Stay Away From the Bay

Why would I give you such a message?  Well, the cost of living in the Bay area is much too high to save a large portion of your income.  As you may know it is not how much you make that counts, it is how much you save.  I wrote last time how it was frugality that mattered.  Earning $500,000 can still feel like you are barely scraping by.  So let’s use a scenario where you are working in Houston and are offered a promotion to headquarters in San Francisco with a nice $15,000 raise (25%) to $75,000.  Should you take it?


One of the biggest expenses for a household will be income taxes.  In Texas, with a $60,000 income you were paying $8,145 in federal taxes and $0 in state income taxes.  However, moving to California with your new salary puts you at $11,895 for federal taxes and around $4,000 in state income taxes.  So your $15,000 raise is reduced by $7,750 in additional taxes, but it’s OK because you are still up $7,250 right?


Excited by all the extra money you are going to make you move out of your $1,245 a month place in Houston and show up in SF after two days of driving.  You are shocked when you go on a tour of a place similar to the one you had and the rent is $3,590.  You obviously can’t afford that, so you decide to rent a bedroom in with a friend who has a two bedroom.  He is a nice guy and gives you a discount, only $2,000 a month.  So instead of paying around $15,000 a year for rent you are up to $24,000 and you are sharing a place.  You were $7,250 ahead after taxes, but with $9,000 more in rent you are now $2,750 behind after rent.  But it is fine because you are living in such a cool place?

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The Millionaire Next Door Lessons

I recently purchased a Kindle because my wife was reading so many books on her phone that she was borrowing from the library.  I used $80 of Staples credits I got from ink recycling and then spent $20 of my Discover rewards to get a $25 gift card.  The Kindle was on sale for $100, so now I have a sweet $20 Kindle.  Many months ago I started the Millionaire Next Door, but this weekend I went to Morocco, started an Instagram, and finished the book.  Here are some of the lessons I learned.

Lifestyles of the wealthy

When you think wealthy you may think of fancy cars and a big house.  However, this lifestyle is very expensive to maintain and is often financed.  Many of these people do not have much wealth, but have a high income and spend all of it. Wealthy people often live in neighborhoods with middle class people and don’t show off their wealth.

It’s about frugality

What being wealthy comes down to is frugality.  There are people who make $500,000 a year and struggle to make payments on their cars because they have so many expenses like country clubs, private schools, and timeshares.  Being frugal allows you to have a higher savings rate and retire earlier.  If you make $50,000 after taxes, spent $45,000, and save $5,000 (10%) then you need to work 9 years to save enough for one year of expenses.  However, if you can trim a bit and only spend $40,000 then you only have to work 4 years to save enough for one year of expenses.  Taken it even further if you could save 50%, each year you are saving enough to pay for another year.  Combine this with investments and you can see how growing your wealth and early retirement works.

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Spent over $100 on Skincare

And apparently I got a deal!

Little did I know that women use a lot of skincare products until I got married.  There are “routines” to be followed with products like toners, cleansers, serums, and moisturizers.  But you’re likely a woman and know this, so let’s move on to how we can get the best deal possible.

What I got

My wife wanted the pictured product, a serum that costs 122 bucks for 3.4 fluid ounces.  A gallon of this stuff would cost $4,600!  There are two smaller sizes, such as a 1 ounce which is $46 but that is even more pricey per ounce.  So why did I give in?  Well, I’ll explain.  I’m taking a course in Marketing and know the Kiehl’s is a premium product and likely has an 80% margin.  This means that they will try not to do discounts, however, they may try other promotions.  This week was such a promotion with a full-sized cleanser and 4 larger samples (yes samples are valuable too) with purchases over $100.  Then I checked the shopping portals and noticed that British Airways had double points meaning I could get 24 points per dollar, almost 3,000 total ($45 value in my book).

How you could do better

I was almost able to get an addition $16 off by purchasing a Kiehl’s gift card from SaveYa.  However, they flagged my account as suspicious, probably since I was trying to buy dollar-denominated gift cards from Europe, and I was unable to make the purchase.  I also joined the Kiehl’s Rewards program which will give me $10 in credit at some point for this purchase.  I don’t know what my wife will need by then because 3.4 fl oz should last 10 years right?


I love to be frugal and could probably use Boraxo to clean myself.  However, I’m not going to mandate that my wife can’t have any beauty products.  Life is more than just money.  We don’t have to spend it all to be happy, nor do we need to save it all.  Find a healthy balance that works for you and hopefully your money will be working for you rather than you chasing after the money.

Looks Like Women Like My Advice

It appears that women are going to be the rich ones of the future because among my Facebook fans 69% of them are women.  Back in high school, my English teacher said that women rule the world.  I disagreed pointing at the Wall Street Journal I carried everywhere showing him Bernanke, Obama, Buffet, and other men.  He said I would come back within ten years and admit that he was right.  Nine years later I went back and told him he was right.  The Fed Chair is now Janet Yellen, I am married, and Hillary was almost president.  So I guess it shouldn’t be surprising more women are reading my advice and saving money.  So now I have to think of a way to talk to my female audience.

Women’s Products

You may have noticed that there are products made just for women.  This could be clothing, deodorant, or even the notorious Bic for Her pens.  A study found that among a basket of 800 products in the UK those targeted to women were 7% more expensive.  I am going to recommend considering men’s products, but probably not for dresses.  I have used women’s stick deodorant and didn’t notice any difference and I suspect it is the same as men’s in a smaller package.  Perhaps I missed out on women flocking to me as the Axe commercials show, but I don’t need that.  A razor will cut hair whether it is pink or black.

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Living in Lisbon

I have said in the last few articles that I have been living in Europe.  The city is Lisbon, one of the cheapest capitals in Europe.  It has a great quality of life and it is pretty cheap to live here.  It is not nearly a cheap as Tainan, but it certainly blows away the high cost of living in Orange County.  Today I will give you some of the costs of living here and point you to a website I thoroughly enjoy, The Earth Awaits.

The Earth Awaits (TEA)

As you can see, living is Lisbon cost less than half of what it does in Irvine, where I was living before.  It can often be difficult to gauge the cost of living before going somewhere.  But with TEA you can input your lifestyle and get a reasonable estimate for the cost of living elsewhere.  This is great if you are thinking of working abroad, hoping to retire somewhere where you can live more comfortably, or maybe you have another idea.  I’d definitely recommend trying it out.

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Currency and International Transfers

I have been able to travel a bunch and that means going places where the US dollar is not used.  Currently, the dollar is very strong and that allows us to purchase more when buying in other currencies.  This is been a boon for me to pay for my tuition which is denominated in Euros.  The price of €36,000 is $38,500.  Just two years ago that would have cost me over $45,000.  So now that I am living in Europe I need Euros to spend because not everywhere accepts credit cards.  So how did I do it?


So if I think my expenses for the year will be around $10,000 I could carry that amount in cash and exchange it here.  The problems are several with this method.  If you bring in more money make sure to declare it so it is not confiscated.  Next, carry a large amount of cash is dangerous.  Lastly, you’ll need to exchange it somewhere for a below market rate.  I lost my wallet last weekend and urgently needed cash so I exchanged some US dollars I brought.  The rate I got from the place I exchanged was .895 € per dollar.  Not too great when the rate on Google shows .94 €/$.

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Free Trials, What Could Go Wrong?

So, I’m living in Europe at the moment and don’t have as as many opportunities to hustle, but I’m learning a new culture.  So here they have very affordable cellular service.  A 1GB plan is €2.45 a week and a 5GB one is €3.99 a week.  I got the 5GB, but it may be overkill.  One thing that is pretty cool is that you can go to the store and they will give you a SIM card which you can use for free for a month.  After that you’ll have to reload it.  This is a form of a free trial and that is the topic of the day.


Never tried Netflix nor have a password from a friend?  Well, you can get a month free.  I’ve used this before, as well as for Hulu.  However, now I’m off Netflix until the next season of House of Cards is released.

You can try Spotify Premium for 30 days.  I use the free version, but wouldn’t it be nice to not listen to commercial even if only for 30 days.

Newspapers, business journals, Amazon Kindle Unlimited also have trials and you will get charged after the trial is over so make sure to cancel if you don’t want it.

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Paying Off Credit Card Debt

This is the first article I am writing based on reader request.  This person wanted to know how they could pay off credit card debt.  This is a situation that many people are in.  I hope if this is your situation you would like to get out of it so you can save more and have less financial stress.  Let’s see the options.

The first steps

The first thing you must do is set your spending below your earnings.  If you spend more than you take in after taxes then your balances will go up and you will NEVER get out of debt.  So once you have done this, stop using your credit card.  You are earning more than you spend, so now there is no need for credit.

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