Know Your Blogger Series

Financial Freedom Countdown

My blog is titled Financial Freedom Countdown and focusses on individuals living in high cost of living areas. Even with high incomes; I noticed many of my coworkers and friends stressed out about work, finances and emergencies. Earning money is one aspect; but effectively deploying capital so it works for you is the tricky part. I started Financial Freedom Countdown in 2019 with the goal to encourage others to be mindful when trading time for money.
Check out our Q&A with Financial Freedom Countdown here.

Come read about the great personal finance blog, Financial Freedom Countdown.

Each week at Personal Finance Blogs, we publish interviews from amazing bloggers from the personal finance space. This week, we are featuring the blog, Financial Freedom Countdown.
During these weekly features, we are hoping to provide a way for you to interact and learn more about different blogs in the personal finance space.
Below, you can read more about the story behind Financial Freedom Countdown, learn about the author, and learn personal finance tips from Financial Freedom Countdown to help you improve your financial situation.
A big thanks for Financial Freedom Countdown for this interview! Now, we will turn it over to the author for this interview.

Tell us about Financial Freedom Countdown

My blog was inspired by a distinct memory in my working career. I remember my VP who is in her 70s mentioning that her sister was not keeping well. I naturally assumed she would visit and asked about her travel plans. However, she did not want to take time off given that we had a huge product launch coming up.

Two weeks later, when we were in a meeting; she received a phone call. Her sister had passed away:(. The fact that although she was a VP, earning at least 3X more than me; and yet was a “wage slave” hit me like a tidal wave.

It was at this point I was also reading a book on five regrets of the dying. Although it is not technically a retirement book, I believe it defines the essence of why we should strive for financial freedom and have included it in my ten early retirement books.

What makes you and your blog unique?

Very few personal finance blog writers have esoteric investments like Bitcoin, SPACs, real estate syndication, lawsuit financing, commodities futures, pre-ipo investments, art paintings, etc. and talk about them.

I came from a third world country to the US with only $1,000 not knowing anyone; guided only by an immigrant dream. Achieved Financial Freedom in 12 years living in the most expensive part of the country (San Francisco Bay Area).

The immigrant, late start and absence of family support aspects of my story demonstrate that you can still achieve Financial Freedom:

Even if your family knew nothing about money
Even if you have a late start
Even if you live in an expensive part of the country

I was born in a different country and had no knowledge of anything like credit scores, renting an apartment, opening a bank account, investing, etc. My family was not in this country to hand hold; and I had to figure out everything on my own.

In my early days I learnt a lot by reading other blogs. Starting my blog is my attempt to give back to the community. I write my blog posts with as much detail as needed; to help my audience along the journey. Many of my blog posts are based on audience requests and the readership has a close-knit community feel v/s the larger blogs. I strive for a mix of philosophy (why), process (how-to), and tactical (comparison reviews)

What does “being good with your personal finances” mean to you?

The most important part in Personal Finance is the word “personal”, Everyone has different priorities in life.

For me “being good with personal finances” means defining your priorities and having a plan to achieve them. I firmly believe while each of our paths would be unique based on our own financial situation; we all share the same goal of living our best lives along this journey.

What are some habits you practice to keep your personal finances in order?

I know a lot of people focus on budgeting or hacks like skipping coffee. Personally, I find these tactics to be mentally draining. There is no point in spending a lot of time and energy on the aspects that do not move the needle.

The 2 habits I focus on are:

1) Automate the core of my investing.

Investing is hard due to a myriad of factors ranging from behavioral to psychological.

Getting started with investing and continuing with investing should ideally be automated so we do not second guess ourselves; trying to time the market or chase the next hot sector. Despite all the technological advances and myriad of brokerages competing for our investment dollars, there are not many perfect investment platforms.

I looked at several platforms and compared them to find my perfect investment platform. I was looking for a platform which permits you to automate investment. Pre-set rules to bring your asset allocation back on track with automatic rebalancing, It should also have pre-built asset allocation to get started. And have zero fees and very low minimums.

2) Track your net worth.

I am a huge fan of the Peter Drucker quote “what gets measured gets managed”. This is true for all aspects of life and not just financial.

Tracking your net worth helps you examine what is going wrong if it does not increase annually. Are you picking the wrong investments? Are you spending more without realizing it? Is your income not increasing as expected? Should you switch jobs or add a side hustle to increase your income? Several such questions can be answered by tracking just one number.

And it is always best to compare your today with your yesterday.

Don’t fall in the trap of comparing yourself with others. Since everyone has different preferences with investment opportunities or increasing income, net worth is the best way to measure your own progress.

What are your three articles’ people should read to get to know you and your message better on your site?

My article on how to improve human capital details the steps I took to grow my income and consequently my net worth. Given a choice between increasing income and cutting expenses, I would always focus on increasing income. There is a limit to cutting your expenses but your potential to increase income is unlimited.

I started investing in crypto currencies early on due to my personal experience dealing with sectarian violence. The censorship nature of money was a more attractive feature compared to the asymmetric price advantage of Bitcoin.

Real estate has always been a fascinating investment for me as an immigrant since the fixed rate mortgage for 30 years in not available in most countries. I do own a rental property but due to the changed laws, I don’t believe it is a great investment. In fact, I switched to real estate syndication to maintain the asset allocation and reduce risks.

For someone looking to improve their financial situation, what’s your best advice?

In the short term I would advise defining your “why”. Improving your financial situation will involve tough choices. Having your why clearly defined will help you make the necessary trade-offs.

Define your ideal life and what is holding you back currently from living it. If it purely financial then have an approximate idea of the number. If you don’t have an emergency fund then start one. Also make sure you get high returns on your emergency fund.

In the medium term I would figure out the gap between your income and expenses. Work on growing the gap. Focus on increasing your income by either improving your human capital or by converting your hobby into an income generating business.

Examine your biggest expenses and see what one time changes you make to eliminate the fixed cost. It could be downsizing your house or getting rid of the expensive second car.

In the long term, define your investment plan and write it down. Learn about what you want to invest, could be index funds or real estate or something else. Stick to your investment plan. As your nest egg grows larger learn about diversification among asset classes and look at how your investments can be diversified.

In your opinion, what’s better? Renting a place or buying a house to live?

Unless you have access to a rent control place, I would advise buying a house to live. Owning a house with a fixed rate mortgage is the best hedge against inflation.

In the long run, you will come out ahead by buying a house with the same monthly payment as your rent. If you rent an apartment but buy a house then obviously it is not the right comparison.

Owning a house not only provides stability in terms of your personal life but also financially you can project your living expenses decades in the future. Of course, this involves buying a house and living in it for at least 10 years. Buying houses have a lot of transaction costs associated with it and your goal is to minimize it.

At a later point if you decide to move then converting your primary home into a rental is an easy way to get introduced to real estate investing.

In your opinion, what should you do first? Pay down debt, or invest?

Depends on the interest rates and terms of the loan.

Is the debt above 15% real interest rate. If yes, pay it down. If no, max out your 401(k). Employer match and lower AGI are great benefits.

Any debt below 15% rate becomes a tricky choice. Mathematically investing might yield higher return but paying down debt is a guaranteed return on investment compared to investing.

Also, since student loans can’t be discharged in bankruptcy always pay them down.

I am partial towards having home debt since you do get the benefit of leverage with a home loan especially if you buy a house in a location which appreciates in value. The other benefit of home debt is asset protection.

What is your favorite investment class and why?

I invest in index funds, bitcoin, commodities, rental property, real estate syndications, individual moonshot companies, SPACs, art and legal financing.

With so many active investments it is hard to pick a favorite. The best assets to buy depends on your risk profile, time, knowledge, and unique circumstances. I evaluated every asset depending on the anticipated risk and volatility, expected return, liquidity (how easy is it to sell and get our money back), passive nature and availability (can anyone buy it).

I ranked and scored each asset to determine the best income producing asset.

I had some interesting reader confessions on expensive car and RV purchases. In the spirit of making lemonade out of lemons, I updated that post with some ideas to turn liabilities into assets.

Do you have any financial mistakes you’d like to share, and how have you grown from these mistakes to improve your personal finances?

I have made tons of mistakes financially.

I never contributed to my 401(k) for the first 2 years since I was not sure if I would continue to live in the US or go back home. And this was with a 50% match.

As I mentioned I try different investment strategies and fail sometimes. In fact, one of my most popular posts documented my four worst investments. And each of these resulted in over $100K loss. My cliff notes version of my mistakes post is as follows:

1) Buying stocks like Sears Holdings based on TV guru recommendations.

Lesson Learned: Don’t take stock tips from TV personalities. It is wrong to assume success in one field translates into expertise in another. Lampert’s hedge fund success was extrapolated to his expertise as the CEO and Chairman of Sears. Also, the backstop was the real estate on which the stores were located. The Great Financial Crisis decimated the real estate market and retailers.

2) Investing in UNG without realizing that it was a poor proxy for the actual price of Natural Gas.

Lesson Learned: When investing, make sure you anticipate any technological changes that may result in your thesis not being valid in the future. Also, make sure you understand the instrument used to invest/speculate. The usage of futures contracts turned out to be my undoing.

3) Investing in ICOs.

Lesson Learned: In hindsight, most of these tokens did not have a strong business case. Since Bitcoin is already decentralized money, you could use Bitcoin to pay for all these services. I could see a point with respect to decentralized and anonymous internet being a fair use case since Bitcoin does not offer anonymity yet. The lack of adoption should have been a major red flag.

4) Investing in Lithium stocks.

Lesson Learned: Not anticipating the new supply was my biggest mistake. I have limited knowledge of the commodities market and need to do more research before investing in the future. Also, we need to consider jurisdiction risks and the fact that assets outside of the developed world do not have much protection.

I also lost money on real estate crowdfunding deals before I developed a checklist to evaluate them.

I am sure I will make many more in the future. As long as you make enough money, none of the mistakes will be catastrophic. You will survive and live for the next battle. When you are working, be aggressive and take as many risks as you can handle. Position sizing is critical, so you do not lose it all.

What’s a non-money related interest you have and what do you love about it?

My favorite hobbies are travel and weight lifting. Lifting weights helps me focus my attention in a zen like meditation phase. Besides I am hoping that staying fit improves the quality of my life as I grow older.

I typically spend 6-8 weeks/year on international travel. Besides the usual tourist attractions, I do enjoy meeting folks in different parts of the world and it helps ground me with respect to realizing how lucky we all are. I was in Cambodia before all travel was shutdown.

A lot of locals were selling trinkets at Angkor Wat. The person who had the most business was a young teenager who actually spoke 4 different languages – Mandarin, Spanish, French and English. I spoke to him and he mentioned using Youtube to learn simple phrases which helps him connect with the foreigners in their local language. Talk about hustle and developing an advantage over your competition!

Now that life is returning back to normal, I am excited to travel again.

How You Can Contact Financial Freedom Countdown for More Information

You can learn more about Financial Freedom Countdown at https://financialfreedomcountdown.com/, like them on Facebook at Financial Freedom Countdown and follow them on Twitter at @ffcsocial.

Thank you for reading this interview, and thank you, Financial Freedom Countdown, for providing us with some great personal finance tips!