Changing Lanes

Fluctuations in the market over the last several weeks had my portfolio looking like Fujiyama at Fujikyu High Lands.  That's okay for the most part.  I wish I could have taken advantage of the dip but actually I'm done deploying capital for the foreseeable future.  I'm not getting out of investing, but a change of lanes on the road of life has me focusing elsewhere.

You see, about a month ago I was asked if I wanted to re-contract and do another year at my job.  I had to tell them "No."  My supervisor, and Vice Principal were both very taken aback, and I could see it was not the answer they were expecting.  I explained to them that this was the best, and longest, job I've ever had in my life.  The rewards, and challenges, were second to none, but alas, I have to move on.

Why do I have to move on?  Well, there are a few things I'm not satisfied with and I'll outline them here (in no particular order).

The Job:  One of the big things about being teacher is, of course, the students.  I get to have an impact on the lives of young people.  Not just in how I teach English, but for many of them it might be their first time interacting with a foreigner on a face to face level.  It excites me that my job is meaningful.  But, I was also the head supervising teacher of the school International Education class. This was a special class where I could teach any curriculum I wanted to a small number of students who were motivated to speak, read, write, and listen to English.  This program is ending in March.  My other classes consist mostly of conversational English, or writing classes.  I enjoy these as well, but really the International Program was the real treat.

The Exchange Rate:  For anybody that takes notice of FX, the yen is at it's weakest it's been in years. This is of course good for Japanese exports, but as someone who get's paid in the Japanese yen, it makes it very difficult to send money home.  I was very lucky to have lived and worked in Japan at the opposite end of the spectrum.  From 2010 to the end of approximately 2012 the yen was so strong it was causing headwinds for Japanese companies.  I, however, reaped huge benefits from this as my salary compared to that of Teachers (or even high tech companies) was ballooning.  It made sense to say and work in Japan when I could easily send half of my salary home and get $2,000 plus!  It also made sense to work extra jobs, and find side gigs as they also "paid more."  Well, that's all over now.  

My Pay:  As an English teacher in Japan, I was making a great salary.  Trust me when I say, the direct contract with a private school is the way to go.  It pays more than a third more then most Eikaiwai jobs, and more than any other ALT job with the added benefit of being in control of your classes.  However, my contract raise ends this year.  That is, before for every year that I re-contracted, I would receive an extra 120,000 yen a year or, a bump of 10,000 yen a month.  Pretty good!  Well it sounds nice, but actually it's a little under 3% and barely keeping up with inflation.  That being said, most other jobs don't even touch that number.  However, that annual contract raise was not part of me signing a new contract for a fifth year.

The Challenges:  I suppose a better title where would be "Lack of Challenge."  When I came to my school I was a lost little puppy, trying to make his way out of his box.  But now, I own the box.  I've become a great teacher, if I do say so myself (and I do!), and therein is part of the problem.  The challenges don't really  humble me anymore.  I do my best with each lesson I create, but I don't feel like it takes my best anymore to create a great lesson.  

Japan:  I love Japan.  This place is my home now.  I enjoy the convenience of the trains, the drinking culture, and the safety net I feel at all times.  But, it's also grown too comfortable.  I remember when I first came to Japan and everything was new and exciting.  The idea of going out to Shinjuku now just doesn't hold the same air of excitement it did even just a few short years ago.  Sure, I'm getting older, and my tastes are changing, but I find myself no longer interested in even studying the language.  I've plateaued.  I'm read to move on and one day come back to Japan fresh, and hopefully financially independent.

Home:  I've said it before, Japan is my home.  I will always consider Japan a place were I can take my shoes off and relax by the fire (or under the kotatsu is a better analogy).  But, I still have friends and family back in the states that I haven't seen for years.  I'm really looking forward to reconnecting with people.

I could probably go on and on, but I'll stop there.  Life is such a strange beast when you stop and look at it.  Almost eight years ago I got off the plane at Narita Airport not sure of my future.  Now, looking forward, I'm in a very similar position.  I'm not sure were my life will lead me in the coming months, but I have to say that I am filled with so much more confidence. 

When I stepped off that plane eight years ago I was almost $40,000 in debt.  Now I have an $80,000 plus portfolio that provides almost $2,500 in income annually.  Sure, I'm not going to be living the high life on that, but I know that I always have money for food.  If worst comes to worst I'll be able to eat while I study to learn a new skill, or go through interviews.

It's very sad to think I'll be leaving Japan.  I have so many good memories here, and it will be difficult to make the transition back to life in the states.  But, in the end, it will help me grow and improve as a person, meaning I'll enjoy it just that much more when I come back.

Portfolio Update November 2014

I've had little bit of action in the last month, including a sell.  I'm pretty happy with the way things are going lately!

I recently decided to get some money back to work for me in my Vanguard account, so when my money hit my account I decided to put $2300 into the Vanguard Total Stock Market Index Fund Investor Shares (VTSMX).  Things brings me up to a total of $8571.56 in VTSMX and 166.537 shares.  My average cost per share is $47.380 and the current price as of this writing is $51.47.

I have been looking at getting more money to work for me in the stock market as a whole.  I am very often torn between the Dividend Mantra "seek out strong companies at a good value," and the Jim Collins "just throw into in an Vanguard index fund and forget it," methods of thinking.  They both make very valid arguments!  So rather than throw all my eggs into one basket I've been using both methods to invest.  So far it's been working great!  I'm up on all Vanguard accounts, and there have been very few losses on the individual company front.

One day I think I'd like to move everything to index funds as it's less to think about, but catching huge yields on companies like on SBSI or NSC has kept my looking for the next opportunity in DGI.

My portfolio's total value cracked $80,000 for the first time every just before I made this last purchase.  A new five digit value is something that I like and keep me motivated.  After this last purchase my portfolio was at $82,296.  Not bad for an English teacher right?

 Rounding out the action was actually a sell order.  Back in I got in on the GoPro IPO via Loyal 3.  I managed to get in about $250 at an average price of around $32.  GoPro has seen it's up and downs, but I decided to sell my position here for a few reasons.  First and foremost, GoPro doesn't pay a dividend.  I'm not sure if they will start to pay a dividend or not.  Second, GoPro was just a fun thing I tried as I had never been part of an IPO before.  I honestly wasn't sure what it was going to do, but it's been up as much as 150% at times.  I've held the stock for almost six months now however and realized it's time to take my money somewhere else.  It was fun, but this stock doesn't really belong in my portfolio.  To be honest Twitter is also on this list, but I'll wait a little bit longer.  Finally, I figured it's a good time to sell for tax reasons.  I'm still going to be way under the line for taxable income and this was a good time to sell.

All in all I'm feeling very good!

That's a Wrap! Bike Paid Off!

That fateful day has finally come!  My trusty bicycle which I bought and started riding exclusively in 2012 has paid for itself and then some.  I've been collecting transportation reimbursements for my employers, as well as money I've made using Runkeeper and Pact app, which has now exceeded the cost of the bike plus all of the tools, accessories, and expenses associated with the bike put together.

As of my most recent calculation I'd spend $3038 on bike expenses.  I'll list them out here.

Bike	$1,000.00
Lock	$360.00
Pump	$37.50
Pedals	$20.00
Handle Bar Bag	$126.73
Fenders	$60.64
Lights	$40.00
Breaks	$62.50
Transportation	$10.50
Knog Lights	$100.00
Bike Bag	$162.00
Map Case	$30.00
Break Cleaner	$3.65
Chain Cleaner	$12.00
Brushes	$5.00
Lube	$8.00
Tire	$40.00
Tubes	$50.00
Tire	$36.59
Rack	$60.22
Panniers	$123.68
10mm bit	$11.00
Torque wrench	$32.00
5 Plyers set	$19.00
Shifter	$2.00
Brake cables	$10.00
Bike Parking April	$15.00
3 Month Pass (May-July)	$44.00
Water Bottle	$10.00
Handle Bar Tape	$10.00
Water Bottle Cage	$8.00
Helmet padding	$10.00
Seat Bag	$12.00
3 Month Pass (Sept-Nov)	$44.00
Tool box	$2.00
Pannier back pack	$36.00
Pannier accessories	$24.00
Shifter cable	$3.20
Shifter cable x 2	$6.40
Ferrels	$1.60
One month pass (June)	$16.00
3 Month Pass (Dec-Feb)	$44.00
3 Month Pass (March-May)	$44.00
Chain	$30.00
Crankset	$100.00
Cog	$30.00
Tires	$65.00
Brake pads	$16.00
3 Month Pass (Sept-Nov)	$44.00

I'd been keeping track of everything in excel, and due to the fact I live in Japan and most of these items were bought in Yen so I've rounded to the nearest dollar figure based on the exchange rate at that time.  I tracked everything as accurately as possible, but I might have missed some screws, or a one day parking expense here or there.  Still this is pretty close and the simple fact that I've been paid over $3000 dollars to ride my bike is pretty solid evidence that a bike is worth it.

I'll now list out the transportation money I've been paid to take the train but instead rode a bike.

October Exp	$377.50
Pact app	$120.00
May Exp	$54.00
June Exp	$215.78
Berlitz	$160.00
July Exp	$207.00
August Exp	$140.00
August Exp*	$15.00
September Exp	$18.00
October Exp	$54.00
October Exp*	$60.00
November Exp	$225.00
December Expense	$185.00
January Expense	$120.00
February Expense	$113.60
March Expense	$96.11
April Expense	$174.75
May Expense	$60.00
June Expense	$194.00
July Expense	$198.00
August Expence	$126.00
September Exp	$59.46
October Exp	$120.00

Total $3093.20.  As you can see I've exceeded what I've paid for the bike by $54.99!  That's right, now is my bicycle not only free but it's actually put $55 on the table!  In addition the $3092.20 I've collected actually exceeds the $3041.94 I've collected in lifetime dividends!  You read that right! Living in Japan and riding a bike has actually paid me more than an approximately $75,000 portfolio!  

That to me is really amazing!

I'd also like to point out the Pact app amount of $120.  This is real money that I've been paid to track my bicycle activities using Runkeeper and then collecting money through Pact app.  This averages to about a dollar a week.  You might think that's not very much but think about it like this:  KO currently pays out 2.85 percent.  If you put $1000 into KO you'd get $28.50 back per year.  It would take more than $2000 invested in KO to pay out the same kind of money.  Just by riding my bike I'm able to displace $2000 in needed investment capital.  If you still don't think that's very much I'll give you my paypal address and please send me $2000+, because clearly you're bad with money!

One last thing I'd like to point out is that I haven't included the "opportunity savings" of not owning a car.  I would never own a car in Japan as they are just too expensive to drive, service, and store.  But imagine how much my bike would have saved in if I'd included the money kept by not owning a car, not paying for gas, insurance, maintenance, parking, storage...  You get my point.

I'm sure one day my dividend income will certainly take over and the money I've received from biking.  But if you want to add some nitrous oxide to the gas tank while driving down the road to financial independence then might I suggest you get a bike.  I can think of no quicker way then a bicycle to take down one of the big three, freeing up capital to invest and lowering your expenses permanently super charging your way to early retirement.

Let's see what another two years brings.

Taking Down One of The Big Three

Anybody who has been in this FI "game" for longer than a month knows the strategies.  Decrease your expenses and increase your income without lifestyle creep.  The more you can decrease your expenses the further your income will go.  The more you can increase your income the more capital you can invest.  It seems like basic FI abc's.

Of course decreasing expenses is the easier of the two to do, and what springboards most people through their first few months of paying of debt, then saving and investing capital.  Increasing your income is, of course, quite valuable, however it's easier to cut out a latte every morning or cut out the cell phone than ask your boss for a raise.

A typical first worlder has three expenses that will take up most of his or her income transportation, food and housing.  In transportation I include anything that goes into getting you from point A to point B.  The includes the cost of the car, insurance, gas, parking, repairs, maintenance (nobody likes a dirty car!), tolls, etc.  I have been lucky enough to not only cut transportation down to zero dollars a month, but actually have my main mode of transportation become an income producing asset!

Well I'm taking the sludge hammer to the expenses again and this time going after the biggest of the big baddies, rent.  My story might not really be all that interesting on the surface, but it's what I've come away with that is the lesson.  In face the story is just my GF and I moved to a cheaper place.  That's it.  I've cut my monthly rent from approximately $500/mo to around $310/mo.  I'm a little bit farther from work and still getting used to the new area, but that's about it.  Like I said, not all that interesting really.

What I find fascinating here however is how long it took me to make this move.  I've been on the road to FI for almost two and half years now and only just recently decided to make this move.  I lived at my old place for almost four years.  Within those four years I never once hopped on the net and tried to look for a new place.  I unconsciously just told myself "There is nothing better and you're in a great location!  Besides your rent isn't that bad anyway."

I suppose that might have been true.  Before moving my rent was about 15-20% of my paycheck.  Not bad, but not that great.  I was also close to friends, and not too far from lots of attractions.  But then a friend of mine moved and I heard how much he'd be paying for a similar place to ours, and it got me thinking, "Why not just take a look?"

I did and found a place that now puts my at rent being less than 10% of my paycheck!  That's a savings of almost $2400 a year!  That's real money!  To put it on other words I just wiped out my prefectural taxes.  Or I just gave myself a 6-7% raise.  To put a finer point on it had I moved here from day one I'd be more than $10,000 closer to FI once you include dividends and appreciation.

The realization that I had become complacent was not something that I wanted to admit, but there it was.  The greatest realization however, I think, was now I'm looking for other areas of my life I've let slack.  Food?  Entertainment?  Let's find out...

Finding Motiviation

You don't need me to say it, but here it goes anyway.  I've been neglecting this site.  Just look at the amount of updates since January?  Two?  Yeah, that's full on neglect.

"Why?"  It's not like I've given up on my dream of very early retirement.  I haven't stopped investing in dividend paying stocks.  I'm still living a low cost lifestyle (at least compared to others in a first world country).  My income and expenses are still updated almost daily.  I'm still riding a bike to 90% of my destinations.

So what's the rub?

Motiviation.

I lack it.

How do you find motivation then?  Well, finding it in other people is a start.  I recently had the opportunity to hook up with the excellent blogger of fifighter.com during his time here in Japan.  We had some beers, ate some great chicken (Torikizoku is so good!), and sang some sweet sweet karaoke.  Somewhere in there we also talked a lot about investing.  I was particularly interested in what he had to say as his road to FI is through real estate investing, while mine, so far, is through dividend growth stocks.  Both have their advantages and disadvantages of course, but a lot of what he said made sense and the numbers really don't lie.

While I'm living here in Japan it makes sense to continue on the path I've started on, but if/when I return to the states, well, boy do I have a lot to think about!

Not only did I get a lot of information from him, but there is nothing like meeting a successful investor in the flesh to fill your typing figures with motivation.

I feel a new urge to try and communicate with the world where I am at in my journey.  Here's hoping it lasts and lasts.

Mental Wins

When I first started on my journey to financial independence I looked for every last scrap of blog post I could find in order to motivate myself to keep pushing forward.  This world, weather your in Japan or Jersey, has many temptations, and almost all of those cost money.  The goal however was to not just save my money but to invest it wisely so that over time my passive income would grow larger than my expenses and at that moment I would have the choice to exit the rat race.

Ohhhh so tempting....

It's not always easy.  I'm a big gamer and with new consoles like the PS4 and Xbox One (both of which I could run out and buy right now if I wanted) as well as the number of games they promise, it's very difficult not to purchase them with the click of a button.  I also like technology and my "screens."  For the last four or five years I've survived on a 24" Samsung TV that displays everything in beautiful 1080p, its just in 24 inches.  I'm constantly tempted by much larger 40 and 50 inch TVs.  Heck, even a 32 inch is technically a 100 % increase in screen real estate.  But, no.  I've managed to avoid all that lifestyle creep.

Not exactly what I have but you get the idea...

How?  By reading others blogs and following others' stories.  One such man is the one and only Dividend Mantra.  This man needs no introduction, as if you are reading my blog, I'm sure you've read his.  DM is a monster when it comes to blogging and picking winning stocks.  I can't lie, a bunch of stocks I've purchased have been based on his advice.

I followed his blog religiously, and remember very specifically an article he wrote that struck a jealous chord in me.  It was back in May of 2012, and I was just a little beginner still excited by each email I would receive from OptionsXpress about an incoming dividend (I still get excited, it's just they come so often now!).  DM, because he is the man, keeps great records and is willing to share them with all of us online.  He updates us every month on the value of his "Freedom Fund," his name for his portfolio that will set him free.  Let me preface this by saying that I completely understand he puts very little value in the value (hehe) of his portfolio.  By that, I mean, his barometer for success is his dividend income not the overall value of this portfolio.  In fact, many times he's stated he wouldn't mind seeing the value of the overall market (and in correlation the value of his portfolio) fall so he can pick up stocks at a better price.

Having said that, it still holds true that the bigger the value of your portfolio the more dividend income you're likely to receive.  You'd have to agree it would be very difficult for a $10,000 portfolio to bring in the same kind of dividend income as a $68,000 portfolio.  So, you'll understand when back in May of 2012 I read DM's post about the value of his portfolio reaching $68,000 while I was sitting there with just under $10,000 in all of my investment accounts.  Granted DM had been investing for a good year or two before me, but still it's hard not to look how far others have climbed and realize how much farther you have to go yourself.

Well, it was quite the mental win for me when just this last week I was updating my spreadsheet and low and behold, my total portfolio value crossed the $68,000 mark!  I couldn't believe it.  I was now that guy standing tall, on a milestone peak that just a few short years earlier I was looking up at!  It felt great and I really needed to tell the world!

Again the value of the portfolio is really just a mental win, the real victory is the financial win because my forward annual dividends crossed $2,000 a year!  That's right!  I've basically bought back more than a month and a half of my life, every year, for the rest of my life!  That to me is amazing, and quite motivating to boot!

Whew...  That was a lot of exclamation points.

What's interesting about this is that it didn't "seem" so difficult.  Staying the course has become easier.  I don't mean it's always easy to not spend money and invest it, and I don't mean the journey hasn't been long (two and half years at this point).  What I'm trying to say is that it seems very natural, to me, that I'm where I'm at now.  I suppose that makes sense as I've watch my investments grow every step of the way.  Watched and tracked how my dividends have increased and seen the compounding effect of time.  I'm sure this must be how it was for DM, and every other blog I read about where people are investing and chasing their dreams.  However, when I was starting out it I had to fight just to obtain $8.00 a year in dividend income.  Now my portfolio generates this and more automatically.

There are still many other FI bloggers out there with portfolios bigger than mine, and that's fine.  We are all going to the same destination, we are just taking different roads and at different points on those paths.  I'm not a very competitive guy but I do like to see where I measure up with others who are similar to me.  Who knows, maybe somebody reading this is in my position two and a half years ago. If you are, let me tell you, stay the course.  It's worth it.

Bike Update

This blog has been dormant for quite some time. I haven’t felt the inspiration for any new posts, especially when I read other blogs that seem to cover exactly what I would have written about anyway, and they did a better job.  I can’t promise that anything is going to change dramatically after this post either, but I suppose it’s good to wipe away the cobwebs every now and then. 

I sat down recently over one of my many excel spreadsheets and updated some numbers only to find that I am within striking distance of one of my long term goals:  having my bike pay for itself

I probably could have done a better job giving updates on this but to make a longer story short, back in 2012 I decided to invest a pretty big chunk of capital into a nice bike, $1,000 to be exact.  The fun didn’t stop there however, as I also needed a lock, riding glasses, tools, parts, etc.  I’ve kept track of everything and the total so far is $2,685.21.  Yep, the accessories, tools, and equipment cost more than the bike itself.

But I wanted all of this stuff for free.  No, not just free.  I wanted it to make me money.  I wanted my bike to become an income producing asset.

In Japan, your employer pays for your transportation to and from work.  So, if you have to take the train and the fare is 500 yen your employer will then refund you 500 yen on your next paycheck.  If you ride your bike however, you can pocket the 500 yen (500 yen is about $5).  My train fare to work is almost double what it is in my example, 900 yen.  So every day that I decide to get on the ole war horse and bike to work I get to pocket almost 9 bucks.  That money really adds up over time, enough to even cover the cost of the bike and its satellite costs.

I started back in September of 2012 and since that time I’ve collected $2,305.74 in work related travel compensation.  That leaves me with only $379.47 to go.  I’m confident that by August or September not only will my bike be paid off but it will start paying me!  Notice how I haven’t included a single cent from not having to pay for gas, insurance, car maintenance, car parking, etc. in my calculations.  If I were to include that cost savings as well, my bike would have been in the black many months ago.  Nor am I including the money that my money is making from being invested.  Again, it would just put me into the black faster.  But, I’m only looking at cold hard cash that I have collected in hand. 

Even more than the money is the health related benefits.  I wasn’t overweight before so I wasn’t looking to drop any pounds, but I feel confident that I can drink a few beers during the week and not have to worry about it.  I sleep soundly at night, and my GF says I’m looking the best she’s seen in a while.  It also feels good to know that I am in the beginning of my 30’s and probably the healthiest person in my group of friends.  I think of this time as a critical point where if you don’t start taking care of your body it’s going to take more time and energy to dig yourself out of a hole.  The sooner I start getting in fit condition the easier it will be to keep my body like that.

I’ve also learned more about my community and neighborhood.  In case of another earthquake I would know how to get home in case public transportation stopped.  I could even help other foreigners who might not know the way.

When I owned a car I knew how to change my oil, and put gas in the tank (or waste money rather).  Anything else beyond that was beyond me.  Now, I’m my own mechanic.  I’ve learned how to change brake and shifter cables, align my derailleurs, clean a chain, replace brake pads, and use clip-less pedals.  Just about the only thing I haven’t done yet is change my bottom bracket, but even that wouldn’t take much effort.  The beauty of a bike is in its simplicity.  Anybody can look at one and pretty much “get” how it works.  Then it’s just a few youtube videos to learn the tricks and you’re off and running.  I never used to have confidence in my car because it was always braking down, and I even had good mechanics in my family.  But with a bike I never ever have to worry again about being late or abandoned on the side of the road because of an overheating radiator, or a failed alternator.

The only drawback that I can think of is that I don’t get an hour and a half on the train to read, study, listen to music, or play videogames anymore.  Not that that’s a bad thing, and not that those activities can’t be done any other time of day.  I still find a lot of time to sit in front of the old TV.

I suppose the only thing I might have done differently was to look at a used bike versus a new bike.  Unfortunately I was on a limited time line when I bought my bike, plus I got a great deal on it from the company that makes my bike.  Still, I could have saved probably another $500 or so by searching Craigslist more.