Planning 3

Plan Harder

Four years ago I wrote a couple of posts about planning (Planning, Planning 2). It was really interesting to go back and reread them.

Let’s take another look at the questions and see what kind of progress we’ve made in that time.

Two big changes: I started doing jiu-jitsu just over three years ago, and we renovated my in-laws’ house with a view to eventually living there.

Planning

Over the last few years I have found it incredibly valuable to do annual planning and reviews, both personally and here on the blog. This can be as simple or complex as you want.

Basically at some point in the year (a birthday, the new year holiday, some other significant day, a random day) you sit down and make a list of things you would like to focus on/achieve over the next year. I also find it useful to add 5- and 10-year goals to this.

You can check your plan every so often to remind yourself of what you wrote, then after a year sit down and write a report of how it went.

Then make a new plan for the next year.

I find I rarely get more than half my goals done, but that’s fine. It’s normal for priorities and conditions to change over time.

Still, being slightly more deliberate with your time can really help you shape your life the way you want it to. Of course, this is not limited to financial goals, but can also include health, relationships, hobbies, etc.

The Five Questions

In the post four years ago I answered five questions:

1. Where do you want to live in the future?
2. What does your ideal day look like?
3. What kind of work would you do if you didn’t have to work?
4. What is your current financial situation?
5. Do you have a realistic estimate of what your financial situation will be like in the future?

My answers haven’t changed all that much, but they have become clearer.

Where do you want to live in the future?

Last time I wrote that I didn’t really care where I lived. Now, barring disastrous changes, I am pretty sure I want to keep living in Sendai.

I own my home now (well, technically the bank owns it, but you know what I mean), we expect to inherit my in-laws’ place at some point, my daughter and her children live here, I have friends here, my jiu-jitsu dojo is just down the road, and I am very comfortable.

If we had to leave Japan for some reason, I can see myself living elsewhere in Asia or Europe, but if we stay in Japan I’ll likely stay in Sendai.

What does your ideal day look like?

I’ve been ‘working from home’ since March last year, so I have a lot more control over my time now. My days now look something like this:

Morning: wake up 7:30 or so, walk to school with my granddaughter, go for a relaxed walk/run, row, then work
Early afternoon: work, have meetings
Late afternoon: work
Evening: work, jiu-jitsu, or relax at home

I’ll be retiring (being fired/downsized/nonrenewed) from my university job next March, so work will likely look quite different in the future. We also need to figure out what to do with my wife’s language school.

I think in the future I would like less work, and less structured work. Probably more exercise outside and more time with friends.

What kind of work would you do if you didn’t have to work?

This has become pretty clear, as it is basically the things I do even though I should perhaps be working instead… basically run RetireJapan, write essays/books, and do financial coaching.

I will need to help my wife with her school for a while longer, but we’re not sure for how long or what that will look like.

What is your current financial situation?

It is much better than it was four years ago (fortunately, as our income is going to collapse next year -I only have nine paychecks left!). We have savings/investments over 25 times a reasonable estimate of our annual spending, which puts us in the neighbourhood of being able to stop working.

However, there isn’t much of a margin of safety there, and it is based on current stock market levels (which seem somewhat overvalued and thus due for a correction at some point). So I don’t feel confident enough to make any big moves beyond letting my job expire without looking for a new one. I also don’t feel confident about being able to afford large expenses like replacing cars, travel (if we ever get to travel again), home maintenance, etc.

Do you have a realistic estimate of what your financial situation will be like in the future?

Somewhat. We’re in a good situation now, and each year we manage to keep working/earning gives us a bit more runway and takes us closer to pensions, etc.

I’m a bit worried about stock market corrections in the short-term, and so we’re going to shift some of our monthly savings from investing in mutual funds to just building up cash to get ready for eventual retirement. Hoping to end up with 2-5 years’ worth of spending in cash by the time we retire properly.

Personally I am finding it very hard to shift from a saving/investing mindset to a spending one, but hopefully that will get easier with practice.

How about you?

Can you answer the five questions? If not, why not? Are there any other questions we should be asking?