My first full month in Japan is officially over.
This month I’ve been mostly staying in business hotels (small, no-frills hotels that cater to budget-conscious business travelers). I try to maximize my savings by changing hotels every few days when rates predictably spike for weekends, booking through Hotels.com which gives a free night after every 10 stays (equivalent to 10% discount on all bookings) and buying Hotels.com gift cards at discounted prices (10-20% off, depending on what promotions are ongoing) and collecting cash rebates for the purchases (3-20%, depending on promotions). Using these techniques, I am able to average about $60 / night on my rooms.
Nevertheless, I have found a short-term rental apartment through the rest of my stay. The cost comes out to be slightly cheaper than hotels, it gives me a little bit more living space, and eliminates the need to change and book hotels every few days. It also gives me a kitchen so that I can cook my own meals and buy ingredients in larger sizes for less. Hopefully this will decrease my expenses over the next 6-8 weeks.
In other financial news, now that I’ve left my company I have been rolling over my HSA, 401k, and pension plans. So far I’ve been able to finish the 401k, while the HSA and pension are still ongoing. HSA and pension each are about $10k in value, which are much smaller than my 401k, so I’m not in a huge hurry to have those finished. I was able to roll my 401k into my IRAs, with almost all of it going to my Traditional IRA. When I first started working, I made a few Roth 401k contributions before I realized that Traditional was better, so I had a few hundred dollars’ worth of after-tax contributions that were rolled into my Roth with the rest into my Traditional IRA. I think I got a little bit lucky with the market timing during the transition as the market declined quite a bit in May and my 401k money was out of the market for much of the month.
Since this is a transition period in my career, I concluded that I am less willing and able to take risks with my investment, and as such have changed my investment allocation. Previously my allocation was almost entirely stocks (47.5% Total US stock market, 38% all-World ex-US stock market, 8.5% REIT, 6% US Total Bond market). Per Portfolio Visualizer, during my working period this had returns of approximately 9.1% annually, with standard deviation of 10.7%. While this was excellent performance, now that my future income will likely be substantially lower (or nearly zero) for the near future, I am less willing to hold such an aggressive asset allocation. As I am now prioritizing capital preservation until my income picks up again, after a lot of researching I have decided to use the so-called Pinwheel Portfolio allocation. At first I was hesitant to make such a substantial change from my previous allocation, but after examining its past performance I am convinced that it is better at reducing losses / volatility (at the expense of slightly lower average returns, of course) than some more conservative variant of my previous allocation. Past returns do not necessarily reflect future performance, but it stands to reason that by holding a larger variety of assets with low correlation to one another will reduce portfolio volatility more than they reduce returns, and is thus on the efficient frontier of possible portfolios. I personally don’t mind the slight extra complexity such a portfolio entails (I actually enjoy it) and am looking forward to watching its performance going forward.
That being said, here’s a look at my spending for May:
|Rent||$2,234.78||Rent for short-term apartment for June and July|
|Cell Phone||$27.61||Next 30 days of cell phone in Japan|
|Natural Gas||$33.37||Last payments for my old apartment|
|Electricity||$28.92||Last payments for my old apartment|
|Water||$33.11||Last payments for my old apartment|
|Groceries||$165.56||My non-restaurant food spending in Japan. Kind of high, but will go down now that I have a fridge and longer-term lodging.|
|Car Insurance||$0.00||Nothing this month|
|Health||$5.62||OTC medicine in Japan|
|Other||$34.88||Mail forwarding and other miscellaneous expenses|
|Necessary||$2,673.51||Above average, but mostly due to advanced rent payment|
|Restaurants||$364.81||Restaurant meals in Japan.|
|Travel/Parking||$2,317.87||Hotels, plane tickets|
|Software/Games||$12.59||Bought an app|
|Business||$0.00||Nothing this month.|
|Other||$16.75||More expenses for my personal project|
|Discretionary||$2,725.94||Above average, but will go down next month now that I'm no longer in hotels|
|Total Expenses||$5,399.45||Above average|
|Gross Income||$1,134.44||Rent deposit refund, belated birthday gift, cash back portals|
|Net Income||$1,134.44||Below average|
|Savings Rate||-375.96%||Doesn't really make sense now that I essentially have no income. Might stop reporting this going forward.|
|Net Worth||$290,814.22||Most of this decline is due to the market drop in May, not my spending. I still have some money in limbo so this should go back to about $300k soon.|
Projected time to FI (assuming 6% growth and 4% withdrawal rate): 4 years, 8 months.