Foreigner's Finances

Another ALT (assistant language teacher) and I were recently talking about post-college life. He’s been out of college for a little over a year, while I have just been out for five months.

I told him how I was really enjoying the freedom and doing what I wanted for the first time in my life. For 22 years I felt like I was doing what was expected of me, and was never doing what I truly wanted. That finally changed when I got on the plane to Japan in July.

I told my friend I was enjoying not having to go to the library to study for a test, or having to keep myself awake through morning classes, but I mostly enjoyed coming home at four or five in the afternoon and being completely done with work and obligations.

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Last week we explored the numbers behind credit card debt. This week we’re going to take a look at how compound interest works in your favor by giving you more money for free.

With the ups and downs of the economy over the last twelve months, it’s difficult for anyone to know what to do with your money. Invest in the market and ride the roller coaster, or keep it at home where you can see it and no company will steal it?

The historical returns of the market, mixed with inflation, shows that keeping your money under your pillow isn’t worth it and sometimes you need to take some risk. Inflation has averaged around 3% a year so your money is losing value everyday it sits in your wallet or in a safe at your house.

The power of compounding interest is something that cannot be ignored. At first, it sounds like another boring financial term like dividend or exchange-traded fund, but compounding interesting is your best friend, and when you see it in action it really changes your mind about keeping your money in a safe at home. Picture your money giving you free baby money as a thanks for putting it in a savings vehicle.

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I don’t get spam.

I get that people are tricked into purchasing items through spam and that’s why it exists, but it’s so much easier to be a trustful business.

When you insert trust into your business you immediately gain the attention of consumers who are willing to spread your good business moves to their friends, co-workers, and internet friends.

Has anyone ever tweeted their experience with a spammer?

“Hey, got ripped off by a spammer – these pills didn’t make me gain 15 pounds in 2 hours – but you should still try them out!”.

When you treat consumers right, when you really WOW them, you will gain 10x more customers on the back end due to referrals.

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My financial turnaround began a little over a year ago. After reading some articles online about personal finance, I was persuaded to head to the local library to pick up some personal finance books.

It was the summer before my senior year and I was having one of those, “oh my god, I’m graduating in a year moments”. Life transitioning moments like a graduation, marriage, birth of a child, or purchase of a house are usually the sparks that lite the change in many people’s personal finance lives.

In hindsight, it was one of the best decisions I’ve ever made. As soon as I was finished with the first book – it was The Automatic Millionaire by David Bach – I was hooked. I wanted to tell everyone what I had learned and have them be as interested in personal finance as I was.

The trend I began to notice in the personal finance books I was reading was that every now and then certain facts, graphs, or insight would show up that would stop me in my tracks and overhaul the way I viewed money forever.

These moments are much more much life-changing than a friend or family memeber just saying, “hey, you should pay off your credit card debt.” They are moments of clarity, of education.

Today, we’ll dive into some of these facts of clarity when looking at information on credit card debt and how much paying the minimum is really costing you every month.

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My girlfriend and I have been busy with some big purchases. These are the types of purchases that if we play our cards right, can provide a load of savings and allow us to avoid worrying about the pointless savings of <$5 at the grocery store.

I’ve quickly learned why so many people struggle with the big purchases like a house or car: they’re incredibly stressful and time-consuming.

The amount of information consumed during research mixed with the language barrier has made it an exhausting experience, and I can definitely see why people get tricked into a mortgage or car loan they can’t handle. Information overload to the max.

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The availability of online banking, Mint, and stock portfolios at my finger tips made me over manage my finances in America. I evolved from occasionally checking my debit card statement to checking four to five different accounts daily. I had too much control. This was a huge waste of time and needed to change. Luckily, dealing with my finances while living in Japan has changed my ability to manage money and forced me to become more patient.

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The day I sat down and decided to track my net worth was the day my finances turned around forever.

As a college senior, I was finally able to see how quickly money was disappearing from my checking account. At the time, I had two part-time jobs and thought my income was more than enough to cover my expenses, while still having a good amount leftover for savings. I couldn’t have been more wrong.

It turned out I was burning through my paychecks and barely saving anything every month. After reading some personal finance books, I created a simple net worth spreadsheet in five minutes. That decision happened one year ago and I fully believe it will save me hundreds of thousands of dollars in my life.

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