My First Dividends

Well I am rather new to this whole game of investing but I am starting to see why people like it so much. 

As I've stated before I finished paying off all of my debts in December of 2011 and started to invest in January of 2012.  I've purchased a few dividend stocks since then.  I own some shares of JNJ, KO, PEP, and a Vanguard REIT.  The other day I received an email from my online broker stating "Pending dividend payment!" 

Wow!  I mean I didn't really do anything and they are going to pay me money!?  Sweet!  Now I'm not going to totally blow this out of perspective.  My first dividend payment is going to be a whopping $8.50!  And I actually won't even see that as it's all being invested right back into the same stock on a DRIP program.

For me this program works really well.  I am still very blue when it comes to investing and actually I don't really own that many shares of the companies above.  I would like to let what I put into them grow and grow until eventually the dividend payment is buying me as many shares as my first investment into them! 

I just received another email from my broker advising me of second pending dividend payment.  This one for less (about $7.00) but nonetheless it's my money working for me while I am sleeping, at work, or just relaxing.  I hope, one day, these investments will provide me the ability to release me from work if I so wish.

I have also recently become very interested in investing in Japanese stocks.  One of my favorite beers, Asahi, pays dividends and I don't see them going anywhere any time soon (not if I can help it!)

The Push

I've been finding it hard lately to stay motivated.  Maybe it's the continuing cold weather here in Yokohama, or maybe it's the six month drag.  It's been about half a year since I first discovered Mr. Money Mustache and the entire concept of ERE, frugality, and sustainable living.  I had an idea of what it was ever since I had read George Ure's "How to live on under $10,000 per year" e-book, but had not really seen these ideas put into practice until discovering certain blogs.

I want to think that I have been doing pretty well following the path.  I recently paid off all of my debt.  I don't have a mortgage, and I have started to invest my money that was previously going into paying off my debts.  This should make me feel good but it seems like it has added another layer of stress now.

To be honest I don't exactly know what I am doing when it comes to investing.  And so far from what I have read on the internet nobody really knows what they are doing.  For every market theory out there there seems to be a reason that it just that, only a theory.  Whatever the reason maybe it seems that I am just as smart as the smartest mutual fund manager, and yet just as dumb as any pig waiting to be taken to slaughter.

That doesn't make me feel good when I am trying to bet my future potential earning and more or less key to my financial independence.  I'm not about ready to cut and run as after all it has only been about one month since I made that first fateful purchase of KO and JNJ stock.  These stocks have both made me money and lost me money during that period.  So I get it, you have to stick around.  But I need to get over this initial period of nothing.  I want things to happen now!  Now!  Now!  And realizing they will happen later, later, later is not always an easy reality to take in.

January to February Spending Breakdown

I finally have a month of solid data behind me.  After having finished YMOYL I now see just how important it is to track where your life energy goes.  I'm happy and also somewhat astonished as to how I spend my money.  Let's take a look:

Total Pay:  JPY 326,995 (USD 4,167)
Total Savings:  JPY 202,800 (USD 2,584)
Money Left Over:  JPY 13,183 (USD 168)
Savings Rate:  66%  (Total Savings+Money Left Over)/Total Pay

I hit my savings rate which I like, but only because I had some money left over (otherwise I'd be at 62% if I'd spent my whole budget).  I need to plan this better.  Next Months Goal:  70%

Savings Break Down:
Emergency Fund:  JPY 31,200 (USD 398)
Investing:  JPY 171,600 (USD 2187)

Once I have a six months emergency fund built up I'll stop saving in cash and invest everything.

Expenses Break Down:
Rent:  JPY 50,100 (USD 638)
Restaurants:  JPY 31,104 (USD 396)
House:  USD 230
Groceries:  JPY 7,589 (USD 97)
Bills:  JPY 7,582 (USD 97)
Alcohol:  JPY 6,986 (USD 89)
Presents:  JPY 5,127 (USD 65)
Entertainment:  JPY 3,460 (USD 44)
Clothes:  JPY 1,980 (USD 25)
Transportation:  JPY 2,340 (USD 30)
Mail:  JPY 625 (USD 8)
Newspaper:  JPY 130 (USD 2)
Grooming:  JPY 95 (USD 1)

I think the biggest improvement I can make is in the "Restaurants" category.  This is going out with friend to restaurants and eating and drinking.  This included a Valentines day date with my GF.  I've been better lately at just saying no to friends and sometimes even lieing and just say "I'm broke till next paycheck."  Maybe not far from the truth if I kept going out.  My goal for next month is to shave this down to JPY 25,000 (USD 320).

The "House" expense is a house my family owns back in the States.  I'm helping to pay for 1/2 the monthly expenses here as I might end up living there if/when I move back to the US.  It's all paid off and in the mean time I am trying to figure out how to rent it out.

"Groceries" is a place I would like to increase some spending as I think every yen spent there would decrease "Restaurants" by 5 fold.

My Two Wallets

Japan is still a cash based society.  Sure many big chain restaurants and shopping centers do take credit card now, but for almost all of your daily transactions you can and sometimes must use cash.  This has provided me with many advantages one of them being that it's hard to go into debt when your using cash.  One day, however, I noticed that I do all of my grocery shopping at a particular super market and they were offering a credit card... with rewards!  Of course they are always offering some incentive or perk to help you rack up some debt and pay for some rich guys Ferrari.  Knowing that going into this game however gave me a leg up I thought.  I told myself I'd use this credit card only for this super market and only for groceries.  That's it.

This mantra went smoothly for the first couple of months.  I racked up some points, and paid the credit card every month (you have to actually but more on that in a future article).  But then I would be out with my buddies and discover I had run out of cash (I try to keep no more than JPY5,000 on me in case I lose my wallet or get drunk and lose my mind) and have to put things on my card.  This started a new trend.  Pay day would come and it was like I was being robbed twice!  First taxes, and then my credit card.

Of course I needed to be more responsible but we all know how that goes 99% of the time.  Nope instead I needed a more permanent solution.  What I eventually decided was to have two wallets.  I actually started this by accident but was surprised how effective it was.

You see other than credit cards, Japan is fanatic about having "point cards," or "members cards."  Go to any karaoke, electronics, big chain restaurant, convenience store,  etc., and they will try to get you to sign up for their members card.  It's usually free or very cheap (maybe JPY300) and the savings using it the first time will cover the cost of the card.  So, I have a lot of these cards.  Putting all of these cards into one wallet and carrying that around, although convenient, just wasn't working.  George Castanza's wallet had nothing on me.

So I decided one day to split my wallet into two.  The first would be a wallet with all the essentials.  It covered 95% of my transactions.  Cash, ID, ATM cards, Costco card (always forgetting this), library card, and train pass.  I settled on a Saddle Back Leather ID wallet.  This worked out perfect, fit in my pocket, is convenient, and didn't bust the bank.  The second wallet would be my store house.  In this I would keep all of my members cards, insurance cards, business cards, coupons, and of course credit cards.  This wallet is a Lamaree long wallet.  Full discloser: the wallet I have is not the one linked but they no longer sell the one I bought but it's very similar. 

I was surprised how well this system worked.  If I was running out of cash it was a reminder that I was going to have to dig into my bag.  This had a profound mental effect on me to either stop drinking, really think about my purchase, and in many cases not buy the item I was looking at or not order more food/drink. 

My monthly credit card bills fell like a satellite coming out of orbit, and my money was mine once again.  I also stopped using it for groceries as I discovered they want you to use it for small purchases to get you used to using your credit card to buy things.  I don't really save any money if I end up spending an extra JPY10,000 that I normally wouldn't have, no matter what the rewards points would have been.

I still get some use out of it.  For example my work pays me cash for my train pass and I put that purchase on my credit card then pay it off with the cash.  Plane tickets, or any major purchases also go on it once I have built up the cash to pay it off.

Both of these wallets will last me the rest of my life as they are well built so I justify the price as it will be depreciated over the next, hopefully, 70 years if I my predictions are correct.

Your Money or Your Life - Book Review

For sure I am not the first person to try to obtain financial independence (hope I'm not the last either).  I think that that award can go to a Mr. Joe Dominguez who created a nine step program to basically "get your shit in order."  That program was brought into book form by Vicki Robin and Mr Dominguez called "Your Money or Your Life." 

I'm not sure if I even need to go on as this book has already been approved by so many people seeking FI that I'm not sure I'll add anything new to the discussion or praise.  But I'll try...

I checked my local library and they didn't have this book so I went online and ordered the Kindle version through Amazon.  If I remember right I paid about USD13.00, or about JYP1050.


The heart of the book is about your life and your relationship with money.  We all have a predetermined amount of life energy (meaning our time on this Earth), as the authors put it, that we exchange via a job for a paycheck (money).  Without a plan this is called "making a dieing."  The nine steps are about organizing your financial life, discovering and refining your values to bring your financial life and your real life (your hopes and dreams) into focus, creating a stash of capital, and finally investing that capital safely to allow yourself the freedom to spend your life energy as you see fit.

Being a big fan of Mr. Money Mustache I drew many similarities between what he writes about and the principals expressed in this book.  I'm sure MMM read this book (or perhaps visited one of Mr. Dominguez's seminars) and it helped him on the road to to FI.

One of the most interesting parts of the book for me was step 5, "Making Life Energy Visible." Step 5 has you graph your income versus your expenses and post them somewhere visible to remind you of your goal. I have been tracking my spending down to the penny regularly for the last 5 years, give or take, but I had never thought of turning it into a graph to see where I was going.    I like this idea a lot!  It gets even better around Step 7 where you start to graph investment income.  Once you reach the crossover point where investment income meets expenses you are FI.  It makes it seem so easy!

This is a step I am very excited to start.  Once I have my first full month of YMOYL style tracking done I will be sticking a graph up on my wall.

Some of the other steps I am not so crazy about.  After you break down your spending you ask yourself three questions about each category of spending and decide if it was worth the life energy required for that activity.  So if you see going to the club and drinking will cost you 10 hours of life energy is that worth it to you?  It was hard for me to decide why I felt this step wasn't necessary for me.  I guess I normally just do the things I want to do anyway so at the end of the month it seems like I would say "Of course I wanted to do that!  That's why I did it."  I won't skip this step when the time comes to do it, and maybe that will show me the purpose of it.

All in all this book is considered the bible of FI.  If you haven't heard of it well now you have no excuses.  A great required read for anybody looking to learn how to become FI from start to finish. 

Where Am I Now? January 2012 Reflections.

January 2012 was my first month completely out of debt.  As of December 23rd 2011 (an early present to myself I suppose) I made my last student loan payment.  This brought me into the world of the debt free!  If my discovery of frugality, mustashianism, and their inherit message that "We don't need shit to be happy" was like Neo waking up from the Matrix, than paying off my debt was like taking out those Agents at the end of the first movie.

But like Neo in the story, my journey is only just beginning.  In January I took the first steps to being fully free from the never ending track of the rat race.  I took 65% of my paycheck and split it into savings and investing.  USD230 went to supporting a property that I hope to start turning a profit on back in the States, 10% into savings here in Japan, and the remaining into my new investment portfolio at optionsxpress.com.  All total I invested about USD3000, and hope that I can continue this trend for the rest of the year.

However as I have started to track every yen that goes in and out of my wallet I've discovered that there is a leaky hole in financial freedom boat.  Although both my GF and I make lunch almost everyday for work, and do very little eating out during the week, recently my money spent on eating out has sky rocketed.  In this category I include any alcohol or food that I order at any restaurant.  If I buy a beer at a convenience store that is just alcohol not eating out.  In February I must try hard to keep my eye on the prize by either inviting friends to drink at my place where I can cook for myself (or cook for myself and others making big meals) or limiting the times and amount I can spend when I do go out.  Perhaps a combination of both is called for.  After all even Neo didn't make that jump.

I am the one.