Wednesday, November 21, 2012

You Only Live Once Right?


I hear the expression “You only live once! So live it up!” quite often.  Usually I hear this when somebody blowing a bunch of money on a dinner, a new big time electronic gadget, or a week vacation that costs a small fortune.  People seem to equate spending money with “living.” 
 
“Well you don’t want to die a millionare!”  “You gotta use it or lose it.”

People are indoctrinated with the idea that in order to truly live you must drive a new car,  own a big house, eat at nice restaurants, and in general “live it up.”  After all if you are not living you must be dying right?  This life comes at a price of course.  All of this stuff that we apparently call living requires money.  Most people aren’t born with tons and tons of excess cash so instead they have to work for it.  They run on the work treadmill that continues to spit out packaging and products, as well as stress and small bits of momentary satiation.  

I’m lucky that I learned pretty quickly the meaning our modern day culture puts on the expression “You only live once” is complete bullshit.  Life is more than weekly trips to Best Buy and full cable packages.  It’s more than a nine to five job in a cubicle.  Perhaps Tyler Durdan said it best:  “You're not your job. You're not how much money you have in the bank. You're not the car you drive. You're not the contents of your wallet. You're not your fucking khakis.”

I like how he really cuts to chase.

 The funny thing is I like the phrase “You only live once.”  It is so true!  You really do only live once (to my knowledge).  So why would you want to waste it working at a job to chase things you don’t need?  Why would you blow $10,000 on a vacation when that could cover monthly costs for several months and could go biking or camping with your family for weeks making truly lasting memories and experiences?  Why would you want to mortgage your life for a mortgage?

If the price of things really reflected the joy or life we got out of them bike rides, friends, barbecues, days at the beach, and photos with loved ones would cost millions of dollar.  On the other hand new cars, excessively big houses, jobs, and bosses would be damn near free.

You only live once.  I am going to spend my life living instead of spending my life spending.

Wednesday, November 14, 2012

October-November Expenses


I'm a hardworking high school teacher who is seeking financial independence.  It might not be the most glamorous or even high paying job but it's what I do.  I track my expenses down to my last yen every month to keep me on track.  Without tracking my expenses I would have absolutely no idea where I stand financially.  Like a sailor at sea, Excel is my sea chart keeping me heading in the right direction.

I receive payment from my job on the 15th of every month so I track my expenses paycheck to paycheck.  This post is for the period October 15th to November 14th.  Let's get started.

Income
Paycheck:  ¥301,911 ($3801)
Transportation Expense:  ¥30,240 ($380)
Part Time Job:  ¥16,294  ($205)
Halloween Party:  ¥10,000  ($125)
English Test Interview:  ¥27,000  ($340)
Total: ¥383,527  ($4829)

Income needs a bit of elaboration this month.  I get my regular paycheck and every six months I get a transportation expense for the train.  However because I am now riding a bike I don't buy a train pass anymore and that money goes into my pocket.  I also work a part time job which brings in a bit of extra cash.  This month I was also asked to help with an English Halloween party for some kids.  It was fun and rather stress free.  Not exactly my favorite way to spend a Sunday but if it get's me closer to my goal I'll sacrifice one Sunday for 40 years of Sundays.  Last but not least there is a national English test given three times a year in Japan.  I am very lucky to be one of the interviewers for the test and we get paid a nice wage for one days work. 

Income for this month was the third highest for the year only falling behind April and July.  Actually April was more of a fluke because my school changed pension systems so my pension wasn't withdrawn that month.  July was the highest as I sold A LOT of stuff that I had just sitting in boxes at my parents place.  I worked pretty hard this last month to get such a high wage.  I don't mind working so hard with the high exchange rate right now but I do look forward to winter vacation where I can take a week or so off.

Expenses for this month were higher than usual.
My expenses totaled ¥171,638 ($2161) according to this chart above.  This is only my Japanese expenses and I also help to pay for a house back in the US.  It's not so much but adding in ¥18,451 ($230) my total expenses were ¥190,089 ($2393) for October to November. 

Obviously the big expense that sticks out here is the medical.  I had to pay for the remaining part of a dentist bill.  I hope this will be that last of these large dental bills.  I have paid about ¥200,000 over the last two years on my teeth.  I've said it before that I don't mind spending this kind of money because I knew it was coming and I didn't take care of my teeth for a long part of my life.  I hope that from here on out, however, this is not more then ¥10,000 a year for regular checkups. 

I bought some fenders for my bike but this a very low month for bike expenditures.  I am looking at pouring a bit more money into this area for a nice rack and I haven't quite decided on panniers or a trailer.  I'm leaning towards a trailer but in the end I will probably end up with both.  I want high quality stuff in this area so that I can always resell it if I find I like one over the other.  A trailer would really help with trips to Costco!

After crunching all the numbers I am left with a *drum roll!!!* 50.44% savings rate for the month.  This brings my average for the year to 45%.  This is well below my target of 65% but I am starting to think that perhaps my target was too ambitious.  I had stated before that I wanted to end the year with at least a 50% savings rate but I'm not sure if I'll hit that either.  Christmas is coming up and as much as I have convinced most of my family we don't need to do much gift giving I still make a nice photo album that costs me about $120-$150 to cover the whole family.  Also, I have a GF who I want to buy some presents for and a few friends who can't seem go give up the tradition. 

In the end I won't know until January 14th just how close I will be to my goal.  I'm either going to need to start playing better offense (ie working more at the PT job or hiring myself out free lance for private English lessons) or better defense.  An even better option would be both. 

Thursday, November 8, 2012

Recent Purchase: INTC

Well the presidential election is over.  I'm not sure what it was like in the states but I remember for the Kerry Bush election in 2004 that you couldn't escape the "election storm."  It was the same when the new Star Wars prequels launched.  No matter where you went or how much you tried to avoid it you couldn't go anywhere without seeing Yoda, or Anakin on a cereal box or in a TV ad.  I'm sure it was the same with this election.  It was I'm sure inescapable for many for the last two months.  Everybody was talking, debating, and choosing sides.  I'm all for the democratic process but sometimes it feels just a bit overwhelming and invasive.

I live in Japan and get to jump into and out of the storm when I want.  If I want to debate politics (I don't) I'll find some foreign friends.  If I want to read up about the races I will.  But for the most part I stayed out.  Frankly I think the president has very little control over the immediate economy.  Any changes he makes, or rather tries to make, will take years to have an effect.

But Wall Street reacted and I picked up a stock at a cheap price.  I had mentioned before that I had two limit orders sitting in my brokerage account.  One was for KMI which triggered a few days ago.  Another was for INTC.  I initiated a position with INTC around $25 but since then it has fallen.  People are constantly announcing the death of the PC but I think it's a bit premature.  Sure, one day maybe twenty to thirty years down the road the traditional PC will be out but something will replace it and I don't think it's going to all be iPads.  Intel has been around for a while and they are the best at their game.  I think this is a great stock that will continue to pay me for a long time.

Long story short I picked up an additional 33 shares of INTC at $21.20 a share.  This will add $28.68 a year to my annual dividend income.

I'm hoping to have a snapshot of my portfolio up before the end of the month for all to see.

Sunday, November 4, 2012

The Frugality of Gaming


I've played video games for just about my whole life.  Its actually my brothers fault.  I remember being five and he wanted something called a "Nintendo."  I had no idea who that was or what it could do but he was certainly excited.  When he got it for his birthday he opened it up and hooked it up to, what at that time, a really new monitor.  We had used it with our Commodore 64 which I guess if we want to get really specific was my first gaming machine.

Anyway long story short he fired that beast up and Nintendo made a new fan that day.  Games of course have become more complicated and engrossing.  I went through my phases in high school and college where I didn't play for extended periods of time.  Girls and parties seemed to be more important.   Life has settled down some so I do find time for about 6-8 hours of gaming per week depending on my mood.

One of the things about gaming is, I think, many people find gaming is not in line with frugality.  I don't think that is necessarily true and like any sport or hobby it really depends on your approach.  I'd like to explain my approach broken down by what I have seen are the pitfalls to gaming thrift.

Buying titles on launch day.  Like buying stocks I don't ever want to pay a premium for my purchase. This can also be applied to buying games especially on launch day.  You will never pay a higher price for a videogame than on the day it came out.  There are very limited cases where a game actually goes up in value after it is released.  99.9% of games will decrease in price the longer it sits on the shelf.  Waiting even one month can net you $10 off discounts, free download able content, and more money in your wallet.  I break this rule maybe once a year.  This year it will be for Halo 4.  Last year I bought LA Noire at almost full retail.  I would say I spend about $200 a year on games but actually purchase about 9-10 games or more for that amount of money.  Check dealnews.com for lots of great choices on saving money.

Buying consoles on launch day.  This is obvious and I never do this anymore.  The premiums you pay to be a first adopter is just not worth it to me.  In addition I will never pay more than $200 for a console.  New consoles are the new cars of the videogame world in my view.  In three years they will be worth half as much as they were on launch day.  I did break this rule as well last year when I bought a PSVita but since the launch of the Dreamcast I have not bought a console on launch.

Buying limited/special/premium editions.  This is a trap a fell into a few times but have since steered away.  These sets usually come with some kind of extra.  It might be a statue, it might be a poster, it might be a figurine.  It also isn't free.  It takes up room in your dwelling and creates clutter.  I really see no point to having these little extra collectibles anymore.  I always pass on the more expensive collectors editions.

Get your consoles for free.  I don't know how popular this is in the states anymore but in Japan when you sign up for internet very regularly you can get some kind of console or cash back money for free.  The console is generally valued at more than the cash back so even to get the console and hock it on craigslist will net you some money.  When my GF and I got internet we also got a free PS3.  The internet was a service we need anyway so might as well get the console with it free.  Look for discounts or freebies when signing up for services you are going to purchase anyway.  However never get a service just for the pure freebie nature of the deal.  You will pay more if you try to cancel the service later or you will have to pay for the retail value of the freebie you got.

Explore gaming history at a discount.  Now that you've bypassed buying games brand new and consoles on launch day you might find that there are many games you missed.  Now however you can pick them up for a fraction of what they used to cost.  I never owned a Gamecube but I could easily go pick one up now for about $20 dollars.  There are several Playstation and Playstation 2 games that I wanted to play but either didn't have the money, time, or I purposely held off.  If there is a lull in new releases or you already bought your one new release for the year take a look back at what you might have missed from last year or even 10 years ago.

Play your games.  I'm always amazed how some people can buy a game and not complete it.  Make your games give you value.  I like to think about it as a cost per hour of gaming.  If I can get a game down to about $0.50/hour I think that's a good value.  The less you pay for a game the easier this is.  For example I said I bough Halo 4.  This game is about 60 bucks.  I will have to play Halo 4 for 120 hours to get it down to this value.  If it's a good game (and I think it will be) this won't be very difficult. But imagine if I paid $20 or even $15 for Halo 4 and played it for 120 hours.  Well that's now $0.17/hour!  That's some cheap entertainment!  Movies are the worst for this.  They cost about $10.00/hour.  Play your games people!  Get the value you paid for them!

Borrow your games.  Many gamers have friends who are gamers.  If you know and trust your friends not to break or steal your games then borrow and trade with your friends.  Your Xbox 360 or PS3 doesn't care who the owner is.  Plus going off of the last point this puts your cost/hour at infinity!  I borrow about 3 or 4 games per year and play them to completion.

Keep your life balanced.  Even if you follow all of the advice I have given here this might be the most important.  Like somebody who get's really into their car and spends all their time modifying, driving, and "pimping out" their ride you need to keep a balance.  I ride my bike to work everyday.  I still go out with my friends for drinks.  I have a GF (who also likes games) who I spend time with.  I study Japanese on the weekends and record a podcast.  I think it's very important to put the controller down sometimes and be social (heck having a gaming night where you have friends OVER to your house and not playing online).  I also have a second side job that generates a few hundred dollars a month.  I would never neglect this job (ie call in sick) to play a game.

Maybe this advice will work for some and perhaps others just have to have six titles a year on launch day.  In the end financial independence is something that is very important to me and I think gaming can be done right along side of it.  Heck one of the reasons that I want to reach FI is to free up some more hours to play some vids!  But this hobby will never jeopardize my journey towards freedom.


Saturday, November 3, 2012

Recent Purchase: KMI

I've had some capital sitting around in my brokerage account for some limit orders that I had set out a few weeks ago.  I put one limit order on KMI at $34.  I thought maybe I was being greedy at that price as the stock was about $35 a share for most of October I think.  I almost just pulled the trigger and bought around $34.50 or 34.30 but I was stubborn and just let the order sit.

Yesterday the stock just touched $34 dollars and my order triggered for 29 shares.  KMI ended the day down at $34.11 but still up from when I bought it.  Unfortunately I missed the ex-dividend date so I won't see any money out of KMI until 2013 but I think that's a fare trade off for the price I paid.

This adds the first oil/energy company that I have in my portfolio.

Thursday, November 1, 2012

My Bike Is My Highest Paying Dividend



I've been reading the "The Millionaire Next Door" (thanks to my local Japanese library) and one of the ways they explain millionaires become millionaires is that they play both good offense and good defense.  Offense meaning they make big salaries and defense in that they are frugal with their pay checks and not squandering them away on big ticket boats, jet ski's, or expensive brands.

So far nothing has increased my offense and defense like a bike.

Let's start with the big impact a bike makes.  Riding a bike every day means not driving a car.  Cars cost money.  They cost a lot of money.  Of course there is the initial price of the car.  Even if you buy a car used it is usually a very significant chunk of change.  Then there are the ongoing upkeep.  Gas, insurance, parking, parking tickets, speeding tickets (oops now more insurance too!), and not to mention the lost productivity sitting in traffic.  Some people say a car sets you free.  I think a car is more like that torture machine in the James Bond movie Goldfinger with the laser.  It moves slow and cuts deep.

So the big baddy, the car, is out of the way.  How else does my bike save/make me money?


-No gym membership.  A fellow teacher pays for a gym membership.  Space is precious in Japan and therefore memberships to places that take up a lot of space are therefor also expensive.  He pays about ¥8,000 a month (about $100) to swim only.  He can also only go on the weekdays from the time the gym opens, 7:00am, until 10:00am.  It works for him as he gets up early and swims before school.  But about ten months of that gym membership would pay for my bike.  I bike about 25km a day which I think is pretty good workout.  No gyms needed here.  Plus I get access to my bike 24/7/365 and it can take me more places.

-I pace myself more.  If I go out with friends for a drink and I am on my bike that is plenty of reason to pace myself and not drink so much.  Drinking in Japan a la carte is expensive.  If I have to choose between a dangerous zig zaggy ride home or my life I'll call for the check after just one or two (I'll also keep more money in my wallet).  My friends are also less likely to egg me on as well knowing that it would endanger my life.

-I pocket my transportation expense.  In Japan many companies will pay for your train pass or fuel expense to get to work.  My school will pay me this if I am riding my bike or taking the train.  This is a major source of how my bike will make me money.  How much?  Currently my transportation expense is about ¥60,000 a year (about $800 or so).  Next year when my school moves to a new area it will be about ¥160,000 a year (about $2000)!  Not bad.  That's real money in my pocket.

-Gympact pays me for what I would do anyway, ride my bike.  Gympact is a website and iPhone app were you promise to workout a certain amount a week.  You can track it with Runkeeper, or the Gympact app itself if you are going to a gym (but we covered that already).  Meet your pact and you get paid money.  If you don't meet it you get charged money.  I have so far made about $10.00 over five weeks and I have never been charged for missing a pact.  That might not sound like a whole lot but when you figure most of my dividend paying stocks pay out about that once a quarter Gympact doesn't suddenly look too bad.  Plus I would be riding anyway so might as well get paid for it.

-I am more stress free.  I'm not going to make it sound like teachers have the most difficult jobs in the world.  We don't have to lift heavy things, and in general if we mess up a lesson nobody dies.  But there is stress involved.  I stress out about my lessons and if they are going to go well.  Will it be fun and also educational?  The last thing I need is a class full of 39 Japanese school girls staring at me and then giving up and going to sleep.  It is probably more psychological than actual but I do feel the pinch.  Japanese parents can be very demanding of their private school teachers and I have to deal with that.  Riding to and from school each day is a great release for me.  I get exercise and I focus my mind on something else even if just for thirty minutes.

Why don't we get concrete.  The following is the breakdown of what my bike has cost me.

Bike $1000.00
Lock $360.00 (this was for two locks, one for me and one for the GF)
Pump $37.50
Handlebar basket $126.73
Fenders $60.64
Lights $40.00
Breaks $62.50
Transportation $10.50
(Transportation is train fare I paid which normally would have been covered by a train pass).

Total $1697.86

Wow!  You might think that's quite expensive.  But I received my second half of the year transportation reimbursement which was ¥30200 or $377.50.  So far my bike has actually cost me:

$1320.36

I'm going to continue to track my bike related income and expenses.  There are still a few items I need to purchase so this number could go up in the following months.  But within a year I'm pretty sure it will become negative meaning my bike is another part of my life making me money.

Image credits:
http://www.thebicyclestory.com