It’s been a while since I posted here. I almost feel as if I’m done telling my story on Financial Independence now that I’ve reached the financial goal. Plus it’s a story that’s been told, in better ways, by dozens of bloggers already.
But I haven’t RE’ed yet. In one of my last posts, I explained that we were looking for a house, in order to get a loan, before I could pull the plug from the corporate job.
I believe we’re getting close to choosing the house. Unless we have cold feet at the last minute, which we’ve already done a handful of times so far while looking for the right place.
What we’ve found now has the right balance for us in terms of space, distance to and from Tokyo, and every other one of our 20 stupidly precise selection criteria. One big caveat: it’s way more expensive than I initially computed in my numbers for FI. Specifically, it’s 10% more expensive that I was willing to go (and 20% more expensive than the target I gave to real estate agents). But I feel it’s the one we want, so meh…
What does this mean in terms of my “target” FI number? Well not much really. It does reduce some of our buffer for flexibility, but cfiresim still says I’m good, as long as I keep busy on my side gig for 10 years. I’m not super happy about that added risk though. Financial Independence should mean that I can choose to work on my side gig if I want to, not that it replaces my corporate job as my main source of stress.
A more expensive house, combined with a terrible year so far for my portfolio (and the overall market, since I use index funds for the most part), and exacerbated by the drop of the USDJPY pair in 2018, means that my current wealth has dropped significantly over the past 3 months. My insane savings rate is not able to compensate for the swings of the stock market like it used to.
In 2016, there was a huge increase in the Yen, which conversely meant that my portfolio, when calculated in Yen, was decreasing significantly. However I was able to offset that with a great salary and savings rate. 2 Years later, a couple of stupid tweets by Donal Trump are enough for me to “lose” the equivalent of 3 months of savings in 3 days. But hey, don’t get me wrong, it also means that on positive days, my portfolio’s increase also dwarfs my savings, and this is good news. Or at least it will be when the market gets back on its feet.
I can’t help but think of what would have happened if I had pulled the plug in December like I initially wanted to (this assumed we would have found a house by then, which was unrealistic). In hindsight, December was the beginning of the 2018 Q1 cliff, a steep drop in my wealth. I’m not sure I would have taken that very lightly if I had quit my job then.
As it is now, though, this gives me some time to think about my situation. I still don’t have the loan, but it could happen soon. My feeling right now is that I’d probably be ok with working 6 more months in order to crank up my portfolio by (fingers crossed) 5 to 10%, in order to get back to a cfiresim number that matches my expectations better.
A note on the house
We initially did commit to buy a house with house maker Ichijo. They were not bad in terms of price and building quality (pros: heat insulation, cons: sound insulation inside the house. In their model home I could hear everything happening on the 1st floor from the second floor, with all doors closed), but ultimately, picking the house maker first artificially limited our options, since some plot of lands are bought and sold by some of their competitors. so we cancelled our pre-contract with them and started looking for more options (including condos, which we almost decided to go with at some point. I’d still be ok with that actually). In particular, finding a city first, *then* looking for houses seemed like a critical thing we had to learn the hard way.
It might sound obvious for anyone that you choose the location first, but in our case, since our goal is to RE, I was not specifically tied to a daily commute or anything. As a result, we initially felt that anywhere would be good. It turns out however that we do value closeness to friends, family, and Tokyo. To some extent at least.
The house we’re looking to buy now is sold by Toyota homes.
It’s significantly more expensive than I wanted to pay, frankly. The price is ridiculously high by any standard, except for the Tokyo area. I think any American or French friend seeing that we pay such a premium price to cram a family of 5 into 120 square meters would probably laugh, or cry, or both. In my home region of France, I could probably get 3 houses of the same size for that price. Then again, my home region of France is not 40 minutes away from one of the biggest cities in the world.