Article: A family of 3 gets by in San Francisco without anyone working a job

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jainn
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Article: A family of 3 gets by in San Francisco without anyone working a job

Post by jainn » Thu Aug 16, 2018 9:12 am

CNBC article on living on income in HCOL area without anyone working a job....but looking at his income, there seems to be some job related activities...so not really 100% passive income? Hobby = job, if a job is something you enjoy and quitting has zero effect on your lifestyle?

https://www.cnbc.com/2018/08/15/how-a-f ... a-job.html

The family that runs the Financial Samurai website outlines their portfolio...scroll to very bottom and see its approx 1/3 in tax-free muni's and savings, the rest in stocks and other riskier investments.

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JoMoney
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by JoMoney » Thu Aug 16, 2018 9:27 am

2018 Median home price in San Francisco is $1.6 Million
It was $850,000 in 2013.

Over the past five years that works out to something close to $150k a year without anyone having a job... all you had to do was have a mortgage and a HELOC to spend the equity on.... likely not owing any taxes either :?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Raymond
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by Raymond » Thu Aug 16, 2018 9:30 am

Misleading headline is misleading.
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arf30
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by arf30 » Thu Aug 16, 2018 9:32 am

"You won't believe how this family gets by without working a job!" Answer: millions of dollars in investments, real estate, and rental income.

smitcat
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by smitcat » Thu Aug 16, 2018 9:32 am

Yes of course...
- make a host of income on a home sale
- start a blog that attracts this attention and reels in cash

GT99
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by GT99 » Thu Aug 16, 2018 9:54 am

Definitely misleading. I've followed the Financial Samurai for a few years now. He spends a lot of time on his blog, which I know generates good income for him (per his posts) and that's not included in the passive income in that article. He "doesn't work a job" in the same way that anyone who works for themselves on their own schedule doesn't work a job. Still a great setup, but not what the article portrays.
He has a lot of good content, but he does have a good bit of "fluff" - but you can generally figure out which is which before getting too far into it.

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sergeant
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by sergeant » Thu Aug 16, 2018 9:55 am

6 years severance probably helped! To those who haven't read the article, don't bother!
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jminv
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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by jminv » Thu Aug 16, 2018 10:04 am

I came across this too.

I liked it overall since I also did the FIRE thing but it didn’t seem to flow all that well and parts of it left me confused, perhaps because he had space restraints for the article.

Some thoughts I had on it when I was reading it:

His own severance story didn’t make a whole lot of sense since he wasn’t providing context. I see he sells an ebook on how to ‘engineer your layoff’ which is probably why his own story doesn’t make sense. It would make more sense if what he really had was a stake that vested over time which seems to be at least part of what happened given the timeline of payments. 6 years of severance? Unlikely without this or if he had something on them. Perhaps he isn’t clear on this because he’s selling a ‘engineer your layoff’ to the broadest market possible.

If it’s the above, this is really a case of a windfall. Everything since then was built on it which is good for him but I don’t think it’s classical severance.

He talks about his wife’s clever severance too since he’s in the business of selling that book but what she really did was switch to part time work for 5 months.

He says he’s always been very frugal (and only consulting 10-20 hours a week occasionally and only because he got bored). If he’s so frugal and doesn’t need to work, why does he continue to live in San Francisco, feeling like he was middle class as he tells us, and considering expensive private schools? After selling his big house the easiest way to cut his expenses and make $213k feel like a good amount of money would be to relocate somewhere else (and make even more money on the house they’re in now). This part of the story doesn’t flow. I’d say he does quite a bit of work on the side that’s actually in person and requires him to be in San Francisco. Or he loves San Francisco but then he isn’t being so frugal anymore.

I don’t see his 10-20 hours per week consulting anywhere so I assume he’s adding it to the 213 or maybe saving it which would be better.

Although he has a lot of ‘passive income’, he is spending all the proceeds/gains from some of his asset classes instead of reinvesting. He would still expect capital gains on the stock and real estate in the long run which is good.

He doesn’t break out his website earnings despite talking about how it’s worked out well in 10 years. Maybe that’s just the ‘engineer your layoff’ book in which case still good but wasn’t clear. Perhaps it’s because it either doesn’t make much money and he has to project success or it’s where a lot of his accumulated wealth has originated from. Hard to tell but given absence of info and that he tries to project success, it’s probably not all that profitable.

He still has a rental in San Francisco and another one in Tahoe. Unlike the house he sold and the one he now lives in, he doesn’t give the valuation of his rentals so you can’t tell what sort of yield it has. It’s curious he doesn’t talk about them too given that he talks about his passive income, last house, current house, difficulty landlording, and apartments when he was frugal but not the ones he currently rents out.
Last edited by jminv on Thu Aug 16, 2018 10:07 am, edited 1 time in total.

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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by Jack FFR1846 » Thu Aug 16, 2018 10:05 am

sergeant wrote:
Thu Aug 16, 2018 9:55 am
6 years severance probably helped! To those who haven't read the article, don't bother!
That and their rental property in Tahoe income. I like the financial blogs out there but I don't fool myself that these people are living the FIRE lifestyle by simply leaving their job and doing minimum wage jobs. They're perhaps bringing in $400k a year on their blog (what the MMM site earns) or there's massive savings before hand (Samurai appears to fit this model).

Steve Martin comes to mind: How to become a millionaire......and never pay taxes. First.....get a million dollars. Then, when the tax man comes to the door and says "you have never paid taxes", you say "I forgot".
Bogle: Smart Beta is stupid

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Re: Article: A family of 3 gets by in San Francisco without anyone working a job

Post by prudent » Thu Aug 16, 2018 10:21 am

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