Financial Stability

2017-02-08

In the last few years, I've started thinking more about money and financial stability. These topics used to bore me, but I've grown interested in the last few years. The better I understand my financial position, the greater confidence I have in speculating on how to handle the unknown future.

Motivating Questions

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Temporary Jobs Are Temporary

In Japan, most English teaching jobs for expats are temporary. I came to Japan on the JET Program, and I worked five years on one-year contracts. Then I worked five more years with another company, again on one-year contracts. Last February, due to budget negotiations, I almost lost my job a month before the new fiscal year. That wasn't cool. Also, the salary for temporary teaching jobs in Japan is low, even if you're experienced. These jobs are nice for a while, because the responsibilities are simple and there are a lot of openings. But if you change jobs a lot, you have to move a lot, which is stressful and expensive. With temporary jobs, it's hard to save money.

Teaching Jobs in Japan

ALT
An ALT (英語指導助手) is an assistant teacher. Many companies will hire you if you're a native English speaker with a 4-year college degree. Most ALT contracts are one-year. It's entry-level, so the pay is low and work responsibilities are light. There's always ALT work available in the cities.
Special Foreign Lecturer
As a Special Foreign Lecturer (外国人特別講師) you can teach English by yourself, but only at private schools. Technically speaking, your school brings your college diploma to the local office and gets you a Provisional Teaching License which is good for three years and can be renewed. Most schools that hire special foreign lecturers hire them on one-year contracts. The salary is low, and it doesn't rise much with experience. Tenure is extremely rare. You cannot be a homeroom teacher.
Part-Time Teacher
Part-time teaching (講師) doesn't qualify you for an instructor visa. If you have a spouse visa or a permanent resident visa, you could look into it.
Full-Time Teacher
A full-time teacher (教師) can work at a public or private school. There are separate licenses for elementary, junior, and senior high school. It's common to get the junior and senior high school licenses at the same time. For junior and senior high school, teaching licenses are subject-specific. The usual path for licensing is going to a four-year Japanese university and taking certain courses and tests. If you come to Japan as a working adult, you could obtain the functionally-equivalent Special Teaching License. Many schools hire you to a three-year tenure track position. After three years, either they give you tenure (permanent hire) or say goodbye. Salary for full-time teachers is based on age or experience, depending on the school.
University Instructor
To qualify for an English instructor position at a Japanese university, you definitely need a four-year degree. The applicant pool is flooded, and if you're seriously pursing a position, it's best if you have a master's degree or PhD in applied linguistics or a similar field.
Eikaiwa Instructor
There are many evening/weekend English conversation schools in Japan. In many cases the pay is low and job security is bad, but there are good companies to be found. Eikaiwa schools typically have fixed teaching materials and methods, so work could get repetitive and boring in a hurry.
Preschool Teacher
The visa for this is a child-care visa, not an English instructor visa. Salaries are shockingly low, and the experience you gain isn't going to help you in the future. You probably don't want to do this.

The Six Month Rainy Day Fund

Imagine you get fired. Can you afford not to work for six months? For years I didn't have a rainy day fund. Now I do, and it lets me relax. After all, you never know if your company will go bankrupt, or if you'll mess something up, or if someone else screws up but somehow you're the one who gets axed. You can't control what other people do, but you can make plans for emergencies.

As an expat living in Japan, I need a visa to be in the country legally. Right now I have an instructor visa, and to qualify for that, I need to be teaching English. This summer, I'll apply for a permanent residence visa. Once I get it, I won't have to teach English, and I could even take a few months off without having to leave the country. The thing is, I don't plan to stop teaching English, because I like teaching, and I don't plan to change jobs, because my school is a friendly place, but I don't know what's going to happen. Flexibility reduces worries.

There are various scenarios where you could end up leaving the country in a hurry. If a drunk guy picks a fight with you and you are arrested for brawling, you might be deported. If someone in your family gets sick, you might want to live with them and care for them. Leaving the country on short notice is not ideal, but it happens from time to time. If it's convenient, split your rainy day fund between the two countries.

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Good Online Banking Is Good

I live in Japan, and I have bank accounts in the U.S. and Japan. It's important that these accounts have good online banking features. If I'm visiting the U.S., my money in Japan should be somehow accessible, and the same goes for my U.S. money when I'm in Japan. Wiring money between countries costs a bit, because the bank charges you for the exchange. I don't send money very often, but I can, and that gives me more ways to handle the unexpected.

Taxes

If you're an American working abroad and you make less than $100,000 (in 2016), you don't have to pay U.S. income tax on it. This is called the Foreign Earned Income Exclusion. You still have to file, though.

Retirement

There is a U.S.-Japan treaty that merges Japanese national pension with U.S. Social Security. Payments in Japan can be used if retiring in the U.S., and vice versa. However, you wouldn't want to retire on national pension or Social Security alone, because the payments are small. In both countries, you're required to pay into these systems.

A conservative politician might predict that Social Security is going to fail in thirty years from ... whatever year it is now. Some people say the same thing about the Japanese national pension system. And if you get on any investment forum, people will often hedge their advice by mentioning that the stock market is unpredictable, and you might lose money. Changes to both U.S. and Japanese tax law could significantly affect retirement, too. We just don't know what's going to happen, so we need to diversify.

I'm in a position now to save extra money for retirement. My general goal is to have money in the U.S. invested in U.S. stock and bond indexes, and money in Japan invested in Japanese stock and bond indexes. However, it turns out that U.S. tax law gets wildly complicated very quickly when you invest in non-U.S. companies. Depending on the amount of money, it could make sense to do most of the investing on the U.S. side.

Information Sources

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