Tag: t_homePeerPressure

[21]to sis:G3specific goals@invest`more

Posted on by tiger40490

See also best Spends@100k windfall but I want to maintain two distinct blogposts.

Hi my dear sister,

Re your “vague” question of what exactly I want to achieve with my investment effort, I have a longer answer now, hopefully not so vague 😉

Indeed I still spend several weeks each quarter on investment research/review/decisions. I adjust my views (more often than my portfolio) rather actively.

In [[irrational exuberance]]  Shiller imagined holders of stocks growing into paper millionaires. One of them out there will feel the itch to cash out and improve current living standard. If I were one of them , how do I want to “live more like a millionaire“?

Even though I feel almost “job done” (i.e. I can retire to a thrifty retirement), there’s still some cash flow anxiety beneath the surface.

1) First goal I want to achieve with my investment is relief from that anxiety. Comparatively, I’m on a very comfortable cash flow “high ground”, so my anxiety is less than other people’s.

I will say there’s a risk that we could fall sick, suffer an investment loss or take other strategic missteps. Investment incomes (hopefully diversified and without a 10-year wait) provide the cushion I need.

I can see the ERE author doesn’t have this goal in https://www.getrichslowly.org/early-retirement-extreme/

See precarious pillar/levee/shield #MLP

1b) a related (vague) goal .. reduce my dependency on the WSC harbor as the base_camp for my family livelihood. Best achieved with higher NNIA.

2) The Second (specific) goal I want to achieve with my investment is relief from long commutes, which is a common pain in NY/NJ area. Most people seem to put up with long commutes but I hate it. With more investment income, I can afford to live closer to office, or take lower-paying jobs closer to home.

This goal is so close to heart that it popped out  as soon as I wrote down your question.  After a while, I found a more important, less realistic goal about work stress (work-life balance). I would want to find an easy job (less lucrative) with plenty of free time, where I am free to put in 50% of effort to do a good enough job, without risk of PIP.  I said “unrealistic” because my current level of wealth is insufficient to support it. At a more realistic level, I do feel less pressure to earn more, since 2019 in my chats with GregR. See also my blogpost on all_the_way despite low pay

3) another specific goal .. to support my stay-home wife, so that she can nurture the kids till high school. Many well-off families have a stay-home mother.

9) A distant goal I want to achieve with my investment is extra reserve to support optional big ticket items such as college. I don’t need an even bigger home, but my wife has persuaded me to consider a bigger home. Vacations are unnecessary to my simple life, but my wife would appreciate them.

Fundamentally, by age 40 I had completed all my big-ticket goals — 1) home ownership 2) retirement 3) medical contingency reserve 4) an optional, reasonable amount set aside to help pay college (discussed shortly)

When I look around at my age group, where is the Biggest difference in cash flow pressure, the difference between high ground vs low ground? Luxury branded education. As I said, most of my peers (Chinese professionals in finance or technology) set a target to save more than a million dollars for top school-district housing and top colleges. These are luxury items, not suitable for lower-middle class like me, with only a single income and two kids. To them I say NoThanks.

Now, Many of them consider the school-district home purchase (USD 700k+) an investment, but the monthly cost is heavy, including mortgage, pTax and maintenance, adding up to 4k to 6k every month. When I first considered this burden, this monthly commitment, I had to literally take a deep breath.

Why do I keep talking and thinking about my peers making their decisions? Because they represent a huge peer pressure on me and my wife. The “NoThanks” is easy to say once or twice, but consistency requires mellowness. I have to work hard to keep saying NoThanks. Paradoxically, this NoThanks is a major underlying motivation behind my investment effort.

Overall, I’m comfortable in terms of cash-flow, but in terms of income, we are really lower-middle class . No shame no regret.

— In Sep 2021 AshS asked me a similar question “Your growing net asset is just a number on a screen that you check every year. Why is that number important to you?”

  • I named nonwork income, esp. after retirement. I allocate most of my spare money into income-generators
  • I said that at the moment I wasn’t worried about having too much money to spend in later life. I think it reflects an underlying insecurity in livelihood[3], perhaps not about (anticipated) job loss but about non-financial disasters that financial resource would be needed just to reduce the impact. 100% complete protection is usually unattainable.
  • .. How about legacy for my offspring? I told AshS “not my plan” but any leftovers I can surely leave to them.

[3] Even the best managed companies and countries , with the widest moat, have the same insecurity.

— compare to younger peers like Kun.h
My friend K.Hu’s 2020 email is quite in-depth. Similar to my first goal, I can see that he still works hard for long-term family livelihood. ( I guess AshS is more carefree, due to the bachelor’s life. )

Compared to them, I’m older and more mellow, less ambitious in terms of Brbr, FOLB/exclub, career growth… Instead, wellness, lifestyle adjustment, healthcare, choice of home country, retirement planning …. are more important as I grow older. Therefore, livelihood is a slightly smaller driver.

FOLB/exclub/kiasu … At my age, I have less to prove, less to aim for in terms of moving higher…

Cashflow is a factor (sometimes a major factor) in each “dimension” above. However, cashflow should not dominate every dimension.

show off big nice home@@

Posted on by tiger40490

Remember Zhu Rong’s comment about my simple furnishing in James Madison #25-12 ?

I visited several Chinese middle class home in the U.S. and Singapore.  My home pales in comparison so I seldom invite friends over such as YLZ. I have always felt negative, a bit ashamed and inferior. This sentiment is natural immaturity. Most of us are immature. I think my dad would tell me to relax and let go.

Main focus today is the U.S. context. To a lesser extent, this blogpost also applies to Singapore. My wife envies those families living in luxury private housing.

— Brbr Principle : pay for what’s important to your true self. Guard against mindless peer bench-marking and lifestyle creep

  • I pay for UChicago degree.’
  • I pay for well-connected location with short commute
  • I pay for frequent family reunion flights.
  • … but I don’t pay for a big, nice home just to show other people.

As national leader, LKY followed many unconventional principles.

In my case, this is another of my unconventional principles in personal finance. This and other principles underpin my Brbr, Fuller wealth, cashflow high ground, and bare-bones but growing ffree.

— rental yield is underwhelming in the fancy homes :

  • newer buildings
  • higher floor
  • bigger homes
  • bigger backyard

— fancy home as investment?

Like my sister, many middle-class families would justify their home purchase as something unlike a lavish vacation. Home purchase is an investment. Really? Such a big home entails burn rate burdens due to maintenance, mortgage, and taxes. Rental yield is discussed above. As investment, the saving grace is windfall appreciation.

As explained in big discretionary spends4Chinese middle-class]US and other blogposts a big home could entail up to $6k/M burn rate. Heavy burden.

— immigrant’s American dream — DeepakCM’s point. I think many immigrants come from developing countries. Even a middle class in the home country won’t have such big homes. So when they come to the U.S. they want to experience this part of the American dream.

— financially struggling family living in an expensive home, inherited or purchased

I think this scenario can be realistic — say, a family of four earning $7k/M living in a home worth $1000k.

Would they rather live in a $500k home (half the current home value) with the other half of the money invested somewhere producing $1000 to 3000 monthly rental income?

Answer depends on many factors such as home size, location, floor (the higher the more expensive), but I think if they are struggling financially, then they can trade those nice things for a simpler yet safe and comfortable home + steady income. Remember Ms Cheng’s Bayonne home?

So a big nice home is kinda unneeded and wasted, like a massive lifestyle creep.

Q: Between current income vs windfall appreciation, what’s more important? I guess for a struggling family (me?) income is.

my parents != rich #property..

Posted on by tiger40490

My parents are not rich or wildly successful in the conventional sense (waterfront luxury, multiple properties, brank, …) but I always saw them as decent parents and role models.

Look at wife’s parents. I see them as decent parents too, even though they live in a village, without a car, not earning much throughout their career. By the convention standard, not really “successful”, but decent parents.

Barely middle-class parents, without top (academically) kids can be successful parents.

Parents with half my income and without top (academically) kids can be successful too.

My parents didn’t put me and my sister in top schools using 学区房. I plan to do the same but why in my generation we view it as stigma? I call it peer pressure, but Alok felt it’s pressure from within.

home: pay4what’s important to my(!!peers’) family

Posted on by tiger40490
  • Opening Eg: Some people value high floor but I hate the long wait for elevator.
  • Opening Eg: some people like ethnic diversity. My wife and I prefer more Chinese
  • Eg: Some people value a huge backyard, but I worry about maintenance. If I buy such a home, I am likely to take on 300k additional burden for no particular benefit.
  • Eg: Some don’t mind 45 vs 60 minute commute. I do.
  • Eg: some people don’t mind driving to work every day. I do.

Some parents consider an above average (like 7) school district unacceptable. We may find it good enough. If I lack a backbone, follow the herd instinct and pick a top school district, and sacrifice commute and take on 300k additional burden, I am likely to regret it.

–Some price factor in Bayonne

  • close to light rail — not a key price factor
  • close to shopping — not a key factor, since people drive
  • more uptown and shorter commute — not a price factor at all
  • bed room count — not a key factor
  • side windows (very few in row house) — not a key factor
  • close to park — yes G10 factor. I think these are affluent districts. Better avoid buying those locations
  • condition and age — yes G3 factor

street cleanliness #waterfront=luxury #BayonneParks

Posted on by tiger40490

See also my Chinese writing on Edison street cleanliness in https://tanbintpy.wordpress.com/2017/07/24/edison-scorecard/

Abandoned homes, broken windows are a major part of street cleanliness. Dilaepidated buildings and damaged sidewalk is also an aspect.

Clean street means a lot to me, psychologically. It gives me a sense of

  • law and order — dirty streets feel like lawless
  • ownership — not abandoned by the local authority
  • commitment — by community
  • education level — this usually correlates with income level
  • street safety
  • wealth and decency of the owners
  • local government effectiveness

Waterfront locations have the highest cleanliness, Presumably because it’s a park, not a street, so there is more funding, commitment to keep it presentable. But do I want to pay a premium, when the water front park is factored into the psf, like a premium for the NY skyline view from my window?

Except Scarsdale, I feel most inland streets will never be that clean, but clean enough for me. I think this applies to

  • Bayonne
  • white plains
  • Sunset Park
  • grove st station
  • Becky’s place near Boston Chinatown
  • Cambridge

In these neighborhoods, street cleanliness depends more on house owners, less on local government

 

##[17] top SDXQ: what r we pay`4

Posted on by tiger40490

–Update in 2020: Q: What does a school district mean to me?
A: It means level of drug prevalence.
A: It means motivation level among fellow students.
A: I don’t care that much about benchmark score

SG average school is possible a 7/10 (possibly 10) school district in terms of benchmark and discipline. Similarly, California schools often has higher academic standard than NJ school districts.

Why do I spend so much on U.S. top school districts (housing, private schools etc) when Singapore is cheaper and better?

Buyers bid up home valuations. According to my friend  Paul Meduna, when buyers pay the pTax (or rent) in such a school district, they are paying to be entitled to the local high school.

They put a high value on the SD not only because they put that value on the local high school. I guess their kids may not enroll in that high school (but Paul disagrees). Even if they do, that school may not be suitable for them (too competitive?)

For me, the high school is not the most important thing I pay for. In addition to the high school, buyers put a value on

Conventional wisdom equates top school district rating to superior learning environment.

It’s difficult but conceptually, I want to separate the academic benchmark element from the conducive environment, because these are two separate benefits you pay for.

Most of the costs we pay for top school districts are perceived as a price to pay for benchmark performance.  Common parent psychology.

To put it more bluntly, what if the pTax + home price premium (+ longer commute) only “buy” a modern, well-equipped (like in movies) conducive learning environment with many special programs [1], but without the superior academic performance? It could happen if the students don’t put in more effort than students in other schools. I doubt any parents would accept the deal.

More funding doesn’t automatically improve academic performance. At high school level, student’s effort is the #1 factor, followed by 2) abilities 3) parents + teachers.

Schools are rated by benchmark tests, but test score is not always correlated with funding — some very poor schools in China produce better exam takers than the affluent schools. Therefore, you are really paying for an environment and system geared towards test scores.

[1] those ECA programs, even the academic ones, may not directly help the benchmark tests.

For me, I want to pay for a conducive environment, not benchmark performance. An above average school might provide that, at a huge saving.

shades@grey: !! 100%of cohort owning学区房

Posted on by tiger40490

It’s not black and white like “100% of my Chinese peers bought a nice big home in a top school district.” Reality is not so perfect for “them” 😉

Perhaps some percentage of the Chinese peers bought in an average school districts. Among the rest, some percentage don’t go to the good schools in the district.

Perhaps some bought in a 2nd-tier school districts. Indeed the #1 school district may not be in this NY region.

Actually some of them do rent in a good school district. I just haven’t met them yet.

In reality, XR’s home is rather small and was run-down. YH also said his friend’s home in a top school district is 小黑屋.

Even if they live in a good school district, their kids may not all fare well academically or socially. It’s simply untrue that all good schools’ students are stronger than all regular schools’ students.

In many cases, those who bought there may not benefit from the top school district, but they are still paying the pTaxes.

 

DeepakG@学区房pressure: yourself(!!peer pressure)=the issue

Posted on by tiger40490

The strain + pain I feel due to SDXQ

  • higher price tag -> heavier mortgage
  • longer commute -> less time for family or rest
  • or both

I complained about peer pressure. It’s real. I can imagine that “most” [1] of my Chinese and Indian peers live in top school districts and send their kids to good schools there. I feel poor as a parent if my kids don’t go to some school in a good school district, whereas the kids of my peers do.

Paradoxically, if my kids can’t compete in a top school and transfer to a regular school in a good school district, I won’t feel the guilt. That particular guilt is about providing enough for my kids — Real peer pressure. Then Deepak raised Point #1 why don’t you care about the serious peer advice that you should not live away from family? Strangely, I have a robust defense against the “family separation” accusation and peer pressure. But why am I defenseless against the “school district” peer pressure? Because deep in my psyche, I still believe a decent school is a probably necessity for my kids.

If the regular U.S. schools are as lousy as I feared in my subconscious, then my kids can stay in Singapore schools.

When I feel the unwanted pressure to buy a school district house, I immediately blame the peer pressure but actually the key is my mentality.

[1] https://tanbinvest.dreamhosters.com/2017/07/14/shades-of-grey-peers-owning-sd/

 

 

multiple houses]US:don’t compare with cohort

Posted on by tiger40490

Owning multiple houses is an advantage but be very careful when comparing with those peers. We might be able to own multiple homes somewhere down the road but in the first 10 years, it will be painful and self-hating if we fall into the habit of comparing with our so-called “peers” who own multiple, big homes.

  • Some of the techies are more successful and earn much higher than me
  • Many of them have both parents earning
  • Some of them have been earning high salaries for 20 years. (I started only in 2010 Citigroup)
  • Some of them are stock market mavericks
  • Some of them can create the spare time for renovation. I think Anthony and Hou Li’s husband could.
    • Some of the mothers could multi-task better rather than spending all the time on the kids.
    • Some of the kids don’t need so much parenting time

My tentative conclusion — my family don’t have their income or the spare time. So we will settle for one, small home, and make it loving and beautiful.

I feel such a comparison is deeply emotional and personal at times, esp. when it’s semi-conscious, so we want to be /mindful/aware/ when our mind goes into those sensitive territory, often automatically and semi-consciously.

It’s very important to feel satisfied with what we have — loving family, wonderful kids, better career prospect than in Singapore…