As I’ve mentioned before, a monthly budget in Japan is very different from one in America. One of the things that unfortunately isn’t different is my income. Despite the Dollar being stronger than the Yen, and despite a $10k salary increase, my nett monthly income is the same thanks to taxes I didn’t have to pay while living and earning overseas. This will inevitably involve some budget adjusting.

So since I’ve started this new, inefficient station in life, I’ve been focused on developing a good budget. Today I came across some posts on Zen Habits about financial management. My favorite one discussed 10 ways to simplify your budget. Specifically, I became interested in the “60% Solution”, i.e. your regular monthly expenses should be no more than 60% of your total income, another 30% should be divvied up evenly between 3 types of savings plans, and the final 10% is left over as “fun money”.

I did some quick figuring and realized my regular monthly expenses are a whopping 78% of my income! There are two ways I could make the 60% figure work:

• Keeping my income the same and shaving $420 off my expenses.
• Keeping my expenses the same, and generate $700 with another income stream.

Let’s see what flexibility I have in my expenses.

Mandatory Fixed Expenses
Rent, car payment, car insurance, and internet. Combined, these make up 70% of my expenses. Unfortunately, there is no simple way to reduce them.

Mandatory Variable Expenses
Utilities and gasoline. I could be frugal with electricity and water, and drive around even less than I already do, but the savings would be minimal.

Truly Optional Expenses
The only optional expense I have is a payment I make on a living room set. Aside from my mattress (no bed frame yet) and a computer desk, it’s the only furniture in my house. I could return the furniture and have an empty living room. This wouldn’t bother me, but even then I’m only saving $120 a month.

Housemate as Cost Cutter
Since rent makes up over half of my monthly expenses, it makes sense to target it first. Moving is a bad option because I doubt I could find a place as nice as what I have now, and the savings would be null after sacrificing my deposit for breaking the lease agreement. The only option is finding a housemate. If someone else was paying for half of my rent, utilities, and internet, it would be sufficient to reduce my total expenses to 58%. Awesome.

(Aside: When doing the math for this, I came across a weird inconsistency. If I added the housemate money to my income, my current expenses come out to 65% of the new total income. But if I subtracted the housemate money from my expenses and left my income the same, the reduced expenses only come to 58%. In my head it seems that the figures should be the same no matter where you put the new money, but on paper the percentage is differnet. Can someone explain this?)

To these ends, I’ve made up a great flyer (see above) and put it up around the local community college campus. I also plan to hit the grocery stores and some restaurants. I’m getting the word out to some of my co-workers as well.

Next Steps
Once the housemate is in place, I intend on starting the 3 types of savings mentioned in the Zen Habits article.

I also intend on finding alternate income streams. I very much enjoy my current day job, but ultimately I aim to earn money without going into an office everyday, having a boss, dress codes, established working hours, etc - i.e. self employment. I definitely know I want to make a living using my creativity through freelance graphic/web design, interior design consultations, photography royalties, or by becoming ProBlogger - the Shangri-La of self-employment.