Komakai cash flow planning for the cross-border professional

I’ve been intrigued lately by some good pieces on gaijin personal finance. First there’s the blog Frugalista Japan, which is all about saving money and has some interesting tips to share. Then came this great piece on budgeting for the inaka lifestyle by Deas at “Rocking in Hakata.” And, of course, our own Adamu wrote recently about borrowing his way out of debt.

This stuff is great. For those of you who don’t know, I work in structured finance at a bank in Tokyo, which is an inherently unstable job these days (lots of going-away parties lately). To make matters worse, although my salary is pretty decent, going through three years of grad school gave me several figures of student loan debt to pay off, and I have to wire money to the US on a regular basis to cover these bills. So money management has been in the forefront of my mind for a while.

I started out keeping track of my accounts manually, but this carried three significant drawbacks. One was that it took a hell of a lot of time. One was the ongoing annoyance of fluctuating exchange rates and wire transfer fees, which really add up if you are doing things on a paycheck-to-paycheck basis. The other was that I would sometimes miscalculate something, or overlook a pending payment, and end up overdrafting one of my accounts, which can be REALLY expensive.

If you are rich, you can get an account with HSBC Premier and avoid many of these headaches. I am not rich, though, and even if I were, I would not want to stick 100 grand of cash into an uninsured account. Not in this economy.

Fortunately, the right accounting solution was in front of my eyes the whole time. Structured finance — whether in the form of asset-backed securities or syndicated loans (i.e. loans extended by a big group of banks rather than a single bank) — often revolves around the concept of “waterfalls.” This is the notion that some constant flow of money (business revenues, mortgage payments, etc.) trickles into an account somewhere and then gets divided among a bunch of recipients in a predetermined order on a regular basis, much like a multi-level waterfall pours water in different directions. For instance: “Bank A gets paid interest on its share of the loan, then any remainder gets split evenly between Banks A, B, C, and D, then the company which took out the loan gets to keep the rest.”

This concept works pretty well when you are getting a regular paycheck and need to pay bills in two countries. I set up a spreadsheet using Google Docs, and now I have an idea of exactly what to do with my money each month. I’ll start with the Japan side.

                        4/19/09   5/19/09
Last Balance            xxxxxxx   xxxxxxx
Paycheck          19th  xxxxxxx   xxxxxxx
Other Income                       57,550
JAL Card          27th   11,800         0
View Suica         4th  207,431    60,000
E-Bank Deposit          158,000   183,000
Rent              Last   90,000    90,000
Extraordinary             8,000
Discretionary            90,000    93,000
Wire to US                        199,040
End JPY Bal             xxxxxxx   xxxxxxx

Each column represents the cash flows from one incoming paycheck (I get paid on the 19th) and any extra income, such as my commuting allowance or the upcoming teigaku kyuufukin bonanza. I pool my yen in the bank account where the paycheck comes in, and my two credit cards automatically pull payments from that account. (My utilities get billed to these cards as well; the April payment is high because I put a few sizable nomikai on my card for the points.)

Then I stick spending money in a separate account with eBank, which I use because of its awesome cash card (it works as a Visa card and can pull money for free from Yucho and 7/11 ATMs) and easy online banking interface. The “E-Bank Deposit” line gets automatically calculated based on how much I plan to spend in rent, extraordinary expenses and discretionary expenses.

The “discretionary” line is my pocket money, which I use for groceries, restaurants, booze, gadgets, hot dates or whatever else comes up during the week. I keep this budgeted at 3,000 yen per day/21,000 per week for simplicity’s sake: it varies in monthly amount because the months have slightly different lengths. Then there is a line for “extraordinary” payments: gifts, travel and other potentially big-ticket items which I know are coming up.

Finally, I have to send money to the US to pay student loans. The rather random-looking “wire to US” number comes from the bottom half of my spreadsheet, which looks like this.

                        4/19/09   5/19/09
USDJPY rate               99.56     97.52

Last Balance            xxxxxxx   xxxxxxx
Wire from JP                     2,000.00
Interest                   2.48      0.44
Wire Fee                            18.00
Chase SLS         Last   389.62    389.62
KHESLC            10th   456.00    456.00
Chase CC          15th   400.00  1,400.00
Other Spend              405.64
End USD Bal             xxxxxxx   xxxxxxx

It’s easiest to read this from the bottom. I have two student loan accounts, which draw from my US checking account automatically every month, as well as a US credit card which is still carrying the bill from my last trip to the States. I simply set up the spreadsheet to calculate the ending balance for each month based on the starting balance and the scheduled payments in between. Then, whenever the ending balance comes up negative, I drop in a big wire transfer to top it up.

The spreadsheet automatically updates the USD/JPY exchange rate based on Google Finance data (one of the advantages of using Google Docs for this purpose), and the formula for the outgoing transfer amount accounts for the transfer charge and the rate spread. So whenever I go to make a transfer, I overwrite the auto-updated exchange rate formula in the spreadsheet with whatever exchange rate was actually used (generally the same one if I am quick enough), and all the numbers line up perfectly.

The beauty of this system is that it makes it really hard to run out of cash or miss a payment on any of your accounts; you can simply tweak a couple of numbers (like wire transfer amounts or credit card payments) to keep everything in the black in any given pay period. Setting the spreadsheet to make negative numbers bold and red helps a lot. This also makes it easier to game exchange rate fluctuations, as you can move your transfers around based on your own estimates of when the rates will be good.

Just to be even more komakai, I also set up a running balance sheet for myself so that I can track how my net worth is doing. Although I started out doing this on a monthly basis, I switched to quarterly accounting recently after reading Nassim Taleb’s book Fooled by Randomness. Taleb makes many good points in this book, but one that stuck out in my mind is that keeping a very tight eye on financial indicators which are mainly relevant in the long term (stock prices, property values, etc.) is likely to cause more stress than the benefit of the additional information can justify. Personal net worth is one such indicator: it’s nice to know when you will pay off your debt, or how much dough you are set to hoard by retirement age, but you don’t need to know it on a monthly basis, as those months where you buy a plane ticket, give to charity or have a wild night in Roppongi are likely to turn you off to the whole idea of accounting for yourself.

Paypal coming to Japan

UPDATE: Just to be clear, this article is about an expansion of Paypal’s services in Japan  into bank remittances. Paypal already offers some services in Japan linked to credit cards. Thanks to commenter Adrian for pointing that out.

The Nikkei has an article noting that thanks to law revisions set to pass in the current Diet session, restrictions on the remittance business will be substantially relaxed in a move that will finally allow Paypal to offer its services in Japan. The article contains an example of how sending money will change starting some time in 2010:

Current money transfer services offered by banks are not ideal for sending small amounts of money overseas. For example, a major Japanese bank charges 5,500 yen for wiring money to a U.S. bank account regardless of the amount.

PayPal and other online money-transfer services offer a cheaper, more convenient alternative to traditional bank wires. High fees have stopped a grandmother in Nagoya from sending a 5,000 yen birthday gift to a grandchild in the U.S., since she would have to spend more on fees than the amount she is sending.

If an online money transfer service such as PayPal can be used, the grandmother probably would have sent the money without hesitation because fees for sending 5,000 yen to the U.S. using that service come to no more than 200 yen.

This sounds tempting, but the numbers presented are misleading, especially in this English-language summary of the original Japanese article.

According to the print edition of Nikkei, Paypal will charge fees of 1.9-2.7% of the amount, plus an additional 30 yen fee, in contrast to banks which take a flat fee (usually around 4,000 yen, but Lloyds charges just 2,000) plus a foreign exchange fee of around 1%. So while the service looks cheap for small amounts like the example above, in reality the fees are cheaper than banks only up to around 150,000 yen, according to a company spokesperson quoted in the article (vs. Lloyds that number falls to 100,000 yen). For debt slaves like me who routinely send 200,000 yen overseas each month, this would make no difference at all.

And of course Paypal’s service has other benefits besides overseas remittances – it’s mainly a convenient way to pay for online auction purchases (without giving out credit card info), so maybe it will catch on here as well. Other benefits touted by the article included 24-hour service and “lower fees” though they did not present examples as to how the fees for domestic transfers would be cheaper.

Plus other businesses such as NTT Docomo are planning their own services, so maybe at some point someone will find a profitable way to make overseas remittance cheaper.

In defense of unicorns

I have noticed a recent habit of political pundits to mock perceived idealism and naivete with phrases like “rainbows and unicorns.” 

For instance, a commenter on the latest episode of The Young Turks, in explaining that Arlen Spector has never been principled (he was the guy who voted for a bill that he himself argued would set human rights back 700 years), noted that “he was not voted in on rainbows and unicorns.”

In a sign of just how much of a standard cliche this has become, in the Washington Post former CIA Director Porter Goss makes the topsy-turvy argument that making the torture memos public has jeopardized national security: “The suggestion that we are safer now because information about interrogation techniques is in the public domain conjures up images of unicorns and fairy dust.” (Has anyone actually argued that the move makes us safer? I thought the whole point was it is not worth it to torture people even if it does make us “safer” and that the people who pushed for and praised releasing these memos see it as a step in disclosing mistaken and illegal policies that were done in our name)


But you know what? Unicorns are nothing to mess with! It only takes a cursory reading of the animal’s Wikipedia page to prove why:

1. Unicorns are as strong as the Lord: The bible (or rather its translators) considered unicorns “untamable creatures” and noted that God himself was only as strong as a unicorn:

“God brought them out of Egypt; he hath as it were the strength of the unicorn.”–Numbers 23:22

2. The ancient Greeks and Romans considered unicorns to be both real and fierce: The Greeks, for all their polytheism and fantastic mythology, believed that unicorns really existed somewhere in India:

Pliny the Elder mentions the oryx and an Indian ox (perhaps a rhinoceros) as one-horned beasts, as well as “a very fierce animal called the monoceros which has the head of the stag, the feet of the elephant, and the tail of the boar, while the rest of the body is like that of the horse; it makes a deep lowing noise, and has a single black horn, which projects from the middle of its forehead, two cubits in length.”

3. Unicorns are so insane that they must be placated with virgins to stop their bloodlust (see above painting): In the middle ages, unicorns were used to mix pagan stories with Christian virtues, such that “The original myths refer to a beast with one horn that can only be tamed by a virgin maiden; subsequently, some Catholic scholars translated this into an allegory for Christ’s relationship with the Virgin Mary.”

Moving into Renaissance times, Leonardo Da Vinci had this to say about how to hunt a unicorn:

“The unicorn, through its intemperance and not knowing how to control itself, for the love it bears to fair maidens forgets its ferocity and wildness; and laying aside all fear it will go up to a seated damsel and go to sleep in her lap, and thus the hunters take it.”

Bottom Line 

This “unicorns are fuzzy cute happy creatures” concept apparently originates in more modern imagery, particularly the My Little Pony animated series and toys and some other “fairy princess” pop culture. A product of the 1980s, My Little Pony offered saccharine-sweet entertainment for young girls that could not have anticipated the ballooning of ironic humor in the 90s and 2000s. Hence, when Homer Simpson uttered this classic, oft-repeated line:

Ohhh look at me Marge, I’m making people happy! I’m the magical man, from Happy Land, who lives in a gumdrop house on Lolly Pop Lane!!!!…… By the way I was being sarcastic…

it was only a matter of time before someone added a unicorn in there. But as we start to retreat from irony a bit as a society (see the return of earnest saccharine with Disney hits like High School Musical and Camp Rock, along with South Park’s reaction), it might be a good time to stop equating unicorns with frivolous and naive idealism and recognize their historically badass mythological status. I mean, honestly – how happy and nice could an enchanted animal with a deadly sharp horn actually be?

Biking up and down Arakawa

I have finally discovered what a great service Flickr is! You can check my photos here.

My first slideshow for you is a set of pictures I took this afternoon on a bike trip up and down a fairly nondescript section of Arakawa, spanning Adachi and Arakawa wards.

The route was a circle on either side of this section of the river:
View Larger Map

Like many big rivers in Japan, the Arakawa has a paved road along the shore and is lined with dozens of athletic fields, open spaces, marshes, parks, and homeless encampments. It’s refreshing to see all the energy of that area- baseball players, soccer moms, skateboarders, hip-hop dancing high school kids.

Japan, Czech Republic, and Spain: Foreigners, we’ll PAY you to leave

Japan made world headlines in the last few weeks as it began a program to pay second generation Latin American immigrants to go home. It may have been the first domino in a chain of rich countries — now the Czech Republic and Spain are offering immigrants a similar “buyout” if they’ll leave and promise not to come back:

During its manufacturing boom earlier this decade, the Czech Republic wooed immigrants with plentiful jobs and comparatively higher wages. Now the Czech government is paying them to go back home…

Other countries in Europe have reacted similarly, amid rising unemployment. Last November, Spain’s Socialist Party government launched a program to send 100,000 immigrants home. Those who promise not to return to Spain for three years get six months of unemployment benefits — an average payout of €14,000 ($18,500). Some 4,000 immigrants have taken the cash.

The catch, of course, is that once the immigrant leaves, they promise not to come back. But from a practical standpoint, it’s not quite that simple, especially in the EU, where a migrant can take the cash and mozy into another part of the EU.

Europe has a history of offering immigrants cash to go. After World War II, countries including Germany and France recruited thousands of guest workers to help rebuild shattered economies. France launched the first of these programs in 1977, and thousands of immigrants went home.

But there were drawbacks. Many immigrants who took the cash later broke the ban and returned to France. And apart from making them feel unwelcome, the payments often weren’t enough to entice workers who felt job prospects back home remained bleak. Such complications also bedevil the Czech Republic’s program.

You’ve at least got to hand it to the Europeans for being sensitive about the topic. Czech NGOs and government officials stress that, in distributing information on the buyout, they’re only informing immigrants of their options. Japan is being borderline dishonest. When the plan was announced, some thought that the package was almost a paid family leave scheme, and the promise never to return was only fine print.

Batman saves Bangkok

During one of the “red shirt” riot scenes in Bangkok on 13th April 2009, when a gas truck was hi-jacked and reportedly threatened to release the flammable contents near Din Daeng Area, an unknown individual emerges as Batman. The super hero was able to divert the attention of the protesters, opening an opportunity for the rescue team to retrieve the gas truck.

This is all kind of confusing, but I am glad Batman saved the protesters.

Spanish flu was not Spanish

With the swine flu suddenly in the news, some might wonder why the authorities are so frantic to stop the disease in its tracks. For context, it might be worthwhile to mention the modern world’s worst disease outbreak, the deadly Spanish flu of 1918 that killed tens of millions. 

But ironically, the “Spanish flu” almost certainly did not originate in Spain. 

The only reason it acquired the name was because of Spain’s neutral position during World War I. Other countries at war instituted press restrictions, and the decision was taken not to report widely about the flu epidemic out of fear it would hurt morale. Since Spain had no such restrictions it was the only country in Europe reporting an outbreak, hence fooling observers into thinking that’s where the flu had come from. 

(Source: Read in yesterday’s Yomiuri)

A History of Violence

Yesterday, I was supposed to go and eat lunch at either the infamous coffee ramen joint or Tokyo’s oldest horse stew restaurant with other contributors of MF. Instead, I was called on a family excursion to a different type of interesting cuisine — Banya, a cafeteria next to a local fish market in southern Chiba managed by a fishing union cooperative that has recently gained cult status among gourmet followers. The restaurant, which seated hundreds, was crowded, and for good reason — it was delicious. But the grotesque nature of the meal made me think about the inherent violence in the way food is often served in Japan.

In the West, it’s no secret where meat comes from — animals. Often the beasts are harvested and processed in the same way as agriculture. And there has long been a certain Puritan virtue associated with vegetarianism. As many as 20% of the U.S. population believed to be vegetarian. Yet we rarely see evidence of the kill in our meals. Most meat is well processed. We rarely see evidence that the meat we eat was once alive.

Vegetarian advocates have long said that, if the public was aware of the violence inherent in consuming animal flesh, they would realize that “meat is murder” and more people would be vegetarian. The case of Japan, where there is much violence in food yet low prevelance of vegetarianism, suggest otherwise. In much of Japan’s cuisine, the violent inherent in meat is more obvious, and this is no more so the case than with raw fish. At yesterday’s lunch we had an assortment of freshly slaughtered fish, often prepared ikitsukuri style, freshly slaughtered and with the carcass, sometimes wriglign, on display on the same plates from which we ate. Read more below, but viewer discretion is advised.

Continue reading A History of Violence

Difficulties for rare names in China

Just two weeks ago I posted a link to an article about a Taiwanese “collector” of rare Chinese family names. While his activity may seem to be a mere eccentric hobby, documenting these names and their lineage does have important historical significance, as seen in recent moves by the Chinese government. According to a NYT article from April 20, China has been phasing in an electronic ID card system which does not support many of the exotic antique characters used in rare family names, and their solution has been to ask people affected to change their names.

One of the main examples given in the article is the character [ed: oops, actually the character they reference was too obscure for me to enter using either the Japanese or Chinese IME. I confused it with the still-rare but far more common “驫”. 驫 (骉 simplified, as it would be written in the PRC), pronounced “Cheng” according to the article, but “Biao” according to the dictionary. Apparently the software used for the Chinese ID system does not support this character, despite the fact that I had no problem drawing it on the IME pad in Windows Vista using my house, and it can even be found in the Japanese language Wiktionary.

(Before I go on, I want to note briefly that the word 漢字, meaning “Chinese character” is used in Chinese, Korean and Japanese, respectively pronounced hanzi, hanja, and kanji. When using one of these three words I am specifically referring to the use of Chinese characters in that country/language.)

According to the article, the computer system currently in use by the government supports 32,252 hanzi, out of well over 50,000 found in the most comprehensive classical dictionaries. The government is currently working on a restricted list of characters approves for use in modern Chinese writing, which they estimate will exceed 8000 characters-a significant drop from even the current de-facto list of 32,252.

While these sorts of legal restrictions on one’s very name name may sound stereotypically totalitarian for the communist People’s Republic, in fact both Japan and Korea have had similar restrictions for a long time. In Japan, the Law on Household Registration (Koseki-hou) governs the kanji which may be used in personal names. Under current regulations, kanji for personal names may only be chosen from either the Joyo Kanji (Kanji for Daily Use, the list that forms the basis of public school Japanese education, Japanese proficiency tests, etc.), consisting of 1945 characters, or the  983 character Jinmeiyou-kanji (Kanji for Use in Personal Names). Both of these lists have been revised, usually expanded but sometimes with deletions, over the years.

There was an amusing incident during the 2004 round of additions to the Jinmeiyou list. The committee proposed an initial list of 489 additions purely based on statistical analysis of the commonality of various characters in modern Japanese text, and then posted it online to seek comments. While many of the names were popular, 9 of them were the target of objections from the public, and were removed from the list. Those 9 kanji were: 糞(feces) 屍(corpse) 呪(curse, magic spell) 癌(cancer) 姦(rape) 淫(lewd obscene) 怨(hatred, grudge-as in the horror film) 痔(hemorrhoid) and 妾(concubine). (Bonus word trivia: two of these kanji combine to make the word for necrophilia.) As a foreigner who has only been studying Japanese for around 8 years, I recognized all of 9 of these on first glance and could read all but two(淫 and 妾), so I would assume that any adult native-reader of Japanese knows all of these moderately obscure characters and many hundreds more, despite their not being on the official government lists.

(The current Jinmeiyo list may be seen conveniently at Wikipedia.)

In South Korea there are 5151 characters allowed, even though most people normally write their name in the natively developed hangul alphabet, which has replaced hanja in everyday use. While traditional Korean family names are all hanja, personal names may also contain hangul. Interestingly, the Korean list of name characters is written using the same Chinese characters as the Japanese one-인명용 한자(人名用漢字), although like other shared Sinic words it is pronounced in the Korean fashion “inmyong yo hanja”.

North Korea legally eliminated hanja from their language some time ago, so even though most names can be traced etymologically to Chinese, all legal names today are written in hangul in all circumstances.

Vietnam was also historically a Chinese-character culture (known locally as chữ nôm), but they abandoned it early in the 20th century. While as much of their vocabulary is descended from Chinese words as in Japan or Korea, today they write purely in the Roman alphabet and the original Chinese characters for words or names are found only on old art or documents, or in dictionaries.

Taiwan, as befitting its role as the bastion of traditional Chinese writing, has no restrictions on hanzi name use. Hong Kong and Macao, which while part of the PRC also maintain traditional writing and also have a separate legal code from the PRC, presumably also have the same level of name freedom as Taiwan.

Now, what about immigrants? When I was first studying in Japan as an undergraduate, I know a girl whose name contained the hanja “妵” (pronounced “ju” in Korean), which is not just absent from the Japanese name-kanji list, but also not even found in standard Japanese fonts or dictionaries! On her Foreigner Registration Card, this character was pasted in using an obviously different font, as it couldn’t be typed normally. While I do not know the actual law, I assume that this is the traditional custom for dealing with domestically disallowed hanzi/hanja names in Japan, or domestically disallowed hanzi names in South Korea. (In South Korea today, Japanese names are usually rendered in hangul based on their pronunciation, and the actual kanji are ignored.) However, when a foreigner naturalizes in Japan their legal name must follow the local rules, which may force them to adopt a less exotic name. Of course, even should they be forced to change their name, nothing will keep them from using the original one in all circumstances except legal documentation.

To summarize, the freedom of choice for Chinese characters in names of the four countries which still use such names is as follows:

Taiwan* > China > South Korea > Japan

*Hong Kong and Macau may be at this level, confirmation needed

Although the NYT article implied that the imposition of restrictions on the hanzi in names is threateningly totalitarian, in fact Chinese citizens will still have FAR more options than Koreans or Japanese even if restricted to the 8000+ character list, and South Koreans today have nearly twice as many options as the Japanese do, despite that fact that most South Koreans can hardly read any but the most common of hanja. Of course, it is only in Japan where one has the option of choosing a reading for ones name that has no historical relationship whatsoever with the kanji themselves.