My First Million At 33 Book Is Published At Kindel!

Instead of writing on my blog, I have been working on my personal finance book. I have a lofty goal of making real changes in people’s personal finance affairs, hoping that more people can live under their means, and accumulate a great wealth for their retirement. The book is currently

ON SALE for just $0.99
Since the average number of books sold per title is less than 200, my expected revenue from my book will be 35% royalty of $0.99 x 150 copies = $52.50. My tax is about 47% (CA + Federal + AMT). Out of the remaining after-tax profit of $27.83, I have committed 25% to go to charity (see book for details). So I would net $20.87 at the end.

I’m obviously not motivated by a potential $21 profit. But if I can change just a few people’s lives in how they manage their personal finance, it’s truly worth all of my time putting into the book. The amount of wealth within your reach or for any other readers is truly in hundreds of thousands, if not a million.

YES, you can do it too!
Thanks for any PF bloggers to put this news out. I have an OnlineResource page in the e-book that I can try to reciprocate your promotions.

Here is the table of contents for Part I:

Chapter 1: My 1st Million At 33 – Reader’s Guide

  • Profile of a Frugal Millionaire
  • How I Got My 1st Million At 33
  • Reader’s Guide to the Book

Chapter 2: Understand How Wealth is Created – The secret to making big money

  • Becoming rich is extra-ordinary
  • Your time vs. money
  • The only secret to making big money
  • Take on good debts & avoid bad debts
  • My father’s business moto – How a business prospers
  • Utility and Scarcity
  • Attitude = Altitude

Chapter 3: Book-smart vs. Street-smart – Being lucky is a choice

  • Difficulties are Opportunities
  • Book-smart vs. street-smart
  • A Tiger or a Dog – Finding a career path
  • The true value of a brand-named college
  • Consider free-lancing
  • The three ingredients in starting your own business
  • Being lucky is a choice
  • Pursue what you love; love what you pursue

Chapter 4: Your Income vs. Expenses – Arbitrage the “geography”

  • Are you the boss or the slave?
  • Art & mechanics of budgeting – Running the saving marathon
  • Know where to focus your energy
  • Debit, credit, and cash management
  • Choose a wealth-conducing location – Arbitrage the “geography”

Chapter 5: Why must you invest – Make your home as your best investment ever

  • Nothing is certain but death, taxes, and the I-word
  • Portfolio income is not a usable income
  • Make your home as your best investment ever
  • Avoid the scams and tricks from investment newsletters
  • The biggest investment mistake that people make in following Warren Buffett
  • Investment strategies by the size of portfolio
    • What to invest if you have only $10
    • What to invest if you have $100
    • How to invest if you have $1000 to $10K
    • How to invest if you have $10K to $100K
    • How to invest if you have $100K to one million dollar
  • How much investment risk can you take?
  • Finding a professional money manager: Things to know & ask

Chapter 12: Summary – Get your action plan together

  • Summary – Yes, you can do it too!
  • Becoming rich can be a certainty, not a dream
  • Wealth is a (self-)responsibility – How I tithe
  • Reference guide & resources

For those who are interested, here is the abridged table of content for Part II:
Chapter 1: My 1st Million At 33 – Reader’s Guide (Same as in Part I)
Chapter 6: Investment Theories – Active Investing vs Passive Allocation
Chapter 7: Dividend Investing – Untold secrets of legal tax shelters
Chapter 8: Treat Real Estate like a Business – Leverage & manage your cashflow
Chapter 9: Mega-trend Investing – Bubbles are troubles or Doubles!
Chapter 10: Stock Options – Risks vs. rewards in equity compensation
Chapter 11: Estate & Retirement Planning – Don’t tip Uncle Sam & others
Chapter 12: Summary – Get your action plan together (Same as in Part I)

The full book will go on sale along with Part II later. Part II is targeted for investors with more liquid asset. I split the book into two parts, so that you can buy just the first Part for $0.99. You will not pay more if you buy Part I first ($1), and Part II ($2) later. The price for the full book will be $3. Once the promotional pricing ends, the prices will be more expensive, and I may offer a slight discount on the full book.

Depression: Here It Comes

As days go by, I’m more convinced that the current economic slowdown will turn into an economic depression (but don’t sell your stocks before April, until the intermediate rally runs out of steam).

This depression will be less severe than the last Great Depression at the lowest depth, but it will last much longer, possibly until 2014 to 2018 (no, that’s not a typo). The shape of the recovery will be like a W, with the two low points at the end of 2011/mid-2012, and another point probably at 2016/2017. And we simply haven’t seen the depth of depression yet for sure. I think S&P500 would go to 600 at the minimum, and possibly lower.

Like always, in every depression, the most difficult thing that happens to a family is unemployment. In Great Depression of 1929-1932, the unemployment rate hit 25%. I think we may be looking at 12% to 15% for this current depression. Let’s hope that it doesn’t get worse than that. At 15%, about one for every eight adults is unemployed. If you don’t have any rainy day funds built up, it is probably too late to build up something sufficient to carry over you through the downturn. Make sure you don’t lose your job.

Anything that you could do now to help yourself through?
1. Imagine that your company cut employees by 30%. Will you be the one that remains? If not, you should make every effort to become one of the people that may remain.
2. Apply and get all the credit cards that you can possibly get. Only spend like $10 on the card to just keep them active. You should only use these credit cards until you cannot even afford food.
3. Cut everything to barebone. Review your budget.
4. Sell anything that you don’t need or use now by garage sale, or Ebay. (It’s a little late, but better late than never). Don’t bother to pick up more discretionary junks at the bankrupt Circuit City or similar stores.
5. Keep a positive attitude. Hope for the best, but always plan for the worst. Do something, and do something out of your ordinary routines. That is the only way to create different possibilities for yourself.

At last, if you are able, please help people around you through charity. It may be very hard to give, but every dollar that you give out, means a lot more than in the heydays, by at least a factor of 3X. Charity organizations are experiencing a drought of donation. It is unfortunate, but that’s just how everything goes.

Safety Deposit Box Is Not Safe At All

I have been thinking about getting a safety deposit box to store some jewelry. To my surprise, safety deposit box is not so safe at all. So many reports of thefts.

I googled “safety deposit box theft” and came up with several horror stories. There were 3 different reports on thefts of WellsFargo’s safety deposit box (reports in the comment section, right after Mar 14 at Los Angeles, Oct 10 at Marina Del Rey, Jul 18 at Santa Clarita, and last one at Rancho Mirage, all four in California), and 1 report of a theft on more than 100 safety deposit boxes at Wachovia.

I have also personally asked a WellsFargo representative about some details on their safety deposit boxes. I was told that “WellsFargo is NOT liable for the losses in the event of theft or fire“. By the way, FDIC insurance on the $100,000 does NOT cover anything stored in safety deposit box. NOTHING is covered in there basically. Getting any home insurance to cover your safety deposit boxes will be very tricky too, since they are not at your home.

What’s worse is that it will be extremely hard for you to prove what’s in the safety deposit box. As for evidences, banks may or may not have any surveillence video tapes backup for investigation, and these crimes probably happen long before you discover that your precious items are gone. You can claim all you want, but since banks supposedly never check what’s inside, they would not have any knowledge of what’s in there.

From the comments at the

When you go to get in your saftey depos. box the teller asks for your key then she puts in both keys, turns both keys and pulls out your box. Upon returnig and locking your box all she has to do is position her body between you and the box insert both keys and only turn her key. She then hands your key back and you leave. She can now go in at any time and open your box because your key was never turned to lock the second lock. My friend understood this and said to the lady I am keeping my key I will insert and turn it to be sure my (the second) lock is locked.

…that simple slight of hand leaves your box hers or his for the taking. She can then have a friend come in pretend to sign in and pretend to hand her a key and then empty out your SD box. Then the teller can claim the person showed ID and had the key so how was she to know it was not the right person.

Another thing that you may want to know about homeland security confiscating safety deposit boxes. It is rumored that in the event of emergency, you cannot access your safety deposit box for any items such as gold, silver, guns, and cash. Just google “homeland security safety deposit box”, and you can find more than 20 articles reporting the same story over and over at so many different sites. But the fact is it is nothing new. The terrorist-related acts passed since 911 have put executive branch of the government in the supreme power. Since FDR (Roosevelt) has done it before, it won’t be surprising to do the same in the name of “national security and interest”.

Greenspan, Here Is What You Said Before

Greenspan supported tax cuts back in 2001 (01/25/2001 from CNN Money). Greenspan again defended his position on tax cut in 2005 (‘01 Tax Cuts Were Justified, Greenspan Maintains, 3/16/2005 from Washington Post). Now Greenspan is criticizing Bush’s tax cut that he supported (9/14/2007 from Bloomberg). And he says he is mis-interpreted?? Hey, Greenspan, if you are mis-interpreted, you have let it go for 6 years. And I thought you really like to speak up and express your opinions?

Greenspan says ARMS might be better deal (2/23/2004 from USA Today). This is just right before the first interest rate increase in June 2004. What does that mean that ARMs might be a better deal? Is that an encouragement for would-be homeowners to take up the extremely low initial teaser rate at 1%, with the potential of resetting to 5% later? And you said that you don’t get how subprime mortgages were rampant until late 2005/2006. I wonder who specifically taught the homeowners about all the benefits of ARM.

On the housing bubble, Greenspan defends himself in an interview:

“Sometimes I get criticized, and I deserve to be criticized, and that’s part of the game,” Greenspan says. “But this one, I’m innocent.”

Greenspan argues that the Fed mainly has influence over short-term interest rates, which affect adjustable-rate mortgages, a small portion of the overall mortgage market. Long-term interest rates, which influence fixed mortgage pricing, are somewhat beyond the Fed’s control and became more so earlier this decade.

“We tried to push them up in 2004, and we failed,” he says. “What we found was that the global forces of disinflation were far too powerful for even the Federal Reserve. We tried again in 2005, and we failed.”

Greenspan notes that if the housing bubble was the Federal Reserve’s fault, why were similar such bubbles — many of them worse than what was seen in the USA — created around the globe?

Sorry, Greenspan, I don’t buy that at all. If you want to say that globally there were also other housing bubbles, and so, it was not your fault, then you should refrain from taking all the credits for the low inflation due to the low manufacturing wages from globalization. It’s simply your job of watching over US economy, whether there are globalization factors or not. With increasing globalization, inflation in the USA is spilling over to many countries, especially in countries where there is a currency peg or link to US dollar. Greenspan/Clinton simply got lucky to take the ride in the best part of globalization.

Mis h has an excellent review on Greenspan’s words (click to read more). Greenspan’s lies are obvious to those who remember.

I Am Facing Foreclosure: Shutting Down

Casey Serin at I am Facing is shutting down his website in about 18 days. I received an email notification from him about the news:

I’m shutting the blog down on August 3rd. That’s about 23 days from now.
Any publicity is good publicity. Right?


My marriage and my family has been affected in a big way by my actions and this toxic exposure. The internet could be a cruel place and I am the one who put myself and my family out there. If I knew things were going to get this bad I would have done investing and blogging in a much different way.

Now I may lose my wife over this.

I think he made a tough but wise decision. Family should be always first, money or fame second. You just cannot buy a happy family, no matter how much money you want to spend, but little time for them.

When I first heard about Casey’s blog, I wonder it was for real. At least personally I will never document my own crime if I commit such white-color crime. I assume that getting more publicity will only bring investigation (in his case, FBI) sooner, since one of the million readers must either be a policeman himself or know a policeman well enough.

In any case, he was able to sell his blog for some $20K to $30K, and also had a book publisher interested in his story. Frankly, he has a good chance of making himself a multi-millionaire if he simply play his cards right.

His blog and real estate experience is simply one of the housing bubble phenomena. Unfortunately, all the debts left behind by these liar’s loans (some 2 million in Casey’s case) will not be paid back, but rather get discounted after foreclosures. Well, as you are fully aware, the stratospheric housing price was simply too good to be true. The housing price is only as good as the loans and the money availability behind them.

Who is going to take the loss? Mainly the loan investors, but eventually the whole society takes up the cost one way or the other. We will be paying for the cost of housing bubble through the coming higher inflation and higher interest rates (if not already).

UNG Natural Gas ETF

After USO for crude oil, there is another energy commodity ETF for natural gas. It’s UNG. Like most of other commodity ETF, it starts falling right after debut. And it has fallen big too, down about 30% from the height. Given the recent price history of natural gas, it could fall to $4 from the current $6 (price is for the futures market, rather than UNG itself). That’s another 33% potential drop. But for sure it cannot go down to zero, unless you don’t need to pay any natural gas bill.

The advantage of diversifying into pure commodity plays is that while commodity producers are influenced by all kinds of stock market related factors, commodity itself is less swung by the up and down of the stock markets. Rather it is determined by the economics of the supply and demand. The supposed un-correlation should serve a good complement to a portfolio reducing the overall volatility.

To invest in natural gas, one can invest in UNG directly, and/or natural gas companies such as XTO, CHK, BTU, etc. I already own CHK and BTU, but XTO has been a much better performer. I have always wanted to buy XTO, but when I occasionally do remember to check its stock price, the price has never seemed right to me.

As the demand for energy goes up, I expect rotation of rising prices among all energy sources. It’s really the relative economics of different energy that matters. If crude oil prices go up too high, people will shift to other energy sources whenever and wherever it’s viable to do so. There are plenty of choices such as natural gas, nuclear energy, coal, or any other alternative energy. One should asset-allocating for different energies components, and possibly rotate through different forms of energy investment.

At the price of $6 natural gas, and $74 crude oil, it may make sense to re-balance the stakes between natural gas and crude oil bets.

By the way, UNG like USO is an ETF that employ futures contract, and is subjected to price manipulation around expiration dates. Excessive cost in rolling over the contracts will eat into the performance of the ETF. USO is probably the best example in how your pocket can be emptied even when you’re right. The crude oil price is roughly the same around $72 to $75 in May 2006 and now. But some manipulators have managed to empty USO by 20% in a little bit more than 1 year timeframe from $70 down to $56. Now if that is not manipulation, I don’t know what that is. Is that a “random walk”? Shouldn’t the average of contango and backwardation be zero? I’m sure you’ve read the story on Amaranth’s 6 billion hedge fund blowup. But probably less people paid attention to who pocketed their money.

Anyway, for the above reason, I would definitely not put my money into USO or UNG for the long haul. But as a trading vehicle, it should be fine.


Saudi Oil

The last time we looked at the oil chart was in a post about CanRoys. At the time, there were plenty of oil bears on CNBC predicting $20-30 oil, but I was pretty sure that $50 was going to hold. Fast forward two months, oil’s back up to $63 a barrel. The talking heads would again have you believe that geopolitical tension is the sole cause while completely glossing over the fact that the rebound started long before this latest Iranian incident.

Personally I cringe every time I hear geopolitical events being used as an excuse for price increases, be it oil or gold or anything else. What’s usually left unsaid is that the prices invariably fall as such events subside. Except that quite often the prices don’t fall as much as they rise… While Iran may have contributed a couple of dollars to the oil price, there are greater forces at work. I’ll show a couple quick charts and links and leave you to make your own conclusions.

The first is Saudi oil output in the past five years. The data from four different sources were averaged to produce the black line. Over 2006, Saudi production declined from 9.4 MM bpd to just above 8.5 MM bpd. The full article can be found at the OilDrum.

The next chart is the Baker Hughes oil rig count for Saudi Arabia. The data is only up to early 2006. The rig count increased drastically in 2005, with no apparent corresponding increase in output. So it would seem that the new wells replaced declining production elsewhere, or Saudi Aramco embarked on a massive exploration program, or both. Oil price peaked in July 06, but other than a small supply bump in the middle of the year, Saudi production was a straight line down in 2006.

Click to enlarge

Was the reduction in Saudi oil output by choice or due to production limitations? I leave you to ponder that question. By the way, if you haven’t read Matt Simmons’ Twilight in the desert, now would be an excellent time.

Caveat: This is a look at the long term supply of crude oil, not a short term call to buy oil or oil stocks. As a matter of fact, I think oil will likely move down in the short term to form the right shoulder of an inverse H&S formation. If concerns about world economic growth emerge then $WTIC may retest the lows at $50. It would be a grand buying opportunity if were to happen.

Disclosure: I’m long oil stocks.

Switching To T-Mobile Prepaid

I don’t really use my cell phones that much. Since Cingular wireless is stopping the Free2Go service in March, and both of my phones are expiring, I have decided to switch to T-mobile prepaid. My phones still had $44 and $13 dollars credit near expiration. I have been simply rolling over the minutes, and spent just about $3 a month.

I’m posting this on a Saturday because I just found out that today is the last day for you to get $10 off on $50 T-mobile refill card in Target stores. And if you spend $80+tax for a total of $100 refill, you can become a Gold Reward member. A gold reward member just need to add $10 every year to roll over the minutes if you are not using cell phones a lot. Even if you do, it’s just 10 cents per minute (anytime minutes).

Also, on T-mobile home site, the before Xmas deal is back again. You can get a basic Nokia 6030 phone (which has speakerphone, tri-band, etc) for about $60, free of shipping, minus $30 rebate, and $10+$25 airtime credits or refill card. So that’s about a free phone plus $5 in your pocket before tax. Or you can get a camera phone with 4X zoom for about $50 more.

Now if you do decide to get this now, you could get the refill cards first at Target (which can be returned if you change your mind) before the end of Saturday, and order the phones online or by phone at T-mobile home site. These phone deals are not available at stores.

Between T-mobile & PagePlus Cellular from Verizon, I think T-mobile is much more widely used and cheaper for 3+ years for a moderate usage, assuming that they don’t change the good deal after a year or two.

When I Bought My Diamond Engagement Ring sent me a post on buying diamond ring at Costco. And he asked me for my comments on buying diamond rings at Costco or at Tiffany. I definitely think it’s okay to buy the diamond ring from Costco. Well, guess where I bought my diamond ring for my wife? I bought it from an internet site! Back in 1997!!

Obviously I am not that trustworthy of everything I see, read, or buy from the internet. So here is the procedure that I followed, which I believe to be safe enough for me to do such transaction:

  1. ALWAYS use credit card or Cash on Delivery (COD) for internet transactions if possible, even if you need to pay extra 2%. This is true, especially for big amount transaction. The added cost far outweighs the consumer protection that comes along with credit cards. I will consider alternative payment methods only if the site is extremely well-established, such as,, etc. MOST of the Ebay frauds occurred because people use checks instead of credit cards for transactions.
  2. After you do all of your comparison shopping in Carat, Clarity, Color, Cut, and Certificate, make sure to check out the merchant at for ANY unresolved issues or bad records. I will NOT do any business with any companies that doesn’t have a clean record for jewelry-related products. There are a few kinds of business that may get more consumer complaints than usual due to huge amount of transactions (it’s percentage of complaints that count). Those are exceptions though.
  3. You should buy a bare diamond stone rather than a diamond ring if buying from internet. The reason is that you should get your diamond inspected by a local independent gemologist. For a thorough inspection, the diamond must be unmounted from the ring. You should always buy a certificated diamond if it is bought at internet. That way, you can match your diamond with your certificate specification. Your gemologist can also show you how it matches up in the clarity spec under a microscope. You should have him or her walk you throught the spec of the diamond. And most important of all, before you leave from gemologist, make sure you are taking your diamond home, and not a swapped stone. I think you could probably ask the gemologist politely to make the microscope inspection as the last (repeated) step, and/or diamond-test the stone before you leave. You can test the diamond-tester by bringing in non-diamond rings and/or anything else. Use the diamond tester on the non-diamond materials and you should get a negative response. And if you have some real diamond materials, you should get a positive response when testing it. Make sure that the diamond tester is not a fake one. When doing the tests on diamond tester, you should borrow the diamond tester and personally perform the test yourself. Unless that diamond tester is a fake one with remote controllability, you won’t be cheated. If you don’t know what a diamond tester is, go to a local jewelry store for some comparison shopping and personal education, and they will be more than happy to show you how the pen-like diamond tester works.
  4. And then, you will need to choose a ring and get it mounted too. When you find a jewelry store that will do it for you, you should make sure that the person who is mounting the diamond is at the OPEN & CLEAR (behind the transparent glass wall) location where you can personally watch him mount the stone. Again, you want to leave with your diamond, not a fake. Diamond-test your diamond ring again to make sure you’re leaving with a diamond. Again, don’t forget to test their diamond tester yourself with the same procedure above.
  5. After that, you should go back to your gemologist again for inspection, mounted or unmounted. The best is to negotiate a deal for the dual inspections that you will be requesting from the same gemologist.
  6. Yeah, a lot of work to save big money. You’re done! Well, hopefully that your darling will like what she sees, or better yet, talk with her first about your purchase process.

I followed pretty much the above procedure literally in 1997. That was the only way that I could trust what I bought. I paid about $5800 for a 1.03 carat, H color, VS2 clarity, pretty good cut, and GIA certificated diamond. Yeah, and I didn’t need to pay sales tax. I also paid about $50 to $80 for the gemologist. The ring that I got probably cost less than $300 including mounting only because it had two smaller low-quality side diamonds.

I think the price went down a little bit by maybe some $500 after a couple of years of even more vehement competitions on the internet. But I can tell you FOR SURE that you can definitely get a better deal than Costco if you buy your diamond from other big “wholesale” diamond sites.

Actually, so far in my life, that $5800 is the most expensive luxurious item that I’ve ever bought. I felt so uncomfortable about such purchase that I thought it could only be right if I donated some $2500 to ChildReach in 1998. I can and could never justify such a purchase based on my personal belief. ChildReach actually sent a representative who visited sponsors around the country to pay a visit to me & my wife. We paid for her $5 lunch when she visited us. She said she was surprised to see young and “generous” people. But I was too shameful to tell my wife and ChildReach’s representative about why I donated the money.

I’m not sure if my wife would understand, or others. I feel okay if I’m not donating big money when simultaneously I’m not spending big amounts on non-necessary items on myself or my family. But I consider diamond rings or any jewelries as non-necessary items.

In any case, I hope my diamond buying tips would be helpful to you. There had been so many diamond sites popped up after 1997 that I cannot really tell you which would be the best sites. I believe back in 1997, the better sites were named something like or, or something like that. But whatever sites you’ve chosen to do business with, you MUST check it out at, and get some references, and/or even their banking reference.

Well, the most important thing is that my wife really liked her diamond ring. It won’t do you any good obviously if your girlfriend insists on buying from Tiffany. But maybe you can tell her that Frugal also bought it from internet! My own personal experience is that once they see the ring and with the certificate, they fall in love, and won’t really complain.

P.S. Both my wife and I think it’s okay to get a diamond ring from Costco. Why? Every diamond is truly kind of unique. But once you classify them based on the 5 Cs (or the more common 4 Cs + certificate), they are really just another type of commodity. It makes absolutely no visible or even invisible difference between the two same quality diamonds if they are cut in the same way. Certainly, Tiffany sells most ideal cut diamonds. But you can also get ideal cut diamonds elsewhere. Make sure the ideal cut definition is the same if not very close. Some sites will have a more loose definition so you will need to get the exact dimensions of table width, girth, depth, etc. to compare to the ideal cut dimensions.