The fact that banks like Merrill Lynch paid out $15 billion bonuses after $42 billion losses, or that Citigroup paid out $4 billion after two multibillion-dollar rescues, have been discussed and beaten to death. 

People were outraged, politicians were in disbelief, and President Obama called it the height of irresponsibility and shameful. But the biggest surprise for me in this whole matter is finding out how stupid these erstwhile “financial masters of the universe” are with their own money. 

There are many articles about disgruntled bankers (like the ones working for Citigroup, who only got $4 billion dollars in bonuses this year) who spend way more than their salaries, and therefore are royally screwed when they find that their bonus for 2008 is nowhere near the ones in 2007. 

Weird, eh? On one hand, these Wall Street people are supposed to be a lot smarter than us financially. But talk about personal finance, and these guys are no different from Mike Tyson or Michael Jackson! I mean, honestly, I won’t be surprised to find that a lot of people are smarter financially than Mike or Michael (note to self: don’t name son Mike or Michael). But being smarter financially than a guy who makes 10 to 100 times what you make? That’s gotta make you stop and think for a while, eh? 

Do this so you can self-proclaim yourself smart

So what I, a self-proclaimed “financially smarter than Wall Street bankers” guy did with my bonus, which just came in a few days ago (in January)? Well, I (1) gave some money to my parents, (2) planned a nice dinner with my family and (3) am going for a simple holiday later this year with my family.

The rest of it (around 90% of it) will be allocated this way:

1. 25% will go into either a AUD or a GBP fixed deposit.
2. 15% will go into ready cash for investments, in case a good one comes along (been eyeing MSFT for sometime now).
3. The rest will go into strengthening my safety net. We don’t know whether we’ll still keep our jobs tomorrow these days.

I like to think that that plan of bonus usage is pretty smart (Please feel free to let me know if you have any other ideas though!)

One of my friends bought a high-end home entertainment system. One of them bought a freakin car (on credit! The bonus is used for down payment). Another planned a holiday to Japan (which is a freakin expensive country, not to mention the strength of the yen right now).

(It kinda made me wonder actually: am I the only one who’s feeling the urgency of this financial crisis?)

Later on I realized something: it’s not that they don’t feel the economic pressure. They do. But the way they experience pleasure is totally different from me. They need to spend bonuses and reward themselves to get motivated.

Whereas for me, seeing the bonus figure is all the motivation and reward I need. I don’t get any kick out of spending money–my kick is from earning and investing money. And no, I’m not saying this to boast or feel self-righteous. I’m not sure why I’m wired this way either.

Oh well. That’s probably why I liked uncle Scrooge McDuck so much as a kid :)

(Images courtesy of AMagill @ flickr and Kanou Hiroki @ flickr, in the order of appearance.)

I found that I should increase my basic salary by about 4.4% if I want to keep my position in the rat race, compared to 2007. How the race never ends! Since I didn’t get a 4.4% increase in my salary, my position in the rat race has worsened

(Having said that, note that the report for 2008 is based on people’s income in 2007, which was something like a booming year in Singapore. I suspect the next year’s salary tool–which is gonna be based on Singaporeans’ income in 2008–will be lower somehow…)

The one for Singapore specifically, can be downloaded here.

It’s nice to see some upside potential there… although depending on how things go, everything can become moot anyway in the next 1 year or so. Sigh! 

For now I’m just thankful to have my job.

Who are we kidding? When managers are sifting through thousands of résumés, they’re just gonna use some search terms and don’t even bother to look at anything else. It’s just a matter of sheer numbers. Which is why I strongly believe that networking is KING when it comes to finding a good job (preferably with a much, much better salary).

But hey, we want to tie all loose ends and max up the probability of getting that dream job. So knowing what managers use for that initial filtering of résumés is pretty dang important, I say.

CareerBuilder’s recent online survey shows what the 9 mostly used search terms by employers are:

• problem-solving and decision-making skills (50 percent)
• oral and written communications (44 percent)
• customer service or retention (34 percent)
• performance and productivity improvement (32 percent)
• leadership (30 percent)
• technology (27 percent)
• team-building (26 percent)
• project management (20 percent)
• bilingual (14 percent)

Do you have these already in your résumé? As long as you do have the relevant experience, you should!

(Image courtesy of SOCIALisBETTER @ flickr)

I wish I had found this site before I wrote this post and this page, which, in retrospect, aren’t really accurate. After including my mortgage, my net worth isn’t really that big actually… it’s even negative! :-S I’m gonna update the net worth page tomorrow to point to my Networth IQ page instead.

(UPDATE: Wrong. My net worth is not negative. It’s actually way positive, because I didn’t include in the calculation the house I currently live in.)

It’s really inspiring to see how people in my age group and income bracket can have such high net worth. I’m hoping to learn a thing or two from them! 

And if you’re going there, please drop by and say hi! Here’s my public profile: http://www.networthiq.com/people/5m10y

Now that my salary has quadrupled since then, I can save consistently around 70-80% of my salary every month. Even if I don’t do this project, my outlook for the next 10 years is really not that bad. Plugging into the excellent financial calculator I mentioned in my post here, assuming that:

1. I am properly insured against any unforeseen catastrophy
2. I can maintain my current income level for the next 10 years
3. I can maintain a saving level of around 70k p.a.
4. I can invest all that money at an annual return of 6% (quite conservative!)

Then it seems that I’ll be having almost exactly 1 million dollars, 10 years from now. Definitely not bad at all.

The thing is, this is not passive income. I have to work hard and smart for it. I can’t suddenly double my income because what I do doesn’t really scale.

Also… maybe it’s my psychological makeup. But if I become a millionaire just by doing this, somehow I think I’ll be quite dissatisfied with myself. I want to do something greater, something beyond what I’ve always been doing (get a regular job, deliver as much value as I can to employer, in return getting a good salary). I want to break my limit and go way beyond that.

So! Going back to the 5m10y project