That title there is a take off from another blogger and fellow mustachian, Mustachian Acolyte. Check out his blog "Towards Mustachianism" here. He wrote a few months ago about a "negative wealth shock." I like that term as I think it engulfs the full feeling and meaning of what it is to suddenly lose money. Be it a lost wallet, a sudden expense, a broken sink, or an unexpected trip to the hospital. I also like it because I think you could use the opposite, a positive wealth shock, and still express the meaning fully. Many people when they suddenly have a positive influx of cash are shocked and have no idea what to do with it. Unfortunately in many cases I think they probably squander it.
Well if wealth shocks are on a smaller scale, say $500 or less, than I just had a "negative wealth bomb" go off in my face.
You see I have to start paying taxes. Yeah, taxes. Here's the story:
In Japan, like the US, you have federal taxes. You also have ward or city taxes. These are a bit like State taxes. The federal tax to my understanding is a 5% tax on just about everything (they are trying to raise it to 10% now).
I came to Japan in 2007 on the JET program. Not only is the JET program one of the better paying jobs in Japan but there are many side benefits as well. They pay for your plane ticket to Japan and your return flight when you finish. JET pays for your stay in a nice luxury hotel when you first arrive in Tokyo. Then for your bullet train ticket (or plane ticket for those in Hokkaido or Okinawa)! Another hidden, and I think often over looked, benefit of the JET program is you don't pay ward taxes! Yep! No city or ward taxes. Well, okay, your board of education pays for them. It's not completely free in the sense that nobody is paying them, but it wasn't coming out of my back pocket.
So there I was for three years on JET no taxes. I also didn't pay taxes back in the USA as I was a bo-ne fide resident in another country. I left JET in 2010 and came to Yokohama. I started a regular job as an English conversation teacher at a language school. Soon after that I was hired to teach high school at a private university owned school. The pay was much better and the hours easier. All this time I was not paying taxes.
In Japan your city or ward taxes are based on your previous years pay. I was on JET for most of 2010 so that year was out. I worked in 2011 but because 2010 was JET and the board of education paid my taxes I didn't have to pay anything last year. Now however I am paying for 2011's wages. Ugh.
Don't get me wrong! It's not like I was playing hide and go seek with the ward office. I actually sent them in my equivalent of W2's twice. But they never got back to me and never sent me a statement. I just figured "Well I'll keep investing," knowing that this ticking time bomb is sitting right next to me. Slowly the timer reached zero and now I have to start paying.
This is a big shock to my investing plans which did not include this extra expense. It's about 6% of my take home pay which is a big chunk. I feel this leaves me with a few options now.
1. I can start to work more. I have a part time gig at my old English conversation school. If I worked about 10 lessons a month I would start to make up the difference for the newly minted taxes I'm paying. (I realize that by working more I'm also going to be paying more taxes but at least I'll catch up).
2. Reduce my expenses. This is something I haven't written about very much because I feel that I am pretty frugal as it is. But looking at my numbers, honestly, I feel that I can do better without much reduction in lifestyle but a huge drop in expenses. Hopefully more on this in a future post.
3. Do nothing. I still make more than enough to live on. The exchange rate is still on my side. I could just take the hit and end up investing less.
Of course the Mustachian thing to do is a combination of 1 and 2 and that is the path I will strive for.
To be honest I don't mind paying my taxes. I think Japan is a great country and Yokohama is an excellent city. Clean, safe, and beautiful. Japan shouldn't have to change, and so I will.
P.S. You might be asking yourself "But what if you leave half way through a year? What happens to the taxes based on that year so far?" Well actually you are supposed to go to the tax office and tell them you are leaving. They will then just give you a big fat bill and you are expected to pay. If you don't, have fun every trying to get back into Japan again. I have a co-worker who is dealing with this right now.
Saturday, June 30, 2012
Thursday, June 14, 2012
May to June Spending Breakdown
You'll notice a new look to the place. I was doing a bit of house cleaning and noticed that I'm on my way to crossing about 1,000 views. For me that's pretty big as I don't think I've ever had anything that was looked at 1,000 times. Because of that I figured I should change things up a little bit. Also this format will look a bit better with these spending updates. The graphs I include should now sit nice and center (I think) and not stick out all Frankenstein like like in the old format. Without anything further let's break it down!
Income:
Job ¥321,411
Part Time Job ¥16,859
School Expense ¥2,000
TOTAL: ¥338,270
Not too bad. This is a typical month for me now. The ¥2,000 school expense came from a text book I purchased on my CC and they school paid me back super fast.
Now for the expenses. I'm just going to post the graph.
Income:
Job ¥321,411
Part Time Job ¥16,859
School Expense ¥2,000
TOTAL: ¥338,270
Not too bad. This is a typical month for me now. The ¥2,000 school expense came from a text book I purchased on my CC and they school paid me back super fast.
Now for the expenses. I'm just going to post the graph.
TOTAL: ¥124,698
Savings Rate: 63.14%
For the year this brings my yearly savings rate to: 47%
I think this is pretty good for being half way through my first every super frugal year. I'm still taking the trips that I had planned on but I've still stashed almost 1/2 of every paycheck. Of course my goal for the year is 65% which I'm not quite so sure is reasonable anymore. Perhaps 60% is a better goal. Next year with another raise I think 65% could be attainable. It doesn't mean that I won't try but I'm also keeping my expectations realistic.
There are still some great accomplishments to be found here. Let's look at the day to day spending:
There are still some great accomplishments to be found here. Let's look at the day to day spending:
What I like about this was the period from May to June saw almost 10 days of zero spending. If you include days under ¥2,000 it's more than 20! Meaning I'm getting better at either delaying or completely opting out of purchases. I think it's this mentality that will help me to amass the stasch capital I need to build up some real f-u money. One day at a time right?
Wednesday, June 6, 2012
Why I Don't Miss US TV (or What I Learned About Investing On Accident)
I have never once seen a fight, even with tons of alcohol involved, between two Japanese people out on the street, in a club, or at a restaurant. In fact the only fights I have seen usually involved a lot of alcohol and two foreigners. In general people tend to mind their own business and do their own thing. If something does come up like a bump here or a dropped something there a polite 'sumimasen' does the trick. Interactions with Japanese people are also very pleasant. If I have to talk to somebody at the stations, get directions, or when I'm ordering at a restaurant I am very often impressed with the energy and level of service I get. Whether the transaction is consumer to business, business to consumer, or just two people the interaction eschews a level of aggression we have, I feel, just gotten used to back in the US.
This summer with be my fourth trip back to the US in four years. Every time I always run into this difference in culture, and you know what? I'm not so sure that I am a fan of it anymore. And, don't get me wrong, it's not like some gas station attendant yelled at me, or some waiter was curt when taking my order. I just mean the way we treat each other. I see customers get in fights about places in line, and bank tellers tell off customers. I'm not the kind of guy to say something is right and another is wrong, but I will say when something is more comfortable than something else. Japan is more comfortable.
My girl friend likes to watch a lot of American dramas like Glee, Gray's Anatomy, and some others (she has learned to watch them outside of my presence because of my complaining so if those are old examples, my bad). When I catch a clip of one of these shows I am always surprised how different the feeling is from Japanese TV. The characters are always "fighting" something. I find it interesting how on a show about a hospital (in Seattle of all the liberal places to set it) that these doctors can be competing with each other for men, status, and whatever other bullshit. But I guess it's been on TV a long time so people watch it and find something in it for themselves. The writers know, apparently, what the audience wants (or perhaps what the audience has been programmed to seek).
Mad Money's Jim Cramer. A financial analyst.
I don't usually watch investment news and in Japan there are no finance television shows like Mad Money or Squawk Box. I put finance television show in that last sentence in italics because I had no idea what kind of show Mad Money and Squawk Box were. But according to Wikipedia Mad Money is a finance television show, and according to this page (warning: I just simply googled this page, I can't vouch for it's accuracy or overall truthiness) it is number two right behind number one Squawk Box! If there were a finance television show here in Japan, guess what? It would probably be really boring. Let me explain with a juxtaposition.
Recently I watched two clips on the internet about the recent down turn in the stock market. Both were discussing if the markets were going to rebound. I won't link the clips because I don't think anybody should watch them but I will say that one was entitled Market Really Is Brewing, Don't Get Scared Out Of Stocks, and the other Stocks Slide On Renewed Economic Concerns. Google and watch them at your own risk. Now I am still a novice investor. I started about six months ago and my 'stach is less than 10k. I don't know if the information these guys were talking about was on the mark, or if, like most people on TV, they were just talking to waste air and keep themselves relevant. However, I wasn't even able to get past their aggressive, annoying, staunch attitudes, to get to the heart of their point. When the fuck did stocks become a fucking sport? Since when do financial experts talk like 5 year olds out for recess? Since when do we need a sports center for investing? It's not gambling, and your not some cowboy shooting from the hip. I'm sorry, but if you are on TV and giving advice about what people should do with their hard earned money you should put on your big boy pants and talk like an adult. Oh and take responsibility. Yeah, if you were wrong get back on the TV and explain what you screwed up or just admit there is no predicting the future and stop giving half truths wrapped in recommendations. If you can't do that get outta da kitchen.
The reason, I think, we don't have shows like that in Japan is 1) people don't respond to that pumped up, aggressive attitude like people in the US seem to really be drawn to. Yelling and calling names is viewed as being confident and assertive. In Japan well spoken and logically supported ideas are what get listened to. Especially when it comes to money. 2) The Japanese are incredibility risk averse so to get them to invest you can't just blather some shit and expect them to follow, or watch again the next day. 3) Nobody in Japan, where giving bad advice will lose you your job (as it should if your job is to give good advice), would want to step into that line of fire.
A focus group for the best financial television program.
Maybe this is too simplistic and would ruin business models for cable news, and internet based financial television programs but it makes sense to me. I've learned never to watch these financial television programs ever again. I'll stick with the jlcollinsnh rules of investing: Spend less than you earn – invest the surplus – avoid debt. Wow now that is simple, easy to understand, and not covered in bullshit.
Sunday, May 27, 2012
Mornings, Horses, Laundry, and Choices
I really enjoy the mornings. For work I have to get up at 6:30 in order to shave, get dressed, make sure I'm not missing anything (namely my brain) and hit the 7:25 train heading towards Ofuna. The feeling of a new day gives me a lot of energy and brings about a zen calm. I look around and nobody knows what kind of day it's going to be. Maybe there will be a major earthquake, or maybe I'll come up with a great lesson plan. Either way I relish in the unknown of the morning.
Most mornings are also made better by blogs. I read quite a few blogs (MMM, Toward Mustachianism, Dividend Mantra, Brave New Life, The Simple Dollar, Poor Student, Compounding Interest, FIFighter, DeeDubs, Skillsfire, to name a few) and I add to their traffic at least once a day hoping to consume some new bit of information about FI. Grasping at some new morsel of story or inspiration. You might think that is a very exhaustive list of blogs. It's got the usual suspects sprinkled with a few lesser knowns, but they are all great. However, every now and then I stumble upon a treasure chest of new information. A new story to delve into and wrap myself up in. Well this morning I was treated to a kings ransom and a new blog to add to the list.
I was heading over to MMM to check out a thread on the forum I started about biking around the USA (a dream I have post FI). Going through the main page I noticed he had updated the blog with a guest post from Jim Collins. I had never heard the name but according to the short intro he's a true veteran in the ways of mustachianism. I mean this guy is a full bird colonel! Jim hit FI around 1989 and has seen a lot according to his post on MMM. I'm not going to rehash anything here as I'm not that good of a writer, plus you should read it from the horses mouth.
Speaking of horses...
After reading this great post I started thinking about myself (self centered I know!) and where I am at on the road to FI. I'm turning 31 next week, I have paid off all of my debt, I have been investing since January and have maintained a somewhat respectable savings rate of around 43% for the year so far. But more so than the financial, I feel very happy. I have a pretty good job (teaching high school girls is not super stressful, and not very dangerous), vacation coming up, and more than anything a great girl friend.
I got out of bed and brought in the laundry, as you do in Japan (no dryers here sir). I was folding the laundry but noticed that I was doing it with a calm that only comes in the morning. It seemed effortless and yet all the shirts were coming out perfect. The socks just seemed to match up. Everything was just right. My mind started to wonder and visualize my progress. Here is what it came up with:
We are all in a race. It's not a race of distance but of time. The race is different for everyone and we all can run it in different ways. Some people choose to go it alone, others partner up, and yet even others, like those seeking FI, choose to raise a horse. That's right, they get a horse. Not a giant black thoroughbred, but a small tiny colt (or it could be a filly, doesn't really matter). You have to carry that colt and raise it up while you are running. It's hard and takes patience because he is heavy and squirms around and is slimy (just born). But, if you give it enough time, that colt will start to run beside you. Maybe not so quickly at first but he is running. He's yours and nobody else can have him unless you want to invite them to your race.
One day after enough attention and care you can ride him. He'll take you wherever you want. It's up to you! You no longer have to run the race yourself. Sure if you want to you can jump off and run yourself. Maybe sitting on the horse and enjoying the scenery will get boring. But, it's all up to you.
As I matched the last pair of socks I realized that I've got a colt now and he's young and very small. I'm going to do my best to get advice from all over on how to raise this little guy into a big strong horse that can run the race for me, if I choose. And that's really the key. I get to have a choice.
I'm looking forward to jumping into Jim's blog head first sometimes this week and really devouring all the information he has over there.
Most mornings are also made better by blogs. I read quite a few blogs (MMM, Toward Mustachianism, Dividend Mantra, Brave New Life, The Simple Dollar, Poor Student, Compounding Interest, FIFighter, DeeDubs, Skillsfire, to name a few) and I add to their traffic at least once a day hoping to consume some new bit of information about FI. Grasping at some new morsel of story or inspiration. You might think that is a very exhaustive list of blogs. It's got the usual suspects sprinkled with a few lesser knowns, but they are all great. However, every now and then I stumble upon a treasure chest of new information. A new story to delve into and wrap myself up in. Well this morning I was treated to a kings ransom and a new blog to add to the list.
I was heading over to MMM to check out a thread on the forum I started about biking around the USA (a dream I have post FI). Going through the main page I noticed he had updated the blog with a guest post from Jim Collins. I had never heard the name but according to the short intro he's a true veteran in the ways of mustachianism. I mean this guy is a full bird colonel! Jim hit FI around 1989 and has seen a lot according to his post on MMM. I'm not going to rehash anything here as I'm not that good of a writer, plus you should read it from the horses mouth.
Speaking of horses...
After reading this great post I started thinking about myself (self centered I know!) and where I am at on the road to FI. I'm turning 31 next week, I have paid off all of my debt, I have been investing since January and have maintained a somewhat respectable savings rate of around 43% for the year so far. But more so than the financial, I feel very happy. I have a pretty good job (teaching high school girls is not super stressful, and not very dangerous), vacation coming up, and more than anything a great girl friend.
I got out of bed and brought in the laundry, as you do in Japan (no dryers here sir). I was folding the laundry but noticed that I was doing it with a calm that only comes in the morning. It seemed effortless and yet all the shirts were coming out perfect. The socks just seemed to match up. Everything was just right. My mind started to wonder and visualize my progress. Here is what it came up with:
We are all in a race. It's not a race of distance but of time. The race is different for everyone and we all can run it in different ways. Some people choose to go it alone, others partner up, and yet even others, like those seeking FI, choose to raise a horse. That's right, they get a horse. Not a giant black thoroughbred, but a small tiny colt (or it could be a filly, doesn't really matter). You have to carry that colt and raise it up while you are running. It's hard and takes patience because he is heavy and squirms around and is slimy (just born). But, if you give it enough time, that colt will start to run beside you. Maybe not so quickly at first but he is running. He's yours and nobody else can have him unless you want to invite them to your race.
One day after enough attention and care you can ride him. He'll take you wherever you want. It's up to you! You no longer have to run the race yourself. Sure if you want to you can jump off and run yourself. Maybe sitting on the horse and enjoying the scenery will get boring. But, it's all up to you.
As I matched the last pair of socks I realized that I've got a colt now and he's young and very small. I'm going to do my best to get advice from all over on how to raise this little guy into a big strong horse that can run the race for me, if I choose. And that's really the key. I get to have a choice.
I'm looking forward to jumping into Jim's blog head first sometimes this week and really devouring all the information he has over there.
Sunday, May 20, 2012
April to May Spending Breakdown
It taken me a bit to get together this last months spending information. April to May wasn't kind to my savings rate. In fact it downright killed it! If there is one month out of this year that will be blamed for me not reaching my target rate of 65% it will be April to May. At least I hope there will only be one month to blame. *knock on wood*
Income:
Expenses JAPAN:
Expenses USA:
Total Expenses ¥431,251
Total Savings -¥18,796
Savings Rate -4.4%
Ouch! Okay let's comb over this mess really quickly. My income was actually the highest it's been so far this year. Don't let that throw you off however. A big portion of that is due to receiving my train pass expense and we recently switched insurance or something at work and the new company bills differently so I didn't pay this month. In May my pay has resumed it's regularly scheduled taxes, insurance, and any other nonsense.
On the expenses side however there were some big hits. The first big one was air travel. For the last few years I have gone home during my schools summer vacation. This year I want to go home and kickstart our vacation home into generating some income (hmmm maybe enough to buy me a plane ticket every year!). However ticket prices have really shot up this year and even booking what has turned out to be the lowest fare I'm still taking it in the pocketbook. Further, my girlfriend and I are planning on traveling during our travels. We will be seeing family in the midwest and on the east coast so that is more air travel.
Some other anomilies you might spot was that there was no rent. That is because I booked my girlfriends tickets on my credit card so rather than pay her rent just to have it come right back to me she just paid me the difference (note the "From GF" income) and that was that. I also went to the dentist, see "Medical," and I guess needed three fillings. UGH! That ¥45,000 will see it's older brother rear it's ugly head next month as I make the second and final payment. But don't worry, no interest.
Over all here is how I am doing for the year:
April to May: -4.4%
March to April: 50.68%
February to March: 65.25%
January to February: 58.66%
Average Savings Rate: 43%
Looking at that number all it does it push me harder to try and find places I am not saving. Where can I cut my spending or where can I increase my income to make up for the shortfall?
Here is a visual of my spending habits over the month.
Although this month was pretty harsh, I would like to point out that I had eight days where I spent zero yen. Pushing the envelope back a little bit more, days where I spent one thousand yen or less, six-teen! I'm sure there are those out there that could blow that figure out of the water, but for me that's pretty good and I'll count it as a win!
How are your expenses faring?
Income:
| Job | ¥383,589 |
| Part time job | ¥8,728 |
| From GF | ¥11,638 |
| Sold speakers | ¥4,000 |
| Sold Monitor | ¥4,500 |
| Total Income | ¥412,455 |
Expenses JAPAN:
| Rent | ¥- |
| Eating Out | ¥25,677 |
| Groceries | ¥17,344 |
| Transportation | ¥33,975 |
| Bills | ¥18,748 |
| Entertainment | ¥19,260 |
| Misc | ¥2,947 |
| Alcohol | ¥4,818 |
| Tuition | ¥1,100 |
| Air Travel | ¥119,760 |
| Medical | ¥45,000 |
| Present | ¥2,807 |
Expenses USA:
| Vaca House | $220.00 | ¥18,062 |
| Air Travel | $1,472.41 | ¥120,885 |
| Entertainment | $7.59 | ¥623 |
| Misc | $2.99 | ¥245 |
Total Expenses ¥431,251
Total Savings -¥18,796
Savings Rate -4.4%
Ouch! Okay let's comb over this mess really quickly. My income was actually the highest it's been so far this year. Don't let that throw you off however. A big portion of that is due to receiving my train pass expense and we recently switched insurance or something at work and the new company bills differently so I didn't pay this month. In May my pay has resumed it's regularly scheduled taxes, insurance, and any other nonsense.
On the expenses side however there were some big hits. The first big one was air travel. For the last few years I have gone home during my schools summer vacation. This year I want to go home and kickstart our vacation home into generating some income (hmmm maybe enough to buy me a plane ticket every year!). However ticket prices have really shot up this year and even booking what has turned out to be the lowest fare I'm still taking it in the pocketbook. Further, my girlfriend and I are planning on traveling during our travels. We will be seeing family in the midwest and on the east coast so that is more air travel.
Some other anomilies you might spot was that there was no rent. That is because I booked my girlfriends tickets on my credit card so rather than pay her rent just to have it come right back to me she just paid me the difference (note the "From GF" income) and that was that. I also went to the dentist, see "Medical," and I guess needed three fillings. UGH! That ¥45,000 will see it's older brother rear it's ugly head next month as I make the second and final payment. But don't worry, no interest.
Over all here is how I am doing for the year:
April to May: -4.4%
March to April: 50.68%
February to March: 65.25%
January to February: 58.66%
Average Savings Rate: 43%
Looking at that number all it does it push me harder to try and find places I am not saving. Where can I cut my spending or where can I increase my income to make up for the shortfall?
Here is a visual of my spending habits over the month.
Although this month was pretty harsh, I would like to point out that I had eight days where I spent zero yen. Pushing the envelope back a little bit more, days where I spent one thousand yen or less, six-teen! I'm sure there are those out there that could blow that figure out of the water, but for me that's pretty good and I'll count it as a win!
How are your expenses faring?
Saturday, May 12, 2012
My Debt Story Part 3 - Mustachianism Prevails
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.
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.
Wednesday, April 25, 2012
Sometimes You're Up And Sometimes You're Down
Taking a quick break from my debt story I wanted to turn to a quick investment update.
I am an amateur investor to say the least. I made my first serious investment almost three months ago to the day. In that time it's been a pretty wild ride. I received my first dividend payments and I got a chance to really see my money take some action as the stock market was on fire for this first party of 2012. I saw how my money went from one value to a much higher value. This is a very lucky experience as if I hadn't experienced the high first I would be even more distraught now that my portfolio is at an all time low.
As of this morning I have now lost $16. That means that after all the dividends I received and all of the money I have poured into the market these last few months it is worth $16 less.
That is very difficult for me to accept and I'm not sure I've even seen the bottom of it yet. It's very unfortunate as I had just purchased some shares of AAPL (a great company who I think we will see many more great products from in the future) just before the stock decided to correct itself (or the market correct the stock rather).
However I'm not going to give up. When the chips are down I know that this is the time to try and pick up some shares at a discount. I have to learn to see things long term and that if the market is down things are on sale. If the market is up so are my stocks.
How did you handle your first loss?
I am an amateur investor to say the least. I made my first serious investment almost three months ago to the day. In that time it's been a pretty wild ride. I received my first dividend payments and I got a chance to really see my money take some action as the stock market was on fire for this first party of 2012. I saw how my money went from one value to a much higher value. This is a very lucky experience as if I hadn't experienced the high first I would be even more distraught now that my portfolio is at an all time low.
As of this morning I have now lost $16. That means that after all the dividends I received and all of the money I have poured into the market these last few months it is worth $16 less.
That is very difficult for me to accept and I'm not sure I've even seen the bottom of it yet. It's very unfortunate as I had just purchased some shares of AAPL (a great company who I think we will see many more great products from in the future) just before the stock decided to correct itself (or the market correct the stock rather).
However I'm not going to give up. When the chips are down I know that this is the time to try and pick up some shares at a discount. I have to learn to see things long term and that if the market is down things are on sale. If the market is up so are my stocks.
How did you handle your first loss?
Subscribe to:
Posts (Atom)