Entries from June 2008 ↓

Today I read a rather refreshing article called “Casting off life’s cares” on the LA Times. Basically it tells the story of an ordained pastor named Dave Dixon who gave away pretty much all of his possessions and started to live on a boat and sing songs in a restaurant a few hours a week. His expenses are $565 per month, and he says that “time, not money, is the real commodity in life”. He says that his lifestyle is divinely inspired and “sees himself living out God’s message that faith and people, not possessions, are what is of true value.”

Interestingly enough, I wrote about Chinese proverbs today on Wise Bread and this article reflects the first proverb I wrote about, “an inch of time is worth an inch of gold; but it is hard to buy one inch of time with one inch of gold”. Time is definitely more precious than money, and Dave Dixon has that figured out.  Additionally, I think it’s great to see that someone realizes that you really don’t need much to survive in this world.  My friend the Retirement Hobo said that in South East Asia he was able to eat well on $1 a day, and $10000 is a good retirement fund there.  He might be exaggerating a bit, but I really think that if we are able to let go of a lot of luxury that we have we can live well on very little money.

I think it is awesome that this pastor Dixon seems to trust God so much with his lifestyle.  Though, it’s funny that the author of the article describes Dave as “quixotic” multiple times in the article. Obviously, some people might think that Dave is a fool for trusting God with his health and not having health insurance, but  apparently God provided for him when he had a kidney stone.  He may seem like a stupid bum living on a rickety boat, but I know so many people with huge houses that they slave over and complain about.  Can these people with so many more possessions than Dave Dixon say that they are really truly free and happy?  Dave said in the article, “my possessions made me work harder and stole my time”, and I agree with that sentiment.  We all have an extremely ephemeral existence on this earth, and for us to devote so much time and effort to acquire things we can’t bring with us to the next life is quite pointless.

Now, would I sell everything  and go live on a boat?  Probably not because I don’t like boats very much, but I wouldn’t mind living in a faraway city in Asia where rent is less than $100 a month.  I could even have a little piece of land where I can plant some tomatoes, peas, and corn, and raise a few chickens and ducks.  These are all things I had when I was a kid in China, and really that’s all I need to be happy.  It is a dream lifestyle that is so far removed  from my current daily grind in a glass tower, and maybe one day I can convince the hubby to go there.

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Okay, I am not really at the stage where I am liquidating my investments yet, but my parents soon will be. I have also been hanging around the Early Retirement forums quite a bit so I have been thinking about this since I do want to retire early. When you retire, how do you handle liquidating your retirement funds for everyday expenses?

From what I have read, it seems that these early retirees take the following strategies.

1. Let the nest egg grow as long as possible - Most people advocate letting the investments grow as long as possible and spending other income such as pensions, Social Security, or side income.

2. Keep a cash equivalent reserve of 3 to 6 years - Some early retirees say that they have a big cash fund that could last them for a few years. When they use it up, they sell enough investments to last them for another few years and let the rest grow.

3. Withdraw 4% or less of the entire portfolio per year - The 4% withdrawal rule has been discussed extensively all over the forums. Basically the idea is that 4% is a safe withdrawal rate that gives you the greatest chance of your portfolio lasting for your retirement. It is called a “safe” withdrawal rate based on simulations of portfolio withdrawals during different periods of the stock market. A tool the early retirees love is FIRECalc.

4. Be aware of taxes - One suggestion I read is that in years where you expect to spend a lot you should liquidate the tax-free accounts like Roths, but in the years where you don’t spend a lot you should liquidate the taxable accounts because your tax rate would be lower.

There are also many discussions of annuities but most people seem dismissive of these because annuities cost quite a bit. I think for me I would have a hard time switching from a saving mindset to a spending mindset. I would probably worry if I were spending more than my income, but being retired wouldn’t really prevent me from incoming generating activities like blogging so maybe it won’t be so bad. Anyway, one day I will get there, but for now I just like reading other people’s stories.

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Well, I haven’t blogged for four days, and it feels like an eternity, seriously. This weekend I was down in Southern California for a wedding and that involved about 14 hours of driving between my husband and I. On Monday I was swamped with work and I kept on wanting to sleep so I didn’t blog at all, but at least this article I wrote for the Money Blog Network went up on Wise Bread, check it out!

Anyway, before I left I checked out the site of a commenter named Erica. Her story is pretty inspiring in that she is a young woman in the Silicon Valley who built up a business and recently sold it for more than a million dollars. Now she is semi-retired and writing. Recently she bought an established website on Sitepoint to run as a new business and she is only a year older than me. So this led me to browse the Sitepoint marketplace and learn about buying established websites.

So far, I haven’t made a purchase because just like any investment, it takes a lot of research to find a profitable business worth buying. A lot of the cheaper websites that cost under $1000 have less traffic than my sites or just aren’t very interesting. I see most sites in the following categories:

• Forums
• Scraper sites that steal content
• Directories
• Blogs
• Established e-commerce sites
• E-books
• Spam sites full of ads with a good domain name
• Proxy sites

There are also some unique sites with custom software, but those are very very expensive. I think if I buy a site, the only category of sites I am interested in buying is a good forum because those have user generated content that I wouldn’t have to worry too much about. As long as a community is there it would be fine. I don’t want another blog because blogs takes time to create new content for and oftentimes readers are loyal to the original writer of the blog that made it popular so once you buy it a lot of its value is lost. I also don’t want a spammy site full of butts. Anyway, it seems that people price their sites at a multiple of their monthly revenue, so anything that’s pulling a decent income becomes very expensive. However, there are gems in the rough. For example, there are sites that webmasters have not monetized at all because all they created a site as a hobby, but want to get rid of it due to it being too much work. So this creates another segment of entrepreneurs who buy a site on the cheap, slap on some ads, and then flip it for a profit. I think that’s a pretty interesting business on its own, but it takes time to research and find the best “fixer-upper”.

Anyway, as I have said to many people. I only need about 10 to 20 times my current blog income across my three blogs to quit my job and work on this full time. There is definitely potential for my blogs to grow. Currently my San Mateo Home Sellers in Trouble site is growing quite healthily and could even surpass The Baglady in traffic with minimal promotion. It is already on the blogroll of Redfin, my favorite real estate site. I guess people just browse that site page after page looking at the home prices falling by 200k to 300k like they are watching a train wreck. So if I concentrate on my current blogs and make them grow to their fullest potential I don’t have to buy any more sites. It may take a longer time, but it would be all mine. If I do buy a established site, I will need to spend time to integrate it onto my webserver and learn about running the new site and that may neglect my current ventures a little bit.

Anyway, I will probably still look out for good sites to purchase, but those are very rare and people snap them up very quickly. I am more of a cautious investor and I never buy anything without a lot of research so I probably won’t be buying something within 30 minutes of the listing so I might miss out on some good ones, but I should be able to avoid a lot of bad ones. Looking at some of the better sites for sale, I am amazed at what some of these very young people have done in terms of online income. The biggest sites with millions of page views a day are basically another full time job and cost a lot for bandwidth so I probably don’t want those. I would be happy with 25000 page views a day and enough money to cover my living expenses after taxes. Maybe next year?

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My friend the Retirement Hobo sent me this email from Asia and he wanted me to share it with you all. For more of his writing, check out his blog, and this post about a magical mountain. One day soon I will retire. For now, I can only enjoy my friend’s travels vicariously through his writing.

Quick “whats happening” update, then elaborate and pointless commentary in 5…4…3…2…

Since Bali, I’ve been bouncing around from Java to Lombok to Nusa Tenaggra, to Bali, to Java. These are all islands in Indonesia with their own culture and beauty and I was able to do many cool things and meet many cool folks.

Some points of interest include walking through the valley of the shadow of death to stare into a live volcano, surfing the crazy waves of Bali, going mano-a-komodo with a dragon, learning the ropes to breathe underwater and becoming a certified diver then having my first independent dive turn into a search-and-rescue mission. I am currently in a cute Java suburb of starfruit trees, green mountains, while teaching English to a local school. I leave for Singapore tomorrow, much to the chagrin of many lovable 10 year old kids.

Love works in funny ways. When seeking love, you look so hard that you seem to almost deceive yourself into falling for anyone. But then one day it happens. You just fall and you fall hard and it moves so quickly and works so beautifully you don’t have time to sit back and think about how it happened and take it all in.

I haven’t fallen in love, but that is how I imagine it to work. But I have taken to diving in a similar manner. The moment I stepped into the ocean water, I knew I loved her. When my tank ran out of air, it tore me up to leave her. When I got a new tank, I was jumping as fast as I can into the water to see her. And when I was with her, it was so much and so much more. It was beauty that I did not know existed, and it was always changing. Every time I think I scratched the surface to unraveling her, a new world of discovery opens up. Every moment was excitement, looking at her, around her, and in her. Is this not love?

I am a traveler at heart. Traveling is leaving a piece of your soul wherever you go. It is experiencing new things at a break-neck pace. At least thats what I think, I think. That is why diving is so amazing for us travelers. Most of our blue planet is covered with ocean. Most of the ocean is untouched and unknown to humans. There are new things and soul-receptories at every meter and every liter of the ocean.

When I breathed for the first time underwater, I was stepping onto a new planet, I was becoming a new species. And by doing so, a million curious eyes turned to me and said, “Hello, mister!” Clown fish looked up from their oceanic vegetation and did their “Finding Nemo” impression. Giant Turtles majestically soared above my head. Schools of Napoleon wrasses, the size of my torso swam in circles around me. Sharks zigzag around darting back and forth, making my heart skip a beat. Even an octopus decided to wriggle around on the floor and change colors before my very eyes. Schools of tiny fish swam in perfect synchronization. Seahorses jumped around. Tunas that could feed an army of sushi enthusiasts. Titan Trigger Fish, Stonefish, Lionfish, Scorpion fish, Bumphead Parrotfish. And the colors, just so many colors.

It’s just a different world. On land, humankind is at its apex. We’re basically reduced to two levels in the food chain: hairless apes, and everyone else. It’s a thrill to see one wild animal, even if we have to search for days. On the ocean floor, every species seem to be dealt a new hand. Everyone is equal, and we swim side by side along the coral reefs. I just cannot emphasize how teeming with life the ocean is. And the landscape of reefs, sandy dunes, ship wrecks, overgrown with underwater flower, seaweed forests hazed over by shimmering currents in the water – wow. Land just sucks in comparison. Oh, why am I forced to breathe oxygen?

Just about everything fits so well. When you are underwater, it is a relaxing venture – in fact overexertion causes you to lose oxygen. You’re required to relax! And then eating a lunch of fresh seafood that we bought in a boat-to-boat fisherman exchange, discussing what you saw – what a perfect complement to a dive day. Divers who meet other divers are instant friends. It only makes sense. You are required to dive with a buddy for safety. So, diving forces you to relax and make a new friend. I cannot think of what else actually forces you to do such a thing.

The ocean is sweet. You are looking not just to the left and right of you but above and below you. It seems like you are flying like Superman over an underwater Metropolis. There’s just nothing wrong with it at all. Except that it’s so damn expensive and you risk getting lost at sea fighting off sharks and Komodo Dragons.

The End, until my next update.

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A couple days ago, I was paying off one of my husband’s credit cards and I noticed that his reward terms were quite different from mine. This was an AMEX True Earnings card from Costco that we rarely use.  Nevertheless, there were some cash rewards on it.  So I read the terms as to how the cash rebate can be redeemed, and apparently they send a physical voucher every February with a paper statement.  This is my husband’s card so I asked him if he saw the voucher in the February statement, and he looked at me quizzically and said he didn’t know what I was talking about.  The good thing is that he never throws statements away, so after some furious digging, I found a voucher for $5.83 at Costco.  I triumphantly handed the voucher to him and he laughed at me for a bit and said, “oh so this is what you were looking for.”

We have a couple other rewards cards.  One is a Citi Professional which we use for restaurants, and the other is a Chase Cash Rewards card which still pays 5% on gas and grocery purchases (this card is no longer available to new customers).  I have found that I had to keep up on these rewards programs, too.  For example, the Citi card pays Thankyou points, which has been devalued more and more the last few years.  5000 Thankyou points used to get you a $50 gift card, but now you need 6000 points to get the same gift card.  They are also removing quite a few gift cards from the program.  I like my Chase Cash Rewards card because 5000  points is just equal to $50 cash, but I still have to redeem it once the statement closes.  If I don’t redeem it then they don’t send the money to me automatically.  I try to cash out the points as soon as possible because if I leave them then there’s a bigger chance of them being devalued or completely confiscated.

My husband used to be a big cash user, but now he likes rewards credit cards because whatever rewards we receive in the form of gift cards can be spent on entertainment without impacting the entertainment budget.  In this manner, the rewards are actually rewards for him.  It doesn’t really make us spend more than usual, and since we pay off all the cards every month,  getting $50 every few months from buying groceries and gas is really a bonus. Even though keeping track of these rewards programs can be a bit annoying, I feel that it is necessary to get the most out of your credit cards.

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