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

September-October Expenses

Thanks to the very kind and friendly JLCollins of the blog of the same name I experienced a slight bump in traffic recently.  I hope some interested eyes have perused my ramblings thus far.  Feel free to leave a comment if you have a question or just want to introduce yourself.  I'll start really quickly:  My names "The Kechi One."  It's a nickname I gave myself.  "Kechi" in Japanese means "cheap" but I'm taking it back and calling it for what it really is frugality.  I have lived in Japan for about five and half years and really enjoy it.  I work at a private high school where I teach English.  I also have a few side jobs.  Last December I paid off all of my debts including student loans, credit card, and car loans.  After, I made the decision to start investing.  This blog it about my journey towards building a portfolio that will allow me to retire by the time I'm forty. 

I like to blog about Japan and why it's a great place to work while going towards FI, biking, my investments and expenses, or anything else that just happens to catch my interest.  I hope you enjoy your stay.

Back to business: 

I get paid on the fifteenth of every months so I track my expenses from the fifteenth of one month to the fourteenth of the next.  In this case we are looking at September fifteenth to October fourteenth.  This was the first month back to basics in that I'm not trying to split expenses between yen and dollars.  In August I was back in the states and it was much more difficult to track.  Here we go!

Income:  ¥317,813

This is for my regular job and my part time job.  This was my second lowest income month for the year.  A big part of that is that I am now paying my city taxes which knocks about ¥20,000 off each paycheck.

Expenses:

 

Total Expenses:   ¥185,167

And as always expenses by day:

 

 Transportation jumped up this month as I was paying off my bullet train pass from the previous month on my credit card.  My bike expenses also were up this month as I purchased a really nice handlebar bag, a good pump with a built-in pressure gauge, and also a set of fenders.  I'm going to do a whole blog post soon on how much my bike has cost me and also how much it has made me.

Doing all of the math then that puts me at a 42% savings rate for the period of September to October.  This is below my annual goal of 65% and puts my average savings rate for the year at 46%.  My savings rates so far for the year have been:

January  58.66%
February  65.25%
March 50.68%
April  -4.40%
May  63.14%
June  39.87%
July 40.08%
August  48.32%
September  41.74%

Not to completely ditch my goal of 65% but I figure if I can pull this number up above 50% for the year I'd be very happy.  That would mean I saved/invested half of every single yen I made even while taking a very unmustachian vacation, buying a new $1000 cycolocross bike and accessories, and still enjoying quite a bit of going out.  I know I can do better however.

Thanks for tuning in!  How are you doing for the year?

3rd Quarter Dividend Update

My portfolio is not much when compared to a lot of the other bloggers I read.  Sometimes I get depressed thinking about how in the same amount of time people have made much greater strides than I have.  But my stache is my stache and I'm going to keep building it up.  If it takes me twice as long as the next guy so be it.  I'll still be ahead of 99% of people.

Almost all of my holdings pay out at the end of the quarter so rather than doing monthly updates (of nothing) I've been doing quarterly updates.  Here is how I finished the 3rd quarter.

AAPL:  $5.30
INTC:  $8.55
JNJ:  $9.32
MCD:  $16.18
PEP:  $8.23
KO:  $7.67
VNQ:  $7.41
VFINX:  $15.77
VBINX:  $14.76
VGSIX:  $22.01

Total:  $115.20

And my dividends for the 1st and 2nd quarter:

1st Quarter:  $44.17
2nd Quarter:  $71.90

1st-3rd Quarter Total:  $231.27

What I can brag about is the percentage increase in quarter over quarter growth!  My 2nd quarter dividends where 63% higher than my 1st quarter, and 3rd quarter was 60% higher than my 2nd quarter (thanks for checking my math fifighter).  That's quite a jump!  Sure this kind of growth won't be sustainable forever (oh if only!) but it keeps me motivated.

It's All Down Hill From Here

When I first came to Japan I was pretty heavily in debt.  I don't think I was any worse off than any of the other teachers around me were, but I I was the only person I know who treated my debt like an emergency.  I was probably about $40,000ish in debt and making about $2,500 a month.  The exchange rate wasn't so kind back then as the yen was trading about 117 yen to the dollar.  Not nice.

I did my best however saving up about 1/3 or each paycheck to send back when the exchange rate seemed to move my way.  It was tough but slowly the stars came into alignment.  2008 hit the US economy hard and the exchange rate opened up like a flood gate.  I continued to send back money and use it to pay off my debts.  I wasn't fully dedicated to the mustachian lifestyle yet so I was also spending on vacations, and gadgets.

One day in late December however I made my last payment on my student loans and that cleared all of my debt.  If felt really good.  The journey of climbing out of a pit of debt was not fun.

So what then?  Well actually the really fun part started.  Instead of using my money to pay interest and loans I now get to use my money to make me more money!

"But you still don't have that money!  It's locked away in some company!  It's just like when you were paying down your debts!"  Say the spenders.

I don't agree with that.  Sure the money that I put into investments every month is somewhat locked away but psychologically it is so much easier for me to put $2,000 a month into in investment that pays me dividends and will possibly go up 10%, 20%, or even 1000%.  I'd come to the top of the mountain and the ride is all down hill from here.  

My goal for this year is to invest $24,000.  I'm at about $17,000 so far and should be able to hit my goal by December.

The other part about investing is that it seems so much easier than paying down debt.  Although the processes are somewhat similar:  make some capital, transfer it to another entity.  But with my investments I really WANT to put my money in.  Of course with debt you HAVE to put your money in (or you don't pay it and well...)

I'm surprised it took me 4 years to pay off $40,000 when in less than a year I have built up almost half of that.  It's all about motivation and it's much easier to have on the down hill part of the journey.

Quick Bike and Blog update

I've been busy with work lately, but we all got Monday off in lieu of having to work on Saturday and Sunday for the school festival.  I had a great time and can't wait till next year when we move to a brand new school.

Okay, let's take care of some business.  Of the 21 days that I worked last month I biked 17 of them.  The other days I took my GF's train pass, which is paid for by her company, so I could take some rest days.  I put over 400km on my bike already and I feel great.  As I stated before I feel tired at night and get good sleep.  When I wake up biking is not exactly the first thing I want to do, but when I get to school I feel awake and ready to attack the day.  The weather is also starting to cool down which is nice.

As for the blog I was informed by a very nice reader (Mr. Collins of http://jlcollinsnh.wordpress.com/ fame) that when he tried to leave a comment on my blog he had to deal with some Japanese.  The Japanese language is a puzzle to me that I am constantly trying to untangle and the best way I have found is to surround myself with the pieces of that puzzle.  So my iPhone, computer, video games, TV, etc. are all set to Japanese language.  I did the same with this blog as well.  I see now that it might be creating some difficulty for my readers who might not be trying to put together the same puzzle as I am.  For that reason I changed the language of this blog to English.  It makes sense to me that if I were writing in Japanese I should have the blog in Japanese, and if I'm writing it in English it should be in English.  Don't know why I never thought of that.

All for now.

Bike Update

Great friend!

School started back up on September 3rd, and it’s now the 14^th.  That means I’ve been riding my bike for two weeks now.  According to my Runkeeper activity I’ve put down over 210KM already!  That’s not too bad and it actually doesn’t include today’s activity which would put it over 230KM.

Not too bad for only two weeks.

My body is getting used to the ride now.  My general climb is about 144 meters but about 24 of those meters come in the form of a huge hill at the end.  My legs burn after the climb but so far I have never had to get off the bike and walk up.  Thank goodness for lots of gears!

I few things that I need to do something about.  My hands really hurt at first but it turns out that I was gripping the handlebar really tightly so I have loosened up on that.  Some of it I think was just a break in period for my body.  However to shift my front derailleur is quite difficult and has been straining my left hand.  This might also be a break in period for my body but I’ve noticed my fingers will ache if I have to shift a lot.  I need to look into this and adjust my front derailleur.

Perhaps the most important thing is how much is this bike saving me?  After all the whole point of importing this thing was of course health, but also to free up extra capital.  Well so far I’m in the red.  The bike was about $1,000 US and I probably spent another $400 between lock, pedals, tools, lights, mini bike pump, bike stand, and new breaks (I killed the Avid 6 breaks in a crash).  I’m also budgeting about ¥10,000 (about $130 ) a month for bike necessities as they come up.  I still need to get a proper pump that will measure PSI, a light bag for the front to hold all of my tools, flight tire repair kit, proper eye protection (sunglasses at night aren’t working), and further down the line racks and panniers.  I’m guessing when all is said and done I’ll probably be in hole about $1,800~$2,000.

Where I am at so far

 But my first windfall should be coming next month.  October will mark the half way point in the school year and be the next payout of my transportation expense.  It generally runs about ¥30,000 which at today’s exchange rate is about $350 US.  That’s about a 20% return on my investment so far!  It will get better next April when I move schools and my transportation expense will go up to about ¥80,000 or about $1,000.  That should not only pay for the bike and accessories but any money after that will be mine all mine!

Yes it is!

So in short a good year or so of biking should net me a free Kona Jake the Snake plus all of the goodies I need to keep it in repair.  It has also given me health, and a new energy that I didn’t know I still had.  I am tired at night and actually sleep.  I don’t worry so much about what I eat anymore as I am burning an extra 700 calories a day so those two beers at night are guilt free.  If I skip the beers I get the pleasure of knowing I am leading a better life than 95% of people (well 95% of people in the states anyway.  Maybe only 80% of people in Japan).  I’ve seen more of Yokohama in the last two weeks than I did in the last year.  If another earthquake occurs and I am at school I know how to get home (the trains will stop in an earthquake).  The benefits of my bike truly knows no bounds.

Selling My Childhood

Not my collection but very similar

Like most children in America in the 80’s I was born into a culture of collecting and hording.  My brother and I had countless He-Man, Transformers, Teenage Mutant Ninja Turtles, Gi-Joe action figures (they aren’t dolls!).  Of course we took them out of the box and played with them but never the less the idea of having more characters and more playsets was deeply ingrained.  After I got a bit older it become about videogames, and then I added comic books, and eventually I even went back to action figures, in particular Spawn figures, but this time I kept them all in the box.  I figured one day my collection would be worth millions of dollars and that I would be able to retire on it alone.

I’m older now.  Not so much wiser, but maybe more realistic.  After discovering MMM, and truly realizing that material possessions are not what brings me happiness I made a big decision.  I was going to liquidate my collection during my trip to the states.

Selling this stuff was so serious that I actually didn’t tell any of my friends that I was coming back to visit.  I wanted to have total focus on completing this task as I knew it was going to be a huge undertaking.

This was actually somewhat of a bone of contention with my family.  When I told them I was going to sell all of my old videogames, old consoles, old action figures, and just some of the junk I had taking up space at my parent’s place they were taken aback.  “You spent so much time and money collecting those!”  “They are part of your childhood memories!”  I was told.  But the truth of the matter is my collections weren’t memories.  They were things.  The memories of my childhood are mine forever.  I cannot sell them nor would I ever want to.  But the plastic things taking up space, well, that is real money sitting on the table.  It could be making me 6-10% per year instead of sitting there gathering dust.  I later realized too that several of my family members had similar collections and that by me selling mine it was in a roundabout way taken as criticism when I told them my collection itself had no meaning.  

I had changed my view on collecting things and wanted to take this opportunity to re-coup what I could and put it towards something more meaningful.  Either by investing the capital I received or purchasing a new bike that would make me thousands of dollars per year.

So how did I do it?  I basically followed these steps.

1.  Inventory.  I had to take a look at everything that I had held onto over the years and write it down.  This meant breaking into every box that had been sitting in my parent’s garage for almost 5 years.  I had to unpack all my Spawn figures.  I had to gather all the cables for my old Sega Genesis, SegaCD, 32X behemoth and make sure all the games still worked.  It meant keeping a spreadsheet of all the things that I wanted to get rid of.  This was a lengthy, dusty, dirty, time consuming process that took me about two days of full time work to do accurately.  Depending on how much stuff you have it could take more or less.

Taking inventory

2.  Choose.  After I had everything inventoried I had to choose what really is going and what really is staying.  I did hold onto a few things that I knew were rare and have gone up in value.  I own a copy of Panzer Dragoon Saga for the Sega Saturn.  Cost me about $50 new and now goes on ebay for about $200 (and because Sega lost the source code there is a good chance this game will never be re-released as a virtual console or downloadable title).  I kept my old Lunar games as they really did have a special place and again had actually gained value.  I kept most of my comic collection as I really do enjoy reading them.  In the end out of the twenty or thirty boxes I went through only about three boxes worth of stuff was special enough for me to keep.  

Worth quite a bit on eBay

3.  Separate.  For a lot of people I think this is where they start to have a problem.  I had so much stuff that if I tried to sell it all separately it would have taken me six months of full time work.  So instead I had to make sets.  I sold all of the Sega games with the consoles as a set.  All the Dreamcast games went as a set.  I managed to get in contact with the comic book store I bought most of my comics from and sold them ALL eight five of my Spawn figures as one big set.  It felt great to separate all of my stuff into about 15 different piles and know that it was all or nothing.  Either you were buying all four seasons of Futurama or none at all.

4.  Where.  Now that I knew what I was going to sell I had to choose where.  Originally I wanted to do everything on Craigslist but I quickly discovered that my market was too small.  I shifted over to eBay.  I wanted to avoid fees by using Craigslist but almost more important than the money was just getting rid of this stuff.  And as it turns out I got more than I thought I would going to eBay.

5.  Assign a price.  This took some research and actually I was surprised that a lot of my stuff when sold in big sets I could get quite a bit of money.  The Sega consoles and games I was going to sell for $40 I ended up getting almost three times that on eBay.  My Gameboy Advance games sold for a lot more than I had thought I could get for them on Craigslist.  I put together a set of Final Fantasy stuff including games, art books, models, etc. and got almost four times on eBay than what I thought I could get on Craiglist.

My beloved Sega Genesis/CD/32X combo

6.  Profit!  I was surprised how quickly a lot of my stuff sold.  I downloaded an eBay app for my iPhone and it seemed every day it would ding two or three times with more stuff I had sold.  The adventure didn’t end there.  I still had to package up and ship everything.

7.  Shipping.  I learned a lot about shipping.  Don’t ship GameBoy Advance games in bubble mailers.  Don’t wrap big boxes in paper and then just write the shipping info (if the paper gets torn then the post office suddenly just has a box).  I shipped most of my auction parcel post to cut down on shipping.

8.  Stay in contact.  Thanking and keeping contact with my customers was very important.  Some people bought two or even three of my auctions.  I did have some grumpy customers which was just as much my fault as it was theirs.  

That was the basic path that I followed and ended up with about $1400 dollars in my pocket.  I mentioned earlier that I was going to use it either to invest or buy a bike and I went with the latter.  I am now the owner of a brand new Kona Jake the Snake.  It’s light, strong, and hella fast.  I really enjoy coming into work on it!  I keep track of all my progress on RunKeeper.  Join my street team!

My new ride!

In the end I never once felt like by selling the toys of my youth was I betraying my childhood self.  To do so would be silly.  The toys I had didn’t make the memories I hold now.  It was me myself that made them.  Perhaps a toy could trigger a long lost memory and I think that many people hold onto their collections just for that reason.  They revisit it every year or so and remember the “good ole times.”  But for me those times don’t end.  In fact by selling this stuff I am looking forward to a new set of good ole times where I get to be a kid again.  I think the child in any of us would agree that that’s a good thing.