I always get excited when budget time rolls around, and I was particularly interested in this month. September is the first full month we have spent in Japan, which is our most expensive location (not counting Guam). If I had been allowed to peek ahead to the result of any one month’s budget before the year started, it would be this one.
The spending aspect of Japan was an enigma in my mind. We weren’t exactly sure what discretionary (i.e. fun) spending would end up looking like. It could be that things were so awesome we accidentally or intentionally blew out that category. That would in turn lead to increased transportation costs getting to those fun things. We also had no idea what cooking would look like, or what our food spending would be after our late strategy pivot to not cook at home at all in Japan. It seemed the budget could go anywhere, but most paths would be up.
The reality of the month was far more controlled and reasonable than the wild possibilities in my mind. This would stand to reason as we are controlled and frugal people. Nonetheless spending was still high. Particularly on accommodation, food, and transportation.
Budget Numbers
The raw numbers are as follows. An analysis is provided in the next section.
Budget Analysis
The Big Numbers
Before this month even began we knew it would be in the red. Only the year as a whole will be at the 4% safe withdrawal rate. Each individual month may be above or below 4%, and Japan was most definitely on the higher end of withdrawal rates. The numbers broke down as:
- Income $7,362.77
- Expenses $9,192.38
- Total: -$1,829.62
- Withdrawal rate: 5.92%
Viewed in isolation without the context of the year on average, -$1,829.62 is a concerning number. However, it’s actually less of a deficit than we originally planned, which was a 6.07% projected withdrawal rate.
Noteworthy Individual Budget Categories
Many categories are entirely static, mundane, or not worth mentioning. There are a few categories that are more interesting which I’ll walk through.
Accommodation
Having to pay for accommodations well in advance, nothing should catch us off-guard. We did however deviate from the beginning of the year plan. We originally intended to spend in the $3500/month range. That would give us a larger place with a better kitchen so that we could do everything we normally do (spread out, cook at home, etc). The idea occurred to us though that we could spend less on the Airbnbs and shift that savings to food in order to avoid cooking at home, which would have a couple benefits. The first is that we wouldn’t have to deal with the restrictive Japanese kitchens, and the second is we would experience more foods from Japan.
This decision was great in hindsight. We know now (and didn’t then) that we would have had trouble finding the usual things we eat, or any large-scale grocery store period near our area in Tokyo. The tight quarters of the Airbnb was worth dealing with in exchange. It was a fortunate and somewhat lucky decision we made. Had we not, we would have had an expensive Airbnb and ended up spending a lot eating away from the house a lot on top of it.
Food
This category was planned in tandem with accommodation costs. With the intention to do zero at home cooking, we projected we would spend $2,100 (70/day) on food. This projection was surprisingly close to accurate despite my unscientific approach to calculating that. I did that by just browsing images of price tags from convenience stores and restaurants in the area and guessing what we might eat. For all I knew that calculation could have been pretty far off. The slightly lower actual spend amount of $1,991.41 was a nice surprise.
Discretionary
Using numbeo we projected $361/month of fun money for Japan given we spend about $500/month in CO. That honestly seemed really low to me given all of the fun things there are to do. With that in mind we didn’t worry too much about this number as we planned to use side discretionary money if necessary to cover any overage. At 452.32 we did in fact go over, but not by much considering all the fun things we did. It feels like a bargain for everything we did.
Transportation
Spending $392.50 on transportation is another number that would normally strike me as high, but for this budget month felt like a steal. We rode the train system all the hell over the place. Also $350 of that is the bullet train alone going from Tokyo to Osaka. I can’t even believe all of the train riding we did in Tokyo and Osaka for $42.50 (total for four people). It’s the best transportation value I’ve ever experienced.
Conclusions
This is the third budget month and we continue to be right on track with original estimates. The withdrawal rates for the three months so far are 4.24%, 3.5%, 5.92% for an average rate so far of 4.56%. That puts us right about where we need to be as we wrap up Japan and make our way to a few cheaper locations. That average will get pulled down significantly in those places until it starts increasing again in Europe.