Blog

Short blog posts, journal entries, and random thoughts. Topics include a mix of personal and the world at large. 

But a recession is coming

I am ready and itching to head off on another travel adventure. It’s been a solid two months since my return from Japan, and as typical with the ebb and flow of these things, I’ve physically and mentally recovered, and recharged to set off again.

Of course, I don’t have nearly that much freedom from work to be able to skip town every two months, nor do I have the appropriate budget to do so. Indeed, the trip to Japan drained quite a bit of my cash reserves; a stash that was already lower than previous years due to my purchase of the GT3. I’m going to need at least a few more months to store back up the reserves, so even though I’m pining for another escape, the smart thing to do is to enact austerity.

Besides, I’ll be making my annual trip back home to China come the end of December. What’s another three more months of waiting, honestly. More importantly, homecoming trips don’t cost me any money because our family uses the proceeds from our rental property in China to fund it. Otherwise, I don’t think I’d be making the trip this year.

Because the recession is looming, and I think it’s important to batten down the hatches for such an event. Perhaps it’s idiosyncratic to my San Francisco locality, but I am seeing the recession signs all around: vacant storefronts, restaurants closing down, houses not selling, and rooms not renting out. Things definitely don’t look as prosperous as the stock market and unemployment numbers would indicate.

There are similar signs as well in an area near and dear to my proclivities: the automobile. The recent car auctions in Monterey back in August saw a 34% drop compared to 2018 results. You know things are turning sour when ultra rich people are holding off spending their free cash. Just yesterday, Subaru announced its first month of decline in sales after a streak of 93 months (almost eight years!) consecutive growth. That’s the proverbial canary in the coal mine stuff, and the entire auto industry in a downturn now.

I don’t think I’ll stop traveling if and when the recession happens, god willing that I myself don’t get laid off from employment, but for sure I need to build back up the war chest so to speak, for the next rainy day.

Anywhere you go, there you are.

Saving up for my first DIY computer

Writing about AutoCad yesterday and how it’s best run on Windows PC brought me back to my early years of high school. I was super into computer games but as of sophomore year lacked a proper gaming computer. By then I’d already hacked together my first computer but being that it was the first computer I got blindsided by the components learning curve. 

What constitutes a decent computer processor was easy because it’s revealed in the Gigahertz number (multi-core processors wasn’t a thing yet), but I had no clue that graphics cards too carries a hierarchy. Deficient of that specific knowledge I bought just about the worst graphics card possible. Needless to say playing games on my first computer was far less than ideal, often times impossible. 

Growing up my family wasn’t made of money so they weren’t going finance yet another built computer in such a short period of time. Typing word documents and surfing the web hardly requires the latest and greatest so my parents were adamant that I continue to use the computer I’ve already got until college. Obviously then if I want a new one to game on I would have to pay for it myself. 

Which meant getting a job and saving up gradually, and I mean really gradually. I interned for a department at San Francisco City Hall and the monthly income from that was in the single hundred, often times less. The sum total of the parts I was looking to purchase amounted to well over a thousand dollars so saving was quite the long project, ending up over a year. 

The gaming computer was my first instance of setting a financial goal and actively working towards it. The experience taught me the value of working for money and the patience to wait for the rewards. For motivation I had printed out the list of components on a sheet of paper and stuck it in the top of my school binder. Funny how that habit have continued on: when I was saving to buy my first car I had the WRX STI set as my laptop wallpaper as a reminder to keep going after it. 

As for the present time: 

991.1_gt3_brochure.JPG

Learning can be expensive

Frequent readers of this blog (have I got frequent readers?) will know that I am actively saving up for a car, which obviously entails not spending my monthly paycheck on anything other than the necessities (it's going well). However I am bumping up to a metaphorical wall because I’ve just finished up with my Korean studies (the textbooks portion anyways) so I’m in search of the next thing or hobby to learn. 

The problem is that most of what I'm inclined towards cost significant money. Money I rather not divert from the car objective. 

Ever since I was a teen I wanted to learn the piano, and while I did take a year’s worth of classes during high school, I lacked the motivation and focus to continue on then. Fast forward a decade and armed with a new learning mindset I think it’s appropriate time to finally accomplish a childhood goal. Youtube videos are aplenty and music theory textbooks are cheap. 

Sadly an electric piano isn’t. A suitable unit I’d need is nearly $2,000 dollars. Now you may say I don’t really need such an expensive keyboard to learn how to play the piano but then I'd reply that I am not the type to half-ass anything I set off doing. A proper digital piano with the correct graded hammer action is naturally quite costly but well worth the money over a cheap plastic version one can buy at a Costco (I had one). Learning a craft requires multiple years (took me two with Korean) so I want a piano that feels excellent to the hand and last a long time. 

But to borrow from my savings goal in order to pay for this extravagance is a difficult decision indeed. It’s a choice between one of the other, really: I can buy the keyboard now and delay the car purchase by some months, or keep to the current savings trajectory and not start piano learning until after buying the 911. I’m reluctant to choose the former option because ultimately a car is more important, but in picking the latter I’d still need something to work on in the meantime. 

The search continues. 

Looking down on the evening commute. 

Looking down on the evening commute. 

Mechanism for implementing austerity

I have found the best way for extremely frugality: have something impossibly expensive to save up for. 

My one New Year's resolution this year is heavy austerity in my finances. The past fews years have been a bit overboard on the travel expenses, even though I wouldn't trade away a second of the experiences. Nevertheless it was time to refresh the rainy day fund, in preparation to counter any ill events, should they arise. 

First half of the year the resolution was not going so great. I didn't travel anywhere so that was good, but I put some money down for travel later this year, which required a significant chunk (super counterintuitive, I know). Due to various circumstances my mother decided it was time to buy my brother a car, him of still in college and no real income. So towards that end I've fronted and still fronting (insurance is a bitch) some money.

I also bought a few expensive play things as well. Self control is difficult. 

Now the situation has changed. Looking backwards I realize the only times I was able to implement crazy austerity was when I needed to save for something big. Back in 2012 when I decided to buy a WRX STI and needed many thousands in down-payment dollar, every financial decision, big and small, was run through the filter of will it adversely affect my goal. Utilizing that mental mechanism I socked away nearly over 50% of a paycheck. 

So to force myself into frugality, I've pick another big item to save money for. It isn't a house because I have no interest in ever owning, so naturally it's another car. Not a normal-priced car obviously because I can go and buy one now. It needs to be quite expensive: six-figures at least. 

Won't say what the car is because that'll spoil the fun, but ever since I made the decision my austerity resolution is back on track.  

Do you want to save money effectively? Have a huge monetary goal to save towards. 

The architect drew inspiration from the Death Star. 

The architect drew inspiration from the Death Star. 

By age 35, you should....

The above tweet caused a humorous row on Twitter, with legions of millennials mocking its futile commandment. Twice my salary saved up by 35? Perhaps you mean twice the salary in debt? What's this 'retirement' you speak of? Double the salary is easy when you have a salary of zero! 

While I enjoy the hilariousness of people's responses (it's why I can't seem to quit Twitter, after all), I failed to find anyone argue the "rule" itself is intrinsically flawed - because it isn't. It seems the need to save for retirement is an universally accepted truth; it's just that in today's economy of stagnant wages and high housing costs people find it bloody difficult

I have to call bullshit, though: anyone absolutely can and should save money, for retirement or otherwise. While double the salary by 35 may be not applicable for everyone, it's a fine goal to work towards. I'm fairly certain no one has ever complained they've got too much money saved up in the bank. 

Back in my childhood our family of four lived entirely on my father's measly salary of $1,500 per month yet however miraculously my parents still found ways to put money away every month. It wasn't easy in execution but as long as the spending is always less than income they were satisfied. 

The habit has passed on to me and it's serving me excellently. 

I'm 30 this year, and on my current employment trajectory the goal set by MarketWatch is attainable should I choose. I'd need to perform some hardy austerity to get there so we'll see how it plays out because I'm not one to miserly store away money - in the expense of the now - for a future that may never arrive. 

Retirement savings goals

Yesterday I saw this tweet of jean Chatzky's: 

Upon reading the tweet, I actually felt pretty good. I turn 30 next month, and in solid humble-brag fashion I can say the goal of having 1x annual income saved for retirement is of no issue. Ramit Sethi's book on personal finance taught me the ropes back when I started working full-time. Saving for retirement isn't a chore - it became automatic. I don't think about it at all.  

However, judging by the replies to the tweet, I guess I'm an uncommon case amongst my peers? The responses were full of millennials lamenting their financial misfortunes, being burdened with the likes of student loans, outrageous housing costs, and stagnant wages. Plenty of avocado toasts and 10 dollar lattes jokes were mixed in there as well. Lots of excuses given on why people don't have the appropriate amount of retirement savings, if at all. 

While I don't doubt the veracity of these people's situations, I question their defeatist/victim attitude.  

Let's all agree that saving for retirement is important, no? Barring any natural disasters or nuclear holocausts, our generation should live quite a long time beyond the current 65 year retirement age. Having enough money to sustain a suitable lifestyle is going to take some time accumulating, and people should start as early as possible.

For sure external circumstances have made it difficult for millennials to find jobs and save. However, complaining about the situation - as in the tweet's replies - isn't going to do anything positive. Is the government (or some other macro entity) going to suddenly forgive all student loan debt, build massive amounts of affordable housing, and provide people a better paying job? Of course not. It's all up to you, the individual person, to fight for what you desire, and in doing so save for retirement. 

Don't we often joke that Social Security won't be there by the time us millennials reach our autumn years? People can say how unrealistic those goals set by Chatzky are, but the fact remains you still have to save. If my family of four can do it on $1,500 per month income way back when, so can you.