Time to coast/barista FIRE - things to prepare?

[Kiro]

One thing to prepare for is the remaining jyuminzei which will come after you quit.
And yeah, housing… going from 18,000¥ to likely much more will change your budget, better to plan for it (if you plan on buying and getting a loan, maybe good to do it while still employed?).

[Moneymatters]

I think I'm ready. My mind is set on it. It's time to coast/barista FIRE. YOLO!
..

What are the things I must or should do before I go completely unemployed? (become a non-seishain)

Some credit cards that are a must have? (I have a few already)
Should I get a house loan and purchase a permanent place to live?
Anything in particular I should apply for?

..

Firstly, mad jelly (I'm very jealous) of someone getting out of the rat-race nice and early.
For this forum this is very much the ending scene for An Officer and a Gentleman. What? Just me?!? Really?

Picking up on the above and comments you've made elsewhere in this thread.

Just before when/if/when I early retire, I plan to get a card with mileage.
I'll probably be spending similar to now but hope to travel more even if those are domestic flights.

Getting an older place as a fixer upper whilst stlil young yourself is the dream.
The materials for reform are not so high and due to the construction methods most work is accessible.
You can take time to learn new skills and even volunteer/take part time jobs to build those skills. For example the type 2 electrician license.
https://www.reddit.com/r/japanlife/comm ... ification/
I'm sensing you are sufficiently nihongo jouzu from your description of the resignation process.
Maybe that's a bit much but with a few hours on Youtube you'll be amazed how easy it is to replace flooring for example. They even sell ready-pasted wallpaper!
A lower investment in the property means you'll have less regret about spending time outside the country if you aren't renting it out. Not worrying about things being taken/the place getting trashed is likely worth the peace of mind it brings.

What will you do for income when at pensionable age?
With only 10 years kousei and assume you have another 20-25 kokumin, you'll only see a modest pension income from Japan.
I'm assuming you'll pay into Kokumin no matter your income not only becuase it's required, but also it will allow you to have access to ideco.

I've mentioned this elsewhere but if only under kokumin nenkin you could convert your current investments to ideco at 68,000yen per month. However, that is more than the allowance you'll get when it's time to cash out even being gains are considered.
Even with the allowance, and then halving the balance, it's the full amount that used at the start of the calc. Whereas if you leave investments where they are it's just the gains that are exposed to tax.
So you might pay less than 10% tax (on the total amount, investments + gains) when converting to, then cashing out, ideco. But that's actually more than the 20% cap gains you'd otherwise be paying on just the gains.
Therefore it's likely worth moving a much smaller amount into ideco with the goal being zero tax when it's time to withdraw. Essentially evading cap gains tax. If you like the funds available in ideco that is.

And if you think that constitutes financial advice I have a bridge to show you.. Looking forward to your updates!

[fiskebyxa]

A. This would be my main focus. As an experiment, pick and area, choose and apartment on Sumo, or the like. And plan a budget. Can you live with that budget? Play with different margins or era and costs.

B. Shrinking your dating pool so dramatically is limiting imo. In a country like Japan, you will be harder pressed to find FIRE advocates. Unfortunately, you will be much harder pressed if you are looking for a female partner.

A. I have made a rough budget, and it's sort of doable. But of course, you never know how things end up.
B. You are probably right. I am not getting any younger so finding a long term partner is definitely on my mind. But for now, finding my own happiness is main priority.

I think maybe coast/barista FIRE was the wrong description of this thread.
Maybe it would be better to describe it as Opportunity FI. I am financial independent enough to look for new opportunities in life.
I am hoping to find something I really enjoy doing and eventually end up making more money than my current job.

[fiskebyxa]

Firstly, mad jelly (I'm very jealous) of someone getting out of the rat-race nice and early.
For this forum this is very much the ending scene for An Officer and a Gentleman. What? Just me?!? Really?

Picking up on the above and comments you've made elsewhere in this thread.

Just before when/if/when I early retire, I plan to get a card with mileage.
I'll probably be spending similar to now but hope to travel more even if those are domestic flights.

Getting an older place as a fixer upper whilst stlil young yourself is the dream.
The materials for reform are not so high and due to the construction methods most work is accessible.
You can take time to learn new skills and even volunteer/take part time jobs to build those skills. For example the type 2 electrician license.
https://www.reddit.com/r/japanlife/comm ... ification/
I'm sensing you are sufficiently nihongo jouzu from your description of the resignation process.
Maybe that's a bit much but with a few hours on Youtube you'll be amazed how easy it is to replace flooring for example. They even sell ready-pasted wallpaper!
A lower investment in the property means you'll have less regret about spending time outside the country if you aren't renting it out. Not worrying about things being taken/the place getting trashed is likely worth the peace of mind it brings.

What will you do for income when at pensionable age?
With only 10 years kousei and assume you have another 20-25 kokumin, you'll only see a modest pension income from Japan.
I'm assuming you'll pay into Kokumin no matter your income not only becuase it's required, but also it will allow you to have access to ideco.

I've mentioned this elsewhere but if only under kokumin nenkin you could convert your current investments to ideco at 68,000yen per month. However, that is more than the allowance you'll get when it's time to cash out even being gains are considered.
Even with the allowance, and then halving the balance, it's the full amount that used at the start of the calc. Whereas if you leave investments where they are it's just the gains that are exposed to tax.
So you might pay less than 10% tax (on the total amount, investments + gains) when converting to, then cashing out, ideco. But that's actually more than the 20% cap gains you'd otherwise be paying on just the gains.
Therefore it's likely worth moving a much smaller amount into ideco with the goal being zero tax when it's time to withdraw. Essentially evading cap gains tax. If you like the funds available in ideco that is.

And if you think that constitutes financial advice I have a bridge to show you.. Looking forward to your updates!

Very interesting link, thank you!
I think a fixer upper is something I would really enjoy doing.
Most of the videos I watch on YouTube at the moment are related to house reform and DIY stuff.
Some regions in Japan also offer subsidies to reform old akiyas.

My initial plan after resignation is to cash in a few months of unemployment benefit.
Hello Work also offer vocational training, where they offer some interesting house construction related training which I may apply for.
Being an apprentice, working for free, part-time job to build new skills is also a good plan.

I'll look into converting current investments into Ideco, thanks.
I don't rely too much on the Japanese pension. Hopefully my current 3500万円 will grow enough to have a comfortable retirement.

[fiskebyxa]

One thing to prepare for is the remaining jyuminzei which will come after you quit.
And yeah, housing… going from 18,000¥ to likely much more will change your budget, better to plan for it (if you plan on buying and getting a loan, maybe good to do it while still employed?).

Yeah, a lot of taxes that has to be paid after quitting.
I'm currently looking into potential ways to get deductions on those.

[JimNasium]

Maybe someone with more experience here could chime in, but wouldn’t it be difficult to get a mortgage without a full time, steady job?

[TokyoBoglehead]

Maybe someone with more experience here could chime in, but wouldn’t it be difficult to get a mortgage without a full time, steady job?

I think that has been mentioned quite a few times in this thread. Access to any further credit will be difficult.

[mighty58]

But coast/barista FIRE would suit me better as I will always try to stay busy and make some sort of income.
I feel somewhat confident that I should be able to earn enough money to cover my living expenses and let current investments grow.

Given you're a single guy with no dependents, and have the freedom and mindset to move and try new things and learn, you're in prime position to give this a go. So congrats.

Looking at it purely from a financial perspective though, with the size of your nest egg, and given that your housing costs will rise significantly no matter what choice you make, you're really on the knife's edge in terms of long-term viability, so your success will depend entirely on the quote above, and how much you can actually bring in to supplement your investments. Your investments will give you a base level of income, you can even think of it like a social-services cheque, but like with welfare, it probably won't be enough. Thankfully, given your frugality, you won't need a lot more, but you will need something.

The uncertainty regarding your future family plans is a big question mark as it could throw a big wrench in the whole thing.

Finally, be wary of buying an akiya before you know where you want to live long-term. They can be great, but they can also be nightmare money pits, with little liquidity if you decide to move elsewhere.

[fiskebyxa]

Given you're a single guy with no dependents, and have the freedom and mindset to move and try new things and learn, you're in prime position to give this a go. So congrats.

Looking at it purely from a financial perspective though, with the size of your nest egg, and given that your housing costs will rise significantly no matter what choice you make, you're really on the knife's edge in terms of long-term viability, so your success will depend entirely on the quote above, and how much you can actually bring in to supplement your investments. Your investments will give you a base level of income, you can even think of it like a social-services cheque, but like with welfare, it probably won't be enough. Thankfully, given your frugality, you won't need a lot more, but you will need something.

The uncertainty regarding your future family plans is a big question mark as it could throw a big wrench in the whole thing.

Finally, be wary of buying an akiya before you know where you want to live long-term. They can be great, but they can also be nightmare money pits, with little liquidity if you decide to move elsewhere.

Yeah, this wouldn't be possible if I had a different family situation right now.
A future family will most likely mess up the whole plan, but hard to take that into the equation right now.

Thanks for the tip about akiyas. I will be careful regarding that.

[fiskebyxa]

Current update:

I have already encountered problem with the resignation process.
It feels difficult to make further plans without a confirmed resignation date.

Resignation process so far:

- Handed in 退職願 to my direct manager on July 28th. We are pretty close and he totally understands that I want to leave my current job, even though it will cause a heavier workload on him. I assume that my direct manager brought it up with his manager (company 取締役) and told me that we will discuss this further when 取締役 is in my office next time. (we have offices all over Japan)

- Had a meeting with my direct manager and 取締役 on August 9 regarding my 退職願. I was bombarded with questions why I would want to leave such a wonderful company etc., and if they could make me stay somehow.
I was quite firm at this point that I wish to resign.

My desired last working day on my 退職願 is Oct 31st, which 取締役 thought was way too soon.

I know that legally I can abandon ship in 14 days here in Japan.
Our company "rule book" (社員会規則) say that the employee should give 60 days notice if employee wish to resign by their own will (自己都合).
I have been a nice employee and gave them roughly 90 days advance notice for my desired Oct 31st resignation date.

取締役 will think about what he thinks is a suitable final working day, and then we will have further discussions at a later date.
I am able to adjust my final working day and Oct 31st is not absolutely necessary.

I think this puts me in a good position for some negotiation.
If I stay until the date 取締役 desires, could I for example negotiate the following?

- Change reason for resignation to 会社都合 instead of 自己都合?

That would give me quite a few perks for my life as unemployed such as: 240 days of unemployment benefit instead of 120 days. Various tax exemptions.