” back in 2011, I’ve been intrigued by the concept of investing in what is known in sophisticated financial circles as “tail risk.” Tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution. – Investopedia In …


FIRE Starter – The Non-Financial Side of the Rent vs. Buy Debate

Zach Financial Analysis Leave a Comment

You can find all of Zach’s previous posts here. Today, Zach is going to discuss what often becomes a very heated debate in personal finance circles. It’s easy to do the math to find the optimal financial decision, but not every problem should be solved with math alone. It’s a little like trying to build a house with just a hammer: when you have just a hammer, everything looks like a nail. I know…this goes against my mantra that “the path is all math.” But sometimes personal finance gets, well, personal! Many people forget to account for the time and emotion variables that should be weighed in conjunction with the math.  I hope you enjoy Zach’s latest FIRE Starter post …

Mortgage Deduction

Tax Savings for Home Ownership Are Very Overrated (Especially Under 2018 Tax Reform)

Gen Y Finance Guy Financial Analysis 22 Comments

Do you believe that one of the primary benefits of owning a home in the USA is the tax savings from itemized deductions like mortgage interest, and property taxes? Weeeellll…I have some bad news for you. Despite the fact that this idea is so ingrained in most of us that we don’t even question it, any of that savings is a lot less than you – and I – might have been led to believe. Personally, I have to be the first to admit that I have overvalued these primary residence “tax savings.” And this was before the 2018 tax reform, which has only made things worse. For most of the homeowners in the USA this tax benefit has now been eliminated due …

Rule of 72

The Rule of 72 – The Shortcut to Double Your Money

Gen Y Finance Guy Financial Analysis 7 Comments

How long will it take to double your money? Can you do the math of compound interest in your head? Do you want to extrapolate how long it will take your money to quadruple, octuple, or to hit an even bigger Big Hairy Audacious target, Freedom Fighter? Do you wish there were a shortcut to all these answers? Well, I have good news for you! There is a simple formula you can use to get a decent approximate answer – all without any fancy or complex math. It’s the “Rule of 72.” This simple shortcut will give you an approximate time – in years – that it will take to double your money (investment, net worth, etc). All you have to …

How much a car cost

Cars Are Expensive – Really F*cking Expensive – They Destroy Wealth

Gen Y Finance Guy Financial Analysis 28 Comments

A few months ago I shared a post about helping my brother get a new car after he totaled his previous one. It really got me thinking about how much it was costing the GYFG household to have two cars. Unfortunately, we bought our cars before we had solidified our financial philosophies. My wife and I both bought new cars within a 12-month period of each other. I bought my Hyundai Sonata in April of 2011 for $32,000 and we bought my wife’s Hyundai Tuscon in April of 2012 for $32,000. Back then we were only earning around $170,000 combined.  Yes, we spent 38% of our annual income on cars! It makes me throw up a little in my mouth when …

Top 5% Income Earner

Income Across the USA – What Does It Take To Be In The Top 5%? Top 1%?

Gen Y Finance Guy Financial Analysis

As the income of the GYFG household has continued to grow, being the data-obsessed fellow that I am, I started to wonder where we ranked against other earners across the United States. Most people benchmark their investment returns, so why not benchmark our income? Lucky for us, the NY Times has made this extremely easy with the interactive tool they created (based on data from 2012, a little dated, but should be close enough). (Sidebar: I continue to believe that we live in the best time in history for making money. It has never been easier. THE INTERNET HAS CHANGED EVERYTHING!!! Although I recognize that inequalities still exist, the entry barrier to earning big has never been so low, nor has the …

Simple Wealth Building

Wealth Building Made Simple: Make Sure You Get A Little Richer Every day

Gen Y Finance Guy Financial Analysis, Financial Freedom 12 Comments

Note: Just to clear up any confusion, although I say “get a little richer every day,” I don’t mean this in the literal sense. The idea is to get a little richer every day on average. Personally I calculate this by taking my total savings for the year dividing by 365 days. I have known since I was a little kid that I wanted to be rich. It wasn’t until I got to college that I knew I was going to be rich. As you can imagine, I started reading all the books, filled with all sorts of strategies to accumulate wealth. It was very stimulating to fill my head with all these clever ideas on building wealth. Every day …

Options or Equity

The Details Behind Our $105,000 Investment

Gen Y Finance Guy Financial Analysis 58 Comments

One of the perks of joining the executive team at the company I work for is either being granted options or the opportunity to get equity (i.e stock) in the company. Not everyone gets a choice, but I am fortunate to be in a position where I get to choose. There are pros and cons to each, which I plan to walk through in this post. My hope is that by the end of this post I will have made a decision. As you can imagine there is a risk/reward trade off between the two options. For those not familiar with options, an option is a derivative of stock, meaning the option derives it’s value from the underlying asset (i.e …

Mortgage Like a Bond

Paid Off Mortgage is Equivalent to a…Perpetuity?…Bond?…Dividend Paying Stock?

Gen Y Finance Guy Financial Analysis, Mortgage Snowball 30 Comments

Having a fully paid mortgage sure does get a bad wrap around personal finance circles. I constantly see arguments about money being super cheap and that paying off the mortgage will lead to a loss of the interest tax deduction. I won’t argue that rates are historically cheap and that eliminating your mortgage will lead to eliminating the tax deduction. First, remember that with the tax deduction you get 30 cents on the dollar. So, although this is a step up from renting (in my opinion, and situation dependent), if you don’t have to pay interest, why do it? Why doesn’t anyone talk about a fully paid mortgage as a bond substitute? Or compare it to that of a dividend …

Financial Independence Lens

Looking at Savings Rate through the Financial Independence Lens

Gen Y Finance Guy Financial Analysis, Financial Freedom 22 Comments

In previous posts I have talked about how we currently strive to save 50% of our after tax income and how important your savings rate is in building wealth rapidly. But after listening to the Radical Personal Finance Podcast, it made me realize that this may have not been enough to sway you. What I mean, is that this may need to be translated. It is very easy to conceptualize and visualize what a 50% savings rate means to in terms of dollars. But what does it mean in terms of Time Freedom? What may not be as intuitive is what it means for your ability to reach financial independence. I had already previously internalized the fact that a 50% …