RetireJapan

FIRE-Rookie wrote: ↑Sat Jan 09, 2021 2:57 am That is to say, instead of saving 200K, I can save 173K per month. Would that work?

There is no correct answer here. You're going to have to feel your way through it (start, see how it goes, adjust, continue, etc.).

I would recommend saving/investing an amount you are comfortable with now, and increasing it over time. So if your goal is to save 240k a month, maybe start saving 100k or 150k now and see how that goes. If it is easy, and you feel motivated, increase it by a bit. If you get a raise, increase your saving by half the amount of the raise, etc.

You're going to have to keep this up for 25 years, so don't exhaust yourself/make yourself miserable at the starting line

The key point is to save and invest as much as you comfortably can. And reduce unnecessary expenditure. If for example, you were to get married or buy an apartment in the next few years all your current calculations would be meaningless.

Having financial institutions take out regular payments for things like NISA and iDeCo means you can automatically achieve your saving goals i.e. a fixed percentage of your salary is put away for the future.

Also, do you really only spend 20,000 yen a year on clothes? I guess you can wear t-shirts at work.

RetireJapan wrote: ↑Sat Jan 09, 2021 5:05 am If you get a raise, increase your saving by half the amount of the raise

If you're doing the "save 25x your expenses" strategy, it's important to put a higher fraction of raises towards savings. For example, if you get a raise of 200,000 and save half of it, now your expenses have increased by 100,000, which increases your target amount by 2.5 million...

There were a couple of blog posts last year that explained this better than I can, but I can't find them now.

I like to differentiate between core (fixed) expenses and extra (optional) expenses.

So my wife and I spend just under half our income, but if we needed to we could just pay our bills and buy food at the supermarket and cut our spending by 60%. So that gives us a margin of safety.

Just because we bought a new kitchen this year doesn't mean we'll be doing that every year, but we will have to pay our electric bill every month going forward.

RetireJapan wrote: ↑Sat Jan 09, 2021 5:05 am There is no correct answer here. You're going to have to feel your way through it (start, see how it goes, adjust, continue, etc.).

You're going to have to keep this up for 25 years, so don't exhaust yourself/make yourself miserable at the starting line

Roger that, Sir! Actually, now that you mentioned that I realized that I was just in a state of "indecisiveness" that stops me from taking any useful action. Thanks for calling me out on this!

RetireJapan wrote: ↑Sat Jan 09, 2021 5:32 am I like to differentiate between core (fixed) expenses and extra (optional) expenses.

Just because we bought a new kitchen this year doesn't mean we'll be doing that every year, but we will have to pay our electric bill every month going forward.

Got it, these optional ones are kind of unpredicted and I will just have to adapt as they come up. I think I should some put of saving goals towards "Uncategorized Funds" just in case.

MisoSoup wrote: ↑Sat Jan 09, 2021 5:14 am The key point is to save and invest as much as you comfortably can. And reduce unnecessary expenditure. If for example, you were to get married or buy an apartment in the next few years all your current calculations would be meaningless.

Change of plans is completely fine, what I was not fine with is not having a plan to start with. I just didn't like the indecision state I was in and I appreciate people like you calling me out on it.

MisoSoup wrote: ↑Sat Jan 09, 2021 5:14 am Having financial institutions take out regular payments for things like NISA and iDeCo means you can automatically achieve your saving goals i.e. a fixed percentage of your salary is put away for the future.

I am actally maxed out on Tsumitate NISA paying 33,333 yen per month. iDeCo is not an option due to my company DC/DB but I get the point. I just want to automate the process so I don't have to think about it too much.

MisoSoup wrote: ↑Sat Jan 09, 2021 5:14 am Also, do you really only spend 20,000 yen a year on clothes? I guess you can wear t-shirts at work.

Actually, I do rotate 5 sets of good suits (At least I think they are).
In the past, I tended to overspend on training and cycling goods. (Guilty pleasure)
I have a cluttered wardrobe that I am reducing in size so having more is not the issue, it is having less is that I really want to do.

adamu wrote: ↑Sat Jan 09, 2021 5:26 am If you're doing the "save 25x your expenses" strategy, it's important to put a higher fraction of raises towards savings. For example, if you get a raise of 200,000 and save half of it, now your expenses have increased by 100,000, which increases your target amount by 2.5 million...

Roger that! I understand the psychology of "spending it just cuz it exists" and this is why I am trying to avoid that using automatic transfers. Out of sight, out of mind!

There is a number of spendings that I haven't been able to calculate well enough yet so I won't be so rigid till I get a better understanding on these and how they contribute to my quality of life (e.g. Home Improvements / Child / Meds / Entertainment / etc)

Guys, this thread has been super helpful for me. I would like to thank each one of you as now I think I have a better understanding of the process.

Without over-complicating, I think my initial calculations were wrong. (Thanks @seb for noticing)

I actually need to save 207K per month for 25 years to reach my FIRE goal.

Moreover, I figured that since I have control over my DC/DB contributions which is not part of the government pension then that this should be part of my savings. Not separate from it. So now that I got already 27K invested via DB/DC, that leaves: 180K to be saved & invested out of pocket.

Assuming a constant salary of 400K a month, 180K goes into investing then that leaves 220K for everything else.

Based on chart I provided before, these are my current spendings
Essential Expenses: (Fixed Physical Needs) = 126.8K
Essential Expenses: (Societal Needs) = 21K
========Total: 147.8K (Out of 220K then 72.2K left)

Flexible Spending: (Wants) = 19K
========(53.2K remaining)

Life Quality: (Wants) - Known Costs = 22.5K
========(30.7K remaining)

Life Quality: (Wants) - Unknown Costs
Home Improvement / Home Supplies (Daiso or Nitori stuff):  ??
Meds (Headache / Vitamin / etc):  ??
Entertainment (Travel / Museums / Amusement Parks): Keep to a minimum
Hobbies (Cycling Goods):  ??
House: ???
Child: ???

I don't know how much the "Life Quality (Wants)" will cost but I am happy to know that I am actually have an abundant cashflow after all. Life is still good, I was kinda stressed about this unnecessarily.

Thank you everyone again and again