Not to spoil the ending in the title but this is the last part of my debt story, and yes, it has a happy ending.
So there I was I bright eyed and bushy tail just out of college ready to take on the world... with a mountain full of debt dragging behind me. I suppose I should have always known that I would be alright but the first step is always the hardest. When that mountain seems so steep and so high that first step to commit to conquering it is always the most important. For me it started from day one.
My salary was pretty good for a newbie out of college, and for a teaching at job. I made about 300,000 yen an hour and didn't have to pay taxes (wahoo! For those that might be wondering it was the JET program). At this time I had never heard of ERE, MMM, or even the words "safe withdrawal rate." Of course now, terms like swr and dividend go through my head about once every fifteen minutes but at that time during the summer of 2007 it was just a lonely e-book called "How to live on $10,000 a year... or less!" by George A. Ure.
I am a little bit surprised that I have never heard this guy mentioned in any of the forums or blogs I frequent. It might be that his daily news update are a tad bit on the "outside rim" by my standards but I will say that that e-book changed my way of thinking. I had never even conceived of the idea of living close to the bone, paying off your debts, investing in yourself, and being free. I had always thought that credit cards, debt, and stuff was what it was all about. But nope, this book showed me that there is another way that might, just might, lead to true happiness.
So with my new found path I was off on that first step. When I got my first paycheck I immediately stashed away 200,000 yen. Yep! I was saving 66% of my paycheck from the first one that came in. Now unfortunately back in those days the yen/dollar exchange rate wasn't so kind. If I sent home 200,000 yen I would maybe get 1600-1700 dollars. A bit of change but nothing compared to now where I would get north of 2100 dollars. But I took what I could get.
At first I wasn't sending money home every month. In addition to the fluctuations in the rate I also had to pay 2000 yen each time I wanted to send money home. This mean that I would try to send money once every two months. Sure it only saved me 12,000 yen a year, but to me that was real money.
Now sending home 400,000 yen every two months might sound well and good but I didn't always stick to my guns. In that first year I still bought a bunch of snowboarding stuff, tons of gadgets off of the internet, went drinking with friends, and had to take an emergency trip home. It was around the end of my first year that I looked back and saw that I had send home about 1,000,000 yen but had only really paid off my credit cards. I hadn't really made a dent in my student loans. I redoubled my efforts to try and topple my mountain.
Going into 2008 things were steady but I just didn't feel I was making any progress. Then the bottom fell out. The US housing market took a big steaming dump and suddenly people lost a lot of faith in the US dollar. Even to this day I think ex-pats like me who send money to the US are the only people this was a good thing for. The Japanese yen hit all time record highs against the US dollar and I took advantage of it. I did my best to spend no more than 40,000 or 45,000 yen per month including bills and send the rest home.
It was an amazing time, but also dangerously seductive. I hadn't found Jacob, MMM, or YMOYL to tell me that I didn't need crap. I didn't need things cluttering up my place. And now all of these toys and gadgets were basically 20% off to me. 1000 dollar laptop was only 80,000 yen! That was before any discounts via online retailers, or credit card offers that would drop the price even more. I'll admit now that I could have been out of debt probably six months quicker than I was if I had been just a bit more clear headed. Most of these things are sitting in my parents attic waiting for me to sell them on craigslist or give them away on freecycle this coming summer.
I thought things were going so well but my progress was delayed. I had reached the end of my contract with the government of Japan at my job. It was okay as I was ready to move on but I had to start saving for a period where I would be unemployed. During this time I could only make the minimum payments on my loans. I really have to thank my girlfriend for letting me stay in her apartment, as small as it was, rent free, while I got hired at a language school. But my new salary was much less and moving to a new apartment, appliances (Japanese apartments normally do not have a fridge, washing machine, stove etc already installed. You have to bring them yourself), and job training set me back even further.
Ugh! I just so wanted to be done with my debt! But suddenly another punch in the face came. I was having really bad tooth aches and went to the dentist. Turns out a filling that had been put in by another dentist was crap and my tooth was rotting again. I never took very good care of my teeth so now I try not to skimp on them. I get all of the best quality stuff as I love eating and my teeth deserve it after all the neglect I put them through. However quality comes at a price and any yen I was spending on that was yen that I wasn't spending on my loans.
I felt like I was spinning on a hamster wheel. The faster I ran the faster the wheel spun. It seemed like I couldn't get ahead. But then, a disaster hit. On March 11th 2011 one of the biggest earthquakes in history hit Japan and caused a nuclear power plant in Fukushima to go haywire. Foreigners from all over Japan fled. Some went home, others took recluse on the outskirts of Japan. I stayed put. I didn't watch the foreign news, and tried to get most of my information from science blogs, or people that just didn't seem to have any money angel in their motivation to put out the information.
It turns out around this time a teacher decided it was too dangerous for him and his family so he made the decision to take them back to his country. It just so happened another teacher I knew worked at the same school and called me up to offer me job as long as I could start right away. After a few emails I popped the big question about pay and the pay was good. I took the job.
I was back on track. I could see the summit at the top of this huge mountain and was ready to tackle it. But there was one more setback. A car. Yep, another
thing. After getting my new job I went home to visit my parents where I found my dad had imported a 1999 Honda Prelude from Osaka Japan. The thing was in absolutely beautiful condition and had only 50,000 km (about 26,000 miles) on it. I've always kept a car back home so when I go back I don't have to rent but that car was never anything special. Not like this car. This was a real beaut! The car blue booked for about 12,000 dollars and with all the little Japanese features on it the car would probably go for about 14,000 dollars. I made an arrangement with my dad. I told him that I would give him 8,000 dollars. I said that he can drive it while I am in Japan (he is a mechanic and I don't want the car to just sit there) but when I come back home for trips, and if I eventually move back I get to take full ownership of the car. I think my parents needed the money as well so my dad agreed and the car was mine.
Only time will tell if I made a good decision but the clear fact was I had just put myself 8,000 dollars further into debt. However the exchange rate was holding steady in my favor and it was around this time via a link from lifehacker I was introduced to Mr. Money Mustache. I read his article about
the cost of commuting and it struck such a chord with me. I loved it and went onto read all his past blog posts and have kept up to this day. It was great to see someone who so succinctly put what I was trying to do into a clear plan.
I saw the error of my ways with buying crap and all of that ended. I focused solely on paying off the remainder of my debt. In December of 2011 I made the last payment. It was December 23rd, and my money had just been deposited in my account back in the US. I logged in and arranged to finish off all of my student loans. It was such a great feeling! I had made it to the top of my mountain. The view from up there was excellent and the air that filled my lungs was fresh and light.
It was such a great feeling to know that I was back at 0. I didn't owe anybody money. If I lost my job, sure, it would suck, but I wasn't going to be racking up fees, or interest because of it.
From there I have always treated
any debt like an emergency and rather than fall into a lifestyle of consumption I've been filling my time learning creative skills like how to
produce a podcast, trying to start a small garden on our balcony, and getting back into my Japanese studies. Of course I'm also learning about investing and hopefully one day can live off of those.
If you've read this far than it pretty much brings you up to date. For anybody that might be in a similar situation and feel trapped please know that you are not. Just take the first step. Before you know it you'll be looking down from the top of your mountain.
