I’m Calling the Top

Market DownI think I have been reading way too much Zero Hedge lately because I have bought into the idea that the market is overvalued and a decline is imminent.  I have moved to mostly cash and even bought some Bear ETFs which rise on a stock market decline.  If you look at people trying to beat the market then you will see in almost every case they lose.  This will probably happen to me, so writing this article will be a good record of poor decision making.  But let’s see the evidence before reaching a verdict.

For

The market’s PE Ratio is current over 25 meaning that the stock market is priced at 25 times its annual earnings.  This is much higher than its historical average of 15.6.

China’s growth is slowing.  This has hurt countries that are close partners, but China deals with just about everyone, so the ripples will expand.  In my area buyers from China also buy half the new homes so as it becomes harder to move money out of China that will hurt property prices.

Against

The world is entering a new period where growth will be slower, this provides fewer good investments and therefore the price quality investments goes up.

Unemployment is at the lowest level ever and the Fed thinks the economy is good enough to consider raising interest rates.

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This entry was posted in Save.

Rent or Buy

Old HomeThis is a classic question, but now you can hear my take on it.  As you probably have read, I am in Taiwan for the summer which means living in a different manner.  Here rent is not very expensive, but purchasing a place is.  In fact, the price to rent ratio is 768 which means it would take 64 years worth of rent to buy the place.  In the condo I lived in in Irvine, the ratio was 18 years.

The basics

There are some simple rules to keep in mind when deciding between renting or buying.  First, if your situation is short-term or uncertain you should rent.  I’m in Taiwan for two months, it would be ridiculous to try to buy a place.  Next, if you can’t afford it, or if buying will put you on the financial brink then stick with renting.  In this case, buying can be dangerous because an unfortunate event could cause you to miss payments and could result in your home being taken away from you.

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Learning to be Content, a Secret of Life

BeachIf you are reading this then you very likely own a phone and computer, have somewhere to live, and are in the top 10% of global income and more likely top 1%, details on income here.  Despite all our good fortune, we still find plenty to complain about and we get stressed.

So let me share a parable I read years ago that provides lots to think about.

Once there was an American investment banker on a much-needed vacation.  He was standing on the pier of a small coastal Mexican village when a small boat with just one fisherman docked.  Inside the small boat were several large yellowfin tuna.  The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

The Mexican replied, “only a little while.” The American then asked why didn’t he stay out longer and catch more fish? The Mexican said he had enough to support his family’s immediate needs. The American then asked, “but what do you do with the rest of your time?”

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This entry was posted in Earn.

Business Taxes, Sales and Use

Sales and Use TaxToday is August 1, which is the deadline for filing California Sales and Use tax.  I finished yesterday and what a relief it is to be done.

Since I am in Taiwan my mail has been going to my parents and they told me the Board of Equalization sent a letter regarding the upcoming due date for sales and use tax.  I logged into my account and tried to figure everything out.  In the process, I learned a lot that I will share with you.  It may not be relevant to everyone, but great info if you plan on starting a resale business.

But before we start, I just came back from a five-night stay in Tokyo.  We had free hotel and a free flight to Tokyo which really helped cut the cost, but guess what, it still cost over $1000 for two including the flight back to Taiwan.  Didn’t take long to blow through lots of those savings I wrote about last week.

I had a good start to 2016 becoming a Sears millionaire and flipping MacBooks.  Fortunately, most of those sales were to out of state residents, which means I did not need to collect taxes on them but I will still pay tax on the profit generated.

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This entry was posted in Earn.

Tainan, My Cheapest Month

Electricity CardI am currently living in Tainan in southern Taiwan.  Taiwan has a low cost of living and Tainan is great because it is even cheaper than Taipei, the capital.  I have been tracking all my purchases to give you a sense of how much it costs to live here and if you ever wanted to retire here I’ll explain how much you would need to have.

My expenses are broken down into four categories: living expenses, schooling, food, and transportation.  I have converted all numbers into US dollars, the current exchange rate is $1 to NT$32 and I actually get that with my Schwab Checking account.

Housing

Thinnest Bed EverFor my first month, I lived in the student dorm; next month my wife is done with her world travels and we are moving into an apartment.  One month of rent cost $210 for a single with a private bathroom.  I learned this is the most expensive dorm and most people would pay $100-$200 for a room after they graduate. When I arrived I learned that my room came with nothing.  On the first day, I had to buy a mattress but I opted for the cheaper one-inch pad which was $15 and is foam between cloth, so as you can see, it is like sleeping on a piece of wood.  I also had to buy toilet paper and just about anything that is not bolted to the wall.  I elected to skip the shower curtain and squat in the shower so the water doesn’t go everywhere.  Was that oversharing?  Electricity is not included and you have to buy a card which displays your balance and your electricity cost is constantly deducted from the card.

Total cost: $293

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Thoughts on Working Remotely

IMG_20160718_214028I am in Taiwan for the summer and that means my new desk is wherever I place my laptop.  This is my first experience working remotely and I’ll share my thoughts.

Positives

  • I do not need to dress up for work.  It is nice to be able to wake up and go to my computer and start working.  I don’t need to put on a collared shirt or shave and there is no commute.
  • I have been able to build my own schedule.  I have a gap in the middle of my day to learn Chinese.  I have an automated task that takes several hours, so it has been great letting it run while I’m in class.  With a normal schedule, it would be a bit of a hassle to have it running while doing other tasks.
  • I got to work from a different office recently.  Since I am in Asia I got to see our office in Singapore and connect with the team there.  This scenario would have been unlikely if I was still at my desktop.
  • I have a much lower cost of living.  Taiwan is much cheaper than Orange County.  I will post in the future about just how much cheaper.  If you can choose where to work you can spend less and save more.

Negatives

  • Working remotely means I need to remotely connect to the work network which makes sending and receiving server files slower than at the office.  This means being patient and coming up with clever tricks like saving copies locally.  Once I have the files I can work at normal speed.
  • I can no longer stand up and chat over the cubicle walls.  I have messenger which is very useful but our day only overlaps if I stay up really late.
  • For others, it may be hard to keep your motivation.  I have not found that too difficult because I have daily, weekly, and monthly tasks to stay on top of.

Abroad bonuses

  • I realize how little I need.  I brought a suitcase and a carry-on and have been great.
  • I get to practice language every day because I need to use it to buy food, ask for direction, or do anything.

Who can do it?

Like I said before, working remotely was a big ask.  You could try to ask for something smaller like working from home while you are sick or maybe a day each month.  If you can function fine without being in the office then working remotely may be for you.  However, you need to be motivated to work otherwise it could turn into a disaster.

I imagine working remotely is a taste of what it would be like to run your own business.  However, running a business could be much more than an 8 hour a day endeavor, so sticking with my job sounds good for now.

Conclusion

If you are fortunate enough to have a chance or create a chance to work remotely I’d try it out.  I am happy to be working remotely for a summer, but I do look forward to returning to my coworkers.  After three weeks I already feel that they are forgetting me, but the reports are still getting sent and the files aren’t magically appearing, so I’m sure they know I’m still being useful.

This entry was posted in Work.

Technology Buyer’s Guide

My MacBookTechnology plays a big part of our lives.  It makes it convenient to find information and access entertainment.  So it is understandable that we would want to have phones, TVs, and computers.  People have told me that gadgets are really cheap in Taiwan, but I’m not in the market for anything so it doesn’t matter to me.  Yet there are so many choices no matter where we are so how should we go about choosing?

Phone

Except for two years in college when my parents thought it was absolutely necessary to have a smart phone I have always had to pay for my own plan and phone.  I have always chosen prepaid which meant purchasing an unsubsidized phone.  This has lead me to shun the newest phones with prices over $500 in favor of getting someone’s old phone from Craigslist because they want an upgrade.  I have found myself usually two generations behind the current phone model.  For years I had a dumb phone and then moved up to an S2 when the S4 came out, then an S3 for a while and then an S4.  I get them for around $75-$150 so I’m not even worried if it breaks.  More recently I got a brand new Amazon Fire phone because they were practically giving it away at $125 which included a year of Amazon Prime.  I still have that and am using it in Taiwan.  Just last month I purchased a refurbished Galaxy Note II (4.5 generations behind) to use on Freedompop because you need a special phone for their plan, but that was only $90.  I’ve probably had a dozen phones in as many years, but the total depreciation of them has been less than $1000, so my cost hasn’t been too high.

So now you are thinking, yes, Android phones are cheap, but I want an iPhone.  Well, maybe it is my wife who is reading because she likes having an iPhone too.  She was on her parents’ plan before we got married and got to upgrade iPhones starting with 4.  She had a 5 which we sold and used the same idea of getting an older generation phone to switch to a 5C.  As luck would have it she currently uses a 6 because of a crazy Discover Card promotion that gave 10% back on Apple Pay purchases which required an iPhone 6.  Even so, I got that one used!

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Do You Really Need Insurance?

Car InsuranceRecently my wife turned 26 which you wouldn’t think is a special birthday.  However, it is the birthday which you are no longer allowed to be on your parent’s insurance.  So naturally we started to discuss health insurance options.  This is considered a qualifying event so she will be able to purchase insurance.

Health insurance

In the past, you could take a gamble and go without health insurance.  Today you still can but you will have to pay a penalty to the government.  The penalty to go without coverage is the greater of $695 per adult or 2.5% of your household income.  There is an exemption to the penalty if you did not have coverage for up to two months.  You can see it is kind of costly to go without insurance, but still cheaper than an unsubsidized $150 a month minimum coverage plan.

In our situation, my wife will only need coverage for four months until I turn 26 and can get a family policy through my employer.  Even if we were eligible for an exemption to the penalty I would still purchase insurance because health issues can pop up unexpectedly and can be a huge financial burden with and especially without insurance.  Three years ago I broke a finger and needed surgery, instead of paying $7,000 for all visits and surgery my total was closer to $1,000.  That was just a finger, imagine the cost for a vital organ.

To reduce the cost of your insurance, choose something with a high deductible.  Even though you will have to spend more up front on medical expense you will pay less if you don’t need frequent medical attention.  Your care can also be paid with a flexible spending account.

Car insurance

As I am risk-averse and want to protect myself from financial trouble, car insurance is a no brainer.  I am doing a little bit of gamble by paying per mile for my insurance, but being in Taiwan means no miles added to the car and therefore a low premium.  In California and a majority of states, it is required to carry car insurance.  Here the minimum is $15k/$30k/$5k which is the max the insurer will pay for injury to one person/multiple people/property.  I carry more than ten times those limits because it wasn’t too much more expensive and stuff these days is so expensive to fix, I don’t want to worry about it.

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This entry was posted in Car, Save.