First Step Investing Into My Future

I bought my first stocks that I hope will help bring me to financial independence in the next ten years.  I purchased 15 shares of Coca Cola, and 15 shares of Johnson and Johnson.  I liked the look of these companies after what I read about them on Dividend Mantra and on my own independent research. 

Each month I will be focusing on acquiring different types and sectors of stocks.  Next month I will open a Vanguard account and will buy index funds.  My other plans are to research and invest in the Japanese market as well to further diversify my portfolio.

Day one of a ten year journey.  Perhaps tsumashiku kurashi can help take some time off of that.

Putting On The Cement Shoes

Like most people I enjoy reading about, and playing with the newest gadgets.  Getting to check out what the next big wave is going to be like can be very exciting. iPhones, iPads, the newest TV tech, video games, the list is quite long. 

However actually purchasing these gizmos doesn't really fit in with the tsumashiku kurashi life style.  Very often these things are very expensive, and although very cool, don't really solve problem I have and rather creates them.

So how do we combat this?  Well I know a lot of people have built up quite the frugality muscle and the idea of actually purchasing one of these gadgets never crosses their mind.  Sure they might even check them out at a store or a friends place, but putting down hard earned cash?  No way!

I am not that strong yet.  I am still a mere "padawan leaner" in this game of frugality so I have had to devise certain psychological games with myself to keep me from buying shit I really don't need.


One of these I call "cement shoes."  Let's say for example I want an iPad.  The run about USD500 for a new wifi version and go all the way up to around USD900 I think for the wife+3g version.  Well as much as I can afford that it would be detrimental to my long term goal of not punching in to work everyday.  So I put some "cement shoes" on the price of the iPad.  I tell myself "Okay, you can have an iPad IF you find one for USD100 including shipping."  Yep that's right.  I don't deny myself the iPad that might backfire.  Instead I put a pretty unrealistic expectation on that product and keep my eye out.  If I every find an iPad for USD99.99 I can buy it!


This does two things for me.  First I don't feel like I am denying myself anything, I am just looking for a deal and won't buy until I find one.  Second It also buys me time.  I know that one day an iPad will eventually come down in price, even if it's a used iPad, to USD100 or less.  Perhaps by that time I won't even want an iPad.  Maybe something else better will have come out.  After all the "cement shoes" on that iPad are not an agreement to buy, if I find I don't want one when the opportunity arises I don't have it.  The power is in my hands.


Another example is the Pogoplug Personal Cloud multimedia serving device.  You plug your external USB HDD into it and put it up on your wireless network.  Now you can access your file from anywhere in the house.  As convenient and cool as this would be it's really not necessary (would it really be faster than plugging in the USB to my notebook?).  So bam!  On go the cement shoes.

If I really want to send something to the bottom of the sea I'll wait till it's free!  If I'm waiting to find it on the FreeCycle network, you know it's been sent to the bottom.

My First Crack At Financial Independence

I get paid on the 15th of every month but this month was "lucky" as the 15th landed on a Sunday so I was paid the previous Friday (the 13th!).  Wahoo for the days of the week.  This will be my very first paycheck as a debt free human (seems strange to say that) and I'd like to get off on the right foot following my goals I set out for myself (see previous post about my goals for 2012).

Because I get paid in yen and this blog is about living in Japan frugally I'll post everything in JYP with the equivalent amount in USD in (   ).  I'm using the currency converter at coinmill.com for my calculations.

Let's get to it.

Paycheck after taxes:  JPY 312,088 (USD 4,062)

One of the things I was really excited to do after reading "Rich Dad, Poor Dad" was to start paying myself first.  This is the practice of paying yourself before you pay anything else.  Even if it's rent or the electricity company is threatening to turn off my electricity I'm going to pay myself first from now on.  One of my goals of 2012 is to save 65% of my paycheck for investment and building up an emergency fund.  More specifically 10% savings, USD 230 to help pay for a house, and the rest for investment.  So how does it break down?

Savings:  JPY 31,200 (USD 406)
House:  JPY 17,670  (USD 230)
Investing:  JPY 153,987  (USD  2004)
(Adding together the "House" and "Investing" columns I sent back to America JPY171,600 or USD 2234)

Bills
Rent:  JPY 50,100  (USD 652)
Gas:  JPY 2,116  (USD 27.50)
Electric:  JPY 1,207  (USD 15.71)
Water:  JPY 2,982  (USD 19.41)
Internet:  JPY 1,999  (USD 26.02)
Credit Card:  JPY 20,177  (USD 262.62)

My bills except for my credit card are split between me and my girlfriend.  Also I do have a cellphone but it gets automatically charged to my credit card.  It's about JPY 8,000 a month or around USD 105.

So what does that leave me afterwards for food and me?  I think I'm finding it actually leaves a lot of room to save!  Adding up all my savings, investment spending, and bills totals JPY 281,438 (USD 3663) leaving me with JPY 30,650 (USD 399).  This might seem like a lot but it goes pretty quick in Yokohama.  I try to budget myself only JPY 1,000 a day (USD 13) and go many days without spending even a single cent.  However I have to pay for transportation to Japanese class, drinking with friends, various teacher drinking parties, and so on.  It can go very quickly.  I need to get better at planning and vocalizing to my friends they need to let me know well ahead of time when we are drinking and hanging out.

There are still places in my bills I can save some serious cash (the cellphone) as well.

How are you spending your money?

Never Ever Underestimate Your Library

As an avid reader of Mr. Money Mustache (I literally hit reload about every five seconds to see updates) I recently read his recommended reading list for those looking to grow a "money mustache" over their own.  The list covered not just investment but also investment philosophy, and applied math, and general sciences.

Naturally I was very excited to dig into this list and start reading up.  However living in Japan I doubted my local library would have a wide English section, let alone an investment English section containing these books.  Don't get me wrong I could work through a Japanese investment book if I had to, but as time is of the essence I would prefer the original English.

Well I certainly underestimated my local library!  Turns out in Yokohama City the libraries are all connected in a big network!  So although I live in Tsurumi I can get books from Hi No De Cho, Yokohama, etc (don't worry if you don't know these names).  Further more, about half of the books on the reading list were available and could be brought to my branch in Tsurumi for free!

I of course closed my web browser and went straight for my local library.  Signing up was very painless, I just had to prove I lived in the Yokohama City limits and show my ID.  After I went straight for the reservation computer and ordered my books to be brought to my branch.  I should have them either today or tomorrow.

Oh and did I mention the best part?  The Library is literally in my backyard!  Not even a five minute walk.  If I'm not at home, you know where to find me.

So the moral of the story even if you don't live in English speaking "'Merica" check your local library.  They just might have what your looking for.

My Goals for 2012

It's never too late to make a New Years resolution or set goals for yourself.  We get swept up in the fad around the first of January when we look around and everybody is pledging to lose weight, stop smoking, cancel this, study that, etc.  Most of these quickly fall by the way side the first donut we see, or puff of a cigarette we see from a fellow smoker.  Sometimes we set unrealistic goals for ourselves (I'm going to make a million dollars!) and are aghast when we don't achieve them.

Because of that I'm going to set some very modest goals for myself for 2012:

1)  15,000 gamer points on Xbox Live.  (Currently at about 10700 gamer points)
2)  Make USD500 in dividends.
3)  Support my family with our vacation house and get at least one vacationer to rent it.
4)  Maintain a 65% rate of my main paycheck for savings/investing/supporting vacation house (10%/45%/10%)

That's it.  These are all completely achievable goals and I now that.

How Much is My Real Wage?

I was planning on using this entry to detail my goals for 2012 but that will have to wait for another time.  I recently came across this article on renewablewealth.com about your true hourly wage.

Like most people I work at a job.  I live in Japan and I teach at a private junior and senior high school providing English education to young growing minds.  It is a great job and I really enjoy myself, but how much does this job really bring in for me?  Well lets find out.

First, totaling up on an average day all the time that I spend having to deal with work.  Well I generally wake up at 6:30AM in order to get a shave in, eat a bit of breakfast, throw on a suit and be out the door by about 7:20AM.  I catch the 7:30AM train and make it to my destination station 20 minutes later.  A short 5 to ten minute walk and I am usually at my desk.  Work officially starts at 8:20 AM and ends at 5:00PM.  Play the reverse of the going to work game and I am usually home at my door by about 5:30PM.  I've rounded a bit here to make it easier on me so I will round some more later.

My work pays for my train pass so I don't have to worry about paying for a car, gas, insurance, parking, etc. (it's pretty sweet!)  Reading the article further I should also include about 3 hours a month I spend with work buddies drinking at a bar where we usually talk about our students, what's worked and what hasn't with lessons, etc.  Other than that I don't spend much time thinking about work once I step off the school grounds.

So there are 365 days in a year, and 52 weeks.  I receive Saturday and Sundays off.  2 days x 52 weeks = 104 days off for Saturday and Sunday.  I sometimes have to come for festivals, or concerts so lets round down to 100 weekend days off.  Japan in 2011 had 13 national holidays, and I also receive lots of paid time off where I don't have to come to work.  Those include:  spring break; 11 days, summer break 40 days, and winter break 15 days.  All together 100+13+11+40+15=179 days off.  365-179=186 days of work per year (Wow!  Almost half the year!) 

I don't work every waking hour but spend 6:30AM to 5:30PM at work on work days, so 11 hours, and 3 hours a month decompressing from work.  So (11x186)+(3x12)=2082 hours a year I spend working.  I make approx. JPY310,000 a month after taxes (USD4032).  JPY310,000x12months=JPY3,720,000 a year (USD48,300).  Divide my yearly salary after tax by the number of working hours per year 3,720,000/2082=JPY1786 an hour.  I'll round that down to JPY1750 an hour (or UDS22.77 an hour) as I said there are some random meetings, after school tutoring, etc. 

I don't think that is a bad wage and I feel a fair trade for what I am doing.  I'm really glad I did these calculations to see what my real wage is and give me a good idea of what I need to look at if I ever decide to change jobs.  I'm hoping this real wage combined with a high savings and investing rate will allow me to reach FI before I hit 40.

What is your real wage?

Protecting Myself From "Bees"

Japan like any country has credit cards, banks, ATMs, membership cards, wire transfer transactions, etc.  It's a developed nation after all and these kinds of things are normal.  I like to think of the institutions as giant bee hives and my job is to thwack them, try to get some honey, and not get stung.

What I mean by "not get stung" is not get stuck with their fees.  Fees are short, quick, ouchie payments I have to make just to use their service.  It's how many of these institutions pay for themselves other than just by lending money and profiting from the interest.  We are usually charged fees for anything from doing something wrong (making a late payment, or not keeping enough money in our account) to doing something right (like just trying to access our money after 7pm).

I am very allergic to fees.  They make me swell up and want to die.  I avoid them wherever I can.  I recently signed up for a JR East "View" credit card.  I did this because my employer pays me to buy a train pass every few months.  This amounts to about JPY60,000 (USD777.00) a year and I want to make points off of that.  In addition I can make more points and have them redeemed for cash on my Suica card* from my other spending.

When signing up for this card however I was presented with a variety of different choices.  Many of them included annual fees.  I could almost care less what the additional benefit of the card with annual fees was.  I have had credit cards before and have received ZERO benefit from any of the additional "products" they tack on because of the annual fee.

Another example of me trying to thwack a bees next to steal the honey and not get stung is a recent conversation I had with Citibank.  I work for an English conversation school that has an agreement with Citibank for one year of free international transfers and no account maintenance fees.  Well as overseas transfers can cost upwards of JPY4,000 (USD52) a pop of course I signed up.  The catch is that after your year you have to start paying maintenance fees unless you have over JPY500,000 (USD6475) or you deposit your paycheck from the English conversation school into your account.  However your check must have been deposited two months before your one year is up, otherwise, you guessed it, they will start to charge you JPY2,100 (USD27) a month for the account and overseas transfers will cost you too.

Due to my "allergy," in due diligence I made sure my check was being deposited and called them up this morning to extend my benefit.  I was told my account will be extended for another year of free fees and overseas transfers.  This is a savings of not just JPY2,100x12months=JPY25,200 (USD325) in maintenance fees but also monthly overseas transfer fees of approx JPY3,500x12months=JPY42,000 (USD545) and in total JPY67,200 (USD870) a year!  Wow!  That could buy me a few shares of Coca-Cola, or J&J.  And with those dividends...  Well, need I go on?

How do you protect yourself from "bees?"

*A Suica card is like electronic cash that can also store a train pass.  You add money onto the card at just about any JR East train station (there are other places as well) and then you can use the card to pay for train fare, in addition to buying drinks at vending machines, paying for items at convenience stores,  and like I said storing your commuter pass to get to and from work.  Check this out for a more detailed explanation.

Which do You Want First...?

...the good news or the bad news?

Okay the good news.  Last month I made my last payment on my student loans.  I AM OUT OF DEBT!  I have no more credit card, student loan, personal, car, or any kind of debt.  From here on out it is just the government and I.  Who knows maybe there will eventually be a way around that even.

The bad news.  My spending has been a little out of control this month.  My girlfriend and I went to Bali for the Xmas/New Years holiday.  That was all budgeted and we did not use any credit cards to pay for the trip.  We are usually pretty good about trying to drink a few beers or mixed drinks in our hotel room with things we purchased from the store before going out, or finding cheap tour guides, etc.

My problem is the mentality that sets in when you are on vacation.  Unfortunately there isn't a fridge near by not a kitchen to whip up a snack, or a meal.  When you out and about "touring" you want to sample many different kinds of food which means visits to several restaurants.  Plus you  might find yourself getting comfort foods from western style restaurants as we don't have those in Japan.

Once you leave your vacation spot however these habits don't just get checked at immigration (as much as I would like to).  They follow you back home and now I have to beat them into submission like Ed Norton in "Fight Club" wanting to "...destroy something beautiful."

My eating at restaurants, and getting snacks at convenience store spending has reached unacceptable heights.  I hope once my job starts back up on Tuesday this will force me back into my rhythm.  Even if that is the case however, the damage has been done.

I'll be posting my budget for my first paycheck outta debt hopefully this Friday.  I've just finished "Rich Dad, Poor Dad" and will be trying to apply some of its teachings.