Re: “What would be your version of GQ Sports’ ‘My First Million’?”

April 1, 2020, 11:34 PM PDT by Parkzer • Finance, Highlights, Q&A

This post is over 6 years old and may contain information that is incorrect, outdated, or no longer relevant.
My views and opinions can change, and those that are expressed in this post may not necessarily reflect the ones I hold today.

GQ Sports has been doing a YouTube series called “My First Million” where they invite professional athletes to share how they spent their first million dollars that they earned in their respective sports leagues—the most recent episode was released earlier today and featured Will Hernandez from the New York Giants.

Now obviously, even with financial advisors, sports stars aren’t exactly known for being wise spenders. On the other hand, it’s almost become a meme at this point as to how neurotically I personally manage my own money. As a result, I’ve had a few people reach out to me and ask me to do my own version of “My First Million” as if I was also a superstar who had just made my first million dollars.

Those who truly know me know that my answer is actually astonishingly simple—I would save and invest all of it. But that would make for a very boring “My First Million” breakdown, so I’m adding in a few stipulations:

I have to use all the money. Saving is acceptable if it is savings with a specific purpose, but I cannot just throw it in a general savings account or investment portfolio and leave it alone.
I have to spend all of it on myself. This rule is actually mostly to protect myself from people who may see this hypothetical blog post and ask why I would spend money on this person but not on them.

With that being said, I can come to a few initial conclusions:

There is no indication as to whether this is my first and only million, or my first million of many, so I will take the safer route and assume this is the only money I’m getting. This is generally a better approach for superstars to take anyway, because you never know when their careers may end.
Because this is a high-profile sports contract, I believe I can safely assume that this income can be classified as employee salary, not independent contractor miscellaneous earnings. Thus, I am only responsible for my own half of FICA tax (i.e., no self-employment tax), and I am unable to take any operating expense deductions from my income tax.
I already own a lot of stuff that I want, so a majority of these purchases will upgrades of what I already have, or luxuries that I don’t actually need but would be nice to have.

So, here is how I would spend my US$1,000,000.00:

Federal income and FICA taxes With an income of a million dollars, I should expect to spend about $330,000 in federal income tax, as well as an additional $30,000 or so in Federal Insurance Contributions Act (FICA) tax (which covers Social Security and Medicare). I have no state income tax because I am a resident of Nevada.	$ 360,000.00
IRA & i401(k) In the spirit of “pay yourself first,” and for the sake of my future, the next thing I would spend on is my retirement. I have an individual retirement account (IRA) and an individual 401(k) account; IRAs accept a maximum yearly contribution of $6,000, while i401(k)s accept up to $56,000. As a side note, I know I stated above that this would not be self-employment income, but I already file my taxes as a sole proprietor from running my own business and my i401(k) already exists, and there’s nothing I’m aware of at the moment that would stop me from using employee income to contribute to an i401(k), as that kind of restriction wouldn’t seem logically sound.	$ 62,000.00
2-bedroom unit in a high-rise condominium on the Las Vegas Strip I actually had to think a bit on this one. I know for a fact that I’d like to stay in Las Vegas forever if I’m able to, so I can definitely commit to purchasing a property, but I wasn’t sure what type of property I wanted. I really enjoy the lifestyle of living in a high-rise condo, but I also appreciate the privacy and comfort that a single-family house can bring. I ultimately decided to go with living in a high-rise. There are some very high-value units available in high-security, all-residential buildings like the Allure, Panorama Towers, and the Martin, and with housing prices already visibly falling in Las Vegas as a consequence of COVID-19, I think I can get a great property for a low price. Now of course, this doesn’t mean I won’t have any more housing expenses and I can quit my day job. High-rise condominiums on the Strip have sizable homeowners’ association fees, and along with home insurance and property taxes, my monthly expenses will probably still be somewhat close to what I’m paying in rent right now.	$ 450,000.00
Tempur-Pedic TEMPUR-breeze° king-size mattress I’m sure you’ve all heard of how you spend a third of your life in bed, so you shouldn’t skimp on your mattress. I completely agree with that, so much so that I decided to actually itemize out my mattress and get the best one I could find that wasn’t completely unreasonable in price. I’m no mattress expert, but Tempur-Pedic seems to have a great reputation for great mattresses, so I decided to go with one made by them. I don’t think I had this problem when I was a younger child, but as I grew older, I’ve developed a strange back pain problem. I’ve tried quite literally 5 or so different mattresses of different brands, firmness, and construction, but none of them seem to be the perfect mattress. In fact, I actually sleep pain-free for the first few nights on a new or different mattress, then my back pain returns shortly afterwards. My current mattress is a little over $1,000, and I imagine that just buying increasingly expensive mattresses isn’t going to magically fix my back pain problem, but with the great reviews that Tempur-Pedic has, I figured it was worth a shot. My current mattress isn’t bad, though—I’d just use it in the second bedroom of my new condo.	$ 5,000.00
Furnishings I actually own an incredibly low amount of furniture. Since moving from the Chicagoland suburbs to the Pacific Coast, I’ve always minimized my possessions because I moved a ton within Southern California and Las Vegas. But now that I’ve just bought a property, I imagine I can safely assume I won’t be moving again anytime soon, so I can start buying some furniture. When I get something done, I want it done in the best way possible, so if I’m going to buy furniture, I want it to be furniture that I love. I have a mild obsession over ultra-modern design, so I would actually want everything to be in white leather and glass. Of course, that’s going to be far more expensive than a boring brown fabric couch, so I’m allocating about $40,000 for the cause. Combined with the little furniture that I do already own, that should probably be enough to fully furnish the two bedrooms, living area, and kitchen.	$ 40,000.00
Ram 1500 Rebel Now here’s where the fun begins. You may already know that my “dream car” is actually a pickup truck, and it’s the Ram 1500 Rebel. The only reason I don’t actually have one already is because I’m concerned about Fiat Chrysler’s historically catastrophic reliability—I don’t want my truck to randomly break down in the middle of nowhere, and I don’t have the time and money to constantly have my truck in the shop. But, seeing as I’m outright buying this vehicle (and paired with the fact that I just made a million dollars), I’m sure I can afford to get a Ram and pay the extra maintenance costs when the truck inevitably breaks down. The particular configuration I want MSRPs at just over $60,000, but I’m sure I can get some incentives and dealer discounts to bring that price down. I threw in an extra $10,000 in modifications, like ceramic window tinting, matte black vinyl wrap, metallic gold accents, a conservative lift kit, and meatier tires. I’d just need one vehicle as my daily driver, so I’d trade in my current truck, which knocks about $25,000 off the price.	$ 45,000.00
Glock 43 I am a strong believer that you should only buy things if they serve a purpose in your life, so if I already have something, I usually won’t buy “duplicates” unless I have a really good reason to. I don’t think buying another gun is necessary, but I think having a million dollars to spend is a pretty good reason to buy another gun. Glock 43s are subcompact pistols that are generally used by concealed carriers who want to hide the fact that they have a firearm. The firearm itself goes for around $550, but with modifications, the price can climb pretty quickly. I threw in an extra $450 on the price to account for things like a slide cut, Cerakoting, and custom-colored hardware.	$ 1,000.00
Exotic leather goods I’m a big fan of exotic leather goods, with a particular interest in stingray skin. I have a stingray wallet, stingray rowstone belt, and hornback saltwater crocodile belt, among others. I’m not 100% certain what exactly I would want yet, but I would allocate $2,000 into buying more exotic leather goods. If you find a good private leatherworker instead of going for designer brand names, you can get pieces made at a very affordable price, so this budget should be enough to get me two high-quality pieces. One of them might end up being another stingray belt in a different pattern, possibly dyed a different color, with a sterling silver buckle.	$ 2,000.00
Naming rights to a room in the Las Vegas Metropolitan Police Department’s new Reality-Based Training Center Yes, this is technically just a charitable donation to the Las Vegas Metropolitan Police Department Foundation, but seeing as I made a stipulation that I had to spend the money on myself, I found a little loophole. LVMPD is in the process of constructing a new training facility, and donors are able to purchase naming rights to different rooms in the building. Thus, this is my way of “buying myself something”—but also contributing to a good cause in the process. I also know that some of you who know my past history have been wondering this entire time how I’m going to figure out a way to give some of this money to a law enforcement charity… so here it is.	$ 10,000.00
Day-to-day miscellaneous expenses And finally, I’d save $25,000 of the million to cover day-to-day expenses. This covers stuff like food, self-care, health insurance, and pretty much anything else that may come up in my everyday life. I mostly keep my daily expenses slim, and seeing as I just spent $543,000 enhancing my life and another $62,000 to put into savings, I’d imagine that an extra $25,000 would be sufficient to account for everything else.	$ 25,000.00

How much value I got from my Chase Sapphire Reserve in the first year

August 8, 2019, 6:39 PM PDT by Parkzer • Finance, Highlights

Most people are hesitant to sign up for credit cards with annual fees because they never know if it will be worth it. Back in July 2018, I signed up for the Chase Sapphire Reserve because, after a quick calculation, I knew for a fact that I would get way more value out of it than a regular, no-annual-fee credit card.

Now that one year has passed, I decided to do a deep dive on all the spending I’ve done on my Chase Sapphire Reserve to see just how much value I got out of it.

Before we begin, I want to separate this benefit from everything else: I received 50,000 rewards points as a sign-up bonus, which is equivalent to $750 worth of travel redeemed through the rewards portal. All monetary value calculations of points will be done at the 1.5¢ per point rate, as I actually use all my points to their fullest extent (then usually still run out of points and end up buying more travel out-of-pocket).

According to my account’s spending report, here is what I bought between August 2018 and July 2019 (I don’t think all these categories are accurate; I’m just going off what Chase thinks each purchase is):

Category	Spending	Rewards
Automotive	$ 324.72	$ 4.87
Bills & utilities	$ 7,272.35	$ 109.09
Entertainment	$ 386.00	$ 5.79
Food & drink	$ 4,025.55	$ 181.15
Gas	$ 1,664.72	$ 60.38
Groceries	$ 2,061.33	$ 30.92
Health & wellness	$ 2,240.28	$ 33.60
Home	$ 1,759.77	$ 26.40
Personal	$ 445.01	$ 6.68
Professional services	$ 2,955.82	$ 44.34
Shopping	$ 6,715.17	$ 100.73
Travel	$ 4,678.49	$ 210.53
Total	$ 34,529.21	$ 814.47

With that being said, here are the key points:

The annual fee is $450, but the card comes with a $300 travel credit that I am guaranteed to redeem each year, so the effective annual fee is actually $150.
If I had spent $34,529.21 on a 1% cash back credit card, I would’ve earned $345.29 in rewards. By using the Chase Sapphire Reserve instead, I accrued $814.47 in rewards points during the year. That is $469.18 more than if I had stuck with a regular credit card.
I am enrolled in Global Entry, but I enrolled one year prior to getting a Chase Sapphire Reserve, so I haven’t used the card’s Global Entry credit yet. However, over the span of the five-year renewal period, this benefit is equivalent to a value of $20 per year.
In regards to Priority Pass Select, my travel tendencies tend to fluctuate a lot, but if taking a very rough average, I travel about once a month and often enter an airport lounge 2 times per trip, for 24 visits per year. The cheapest way to enter an airport lounge this frequently is through Priority Pass Prestige, which is $429 per year. Now of course, if I didn’t have Priority Pass Select with the Chase Sapphire Reserve, I just wouldn’t use airport lounges, so the weight put on this benefit is different than the raw monetary value of other benefits. However, I do get free food in lounges, and if I were to assign a conservative value of $5 worth of food eaten per lounge visit that I otherwise would’ve had to buy elsewhere, the benefit is worth about $120.
The card comes with various elements of travel insurance, like for flights and rental vehicles, but I’ve never needed to use this insurance, neither during the 1 year I’ve had the Chase Sapphire Reserve, or at all throughout my entire life of travel. Thus, because it is so difficult to predict when emergencies and inconveniences will happen, I’m not going to assign a concrete value to travel insurance.

This is a lot of information, a lot of which is situational. But if you want a raw number without having to account for the arbitrary value of benefits, it is $319.18. I will passively make about $319.18 each year just for using the Chase Sapphire Reserve instead of a no-annual-fee credit card.

With benefits considered (including the introductory offer), that number goes up to $1,189.18 earned in the first year (non-repeatable, of course).

Re: “How do you avoid spending all your leftover money?”

April 10, 2019, 7:44 PM PDT by Parkzer • Finance, Q&A

This post is over 7 years old and may contain information that is incorrect, outdated, or no longer relevant.
My views and opinions can change, and those that are expressed in this post may not necessarily reflect the ones I hold today.

Within the realm of finances, one of the more relatively frequent questions I get asked is how to avoid spending all your leftover money. Everyone knows by this point that they need to save money, but with a nice, padded bank account, it can be very easy to “forget” to save a set amount during a particular month, and it’s even easier to feel “accomplished” seeing a large sum in your savings account and thinking that you already have enough.

I am by no means rich, but I personally have fallen into this scenario before, and the best recommendation I have is to “create expenses.” I’ll explain.

I am very attentive and “obedient” when it comes to addressing expenses. I make sure everything is paid on time, but not so early that I miss out on interest yield. I never forget about any obligations, and I plan ahead to ensure that obligations continue to be met even in potential emergency worst-case-scenario situations. With that being said, I’m essentially exploiting the way my brain works by triggering that sense of responsibility by creating fake expenses.

As a preface to this, the “my savings account is big enough” argument should be completely invalidated if you have less than 6 months’ worth of living expenses saved up. A lot of people say 3 months’ worth is enough, but remember, the emergency itself that is causing you to lose your source of income will likely also directly drain your funds as well (for example, an injury that will rack up medical expenses), and there is no guarantee that you will recover and return to normal in a maximum of 3 months.

Going back to the main topic at hand, let’s create an example and say your monthly income is $5,000. Your expenses in this example are as such (heavily grouped and rounded for ease of calculation):

Rent (or mortgage plus other homeowner expenses)	$1500
Utilities (power, gas, water, sewer, trash, phone, Internet, etc.)	$300
Medical insurance (health, dental, etc.)	$300
Vehicle (loan/lease, auto insurance, fuel, maintenance, etc.)	$800
Student loans or other miscellaneous installment loans	$200
Food (groceries, restaurants, etc.)	$500
Personal care (haircut, gym membership, etc.)	$100
Household products and other goods	$100
Subscriptions (Amazon Prime, Netflix, Spotify, credit card annual fee, etc.)	$50
Travel and other leisurely activities	$150
Gifts and charitable donations	$100

In this example, you have $4,100 in monthly “expenses,” leaving you with $900 remaining – I put “expenses” in quotation marks because you’ve already taken into account a very large food budget for eating out at restaurants, as well as an additional leisurely spending stipend, as “expenses.” Most people know that all $900 should be going straight into savings, but it’s easy to add an extra $50 here and an extra $100 there and end up shrinking your savings amount.

First of all, make sure you’re not forgetting about any expenses. Are you an independent contractor who runs their own business like I do and doesn’t get income tax withheld? Even if you’re a godlike optimizer of deductions of business expenses, you should be expecting to set aside at least $500 or so per month for income tax, unless you want to go from tax avoidance dangerously close to tax evasion. Are you saving for retirement? Making maximum contributions to an IRA means another ~$500 per month. Combine those two extra items you forgot, and suddenly, you’re short of money, have no savings, and need to cut back on other expenses.

Similar to how you’re budgeting leisure and luxury as expenses into your spreadsheet, also itemize savings as different, individual expenses instead of just lumping everything together as “savings” or “leftover.” Set specific goals for yourself on where each component of your savings is going, and create different savings accounts (where applicable) to keep track of each individual goal (savings accounts are usually either free or have very low daily balance requirements to waive the monthly fee).

Similar to the expenses above, here are some very simple example savings goals (mostly relevant to someone around my age) that you can tack onto your budgeting spreadsheet in the form of “expenses” to turn up the pressure to set aside money for said goals (as well as their corresponding monthly cost):

Maximum $5,500 yearly contribution to a traditional or Roth IRA	$458
Maximum $19,000 yearly contribution to a 401k	$1583
20% down payment on a $350,000 house purchase in 10 years	$583
$15,000 for a wedding in 5 years	$250
$15,000 for the first year of newborn baby expenses in 5 years	$250
$35,000 Bachelor’s degree fund for a newborn starting school in 18 years	$162

Being able to cover all that pushes you into the six-figure yearly salary range, and then you end up getting more expenses piled on just by the fact that you’re richer – you’ll be pushing a 24% tax bracket, you’ll need to purchase more insurance to protect your life and your investments, etc. As you can see, things can very quickly spiral out of control, and it’s all about perspective – you can always put yourself in a situation where it feels like you never have enough money.

So, coming full circle, how do I personally avoid spending all my money? I expand my budgeting spreadsheet to include items similar to the second table, but custom-catered to me specifically. My personal budgeting spreadsheet goes nearly 100 rows deep, and at the end of each month, I “spend 100% of what I earn” … though after reading this post, you know that that’s just an illusion to ensure I’m financially set for my future.

Things you can buy instead of the 2020 Jeep Gladiator Launch Edition

April 6, 2019, 10:44 AM PDT by Parkzer • Finance, Highlights

Ever since suddenly being very interested in pickup trucks out of nowhere, I’ve been following pickup truck and truck modification news pretty closely, and I get excited when something fresh comes into the market. When Jeep announced that they would be releasing a pickup truck of their own, I was pretty excited; even though I personally would never buy a Jeep myself because it just really isn’t my style, having more mid-size trucks available in the market ramps up the competition and encourages other automakers to improve their own vehicles.

Then, I saw the 2020 Jeep Gladiator Launch Edition pricing. On April 4, they went on sale to celebrate the new pickup truck, and only 4190 Launch Editions are being made (that is paying homage to the 419 area code of Toledo, Ohio, the home of the Gladiator). The price? MSRP US$62,310.00.

… I like going to automobile manufacturers’ websites once in a while to load up the vehicle builder/configurator and see what kinds of options are available. I thought this would be a great time to do that just so I could see exactly what else you can buy instead of a $62,310 mid-size pickup truck.

2019 Ford F-150 Raptor with 801A – $60,540

Probably the truck that is given most frequently as the answer to the question “what is your favorite pickup truck,” the Ford F-150 Raptor with the 801A equipment package (which includes everything included on the standard 800A package, plus 10-way power heated leather-trimmed seats, power-adjustable pedals, and a power-sliding rear window) is $1,770 cheaper than a 2020 Jeep Gladiator Launch Edition.

Yes, the Ford F-150 Raptor, the truck that most truck enthusiasts would call their “dream truck,” and then follow it up by saying “but it’s way too expensive to actually buy,” is cheaper than the Launch Edition. Now sure, a lot of dealerships actually sell the Raptor at prices higher than MSRP, but if you want to maintain the example, you can just take the 801A upgrade down to the standard 800A, then there’s nothing more you can say.
2019 Ram 1500 Rebel, fully optioned – $60,290

Not a fan of the Ford Raptor? Go to the Ram 1500 Rebel configurator and click on literally every single available option for a fully-optioned truck, and you can get it for $2,020 cheaper than a 2020 Jeep Gladiator Launch Edition. This includes options like the 5.7L V8 HEMI MDS VVT eTorque engine, air suspension, the Rebel 12 package (which comes with the 12″ tablet-like display), Level 2 equipment group, bedliner and tonneau cover, and power sunroof… and literally everything else, because I actually mean fully optioned.

Remember that Ram was the first manufacturer to introduce the oversized center console display. That, combined with the black leather interior with tastefully attractive red contrast stitching and accents throughout the cabin, and the fully-loaded Ram Rebel feels like you’re driving a top-tier luxury vehicle off-road.
2019 Ram 2500 Power Wagon with Level 2 Equipment Group and 12″ display – $62,385

Don’t forget that the Jeep Gladiator is a ¼-ton, mid-size pickup truck, and the two examples I gave above are ½-ton, full-size pickup trucks. But is that still not enough for you? Then take a look at the ¾-ton Ram 2500 Power Wagon – you even have the luxury of tacking on a Level 2 Equipment Group and the iconic Ram 12″ display and only exceed the cost of the Jeep Gladiator by $75.

All of these trucks are still very off-road-capable vehicles – that’s not unique to the Jeep Gladiator. But, beyond the obvious increase in payload and towing, keep in mind that the Power Wagon actually feels like a luxury vehicle on the inside, as opposed to the Jeep Gladiator that seems a bit too committed to the off-road look-and-feel.
2019 GMC Canyon Denali… AND A 2020 TOYOTA COROLLA – $62,245

Being the owner of a 2018 GMC Canyon, I felt like it would be appropriate to include it as an example in my list. A 2019 GMC Canyon Denali with 4WD is currently $43,240, and the starting MSRP on a 2020 Toyota Corolla is $19,500; combined, they are $65 cheaper than the Jeep Gladiator Launch Edition.

Yes, this does indeed mean that you can get a Denali, the sub-brand recognized among pickup truck enthusiasts as the “luxury GMC,” as well as a small daily driver sedan that gets over 30 MPG in fuel efficiency, and you’ll still have money left over for a little cargo tote for your trunk straight from the Toyota dealership.
A 20% down payment on a $311,550 house

… You get the point.

Honestly, Jeep has to know that the Gladiator Launch Edition is overpriced. They might have been able to pull off something like this for the Jeep Wrangler, because the only “competition” to the boxy off-road vehicle is basically the Mercedes-Benz G-Class, and those two aren’t really that comparable. With no competition comes market control, and a Jeep Wrangler Rubicon Launch Edition at the $60k+ price point might have worked.

But entering the already-very-competitive pickup truck market, then proceeding to price themselves to compete against full-size trucks as well… they’re really preying on Jeep fanatics who like driving with the doors off and top down, because once capitalism kicks in, I foresee unbelievably high dealer discounts off MSRP for the Jeep Gladiator.