Bike Beats Car

Looking at my expenses for the last few months I've noticed a steady and scary rise in what I've been spending. Some of this is was somewhat unavoidable. For example I was on vacation to the USA and although I spent most nights with family or friends a stay at a hotel was sometimes necessary. I also had major car problems that ended up costing an arm and a leg. Another great reason to not own a car and just another time that I have been let down by and completely embarrassed by a car.

So I should do something about it and I have. While at home I bought a new bike and have brought it back with me to Japan. I picked up a Kona "Jake the Snake" This model and brand came very highly recommended from a friend who was using the same bike for years in Japan. It's light, good looking, and exactly what I want. I can, and have, been learning how to adjust everything on it from the brakes and shifters, to the positioning of the handle bars and seat.

I like this because now I am in control. WIth a car and it's various parts you really have to know what your doing. I understand the basic concept of how a car works but when it comes to actually digging in an fixing it I'm at the mercy of a mechanic. My mechanic is my family which you might think would make me favor a car, but it doesn't. Although my family are huge car nuts they can't be with me all the time and are especially not with me when I have a break down. So far every year that I have traveled back to the states I have had one major break down with my car. In fact I actually have anxiety over driving as it's no longer a matter of "if" just "when" I am going to have car problems.

In Japan, as I've stated before, I don't need a car. I absolutely love that fact. It's such a weight off of your shoulders to not have to worry about if your car will make it. The train runs 99% on time and can take me wherever I want to go. In fact I am typing this now from a location in rural Japan that I arrived at via bus and train. It's great and in the long run costs me less than gas, insurance, parking, upkeep, and the stress of wondering which highway I'll be broken down on.

So where does the bike come in? Well, although I'm a pretty healthy guy, eating right and getting exercise, I think I can do more. And in doing more I can make save and invest more money. As I've mentioned here in Japan most employers will pay for your train pass for you to come to work. This is a great benefit but at the end of the day I still end up at zero. They pay me $600 for a six month train pass and then I spend $600 on a six month train pass. I suppose I do end up a bit on top as I don't have the stress of a car. But what if instead I rode my bike to work? Now I can pocket the $600 and get more exercise. This will increase my health and hopefully decrease my health care costs in the future.

Other benefits and money saving effects would be on taking trips. My girlfriend also bought a bike and we plan on using them on the weekends to go to the beach and on long weekends to take extended tours. My dream is next summer to not travel outside of Japan at all and instead take at two to three week tour around Japan. I've lived here for almost five years and leave almost every summer. So the bikes get us out more (health, exercise) and we don't have to pay for the transport (saving money). This bike thing is starting to look good from almost every angle!

We did buy pretty expensive bikes (mine was about $1000 new and my GF bought a nice used bike for about $740) but I want these to be the last bikes we have to buy. Sure it's a lot up front but if I can bike to work everyday for two years not only does the bike pay for itself but it also nets me a nice little bonus! That's money I'll put towards investing and hopefully buying my freedom just that much sooner.

I'd like to keep track of how far I've traveled via "Run Keeper" but it will depend on another project I'm working on to reduce my cell phone bill.

Happy biking everyone!

At The Airport In Korea

My four week vacation to the states has come to an end and that means back to Japan and life as usual. Which includes time for blogging.

This was my first experience in North America with my new found mustachian ways. My trip opened my eyes (or rather brought back from memory) the strong current of consumerism the runs so rampantly through North America (yep I'm looking at you too Vancouver BC). Transportation, shelter, health, entertainment is all ingrained in spending money. It's not an easy stream to cross once you've been caught up in it.

But that doesn't mean I didn't try. For example the last few years when I came back to visit I always reactivated my cell phone so that I would have it to contact my buddies, family, and of course emergencies. On this trip however I decided to go without. I did this for a few reasons. The first, obviously, was money. To reactivate and use my cellphone costs me capital which I would rather invest. Also my girlfriend and I often travel between the US and Canada and have used the phone while roaming. This can really jack up the bill. Previous years saw me shelling out about $100 plus for just a voice plan and roaming.

Another reason was I wanted to see just how difficult it would be to rely on things like free wi-fi at shops, restaurants, and hotels. I have an iPhone 4 in Japan and can still use it in the states when I can find wi-fi. Free wi-fi hotspots are more prevalent in the USA and Canada than Japan. With email, Facebook, and iMessage, and Skype I'm just about covered for all my friends that I need to contact (not just in the USA but ALL my friends ALL over the world). I just let them know ahead of time that I don't have a phone but would contact them in one of those previously listed ways.

So how did it work? Well at my parents place where I spent most of my days I was able to contact my friends, family, and my girlfriend in Canada for absolutely no money. Even when I ventured into my little town I quickly found the shops or restaurants that offered free wi-fi. I would generally just connect send out my message and be on my way. I didn't really feel guilty about this one bit. Their huge bill boards and shop signs expose me to the advertising so I figure I'd expose my phone to their free wi-fi. If I really had to make a call I would use Skype which cost about 2 cents a minute. I'll admit the Skype was iffy at times but I wasn't relaying life or death medical procedures I was usually scheduling a meeting with someone (which is content for a different blog post).

Even in emergencies this worked out. For example, on our way out of Canada to the US the alternator on my sweet ass right hand drive Honda Prelude went out. I know, I know. Not so sweet. But we were just a block from a Holiday Inn and the nice guy manning the counter there let me connect to the hotels wi-fi to contact my parents and strategize a plan of action (THANKS JASON!)

Now the car was a whole other emergency (and a topic for a whole other blog post) but my point is is that I was able to find communication with just a little bit of leg work. I'm not saying people should absolutely go without cell phones. But do you really need that bloated voice and data plan?

In the service of full disclosure I did keep my cellphone with me and charged so I could dial 911, or if I really needed it I could dial 611 and reactivate it. So it's not like I was totally out on a ledge without a twig to stand on. But my point is is if you learn where the free wi-fi spots are (libraries, coffee shops, hotels, your friends house, etc.) you could probably make it without a plan at all (assuming you have a smartphone that connects to wi-fi). It's also not all that bad as I couldn't text and drive or talk on the phone in the car. Plus it felt good to put some distance between me and the internet.

This is the kind of unconventional thinking that can save you thousands of dollars over the years and I didn't really feel a drop in security or ability to connect with my friends. Maybe it won't work for everybody but I'm now challenging myself to find situations like this in my life and find a more unconventional solution. What about you?

June-July Spending Breakdown

It's the 16th of July which means another pay check has come and gone as has another month of expenses.  Actually I got paid on Friday the 13th but have been lazy.  This month I was hit with a negative wealth bomb but also had a bit of extra work come in.  I also made a little bit of money selling stuff.

Income:
Job:  ¥321,647
Part Time Job:  ¥4,653
Other:  ¥35,000
Total:  ¥361,300


Not a bad month for income.  The other category here includes getting paid for English interview tests. This comes up 3 times a year and this was my second time this year.  The next time will be in October or November.  My part time job wage was very low as they started to take my ward taxes out of this paycheck.  I have since changed that and it is now taken out of my normal job paycheck.  (See the above link on negative wealth bombs for more on this).

In an attempt to start getting rid of things to simplify our life I did sell my Nintendo DSi.  I hadn't played it in over a year and I own a Playstation Vita now so it's not like I'm on a desert island game wise.  We are finding it more difficult than I thought to get rid of things.  A topic for another article.

Expenses:

I really took a hit this month in many areas.  First, rent.  When we moved into our apartment the company was running a deal where they split up the deposit over three to five years.  You pay 1/3 when you move in, another 1/3 in two years, and the last 1/3 after five years.  In Japan actually this is great.  Deposits can range anywhere from one month to three months rent.  Usually there are other things you have to pay as well like "key money" or a very vague "thank you deposit."  These can usually range as well from one month rent or more, and these are non-refundable.  The key money is a way to say "Thanks for a key!"  and the "thank you deposit" is like saying "Thanks for the opportunity to pay you rent every month."  I've been very lucky and been able to avoid both of these money traps ever since I've moved to Japan.  I don't know how Japanese people find it acceptable to pay these fees which to me are just outrageous cultural hang nails possibly from a time when housing was sparse and landlords could gouge you for every yen you had.  But that is not the situation anymore, at least not in my head.

Eating out was another source of financial drag.  This month included a birthday party, two going away parties, and the regular trips to ramen shops.  I also took my GF to the dentist this month.  She doesn't have insurance so just getting checkups are expensive.  But I see it as preventative health care.  If they can catch something (and they did) I think it's worth it.  Neither one of us took great care of our teeth growing up (I take most of the blame but I also blame the lack of any health care whatsoever growing up) and so if I have to put even a million yen (about $10,000) into our teeth over the next ten years well then that is the price of learning to take care of your teeth.  I'd like to be able to enjoy steak when I'm 85.

I also spent more on entertainment.  I took my GF out to a baseball game.  This also contributed to increased dining out on beers.  We did play it smart and brought all of our food from the grocery store.

How did it look from a day to day perspective?

As you can see the beginning of the month was when i was hit the hardest.  This was rent.  The scale makes it look not so bad but many of those spikes are ten thousand or twenty thousand yen days (about $120~$250).  However like last month there are still quite a few days where I didn't spend much money at all.

Total Income:  ¥361,300
Total Expenses:  ¥226,133
Total Saved:  ¥135,268
Savings Rate:  37%
YTD Savings Rate:  45%


It's looking more and more like I won't be hitting my goal of 65% savings for the year.  I'm looking at ways to get my expenses down so I can possibly eek out another 2~3% a month.

Next month I'll actually be heading back to the states as it's summer break now here in Japan.  I know I don't make as much as many other bloggers posting about their personal finances, but I do have to say I'm very lucky to work in education.  Six weeks paid off in the summer is pretty incredible.  After all this whole f-you money concept is about getting my time back.

While in the states I plan on looking at buying a road touring bike to bring back to Japan.  I'd like to start biking to work increasing my health and possible giving me a big fat bonus every few months (on that when it happens).  I realize these purchases are going to hit my savings rate but in the long run I think it will be worth it.

June Dividends

I haven't done a dividend post in a while mainly because my dividends all pay out at the same time.  All of the stocks I've bought all pay out in the March/June/September/December time frame.  I'd like to diversify that a little bit so I don't have to wait so long between getting payments.  But it is cool to have a big splash of payments all come in within days of each other.  One day I hope this will happen every month.

Without further delay however lets get it on!

June Dividends:
Coca-Cola  $7.65
Johnson and Johnson  $9.23
McDonalds  $10.50
Pepsi  8.06
Vanguard REIT ETF  $7.27
Vanguard Balanced Index  $14.56
Vanguard Total Index  $14.63

Total $71.90

Not too bad I suppose for only being in the market six months.  This is about $30 more than I made in March and brings my total dividends for the year to about $100~$110.  There are still two more payments to go for the year not only for these stocks but for anything else I purchase from here on out.  At this rate I should break two hundred dollars but probably not my initial goal I set out for myself of $500 dollars. 

It's interesting to watch this money grow.  On top of the dividends I've also watched as the stock value has gone up for many of my holdings.  At firs this always made me very excited but now I wish that price was actually lower so I could invest more at a lower price.  I have far fewer shares than many other people out there writing personal finance blogs but I like that.  I like being the underdog.  And I suppose I'm only the underdog if you believe that acquiring more money than the next guy is the end game.  I don't know that I quite believe that.  I'm only in a race with myself and the only guy I gotta beat is me.  After all the next guy could be making $40,000 a month in dividends but if he doesn't know how to live frugally or isn't trying to retire early then I don't think there is any reason to bother comparing.  We are chasing different goals.  My goal:  Feed that horse till I can ride him. 

Negative Wealth Bombs

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.  

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.

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:

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?

Why I Don't Miss US TV (or What I Learned About Investing On Accident)

I think that I have said this before but I really enjoy living in Japan.  My job is challenging but not stressful.  The transportation system is, by itself, reason to build a 'stach here.  Oh, and you know what?  The Japanese themselves are pretty nice people.

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.

I think a good financial investing program would actually be very boring.  It wouldn't be about one guy trying to beat another guy with his voice, it would be about the news and how it could effect the market.  What are the Economic indicators in plain English.  Afterwards the decision would be left up to the individual investor (see!  individual accountability is in there too!) to do his due diligence and come to a decision.

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.