451: $360K/Yr In Passive Income – Where To Invest Your Money Today With Sam Dogen

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You’re listening to the My Wife Could Her Job podcast, the place where I bring on successful bootstrap business owners and dig deep into what strategies they use to grow their businesses. Today I have a very special guest back on the show, Sam Dogan. Now, Sam is the owner of the popular personal finance blog, Financial Samurai. And in this episode, we talk about passive income, investments, and how to manage your money in the current economic climate. But before we begin, I want to let you know that tickets for the 2023 Seller Summit are now on sale over at SellersSummit.com.

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It is the conference that I hold every year that specifically targets e-commerce entrepreneurs selling physical products online. And you all know me well enough by now to know that my event has zero fluff. Every speaker I invite is deep in the trenches of their e-commerce business and not high-level guys who are overseeing their companies at 50,000 feet. Every year we cut off ticket sales at around 200 people and it’s a very intimate event. Everyone eats together and everyone parties together every night. Personally, I love smaller events and tickets always sell out far in advance.

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Now if you’re an e-commerce entrepreneur making over 250k or $1 million per year, we also offer a special mastermind experience where we break up into small groups, lock ourselves in a room and help each other with our businesses. The Seller Summit is going to be held in Fort Lauderdale, Florida from May 23rd to May 25th. That’s sellerssummit.com. I also want to thank Postscript for sponsoring this episode. Now if you run an e-commerce business of any kind, you know how important it is to own your own customer contact list. And this is why

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No topic is off the table and we tell it like how it is in a raw and entertaining way. So be sure to check out the Profitable Audience podcast on your favorite podcast app. Now on to the show.

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Welcome to the My Wife, Her Job podcast. Today I’m thrilled to have my old friend Sam Dogen on the show. Now, Sam and I, I wanna say we met in 2014 maybe at FinCon. I think we had Dim Sum at Yang Sing and SF a long time ago, this is way before COVID. He runs the very popular blog Financial Samurai. He’s also a published author. His last book, Buy This, Not That, hit the Wall Street Journal.

03:07
bestseller list and he is, he’s fantastically knowledgeable about just finance, the economy, how to make stealth wealth and that is what we’re gonna be talking about today. Great. Sam? Good, thanks for having me. It’s been a while. Yeah, it’s been a while. Quickly just catch me up. Since this is like the first time we’ve talked since you don’t even go to FinCon anymore, do you? I haven’t gone to FinCon, the financial bloggers conference.

03:36
in a long time since it was in New Orleans. And that was so fun. And I wanna go, they’re hosted at places I’ve never been to before. Or that are just super fun. So yeah, it’s been at least seven, eight years. And just, I’m pretty sure most of my listeners don’t know who you are since I typically interview e-commerce folks. How do you make your revenue and how have you retired? Also quick background, I worked in finance.

04:05
investment banking from 2000, let’s see, 1999 to 2012. I started financial samurai in 2009. And then we started the same year actually. Yeah. Okay. July. I was July, two more later in the year. Okay. Yeah. Yeah. So I started in July, 2009 because I was, I was afraid of losing everything, my job, all my money, everything. I was like, ah, the financial crisis really stung.

04:31
might as well have a backup plan. And so the backup plan was financial samurai to just kind of write out my thoughts. And it was kind of a cathartic way to deal with all the chaos, much like the chaos we’ve been experiencing since 2020. Yep. And I just kept on writing three posts a week and the site grew to the point where I was like, Oh, it could actually generate a livable income stream. And I was having a lot of fun doing it. So in 2011, two years after I started financial samurai, I devised a strategy to try to

05:00
negotiate a severance so I could get a severance check and keep all my deferred cash and stock compensation because it had accumulated to you three years worth of deferred cash and stock which equaled like a year salary, right? And so that’s the golden handcuffs in finance and I just didn’t want to quit because if I quit I would have lost all of that. So I was able to negotiate a severance in early 2012 and then just break free.

05:28
And so that’s how I early retired and I did, I was retired for about a year. And then after about a year in 2013, I was like, this is stupid. I’m too young. I’m 35 years old now. I want to do something. So decided to do some consulting for local startups in the Bay area and just work on financial samurai. I continue to travel a lot. So that’s what I’ve been doing ever since. Financial samurai is your main moneymaker. that accurate?

05:58
It’s grown to be a website that generates a livable income here in San Francisco for a family of four, Yeah, because I was about to say, you’re one of the bigger personal finance blogs of the people at FinCon, I would say. Certainly the most enjoyable to read because you write all your own stuff. And I feel like a lot of these personal finance blogs, people have writers now that…

06:25
maybe are using chat, GBT or whatnot, just to get all the facts out there, right? But what I like about your pieces are that they’re opinionated and it’s definitely not, no machine could ever generate your content, let’s just say. Yeah, well thank you. I just like to write. People ask me, how can you keep on writing? And I think that if you can speak forever, you can write forever. There’s something new going on every single day. And for me, as someone who,

06:54
no longer has a steady day job, money is too important to be left up to pontification. I have a portfolio that I need to manage to get right to take care of my family, to generate enough passive income so I never have to go back to work and have a day job again. So to me it’s very important that I get the finances right. I’ll talk about the errors, the wins, to try to make it as realistic as possible because I know if I have questions, other people in my scenario will have questions too.

07:23
The financial journey is a journey where your situation will change in your 20s, 30s, 40s, 50s and so forth. So now I’m 45 years old and I face different situations, different dilemmas, such as raising children, caring for older parents. And these are all important things. And so I guess my style is I just want to write what’s real to me. And I know I can go the freelance writer route to just generate mass amount of content and generate affiliate income.

07:51
And it’s been very successful in the personal finance space. And I’m actually surprised that Google really doesn’t care too much. You know, they talk about expertise, authority, trustworthiness, but I think what they really want is just good quality content, but that can be written by anybody. So I had a decision to make. Do I want to go that route or do I want to just tell my story? And I decided to just go that my route because it was what was true to me and it feels more authentic and

08:19
can last for a longer period of time. Yeah, just for those people listening, in order to write to rank now, telling stories is actually a disadvantage because Google just wants the answer. So I actually took the opposite route and I started writing to rank because if no one’s reading it anyway, then Mays will do it. And I use YouTube now and the podcast as my primary creative outlet.

08:48
So that’s interesting. So I guess the thing that I think about is I can always write to rank and write SEO optimized content and hire people to do. I just want to write what I want to read. so nobody can write what I’m writing because it’s just my own story or what I see the experiences, right? So I feel that I have like this free call option where I can hire people to write on financial samurai and leverage the platform for SEO content.

09:18
when I can no longer tell stories and when I no longer want to work in that manner. but on the flip side, so for some people, if they just write SEO optimized content, I don’t think they have that free call option to be able to share stories in a entertaining way, for example, as easily. Correct. Which is why I use that outlet for YouTube video and audio. Because I think

09:45
Especially with the latest generation people aren’t reading as much anymore Everyone wants just everything in like a short 30 second video or something. Yeah, you don’t say short form content, right? Right, right, So I I I understand that trend But I do believe that there’s enough audience out there for anybody and You just have to do what you feel is best because I can’t for example, I can’t put out tick-tock

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15 to 30 second videos on some piece of financial advice because I would just feel it’s just not enough information to make the right decision. Now, I love what you’re doing, Sam. You should definitely continue on with it. Yours, like I said, is one of the few personal finance blogs that are still interesting to read. Let’s talk about the current landscape right now with what’s going on. Always curious, what are some of your predictions and how you’re changing your…

10:42
strategies right now given the current climate? Well, I think the climate is pretty dire. The Fed has raised rates very aggressively and very quickly, and they’re going to continue to raise rates through the mid middle of 2023. You’re seeing Silicon Valley Bank implode and they’re now in receivership with the FDIC because I think they lent out, no, they bought 10 year treasury bonds in 2021 with an average yield of about one point.

11:12
6, 9%. And as their deposit costs go up, right, they’re paying 4 % interest rates for the deposits. They have this mismatch in liability and duration. And so that was a bank run and an implosion. And that’s unfortunately going to happen to other regional banks. And so this is like deja vu 2008, Lehman Brothers, Bear Stearns, Washington Mutual. And so I think the carnage is not done, unfortunately. And so what I’m doing is

11:42
I’m buying treasury bonds with a three month to one year duration, yielding over 5 % now. You can get, you know, 5.125 % for like a one year treasury bill. Yeah. It’s risk free, no state income taxes. And I’m just chilling, right? And it’s like T-billing and chilling. I think that’s a great phrase to- Did you come up with that? I didn’t come up that. I read that somewhere. was like, that’s really smart, right? Instead of Netflix and chilling, but T-billing and chilling. So you can earn 5 % risk free.

12:11
as you wait for the carnage in the economy to unfold. And so maybe by the end of 2023, we’re gonna be in a recession, a couple million jobs, or maybe a million jobs will be lost. People will be suffering. But maybe then by end of 2023, the Fed will say, okay, enough of suffering to get your grocery bill down by $10 every visit. And we’ll start pivoting.

12:40
And so you just have to be patient because these downturns, a bear market on average takes like 15 months. And we’re now about 15 months in, but it could last another six months easy. So you just gotta be patient. And if you can earn risk-free 5%, I think you should because in the past you couldn’t. Did you liquidate all of your stock positions or are you still invested in &P? Okay. No, no, no. I did was,

13:08
At the end of 2022, I cut down my stock exposure. So I had about 35 % of my net worth in public investments. I cut it down to about 30%. And 30 % to me is like a comfortable range. It’s like, if it goes down 50%, sure, my net worth will take a 15 % hit, but I don’t think it’s going to go down 50%, but that’s kind of it. But what I have been doing is I have rebalanced some of my tax deferred or tax advantage accounts where

13:35
you can buy and sell stocks or bonds or whatever without any tax consequences. And I’ve shifted a lot of that into treasury bonds. Because for me it’s, you know, I feel like I’m just, have enough and I just don’t want to go through the stress and the volatility and stuff, you know, and I just want to spend time with my family. Yeah, we’re older now. And it’s just like, I mean, more money is not going to change our lifestyles because we’re free, right? So it’s like, whatever.

14:04
10 % return versus a 5 % that that spread is is marginal now Sam just for the people in the audience who don’t know how to do this. How does one buy a treasury bond? You can go to treasury direct gov But more efficiently you just go on any online brokerage account and they’ll have a fixed income tab And then you just buy treasury bonds on the secondary market is a huge secondary market for treasury bonds And you just you can look at it by duration

14:34
you know, three months, six months, nine months, one year, three year, five year, 10 year. And then you can choose and you just click a button that’s probably going to hyperlink to treasury bonds. You know, there’s going to be a whole list of bonds, municipal bonds, treasury bonds, corporate bonds, whatever. I just choose treasury bonds and I just choose the duration and you can buy straight from there. And it’s just like buying stocks. Right. And if you decide to liquidate before then it’s just whatever the value it is.

15:02
Yeah, if you decide to liquidate before maturity, you’ll probably take a slight discount. But if you’re buying short-term treasury bonds, which are called treasury bills, three months to one year, the discount is tiny. So essentially it’s very, very liquid because the secondary market for treasury bonds is massive. And you know, you can get money market rates at 4 % to 4.5 % now, but you can get treasury bond rates at

15:31
5 plus percent with no state income tax. So it’s worth spending the time clicking extra buttons to make that extra, extra yield. Well, I think the tax aspect of this is the most important part, right? Cause if it’s money market, you still have to pay taxes on that. Whereas with the treasury bond yield, you don’t, right? Oh, you’re, you’re muted. Yeah. With the money markets, yeah, you pay federal, state, local, and treasure bonds, just, you don’t, you just pay federal.

16:00
you don’t pay the state and local. you have to tax adjust, you should do your calculation. After taxes, what is your net yield? And so a good exercise to think about, so you have to buy at least $1,000 worth of treasury bonds, that’s the minimum. But good exercise to think about is, let’s say you had $10 million investable assets. What would you do with that right now? Wow, you can invest all 10 million yielding 5.2%, so you’d get 500,

16:30
$20,000 risk-free. If you had $20 million, you would make over $1 million a year risk-free. Would you do that in this environment now? For me, I would say absolutely. So you might only have 10,000, $5,000, $1,000 invest, which might not bring you a great amount of risk-free income, but you’ve got to think bigger picture on that. so everything…

16:55
All risk assets are based off the risk free rate of return and the risk free rate of return is the 10 year treasury bond. So you will not invest in any assets stocks real estate, whatever. If you don’t believe the return will be greater than the risk free rate, which is currently about 5.15%. I mean, the way I think about it is I will buy treasury bonds that just match what I need to live on. Like I’ll put the amount of money that’ll generate an income to live on and then

17:24
The rest is just kind of gravy and I played around with the rest. I think it’s just because we’re old, like we’re around the same age and I go for what’s safe now. Whereas in the past I might do like options or stocks. There’s no way I’m doing that right now. I think if you’re early, you’re still wrong is kind of like the investment thesis. So it’s like, yeah, you could have bought something early, but you could still lose money. And even if it rebounds two, three years from now, if you don’t hold on, you’re still wrong.

17:53
And I just don’t feel with the yields at these levels, it’s worth taking that excess risk. But it depends on where you are, right? How old you are, your income, current income stream, your future income growth, what you want, how greedy you are, how fearful you are. You know, as you get older and you have more money, I think for most people we get less greedy, more conservative, and are just happier with what we want, what we have.

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Once again, that’s mywifequitterjob.com slash book. Now back to the show.

20:20
Let me ask you this then. I’m sure a lot of the people listening to this podcast want to use this as an income, right? They want to make more. They’re not conservative like we are. How would you aggressively invest in this environment? Well, what I would do is I don’t think mortgage rates are going to stay in the average 30 or fixed mortgage rates, especially like 6.7, 5%. I don’t think it’s going to stay that way for another year because over the 40 year long-term trend,

20:49
Mortgage rates and interest rates have been coming down and why are they coming down? It’s because of technology Knowledge a smaller world efficiency so What I think people should do is aggressively look for real estate deals. So anybody who is listing now I Would say they’re probably more desperate than not

21:16
Because why would you list now when the economy is in such uncertainty we could go back to recession, mortgage rates are so high and demand has really tailed off. So you might be listing because you lost your job or you went through a divorce or something and if that’s the case, getting the best price might not be the most important but getting liquid is. And so because of the advent of DocuSign for example, you can write up offers, you can make offers in like three minutes.

21:46
Yeah, your agent set something up, put the terms and just click, click, click, click sign. So I would be aggressively spring and praying in terms of submitting offers to all these properties that I think could be great and could turn around because I think the real estate market will go through a retrenchment period through the end of 2023. But if you can get prices down 10, 15 % from 2020 peaks,

22:14
It’s probably just this is like on average around the country. This it’s probably as good as it’s going to get because eventually so the economy will start slowing down. The Fed will start having to cut rates. More people will buy 10 year treasury bonds, 10 year bond you will go down. Mortgage rates will go down. And then so by I would say 2024, you’re going to start seeing a floor and a rebound because the long term trend for real estate is going to be up because inflation is up, population growth and so forth.

22:43
I think that’s one of the best way the average person can make good money over the long term is through real estate. Okay. The title of your book is Buy This Not That. So what do you buy and what do you don’t buy? So Buy This Not That was written to help people think in terms of probabilities. I have this 70-30 probability framework where I say if you believe there’s a 70 % probability or greater, you’re going to make the right decision.

23:13
Go for it while having the humility and understanding knowing that maybe 30 % of the time you’re to get it wrong. But if you get it wrong, so long as it’s not some kind of catastrophic mistake or decision, you’re going to learn from your mistakes and get better. I think over the over the years, too many people feel like they need a 90 % probability or 100 % probability to ask out that girl or boy to apply for that job to join the startup to make that investment. And because of that,

23:42
desire for assuredness, people miss out on too many opportunities. And that is just a shame. And so I think, you when I look back on my life, we should take more risks, but we should also take more calculated risks. So the whole book on buy this, not that is to help you tackle some of life’s biggest decisions such as, you know, private school or public school, have children or not get married or not where to live or not join a startup or stay at a big corporation, start your business and so forth.

24:12
And so that, the book is really about tackling life’s decisions so that we can live better lives and not have so much regret when we look back. Okay, walk me through this then. Okay, most of these people that are listening want to start a business. So walk me through the decision making process on how to assess whether it is actually a 70 % probability. So let’s say I want to start an e-commerce store, which is what I do. How would you assess that opportunity?

24:41
So first you’d have to assess where you are in your current environment, your job, your income, your future income growth, the stability of your job, whether you could get laid off, whether you have the probability of negotiating a severance so you can have a financial buffer. So you gotta write that down. And then you have to talk to people who run businesses that you wanna run and understand what is the feasibility that that business will succeed or fail. Talk to as many people as possible, understand how long it took.

25:11
took for them to succeed or fail. And then you have to come up with this matrix to say, look, if I take that leap of faith, how many years will I need to spend before I determine whether I’m a failure or a success? And if I’m a failure, what is the probability of me going back and getting my old job? So in other words, there are so many variables and you can never really get to that exact 70 % probability, but you have to get to that

25:41
feeling where you will get to that 70, you feel like you have a 70 % chance or greater. And then once you feel and get to that, after you do your due diligence, talk to everybody and understand the various different scenarios, then you’ve got to take the leap of faith and do it. And if you fail, then you’ve got to go back and see where you got your assumptions wrong. I mean, it’s a constant cycle of testing and analysis.

26:08
And for this particular scenario, what I say is the fear in your head is generally greater than what will happen in reality because the worst case scenario is you try for one or two years and then you fail. But what is failure? Going back to your day job, who cares? No big deal. And you can increase your probability of success by just starting it on the side on the weekends and nights in the mornings while you’re grinding away. And I would say that probability of success is pretty high, especially the longer you work at it.

26:36
I think given a long enough runway, the probability is always gonna be high. You know what’s funny is I teach a class on e-commerce and whenever I have an engineer sign up, I’m like, oh man, okay, this guy is gonna overanalyze everything, take forever and he’s looking for the sure thing. And to be straight up, the engineers in my class tend to not do as well as people who don’t think as much. Like what you suggest, it required a lot of thinking.

27:06
The people who are successful in my class are the ones that say, just screw it. We’re just going to try this and see what happens. And some of them, like they asked me for help and I’m like, hey, I don’t think you should do this actually. The chances are low. They do it anyway and they make it work. And I’m like, okay, well I was a hundred percent wrong then. That’s interesting. Cause I’m definitely not an engineer by background, but I’ve decided that thinking is free and planning scenarios is free.

27:32
You wanna do pre-mortem planning as much as possible. So for example, if you get in a car accident, God forbid, you’ll probably be dazed and confused depending on the extent of the car accident. Even if it’s a small car accident, I think most people will be dazed and confused and people will maybe not understand that they need to call 911 or call 311 or find their license plate or pull over or whatever.

27:58
But if you did a pre-mortem planning and said, if I was to go into this car accident, here’s a checklist of three things I need to do, it makes things much clearer. So for me, it’s important to plan for various scenarios and unknown variables that could happen in your life. So I was just driving my son to school today, and what we do is we do a probability game where we say, okay, we left at 8, 18 a.m. We gotta get to school by 8, 45 a.m. What do you think is the probability we’ll get there on time?

28:29
And then we start off at like 90%. And so I’m driving and I’m like, today’s Friday, so not as much traffic. Maybe people are taking time off. Maybe the probability is higher. said, okay, maybe it’s higher. But then what about the unknown variables? So last night, there was huge rainstorm, torrential downpour, and this traffic started slowing on the way to school. And then I asked him, what’s going on? Do you still think it’s 95 % probability? We’ll get there on time. He said, not really.

28:56
And lo and behold, was an unknown variable that a massive tree in the panhandle fell over crunched cars and then they took out a lane. And so that probability of getting there on time obviously declined because there’s a lot of traffic. So my point is thinking is free, planning is free. You might as well plan as much as possible, but then still have the conviction to go for it. I actually a hundred percent agree. That’s the way I am too. So maybe you’re like a closet engineer. I assess all the probabilities and

29:26
At some point you have to take that leap of faith and whatever it takes to convince you to take that chance. Most of the time my wife is actually, ironically, less risk averse when it comes to trying stuff than I am. she’ll, she pushed us over the edge actually when it came time start our business. Whereas I was still calculating the probabilities and how much money we could make and you can never account for everything. And I certainly didn’t account for the success that we had for our stuff. So yeah.

29:54
Was that the case with your blog too or was your blog purely just a hobby when you started it? I didn’t plan for it to make lots of money. I knew there was at the time AdSense that could generate several dollars and I remember telling myself a year in I was like, well, if I can make a thousand dollars a month, that would be amazing. Would it be such great bonus money? Because I was working in banking, the salary was good and I thought I would be in the field until I was at least 40, if not 45.

30:22
I was shooting for 40, so 18 years post college, save and invest aggressively and then have options to do something else. So I really didn’t approach it as a business. And I understand the whole business aspect of it, I really do. But what I found for me is that the more I try to focus on the business aspect and try to make money, the less happy I was. And the sooner I felt I would achieve burnout and then just quit altogether.

30:51
And so that’s kind of half the battle is just surviving long enough to see the flowers bloom. And it is fascinating to me. I see people very business oriented, focused on the money and that’s fine. And then there’s people like me, probably terrible business operator, but I’m enjoying what I do and it generates income anyway. So you’ve got to find out your personality, but find out your objectives. Like what is it that you really want that money for and that business?

31:17
Because some people, they quit their terrible job, they start a business and they end up spending 20 hours a day on their business and they’re back to miserableness, right? Let’s say you make $2 million in your business. What is the extra incremental $3 million? If you make $3 million, what is that gonna do for your life? You have to ask yourself, everybody’s different and that’s part of the fun. What you described actually happened to me. We started seeing some early success.

31:46
and then I just kept wanting to grow it, grow it and grow it. My wife already stopped enjoying it. She, just to give you an example, she used to like embroidery, but I decided to monetize that and sell like embroidered stuff. And then she, it’s one thing to do it for fun, it’s another thing to just fulfill orders and do it for other people. So she dropped that and it got to the point where we were spending a lot more time on the business when all we wanted to do was replace my wife’s salary actually so we could both stay at home.

32:15
Yeah, so you’re right. You need to figure out what you need. Otherwise Everyone in business, especially it didn’t happen to you, which is amazing Is they start setting like the goalposts farther each time? For no arbitrary for no reason really. Yeah Well, I think part of the reason so a good trick everybody should do is Look at your boss. Maybe your immediate boss and your boss’s boss They make probably more money than you they might have a nicer car. Nice a house

32:45
whatever, and you gotta look at their lifestyle and see is this what you want and is this what will make you happier you think? And I encourage people to try to make the money that they think will make them happy and then reassess once they get there whether they’re happier or not. In my case, I saw my bosses, you because I worked at Goldman Sachs in 1999, that was the year the company went public. It was one of the best Wall Street firms and a lot of the partners made tens of millions of dollars.

33:16
Instantly and I saw them. I was like, okay, they’re happy they can have nice they can go to no boo or whatever But yeah, I’ll try for that. I’ll try to make as much money as possible for 15 years But I didn’t see them as much happier, you know, it was like and it’s the same thing with entrepreneurship It’s just like a never-ending a dollar amount to make but there’s never enough time. You’ll never make another second Yep, and the thing is I’ve also know very wealthy people here in San Francisco

33:45
who have half a billion dollars, a billion dollars. We play tennis together and they have the same problems as everybody else, as me, anybody. Same worries, same hopes, same worse problems actually in a lot of cases. Yeah. I mean, they might have 5,000 employees they have to stress about and a board and perception and criticism and privacy issues. And so I just, there’s a whole study about the maximum income amount aware.

34:14
happiness increases no further. I think that’s about 250,000 in the Bay Area. 200, 250,000 per person, maybe 400,000 now for family. Probably, yeah, that sounds about right. Yeah, 400, maybe 500,000. And then the new study actually, Daniel Kahneman, who came out in 2010 saying 75,000 was the limit, which I thought was total. That was BS. BS, right, it was like so low. And I figured out, I think why, was partly because the median private.

34:42
university salary back then was about 80,000. And so it’s like, just kind of like are incurred to what you know. But anyway, so now they came out in March, 2023 and said, actually, it’s not 75,000, it’s 500,000. And I’m like, wow, that’s a big job. But yes, thank you for recognizing that actually your happiness does increase more than the more you make above 75,000, because you have more options and freedom. So let me ask you this. Most of your income comes from financial samurai. Is that accurate?

35:11
Ah, I would say yes. Or is most of it passive from your investments? Significant chunk from financial samurai, right? Yeah, so passive is about, passive investments was about 380 grand last year. Dude, that’s awesome. So the target is to try to get to 400. And I think it’s actually ironically easier to do to generate more passive investment income because interest rates have gone up, right? So a couple of years ago, ironically, you can only get

35:41
0.1 % to half a percent in your CDs, treasury bonds, money market. But now you get 5 % plus. so my goal was to try to get to 300,000 because I thought 300,000 was the amount you could earn to live a comfortable middle-class lifestyle for up to a family of four in San Francisco. And obviously with inflation, I think that number is probably more like 350,000. Just like a middle-class comfortable lifestyle, right?

36:10
Extra bonus is that you don’t have to really work hard for that income, you know, unless all of that income is you managing, you know, private real estate properties where you got to deal with tenants and all that. Right. And so that’s been my, my whole goal. However, I do believe that active income is enjoyable income. And so that’s why I think everybody should have a mix. samurai. Would you say most of your income is from affiliate? Yes.

36:38
Most of the income comes from affiliate partners that I use and invest with. And so the idea is, so there’s two strategies again for personal finance blogging. You can try to sign up tons of affiliate partners, like hundreds, which I know people do, and then they highlight, they use freelance writers to write affiliate articles on those products. So that’s breadth, or you can go deep and invest with or use products.

37:08
and then just have a few. So I just decided to do the few because I just wanna write about the things that I know and use. Right, uh-huh, always a good policy. Let me ask you this. So with the event of Chad GPT, and I don’t know if you’ve gotten a chance to try the Bing search, where you just ask and it gives you the answer and there’s not a whole lot of hyperlinks going on there. Do you think this affiliate model has legs going forward? I think it does. I think you have to build a brand.

37:37
So once you build a brand, you have to stand for something. You know, the brand can be anything, your voice, your looks, your motto, what you stand for. I think it’s important to build a brand. If you do that, I think you become much more impervious to different types of technologies that could disrupt your business. Because if you think about like, let’s say, NBA basketball players.

38:05
Or tennis players. I like tennis. Let’s talk about tennis. So Roger Federer makes, he made millions, but he makes way more from his sponsors because of his brand. His ambassador as a tennis player, he’s elegant player, he’s a good looking player, he’s got nice style and he speaks well. And so he will always command way more in brand sponsorships and companies who want to be his affiliate partner than someone who has no personality and no brand. Of course. I was, I thought you were going to lead to Djokovic.

38:34
but because he’s better as a lot more likeable than Djokovic. Yeah, it does well. So in terms of like chat GBT, you know, I think, so I think content creators can say, well, wow, are they going to put me out of business? And I would say until, you know, AI can, this is goes back to telling, you know, personal insights, unique insights about finance. I don’t think it’s going to, I think what chat GBT can do is probably push out a lot of,

39:04
companies that have no brands or have very generic writing, right? Because it has to spit out generic facts. So if you are spitting out generic facts where you don’t tickle the reader with emotion or ideas or you inspire, then I think you might suffer. But I think those who are able to write original content, I think it actually helps. But maybe I’m biased and overly bullish. I was actually thinking more in terms of search, the entire search model going away.

39:33
Right now you type in something in Google and a whole bunch of articles come up and you said personal capital, right? You’re an affiliate for personal capital. Let’s say it just gives you the answer. Go to personal capital to invest and there’s no link to your site so you don’t actually get that link. Do you see that, the traditional affiliate model that we’re all used to through Google, do you see that getting disrupted? I think that will get disrupted for sure. And so what happens is what you want to,

40:02
Well, if you think about Bing, right? I think Bing has like a 2 % market share. Something single digits versus Google with like, I don’t know, 90 % something, right? Microsoft has been trying to build its search engine for like a decade now, right? To get to single digit market share. So I think there’s this over indexing of, Bing is gonna, and chat is gonna disrupt Google and.

40:31
put them out of business or something, right? But I think in capitalism, you know, yeah, they might be over employed, but at Google, I think they’re gonna find a way to figure something out and counteract. But yeah, I think the affiliate model, yeah, could get hurt. If you’re a marginal player with no brand, nothing unique. But the other thing that I think will rise up if you have a brand is something called, I would say, the ambassadorship model.

41:01
You know, you’re the brand ambassador. So let’s say, Empower Personal Capital says, we like you as a partner for the past 10 years. We’re not going to pay you per affiliate. We’re going to pay you as the brand ambassador. Here’s a million dollars. Right. I think that model is going to increase. And so for people to put themselves out there, I think that might be very beneficial. Let’s talk about you for a sec, though. So you…

41:30
strictly focus on writing, right? And I would imagine that do people find you mostly through search or is it through your email list or? I would say through search, but I do have a podcast. Right, yeah. Yeah, yeah, yeah. How’s that been going for you and how has that contributed? Because growing a podcast is tough. I’ve been running mine since 2014. Yeah. The growth is linear, but it’s not exponential for me at least. Well, it’s been fun.

41:58
I think I recorded my first episode in 2017, but then I stopped for like a year. So I think it’s only been over the past two or three years. It’s been fun because I just kind of record on my iPhone, 10 to 20 minute podcast. It takes 30 minutes and then I just upload it and that’s it. I just kind of get straight to the point. I don’t have any advertisers and I just kind of try to add some nuance to the articles that I write. It’s kind of supplemental.

42:22
because a lot of people will learn differently or, you know, I’m driving my kid to school every day now. So I like to listen to 10 to 20 minute podcasts. And I think it’s going well because it provides a different kind of color and personality. The main reason why I do my podcast, this is really his main reason is so that can have an archive of conversations with my wife. So just in case one of us doesn’t live long enough for my kids to be adults.

42:50
that they can always look back and listen to what mom and dad was talking about when they were young. That’s my number one driver and it’s just been so motivating and it’s been so enjoyable for us to record. And then the second driver is to just build that personality and that little nuance because a lot of times nuance is lost in writing. And so if you can hear the voice, that’s great. And then finally, it’s good practice to learn how to deliver eloquently and concisely.

43:21
Yeah, absolutely. That’s one of your strengths for sure. Any thoughts on video in your future? Video? I think one, it takes too long. Maybe it costs too much. Maybe I don’t, I have a face for radio. I don’t know. And then, and I like to, I like to just maintain my privacy. So probably not. just don’t have, I don’t, I don’t, I don’t have that desire. I don’t have the desire to,

43:51
be out there on video. But I like the efficiency of writing and I like the efficiency of recording and getting it out there. I wish I cared more about the quality of my sound and all that, but I just wanna just get it out there, because it’s like, just get it out there. Let me ask you this last question here. When you engineered your layoff, you had a huge severance package. How much did financial samurai impact your finances to where they are today?

44:19
Could you have just gotten by with that severance? Would you have gone back to work, you think, if you didn’t have financial samurai? In 2012, I left with about $80,000 a year in passive income. I was 34 years old. And so the passive income came from CDs, money markets, rental properties, and stock dividend. And then I had the severance package, which paid out a severance check. I was there for 11 years. So it was a really good severance check.

44:47
And then I got all my deferred cash and stock compensation, which built up over three years. And then I had this toxic assets that they made us buy these mortgage backed securities in 2010. We had to buy it. A portion of our bonus was used to buy it. And it was very smart to take it off the corporate’s balance sheet and then to give it to the employees. It was like, our crap. So we ate the crap.

45:14
And we’re like, fine, whatever, one team, one dream, we’ll just take it. But it turned out to be a good investment back in 2010 because the investments gained in value and it had seven year bullet. was like seven year investing where in seven years you would get it all. So if I left in 2012 and just quit, I wouldn’t have got it. all of this was able to, Severance alone was able to cover five years of normal living expenses. Wow, nice. And I’m a frugal guy, but it was still like,

45:44
four, five, maybe six years of just normal expenses. And then I had my passive income of 80,000. And then I had the ability to generate income from financial samurai. I wasn’t making that much, probably in the tens of thousands. And then I had my wife who was three years younger than me. And I told her, if everything works out, by the time you’re 35, you too can negotiate a severance and I’ll help you negotiate a severance. And you can join me in this crazy new path we’re gonna take.

46:14
And so I had the security, these financial buffers, severance, passive income, financial samurai opportunity, and my wife. So I figured there’s no way I wasn’t gonna take a leap of faith because worst case, I definitely think I could have gone back to work within two or three years at a similar salary. Is your wife still running on Templator? She is, she’ll publish like once a quarter. Okay, okay, yeah, I remember that. Because it was a pretty tight community. It still is to a certain extent.

46:44
that whole personal finance community that I know and love. Yeah, but she basically helps me edit my posts, does the taxes, does like a lot of the backend stuff, updates posts with me. And, you know, it gives her that professional and creative fulfillment. She writes on occasion, maybe like once a quarter on Financial Samurai. Okay. And then we’re just busy trying to be state-owned parents because all the books said before we had kids, the first five years is the most important years.

47:11
because they’re going to stay with you the longest, they’re to grow the fastest, they’re to build that foundation. And then, you know, at the, age of five or at age of five, they’re going to join kindergarten and that that’s a full day. And then by the time they’re 18, they will have spent 80 to 90 % of their time with you remain for the rest of their lives, right? That’s it. And so we just, we just decided to go all in on being parents and because we didn’t want to regret like, I don’t know, 18 years from now, the kids don’t turn out well and they’re like, oh.

47:41
we kind of messed up. And it took us a long time to have our first as well. That’s exactly my same philosophy. In fact, I let my kids know on at least a weekly basis that their lives are not normal. Like I’m around all the time. In fact, they probably wish I’d take a job sometimes. So you’re pretty much around all the time, right? I’m around all the time. I try to have a balance of writing, working in financial samurai, maybe three hours.

48:11
on average a day. It’s like the sweet spot where it gives me a lot of joy and not enough time where I start, you know, resenting the work. Because there’s always like emails coming in and inquiries and all that. It’s like, it’s a nonstop endeavor. And then I try to spend a couple hours doing exercise, like playing pickleball or tennis or hiking. Nice, nice. Last question for you actually, this is a selfish question. Why did you write your book?

48:39
Like what was the purpose for you? I have my reasons, but I’m curious what yours were. Well, one, I tried to get a literary agent back in 2011 and I failed. You I sent out 25 resumes or whatever, inquiry letters and I failed. And then so I decided to self publish How to Engineer Your Layoff, Make a Small Fortune by Saying Goodbye as an ebook. And it was a really rewarding process that has turned out to be a very profitable.

49:07
Endeavor because it generates about forty to fifty thousand a year in passive income from book sales Get out of town that how to engineer your layoff book. Yeah Amazing. Okay. Yeah, and it’s a ninety eight ninety seven point five percent profit margin, right? There’s every sale they take two and a percent right and I updated once every year or two years and it’s helped thousands of people Gain the courage to quit their jobs with money in their pocket. And so it’s been very satisfying

49:36
And so I did that. was like, oh, everybody rejected me in the traditional publishing industry. That’s fine. I’m going to just do it myself. I’ve always been that way. You reject me. I’ll just do them anyway. Right. Yep. And I think a lot of e-commerce people or entrepreneurs have that same type of mentality. And so at the end of 2019, was, I was approached by an acquisitions editor at portfolio Penguin random house who wanted me to write a book. And I was like, oh, really? I’m not interested because I rewrote a book and it took too long and I’m good.

50:05
But then once the pandemic hit, lockdowns March 18th, 2020, I said, you know what, let’s just write this book because this is a way to kick the pandemic’s ass and make lemonade out of lemons, right? So I know that five, 10 years from now when my kids or my grandkids, 30 years from now, hopefully, will say, what did you do during the pandemic? I’ll just say, oh, I used this terrible time to write a book that I’ve always wanted to write. And so that was my main motivator to keep me busy.

50:34
during the pandemic. And also to show my kids who we pulled from preschool, my son from preschool, that this is what daddy does to work. And I would spend time writing and because they’re in the education phase of their life, what better thing to do than to do what they are learning by writing and learning how to communicate. And then to have that final product to say, hey, look, here’s the book. We went to Books Inc in San Francisco.

51:02
and to go treasure hunting for daddy’s book. It was the most joyous experience ever. It was so fun. They were thrilled. They were like, hooray for daddy. So this was an indelible moment that think they will, that hopefully helped them appreciate what their parents do and how important education is. That’s one of the reasons why I wrote my book also. And your story, what you said about getting rejected and doing it anyways.

51:30
I always wanted to be a keynote speaker. No one would take me, so I started my own event. Oh, nice. And I nominated myself as the keynote speaker. Well, there you go. That’s how my event started. Yeah. I think we’re a lot alike, actually. We’re both Asian, so maybe that’s got something to do with it. Sam, where can people find you, your book? Is it still a book sink?

51:54
It’s everywhere books are sold. You can pick up a copy of buy this not that at financialsamurai.com forward slash BTNT for buy this not that. You can find all the relevant links. I think you’ll really enjoy the book, especially if you’re in your 20s or 30s or 40s, you’re going through all these dilemmas. You money is just a means to an end. Hopefully money will be used to help you make better decisions so you can enjoy your life and look back and feel great about your decisions.

52:24
You know, the easiest way to just never say again if I knew then what I know now is to learn from someone who’s been there before and understand the errors in their ways. This will help you in your probability analysis to make better choices in the future. So that’s where my book is. You can go to financialsamurai.com. I read all the comments and I respond to any comment that requires a response. And that’s about it. And I just want to give a plug for Financial Samurai.

52:53
It’s not like the generic stuff that you search for on Google. Like if you say personal capital review or whatever, you’ll get this generic chat GPT-ish article that will show up. But Sam will give you his real opinions based on his experiences and then he’ll reinforce it on his podcast as well. because of Google, it has turned into like a, a Google search is just garbage these days, that that’s just my personal opinion. it’s always nice.

53:21
when someone has not succumbed to the algorithm and continues to write how they want to write. So I commend you for that. Thank you. Thank you very much. Sam, thanks a lot for coming on the show, man. It’s been good to catch up. All right, good catching up.

53:37
Hope you enjoyed that episode. Now if you want to check out Sam’s writing, go over to FinancialSamurai.com. For more information about this episode, go to MyWifeQuarterDob.com slash episode 451. And once again, I want to thank Postscript, which is my SMS marketing platform of choice for e-commerce. With a few clicks of a button, you can easily segment and send targeted text messages to your client base. SMS is the next big own marketing platform and you can sign up for free over at Postscript.io slash du.

54:05
That’s P-O-S-T-S-U-I-P-T dot I-O slash Steve. I also want to hang out with you in person in Fort Lauderdale, Florida. So grab a ticket to Seller Summit and let’s meet up. Go to SellerSummit.com. That’s S-E-L-L-E-R-S-S-U-M-M-I-T dot com. Now I talk about how I use these tools on my blog. And if you are interested in starting your own eCommerce store, head on over to mywifecoderjob.com and sign up for my free six day mini course. Just type in your email and I’ll send you the course right away. Thanks for listening.