FW-95 -- Getting Back on the Frugal Bandwagon

J@pan Inc Magazine Presents:

* * * * * * * * F R U G A L W A T C H * * * * * * * *
A weekly roundup of how to be frugal in the world's most
expensive country to live (unless you read this!), written
and compiled by Wendy J. Imura.

Regular edition, August 12th, 2006 Issue No. 95
+++ INDEX
- Getting Back on the Frugal Bandwagon
- Credits

***** Getting Back on the Frugal Bandwagon *****

Dear Frugal Readers,

So sorry for the two-month hiatus! Work has been very busy,
leaving me very little time for being frugal, much less
writing about it. After several months of more eating out,
convenience foods, and more air-conditioner use than usual,
my wallet is feeling the pinch. Remember that maxim about
your spending stretching to cover a larger income? It's
true. It's hard to admit, but this frugal guru has not had
the time to balance her own household accounts in a several
months! Ah well - maybe the summer will prove better.

To match the timely "reintroduction" of Frugal Watch, I
thought I would devote today's column to getting back on
the frugal bandwagon. Living a frugal lifestyle, like
dieting, requires some willpower. Once your will to pinch
pennies diminishes, it's hard to continue. Face it:
a spendthrift lifestyle is just plain EASIER. Unfortunately,
a lack of certain set frugal habits can create "yo-yo"
frugality - much like yo-yo dieting, where the same 10
kilograms are lost, and gained, and lost, and gained.
Except in this case, it's the same 100,000 yen that is
saved, and spent, saved, and spent.

So, how can you prevent yo-yo frugality? Well, here are
three basic tips, or frugal habits, to get you on a
sustainable, healthy financial track. Even a very busy
person can (theoretically) implement them.

1) Start an automatic withdrawal savings plan at your
Japanese bank, called a "jido tsumitate teiki yokin."
Basically, the bank withdraws a specified amount of money
from your main account every month on a day you choose,
and saves it in a separate savings account with its own
bank passbook. You can, in most cases, withdraw funds
from this account if absolutely necessary at the window
(you'll need your passbook and inkan) or at the ATM
(passbook, ATM card, and friendly staff member to help
figure it out). I've said it before, but I'll say it
again: this is an idiot-proof way to save money.
Set the withdrawal date to the day after payday (or the
day after your bills are subtracted), and you'll never
miss the money.

2) Are you on a fixed budget for your household expenses?
Would you like to be? Why not try the envelope method for
cash management! Essentially, this involves parrying out
a set amount of money each month for a certain expense
category (say 40,000 yen for food expenses) in an envelope.
During that month, you only buy expenses from that category
with cash from the "food expense" envelope. If you are, for
example, trying to limit Starbucks purchases to 3,000 yen a
month you could have a Starbucks envelope, or a "work
lunch" envelope. Some people run their entire household
accounts this way, but I find it works well for busy folk
with a limited number of envelopes (maximum three for me).

3) Are you still using your credit card for routine
purchases? Do you pay it off, in full, every month? If the
answer to these questions is yes, then no, then you've
got some thinking to do. Credit card debt, and consumer
debt in general, is unsecured. For those using US credit
cards, high interest rates and minimum payment requirements
mean you could be paying for that impulse T-shirt purchase
from Uniqlo for years after its gone to the great dumpster
in the sky. The typical Japanese credit card (with
non-revolving debt) is slightly better, but having large
purchases show up two months later can make a dent in
your bank account. My best advice? Leave the credit cards
at home (in the freezer is my favorite place), or if you
must use a card, use a debit card.

If even these small steps help you rejoin the frugal
bandwagon, then I'll be happy. I (literally) have a stack
five months of good intentions receipts piling up in
my cabinets, and no time to sort or track them. Starting
with simple, sustainable habits is looking pretty good now.
Enjoy!

Frugally yours,

Wendy J. Imura

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Written by: Wendy J. Imura (frugalwatch@japaninc.com)
Edited by: JI
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