Roll the Dice

Shhh… Sharing Your Financial Situation with Others

My company recently updated their benefits offerings to include financial knowledge courses (just shows how great my company is!). This tells me a couple of things…

  1. A good retirement (e.g. 401K) strategy for your employees can retain and attract talent.
  2. The retirement/investing world can be daunting even for those that have the money be a player in it.

This has also caused a quite a buzz at work. I have had a few debates from what is the right investment portfolio to college tuition planning for children to starting small side businesses to create passive income. As a personal finance nerd, I have had an awesome time. I love sharing experience and knowledge with others. Here are a couple of stories I found interesting and what might be helpful to you.

The Lost Investor

I caught up with a former manager who has a three year old daughter and dreams of retiring in ten to fifteen years. Sounds great I told him which he promptly returned a depressive swirl complaints about endless work and his measly 401K. I counted with “No way!” He started in the company’s heyday and rode some pretty prosperous times. My 401K is solid, so I thought his must have been stellar. So I probed a bit more to figure out what was going on. To be fair, he married and became a parent late in life, I’m sure the new lifestyle and its costs gave a quick sucker punch to his savings and drove his spending through the roof. But then he told me something that violated a very basic tenet of investing; his 401K consisted of 50% company stock. Half your retirement in only one investment is a big fat red flag; sound the sirens immediately. I was shocked. Here is a guy that took care of entire department budgets and advocated for his staff’s promotions and raises, and he staked his entire retirement future on one investment. Top it off with the fact that the other 50% was in a index fund which meant his asset allocation was 100% stock. I was actually scared for him.

I will advise when you meet someone like this, do not judge. Keep a straight face. Everybody has their own story. Be empathetic to the dreamers and schemers, but throw some logic at them.

Once the dust settled, my ex-manager started asking about my retirement plans and I stopped him right there. I gave him an action item to sign up for the financial knowledge courses the company offered and talk to me after that. As much as you may want to help an old friend or colleague, they’ve got to learn the basics. Not just the financial terms like diversification, but they have to understand where their spending, risk tolerance, and goals are at. If they are completely uninterested in learning these things, then I would advise them to hire a financial adviser from trusted referrals.

So first piece of advice: Learn about your investment/retirement options. Learn to be interested in them. If you can’t/won’t do either, learn how to judge a financial adviser really well.

The Copycat

My counterpart on another team and I are the same age, same career and retirement goals, and we talk “shop” pretty frequently. I’ve shared my investment and retirement strategy which is essentially to keep my yearly expenses below $40,000/year, tap out my 401K and Roth IRA, and push everything else into mutual funds and choice REITs/stocks. My calculated retirement age is between 45-50 given these factors. He, just as many people, wants to retire early too.

Lately he’s been wanting to know every single stock in my investment portfolio. Again, no problem, I give that knowledge freely to friends. However, in hindsight, I would have done something differently.

My colleague’s goal was to figure out his retirement sources. Which is great but his goals for retirement living probably differ from mine. I choose REITs, high dividend yield stocks, etc. because that’s what I’ve decided to use as passive income in the future. Many others have different routes like property investment or more creative outlets like blogs and teaching courses for example; I have no desire to be a property manager and hope to spend most of my time volunteering in different countries. I also only selected investments that are in my realm of expertise. Usually I follow the industry as a whole and utilize that knowledge to look for key risk/benefit indicators that fit my portfolio. For him, he is more likely to follow local economy and benefit from an extensive local family network; he might be better off looking into investment property or opening a small business. Who knows, but it is likely that my projected passive income wouldn’t cover his retirement plans.

So for those that are chomping at the bit to get into investing my advice is this: There are no home runs, no perfect investments. There is only the right investment for what you hope to accomplish.

The Overall Experience

So I came through with a third revelation after talking to so many people about their investment plans. Money is still a very taboo subject. I talk about money with family, friends, co-workers, even strangers with whom I share an Uber pool. I have no problem sharing this information or asking others about similar details. It is no different then talking about the daily weather patterns.

This was not the case with my fellow colleagues. There were several instances where we spoke in whispers. A couple of times they would actually look around to make sure no one was around before they told me about their fears about retirement or how they were investing for their child’s college education. I found this really odd, but completely understandable.

My final piece of advice to EVERYONE: Talk about your finances with someone, preferably someone NOT trying to sell you something. Learn to think about the future and to own your choices by having those words come out of your mouth.

Relaxation is somewhere

Trying to Relax Without Stressing Out

This is the busiest time of year for me. Thanks to intern season*, we try to punch out as many quick-win innovative projects as possible in the span of three months. For me, it means finally starting on those pet projects and the “if only we had more [insert resource here]” changes. Which also means 5-8 projects running concurrently with relatively the same deadline.

Translation: Everyday is crazy amounts of exhilarating and equally insane amounts of stressful. 

I’m pretty sure I’m not alone in this. Most folks work jobs that are similar. Whether you follow the weather patterns, the tax calendar, or holiday sales, there are just some times of year where you’re bordering on burnout. Though some are energized by these hectic periods, others like myself need time to decompress. As far as this blog is concerned, my problem with relaxation cost lots of money… so much so that it causes yet more stress. It’s the typical cycle of living to work and working to live. So I wanted to take a look at how I could change things. Here’s how it breaks it down now from a previous summer.

  • Small Indulgences (2 times per month)
    • Reading a new book or checking out a movie in theaters – $15
    • Getting brunch and a latte from my favorite spots – $26
    • Happy hour with the girls (cab fare and cost of drinks/food) – $45
  • Bigger Indulgences (2 times per 3 months)
    • Weekend trip to visit college friends out of town – $650
    • Spa facial/massage – $165

For one summer that means I would spend about $2,146. That is just for the indulgences. Include the regular cost of living and things that I already overspend on and you can see how my budget spiraled out of control by the time I was gearing up for the holiday shopping season.

Usher in 2015 which brought major life changes. The need to reel-in the budget is the strongest it has ever been. I know I need to find alternatives to some these pricey favorites. Lets be honest though, the best way is not spending at all if I wanted to save money. I’ll address this right now. This is not possible… or at least highly unlikely. Maybe your brain is wired to obey your every command, but mine tends to run without me even noticing at times (darn that clever thing). It’s as if I have to trick my brain so that it still feels pampered. So instead, I employ the substitute method. The goal is to feed the habit with something a bit more beneficial to my wallet.

Lets take the example from above and now substitute what I consider equivalents.

  • Small Indulgences
    • Reading a new book – $15
      • Borrowing book from library – $0
      • If you have Amazon Prime, reading on off their periodic free offers – $0
    • Checking out a movie in theaters – $15
      • Redbox rental -$2
      • Subscription-based streaming video (e.g. Netflix) – $4 (per movie if watched at the same rate)
      • City-sponsored outdoor movie viewings – $0**
    • Getting brunch and a latte from my favorite spots – $26
      • Prep a quick breakfast (e.g. yogurt and granola in a jar, toasted bagel with some toppings, etc.), buy the latte, and head to a bench at the park – $7
    • Happy hour with the girls (cab fare and cost of drinks/food) – $45
      • Group run and finish with ice cream at local shop – $4
      • Set the location as someone’s house, split two bottles of wine, gossip all night – $10
      • Work the charisma, get drinks for free – $0***
  • Bigger Indulgences (2 times per 3 months)
    • Weekend trip to visit college friends out of town – $650
      • Make it a camping trip, road-trip –  $125
      • Have them visit you instead. Plan activities around spending less money (e.g. cooking meals at home, hiking local trails, etc.) – $75
    • Spa facial/massage – $165
      • Use at-home facial masks, products – $10
      • Turn on some chill music and practice meditation – $0
      • Drop in at a community yoga class, outdoor or indoor – $30
      • Make some spa water (e.g. water, lemons, mint, etc.), pack a blanket and some tunes, and head to the park to lay out – $4

I will admit, when I started substituting it was a bit difficult. There were times when I felt that this was too much work than it’s worth. For example, camping is just not my thing. It isn’t that I don’t like the idea; it just takes WAY more coordination and motivation for my group of friends. Meditation is another one that is out of my realm. My thoughts run a mile-a-minute when trying to meditate; I find that I just do better if I’m active and there is something distracting (e.g. balls when playing sports or flowers during a hike).

I do love a few of the substitutes more than the original. The library is my absolute favorite; there is just something so calming about getting lost in book titles strolling through the aisles. Also, getting outside with an easy to eat breakfast has been way better than heading to a crowded cafe. There’s still great people watching at the park (I have a local dog park that’s always full of fun pups) but no rush to finish up with hangry stares of waiting patrons.

Budget tricks, stress spending, etc… What are you doing to break this working to live, living to work lifestyle? I’m always in need of feedback and suggestions.

* Intern season is when 20-24 year old college students desend upon San Francisco to be minions at the top companies in the US. During this time, the city is overrun with crowded buses and bars exceeding max capacity limits. 

** Extra savings because you can bring your own snacks and sneak in some “beverages”

*** Not sure how this is done, but I’ve witnessed it in action enough times to know it’s possible. 

Conversations with Siblings

My [Older] Brother’s Advice on Getting Pre-Approved for my First Home Purchase

For the past few months I’ve been debating buying a home. Nothing fancy, maybe a three bedroom bungalow or a nice condo with some decent amenities. As with any new endeavor, I started with my own scanning of articles and blogs on the Internet for advice. There wasn’t anything particularly inspiring in my search. Just the usual: “get your finances together,” “getting pre-approved is better than getting pre-qualified,” etc. Then last week I decide to shoot a quick text to my brother:

” Do you have advice on getting pre-approved for a mortgage?”

Now before I get to his response. I want to add that my brother and sister-in-law own a few homes, including rental property. They also went through the housing bubble crisis; they bought a house right before and another house when the market bottomed out. I consider both, especially my brother, savvy in home purchasing.

So his response? A sequence of 25 ranting texts. Unlike the home purchasing articles, I actually found his advice worthwhile and thought maybe you would to. Here goes.

1. First thing he said:

“Forget about getting pre-approved…. find out what you want to buy for your future first.”

His point was that if you’re going to purchase a home, it should be about how long you plan to live in the area and where you see yourself in the near and distant future. If the future means having a family, then look safety and school districts maybe your thing. If you’re a rising star at work then something low maintenance and close to work (or school, if you’re pursuing an advanced degree). What you should not be focused on first, surprisingly, is the finances.

2. That being said, there’s really no avoiding the finances part. My brother quickly follows his “forget about the finances” comment with…

“If you have any debts, even small ones, get rid of them.”

Also your history of monthly expenses will be looked at. So even if you have no debt, how you’re living paycheck to paycheck is evaluated when determining the loan amount.

3. Another important tidbit he points out:

“Banks aren’t just looking at you.”

For most of my life, I’ve really just taken care of myself and I looked at purchasing a home as my responsibility. Nope. If I have a baby on the way then that counts “against” me; banks will approve a smaller loan given the financial responsibilities to a child. Then there’s obviously my spouse. Depending if she continues to work or not, if she decides to stay in a permanent position or opt for the flexibility of contract work, etc. All these things affect the terms of the mortgage for which we qualify.

4. Then my brother spent half the remaining conversation giving this advice here.

“Another key item is what are you willing to spend on your monthly mortgage and property tax. Let me give you an example. Let’s say your target monthly for housing expenses is $2,500. Then the loan you should take should be around $450,000.”

Unfortunately for me, I live in the San Francisco bay area and what I’m looking for will cost around $800,000. Per my brother’s advice, I better be ready to place a down payment of $350,000, otherwise I’ll resent the first few years of living in that house. So even if I’m pre-approved for say $650,000, my brother is adamant that I don’t mortgage out at that amount because I’ll end up paying something that doesn’t fit my lifestyle.

My brother ends the conversations with a TLDR synopsis (he knows me so well) and some parting words. Hopefully you find him as insightful, as I did.

“In summary, think about where the family wants to be, see how to get to a comfortable monthly”

” Don’t sacrifice comfort-ability or family for a house”

“Hope this helps. I made some mistakes. Learn from mines [sic]”


SCOTUS Decision on Gay Marriage – My Own Opinion

As you’ve seen with most media outlets, SCOTUS has interpreted the Constitution’s 14th amendment to encompass the equal right to marriage and thus making same-sex marriage a constitutional right. Of course this in not unprecedented, Loving v. Virginia came to basically the same conclusion. But we are not here for a history lesson, we are here to discuss this impact to our society as a whole and our personal finances. Although, to be honest, this is going to be somewhat of a rant.

Some quick thoughts on what has NOT happened.

  1. The world did NOT end in damnation.
  2. Churches are NOT required to perform gay ceremonies. They can invoke the same rights as they have for only male priests for example.
  3. Americans have NOT crushed discrimination or bigotry outright. Sustainable change is done slowly and incrementally, and above all else, consistently.
  4. The US is NOT the most progressive nation, Canada beat us to the punch about ten years ago.

What has changed?

  1. Same-sex couples financial rights, including beneficiary and insurance, have changed. Social security, health insurance, and spousal decision making all are now “more equal.”
  2. Corporate HR departments are cheering. Why? Again, insurance is tough enough with married, single, and family… throw in civil union, domestic partners you have a tax and logistical sh*t storm. Simplification.
  3. Tax accountants/lawyers will have less business. I did taxes one time as a domestic partner in California and it was heinous with community property, single file requirement at the state level, and married filing at the federal level.
  4. Divorce lawyers will have more business. Every time there’s a positive court decision on gay marriage, I see a slew of couples shot-gunning it to the alter. I don’t know everyone’s story, but this does not seem like the recipe for a lasting commitment.

Why would you care?

Honestly, I do not know why most people who are just trying to live their day-to-day lives would care about this decision. It doesn’t affect my budget or what I buy at the grocery store. Does it affect my retirement? Probably not. Given what I know now… I plan to just move on to more pressing things. From a theoretical standpoint, you may have a different opinion.

If you are a proponent of state’s rights and you believe SCOTUS has over-stepped their judicial authority. Then you care and I will not argue with you there. I wholly believe that states need the freedom and right to serve their unique constituents. I do NOT believe that subjugation of a majority against a minority through discriminatory legislation is a state right.

If you are a proponent of religious rights and you believe SCOTUS has over-stepped their judicial authority. Then you care and I will argue that you are being ridiculous. Whatever religion you are, continue to be it to your full heart’s content. Religion is faith and belief solidified by tradition and ritual. No law can take that away from you. All the SCOTUS decision does is inform you that all people are created equal in the eyes of the Constitution and that it bestows many gifts to its citizens which happens to include a marriage license. I mean really, does any religious entity issue marriage licenses? Does a religious entity bestow an federal or civil rights (e.g. social security, health decision making authority, etc.)?

If you have gay friends, family, colleagues, celebrity crushes, etc. or just love America you probably care and should care. I believe if one subset of citizens are denied inalienable rights, then we as a country are only handicapping ourselves. In the history of civil rights, our fellow citizens have undergone persecution, imprisonment, and denial of basic liberties. If that is not a direct assault on the Constitution that deems “life, liberty, and the pursuit of happiness” as an essential pillar to the foundation of American citizenship, I do not know what is.

Now that I’ve got that off my chest… I leave you with some parting words from Justice A. Kennedy’s opinion.

“The nature of injustice is that we may not always see it in our own times… The generations that wrote and ratified the Bill of Rights and the Fourteenth Amendment did not presume to know the extent of freedom in all of its dimensions, and so they entrusted to future generations a charter protecting the right of all persons to enjoy liberty as we learn its meaning.”

Interest Rates on the Rise: How Are Your Impacted?

A Personal Finance Take: The Fed is Signaling a Raise in Interest Rates

The Federal Reserve, the central bank that keeps our economy humming, has been signaling for months that they will be raising interest rates. The financial world is abuzz with rumors and speculation on when and how much and what the impact will be. For a person living day to day making a steady paycheck, they likely didn’t batt an eye at the news. The information can seem out of touch with your reality. In fact, if you have read any recent article on the matter, you may feel a little WTF. The Fed is raising interest rates because inflation is stagnant? Well rent in my region has grown about 7% every year for the past five years. Beef at the grocery store has tripled in cost per pound in the past decade. Anyone paying for college has seen tuition rates only go up year after year. This is all true and what Bloomberg calls the personal inflation rate. We all feel the cost of living differently because of the region we live in, things we spend money on, and how we earn our living. On the other hand, the macro-economic inflation rate has remained low, even dipping into the negative, for a few years now. Although you may not track it daily, it is vitally important to sustaining the economy. By turning a blind eye, you are missing out on some leading indicators that could affect you very soon. Here are a few to keep in mind.

Trying to Buy a Home or Anything with a Loan

If you are planning to refinance or to make a large purchase with a loan, the hike in interest rates is not going to help you. With the Fed tipping their hand, we can already see a steady rise in mortgage interest rates in the past 6 months, from about a 3.6% low to just above 4.1% for a 30-year fixed loan (this is in California). It is only half a point but put that into real dollars, a $300,000 mortgage went from a total cost of $491,017 to $521,854; that’s a monthly payment change of $1,364 to $1,450.

What should we expect when the Fed actually pulls the trigger? I suspect a rise of about 25 basis points, 0.25%, given historical trend and the Fed overtly saying the hike will be minimal. That isn’t much and no guarantee, just a gut feeling. I just read an article about how the Fed may be easing off the gas because of the mortgage market behavior. Is it a chicken before the egg riddle? Sounds like it, but what you as an individual need to know is: 1. If you have an adjustable rate mortgage, refinance if you can, 2. Lock in your loan rate if you plan to make a large purchase within the next 90 days, and 3. If you’re a big saver, be happy because CD and money market accounts should get a boost.

Your Job

Fiscal policy affects industries differently so I’ll speak in very general terms based on “perfect” market systems (i.e. the intention of a rate hike is to slow the economy). If the economy is inherently healthy then we are investing/producing too much for a demand that is not sustainable, although we are still in the black. If that’s the case then you’ll likely keep your job but it may be more difficult to find new opportunities. (This does not include part time or seasonal work which are much more unpredictable and highly impacted by rate hikes). When rates rise, it makes it costs more for companies to finance their growth. This may not be felt for a few years because companies lock in their rates on different terms, but you will start to see some easing there. That doesn’t mean everything eases. If you are part of a employee stock purchase plan or are compensated in options, you likely will see some volatility there. This is due to some corporate accounting voodoo on how total assets and future value calculation play into the stock price. This usually brings the market down; however, a company may also opt to use stocks to finance future growth since loans rate are increasing. This hikes up speculation and therefore the volatility is added to the story.

What does that mean for your job? If you frequently jump jobs either for a better paycheck or its the nature of your field, try to find something with slightly more stable (e.g. you could last 2 years without pulling your hair out). This is not to say you shouldn’t continue to look for what’s best for you, but when searching for your next big thing, your check box items should include an item to evaluate what prospects are available when the job term ends.

Some good news, wages should increase. There is a lot of talk here, but if we truly have a stronger economy that warrants an interest rate increase then the work force will be compensated. Wage movement mimics inflation which is directly impacted by the rate increase. All signs show it won’t be much but at least it is something positive. What it really tells me is that we are still in a pretty fragile state with the economy. There is definitely a fear that the moment rates are increased, the strides made in the past 4-5 years will recede. For the doomsday folks, they see an implosion of the stock market. For me, the optimistic through and through, I think this is the test that the economy needs and we will hate it like we hate any test but we’ll be better for it. We will see wages finally increase after lagging behind the economic growth for so long.

What You Really Need to Do

For the TLDR folks, here’s the short list of to do’s given a possible rates hike by the Fed:

  • Lock in your loan rate soon – they will continue to rise
  • Tuck more money into your savings – better wages AND better savings interest rates dictate this
  • If planning a vacation, consider outside of the US where the strength of the dollar will continue to be strong
  • Focus on making yourself indispensable at your current job (if you enjoy it) rather than relying on your next job jump.
  • Be ready for some heart palpitations with the stock market… actually if you get heart palpitations from this, you should really consider your risk tolerance and look at other investment options

Hope you enjoyed my crash course opinion on the looming Fed rate hikes and what it means to your bottom line! Keep moving towards your financial independence!

Snowball Effect

Second Check In: New Year’s Resolutions

We are now nearing the mid-way point of the year and it is about time to see how my New Year’s Resolutions (NYR) were hashing out. Way back in January, the decision was made to focus on dramatically improving my long-term financial goals: early retirement and family planning. In March we did a quick check up and I was slow and steadily on-target.

The Recap

  • NYR #1: Fully contribute to my 401K retirement account- $18,000  DONE
  • NYR #2: Fully contribute to my Roth individual retirement account (IRA) – $5,500
  • NYR #3: Increase taxable investment account by 25% – $7,500
  • NYR #4: Maintain emergency fund by saving three months worth of expenses – $7,500

In March I was doing exactly as planned thanks to automating allocations into my savings and investment accounts. You can see those numbers here. This time around I am well above target thanks to accounting for dividends, company match and catch-up, pay bump and bonus. I’ve also included dividend payouts and reinvestment for a more complete picture.

Savings/Investment March Total Predicted June Total Actual June Total Difference
401K $3,450 $7,762.50 $27,226 $19,464
Savings $1,248 $2,808 $3,104 $296
Mutual Fund $2,084 $4,689 $5,463 $774
Stocks $0 $0 $286 $286
Roth IRA $916 $2,061 $2,452 $391
Total Savings/Investment $7,698 $17,321 $38,531 $21,211

Thoughts So Far

I have now officially hit the 401K contribution limit ($18,000 for 2015) by allocating nearly my ensure yearly bonus. The numbers look a little strange though; how did I jump ~20K in three months? My usual paycheck contribution $4K, $11K bonus, $3K catch up match, a generous company match of $3K. The ~$15,000 from my working income hit the contribution limit; however company matches don’t affect that limit. Its clear that there will be no other growth in this account other than reinvested dividends (also does not impact the contribution limit). Without further tax benefit, I can move on to better investment options.

Quick thought here: The debt snowball method works in savings too! Now I have a few hundred dollars extra a month in my paycheck. Do I indulge? Nah, just have to move on to another investment/savings goal. What that’ll be, I’m not so sure yet. Since I’m automated for my Roth IRA, there really isn’t a need max out my contribution limit now. Leaving it as it utilizes dollar cost averaging, and for a long-term (over 15 years) investment, that works well for me. If you’re ever in the same scenario, look for tax advantage investments first. It is as close to a free lunch as you can get.

So now I am really debating two options: go extreme on saving for a down payment on a home or invest in a REIT. My portfolio is definitely lacking in diversity and real estate is a great option; I love index funds, toy with some stocks, and keep a steady savings in a higher interest rate account. I still need to do some research but for now the money is going towards the down payment, but I may invest in the REIT after seeing the disarray the real estate market is in the San Francisco Bay Area. From what I can tell, I maybe able to afford a shack forty-five miles away from work… this is not an option. I already have a little savings going for this purchase, but really need to kick it into high gear to stay in this market. My new mid-year revised goal:

  • Determine next investment option by July 15th. Do research!
  • If purchasing a home: Save at least a 10% down payment on a home and get pre-approval
  • If investing in a REIT: Invest $15,000 in a high dividend REIT

A Few More Done

Lastly, there were a couple of things included in my resolutions that were more qualitative than quantitative. Not really my forte but a necessity nonetheless.

  • NYR #5: Re-balance my retirement accounts DONE
  • NYR #6: Create an emergency budget (this is the expected and pared down budget if faced with an emergency) DONE see previous post

Re-balance done. Nothing really special there. I am a very aggressive investor and it has paid off the past few years,and this time around I only made a minor scale down in my risk (approximately %10 shift between stocks and bonds/cash/real estate. I may actually look at it again at the end of the year since I’m expecting big changes (e.g. a house, a child).

Overall things have been moving along quite nicely, but I still have a long way to go and a lot of things to account for. Good luck with your New Year’s Resolutions and always shooting for better!

Millennial Economy

Millennials: Thoughts on Minimum Wage and Housing

My cousin who just completed his first year of college came by after his shift at a local fast food restaurant; we were having a birthday party for his little sister. Looking pretty gross and sweaty, he chowed down on some left over BBQ and soda while we peppered him with questions on school, work, and life in general. As the younger kids ate cake and played, we at the “big-kids” table reminisced about our first jobs and college. We also delved into a lively debate on housing and minimum wage. I’d like to recount this conversation to follow up later.

The Millennial Crew

  • Family Member #1: Male, 19, first year college student at four year university, currently works at Chipotle full time, looking for housing for the next school year (2 bedroom with 3 other tenants).
  • Family Member #2: Male, 29, bachelors in Mathematics, pursuing master’s degree, currently works as a learning center director, lives with parents.
  • Family Member #3: Female, 25, bachelors in Journalism and German, currently works as a contractor for a social media company, lives with parents.
  • Family Member #4 (Me): Female, 31, bachelors in Biochemistry and Cell Biology, currently works as a technical manager for a biotech company, lives in a shoe box (studio) with rent control.

Minimum Wage

As the oldest person in this conversation, I had a starting minimum wage of $5.40 per hour when I had my first job as an after school tutor. The youngest in our group started out at $8.20 for his first job. This is really a difference of almost 15 years of minimum wage growth which amounts to approximately 19 cents a year or 2.8% compound annual growth. That is pretty close to the average rate of inflation over that time.

So where does this $15 minimum wage debate come from? It has been splattered all over the news since Seattle moved to this and Los Angeles followed close behind earlier this year. I really don’t know all the details and have yet to weigh in on the its value as a whole. I did however do a quick calculation on what I suspected, which is that the $15 comes from the historical growth of the economy (i.e. stocks). When I put in the often 7% growth rate of investments rather than the 2.8% rate of historical wage growth, low and behold, my $5.40 goes to $14.90 in today’s economy. Looking at things from a purely economics standpoint, have we seen a 7% compound annual growth in services, goods provided at these positions? Have we seen the same growth in goods provided at the more technically advance levels of employment? I really could make arguments on either side. We could also go into a huge debate on what living wage actually means, impact of government programs, and the value of experience and education… but we won’t.

We won’t because this is not what real people in minimum wage jobs debate. As my little cousin rightly said, “Of course I want a $15 minimum wage. Do I expect to be at this job the rest of my life? No, but it doesn’t mean I shouldn’t try to get the most out of it while I can.” It truly is the American way.


The housing conversation was depressing. First, we live in the Silicon Valley, the greater San Francisco Bay Area, and it is one of the most expensive regions in the nation. We all try to live within our means which include living with our parents or several roommates for years. At one time I had 10 roommates in pseudo-commune house so I could afford rent and live close to work. All of us have lived 3 people or more in one bedroom during college. Today half of us live with our parents, not because we expect them to support us but because it is the perfect roommate situation (e.g. you know each other habits, built-in dependability, and no passive aggressive behavior). For those of us that have been in the rental market here, the battle is incredibly fierce for a place. Searching for my current apartment, I had tried to sign leases with three places. One I was outbid at the last minute, on the second the landlord has a “funny feeling” and backed out, and the third is where I continue to live now. My cousin is experiencing this now. He and his roommates had a handshake agreement to lease an apartment; when they went in to actually sign the lease, another renter had swooped in and grabbed it. Is this legal? Really no idea, but it is the reality here. Luckily he has a couple months before it gets bad. It is a part time job looking for a rental here that’s for sure… and a full time job if you’re looking to buy.

Second point, even if you finally save enough for a down payment to buy a home, the west coast real estate market loves the bidding war. A couple hours before we met up, I went to an open house where the starting bid was $630,000. Hard to believe but this was severely underpriced for the area. After speaking to the real estate agent and a couple of serious buyers, it was clear that the final bid was going to clear $840,000. Insanity!

We acknowledge that we are relatively young; however, all our parents had already purchased their first home by the time they were 30 years old. Based on our conversation, I definitely understand all the arguments about Millennials and their slow entrance into real estate. Without income security and what we’ve seen with the housing volatility, we are trigger shy. That being said, we want to buy. It is not a lack of desire. For my family, we grew up in our houses switching play dates every weekend. Our parents continue to host gatherings. We want to create that same environment for our family and friends, but it just does not seem like it is possible without two very high income earners (which was not the case for our parents) and sacrificing the convenience of living close to where we work.

So how do we deal with the current housing market as young adults? I pose this as a real question, we had no answers. Even the “adults” of the party did not have a lot to say about it. I’m pretty sure they want us to move somewhere else, somewhere with more opportunity for things that we want and enjoy. At least I get that feeling, but I also feel like they don’t want us to go. Is this what empty nesters feel?

So What Now?

We finished our food and gave a round of hugs knowing the next three to six months were going to change a lot for us. The youngest of us has got it easy, even if he doesn’t know it. Second year of college, we assured him, only gets better. Two others would be embarking to uncharted territory. One would be ending their job as a contractor in August with no foreseeable job prospects and another finishing their thesis and starting a business.

I will follow up on this post in a few months to see where we are all at. We are all hopeful but keenly aware that there are no guarantees in today’s economy.