Time to File 2008

It's time for U.S. residents residing in Japan to file their income tax forms. If you've filed before, you should have already been mailed a packet with forms. If you haven't gotten those forms, you can find them on-line or contact the U.S. Embassy. Remember, even if you don't have to pay, you have to file. If you don't, it can complicate your tax situation when you return to the United States.

I strongly recommend you keep a copy of each year's completed forms around so you can use them to guide you next year. The forms rarely change or change very little and you can pretty much follow what you did last year to speed up the process of filing greatly.

A few key points to keep in mind this year:

• You must use the average exchange rate when converting your yen earnings to dollars rather than a current daily rate. The average as of January 2008 was 107.82 yen to the dollar according to the U.S. Federal Reserve.
• The amount of money you can earn and still be exempt from paying U.S. taxes was raised to $85,700 (as compared to $82,400 last year).
• It's a good idea to send the I.R.S. copies of your Japanese tax statements rather than the original forms with a Japanese stamp. The I.R.S. does not require the originals and you may need them for filing your income taxes in Japan and for immigration. Japanese authorities often will not accept photocopies of these forms.
• Don't forget to include any taxable interest on savings accounts you may have back in the United States. If you aren't sent the forms, see if you can access them via on-line banking or have someone at home send them to you.
  
• You must file separate 2555-EZ Foreign Earned Income Exclusion forms for each member of your household who worked in 2007 who earned less than $85,700.
• Though the U.S. deadline for filing this year is April 17, the deadline for those residing abroad is automatically extended to June 15, so you have a bit longer to file.
  

I posted more exhaustively on this last year if you'd like more information. And again, I issue the disclaimer that I'm not a tax expert and only offering a layman's viewpoint. You should check the facts with the I.R.S.

Headed North

A sign from the Communist party expressing the notion that the consumption tax (sales tax) should not be increased.

Last year, I kept reading news about how prices would be going up in Japan "next year", and just 16 days into the new year, they are indeed showing serious signs of doing so. Today when I was at the local drug store buying the same cheapest possible brand of toilet paper that I've been purchasing for two years now, I saw a pretty sizable boost. The price was 198 yen ($1.85) per 12 rolls for the two years I had been purchasing it, but then rose to ¥228 ($2.14) in the last few months of 2007. Now, it is at ¥248 ($2.32). Given the long-term price stability of this particular product, I think it's a good example of the boosts we're going to see and I don't think this was a one-time increase. I think this is where it'll stay (unless it goes up further).

Of course, this isn't the only thing I've noticed which has gone up in price. Butter used to be occasionally on sale for 248 yen ($2.32) per 200 grams (that's about 2 sticks in the U.S. or one cup) and it has not dropped lower than ¥288 ($2.70) for the last 4 months or so and is more frequently over ¥300 ($2.80). Additionally, milk has gone up an average of 10 yen per liter.

If these weren't basic items (and in some cases necessities), price increases wouldn't be a big deal, but the prices of daily goods is clearly headed north while salaries aren't rising much (if at all) for most folks. They certainly aren't going up for my husband or I. I'm guessing that this is just the tip of the iceberg in terms of various food and sundry necessities going up in price, but that isn't all that we have to consider in regards to increases in the cost of living in the near future.

A wall with political posters (including the one pictured at the top).

There has been much talk as of late about raising the consumption tax in Japan from 5% to between 8-15% in order to collect more money for the Japanese pension system. Since the number of young, tax-paying folks is constantly (though slowly) falling and the percentage of people collecting pensions is ballooning, there aren't enough people paying into the system to keep it alive from taxes alone.

Back home in Pennsylvania, sales tax didn't apply to food so that less of a burden was placed on people when it came to buying what they absolutely needed (though it did apply to paper goods like toilet paper so, go figure). In Japan, consumption tax applies to all purchases so it looks like we're headed into 2008 not only paying more for goods we can't avoid buying and facing the prospect of paying a higher tax on those higher prices.

Personally, I think that this is going to reduce purchasing overall and cause the Japanese to re-think or avoid "luxury" goods like new cell phones, televisions, cars, etc. and have an overall negative impact on the economy. I'm guessing the government is hoping people will choose to freeze up less of their yen in savings accounts and maintain their current standard of living, but given that most Japanese people are fiscally conservative, I'd wager on them scaling back and maintaining their level of savings at the cost of their lifestyle.

U.S. Passport Renewal (By Mail)

The XPack 500 next to a B5 envelope with my old passport and a very expensive money order.

Last year, my husband went through a panic when his passport had expired just before he planned to go home for a visit so this year, I was keeping an eye on my passport and sent it off to the U.S. Embassy by mail about one month before it was due to expire.

As my husband and I researched the method for applying for a renewal, we found that some things had changed since last year. For one thing, it used to be okay to apply for your passport by post in Japan using U.S. cash. Now, you have to send an international money order in U.S. currency. This is very annoying both because you often have to wait in a long line to access the part of the post office where such things are done (it took a half hour) and because it costs 2000 yen (~$18) as a fee for such money orders. The fee for the new passport itself is $67 so you're out of pocket $85 just for the money order. Also, when purchasing the money order, the postal worker seemed a little paranoid about who was buying it and why. He required that my husband show his foreign resident's identification card and meticulously checked it to make sure the purchaser's name and address were exactly as on the card. We've bought these types of things before and the level of scrutiny has gone up a bit.

Another part of this that has changed is that passports can only be printed in the U.S. so it takes longer to have them processed. That means I send it to the embassy then they send it somewhere back home then it gets shuttled back to the embassy then back to me. I'm guessing this is related to changes in security measures in the U.S. and part of an effort to make getting fake passports harder, but it seems an incredible waste and more likely to introduce the potential for things to get fouled up as more fingers will be in the pie during the process.

Additionally, in Japan, they want you to send a self-addressed XPack 500 envelope along with the application, money order, passport, and two pictures. These envelopes cost 500 yen ($4.60) and are over-sized so you can't send one unless you use a very large envelope or a second XPack 500 with the SASE (self-addressed stamped envelope) folded in half inside of the other.


The Xpacks are actually a pretty good choice for this sort of thing since they provide bar codes and tracking numbers which you can hang on to in case things go wrong. That means I can trace the parcels if they are lost though I have no control over the middle journey from Japan to the U.S. and back again. I only can track from my address to the embassy and the embassy back to me.

All totaled, the expense of a passport renewal is a little on the high side. Getting the right size photos taken at a booth costs 700 yen ($6.40) and you have to be very careful about getting the right size pictures as most standard passport pictures in Japan are too small. Even if you have a big enough picture, it has to be carefully trimmed down to 2" x 2" as the larger ones are too tall. The photos added to the cost of the money order, application fee, and two Expacks totals about $95 (about 10,000 yen) just for a little booklet with my picture in it and some personal data. I guess someone has to feed the bureaucracy. I just wish it weren't me.

"Japan Isn't Expensive"

Any assertion one makes will be at some point refuted by another. It doesn't matter how obvious or true a statement may be (or appear to be), there's always a naysayer waiting in the wings to "prove" you wrong. As of late, I've run across several instances of foreign folks intent on proving that the cost of living in Japan isn't all that bad despite the world-wide press to the contrary.

In my experiences with such claims, they take approaches which are not valid. Some of them compare the price of goods in "Japan" (meaning whichever city or town they happen to live in) to the price of goods in their home countries. Others add up their personal tabs for living here and subtract it from their salaries to show an impressive remainder. Both of these approaches are flawed though for rather different reasons.

Cost of living is always relative to location, even within the same country. For instance, an annual salary of around $50,000 for a person living in Silicon Valley in California is buying himself about the same lifestyle as a person making $20,000 in Pittsburgh, Pennsylvania. In Japan, rural life is cheaper than urban life and life in Tokyo isn't the same as life in Kobe when it comes to costs. You can't compare any given country's average costs for food, rent, etc. to Japan's because cost of living is relative to location domestically and doing so internationally has no relevance whatsoever. Saying a liter of milk costs $1.50 in Japan and a quart of milk in America about $1 doesn't say anything about how expensive either country is because it doesn't look at the cost relative to average salaries, rent, etc.

The approach to gauging the expense of Japan by tallying up all of ones living expenses and subtracting it from one's salary is a more reasonable one but is still flawed. One of the biggest reasons for this is that most foreign folks forget, ignore, or don't pay some expenses that long term residents (and Japanese nationals) have to pay. The gaijin intent on proving his point about how Japan isn't expensive commonly includes rent, utilities, and food in his calculations, but ignores things like the need to buy new clothes and replace durable goods through time. This is because most foreign folks come over here with a suitcase or two full of new clothes and shoes and move into furnished apartments. They tend to go home before things wear out, but a real reflection of the cost of living has to include ongoing expenses of normal people, not just temporary costs. If you start factoring in the costs for shoes, clothes, and the odd replacement appliance here and there, things get a bit pricier on average. After all, that is a part of the cost of living everywhere.

What is more, the foreign people who come over here for a year or who move around a lot often never pay regular expenses that people who stay in one place for more than a year start having to pony up the dough for. Since health insurance is assessed at a very low flat rate the first year (around 1000 yen a month) and calculated on income the second year and ward taxes calculated only after one year of residence in the same ward, people who move after one year to a different ward or just go home never factor in these expenses. Each ward calculates such expenses differently, but they are roughly around 5% for taxes and 10% for health insurance in Tokyo wards.

Here is a rough example: On an income of 250,000 yen a month, that's another 37,5000 yen off the top every single month as you go into your second year. That's a pretty healthy chunk of change to be ponying up and it doesn't go away once it starts. What is more, you're also supposed to pay up for the year you're behind before you leave your ward or go back to your home country. That means there's a combined balloon payment of about 450,000 yen waiting for you before you leave unless you decide to skip out on the bill. Things start to look a lot more expensive in Japan when you start factoring in ward taxes and health insurance payments calculated at their real rates rather than just looking at the cost during the one year calculation period.

What is more, most folks who tally up their monthly costs tend to dismiss certain expenses as "unnecessary" in their attempts to prove how cheap it is to live here. If you mention the cost of cable television or high speed Internet, for instance, they personally see no need for such things and won't factor them into their tallies. In fact, any expense which they personally don't have isn't a valid cost in their eyes even though many people back home and in Japan find monthly expenditures on gym memberships for fitness (which is actually more necessary in Japan because small places don't easily accommodate exercise gear), cable, and Internet quite reasonable parts of their budget. Ironically, some of these optional expenses are actually lower in Japan than some other countries and would help support their points but including them ups the total too much and leaves the remaining salary total at a less impressive number. (Note: I'll list a few of these at the end for the sake of comparison.)

Depending on the rules and regulations of your home country, there is also an opportunity cost for living in Japan. People who settle here permanently pay into the pension system, but few foreign folks plan to be around for 20 years so they can collect on it. Also, frankly, the entire system is a pretty bad deal all around where you end up collecting such a puny return on your investment that it'd take a decade to begin to get back anywhere near what you put into it. At any rate, every year you work in Japan is a year you don't pay into your pension system at home and could be undermining your future retirement fund. You should be factoring in some savings every month to build up a pension fund, but most foreign folks (though not all and certainly not the real long timers) just see that they only pay about 6% federal tax on their pay checks and count their blessings. Japanese folks are losing a lot more than you because they live in the "real" Japan where they have the same sort of responsibilities and tax burdens as you did as a real citizen back home.

The more reasonable approach to viewing how expensive life is would be to compare percentages of your income that various fixed expenses (rent, food, etc.) are consuming. Back in the U.S., people pay an average of 21% of their income on housing. Food costs similarly tend to take up a certain percentage of your income. I can't speak for other areas of Japan as I've not lived all over the place, but I can say that Tokyo rent can take up to 25% or more of a person's income (in most cases). Food has actually been getting cheaper since we first moved here though it is still costing us a greater percentage of our income compared to back home. Unfortunately, costs of food in Japan are going to increase in 2008 after decades of stable or falling prices. Milk prices have already gone up about 10 yen per liter and other prices are set to follow.

All that being said, a lot of the comparisons between life in Japan and life in other western countries that you read about in newspapers or from authoritative sources on economic situations tend to be rather unrealistic as well because they ignore cross-cultural lifestyle issues and attempt to shoehorn western notions of comfort into the Japanese cost of living picture. They look at the costs of a place with a larger footprint than is average, a car, gasoline, etc., but one doesn't really need these things in urban areas in Japan (where life is the most expensive). Life can be (relatively) comfortable here taking public transportation because the system is so much better implemented than in countries where the population density is sparser. However, it's still a huge pain cramming onto crowded trains and schlepping back and forth to stations, especially if you're carrying heavy or bulky items you have shopped for and having to always use public transport does have an element of degrading your quality of life.

Even if you ignore the quality of life issues which tend to inflate comparisons, living in Japan is expensive though what one tends to find is that you get used to scaling back your lifestyle to fit into the economic picture and eventually feel like it isn't so expensive or so much of a problem. Also, since many people come here with notions of outrageous prices, anything less than that seems downright cheap by comparison. It isn't so much that Japan is actually inexpensive to live in but rather that most foreigners learn to adapt to a lifestyle which allows them to live with the higher expense comfortably.

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Here are some figures for comparison (note the salaries at the end to consider percentages):

Monthly fixed expenses (in Tokyo in my ward):

ADSL (50 Mbps) Internet access: 400 yen for modem rental, 1250 yen for ISP server space, 2600 yen for service = 4250 yen (~$39)

Cable television: 2600 yen (~$24)

Water = (a bill of about 8100 yen comes every two months) 4050 yen (~$37)

Gym membership: (depends on the plan-early morning plans are cheap, evening and all day plans are expensive) 5,000-10,000 yen (~$46-$92)

Health insurance: 10% of income with a cap of around 530,000 yen ($4700) annually

Ward taxes: 5% of income

(Note: Health insurance premiums were raised on low income folks last year and lowered on higher income folks in our ward so health insurance is 6% if you make around 500,000 yen a month or more and higher (10%) if you make 200,000 yen or less.)

Monthly variable expenses (in Tokyo in my ward) averaged out for comparison:

Electricity: (higher in summer, lower in winter) 7,500 yen (~$69)

Gas: (lower in summer, higher in winter) 6,000 (~$55)

Rent: (higher in my area because of its proximity to major train and subway lines and to central downtown Tokyo) 80,000 - 130,000 yen ($736-$1200)

Usual salaries:

Eikaiwa (English conversation schools): 250,000-350,000 yen ($2300-$3221)

*Office Ladies: 200,000-250,000 yen

*Contract employees: 250,000-400,000 yen (depends greatly on the type of work and skills of the worker)

*Salaried workers: 300,000 yen-600,000 yen (depends greatly on seniority, industry, and experience)

University teachers: 450,000-600,000 yen ($3680-$5522)

*These are not jobs foreign folks tend to do (unless their Japanese is good enough to function in a capacity similar to Japanese workers) but are included for reference. These figures include twice yearly bonus payments which tend to increase the average monthly salaries by about 30% in most cases and about 50% in a few cases.

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You may note that there is much more variability in the salaries of positions for Japanese staff than the typical work for foreign workers doing work which requires a university education and that I don't include unskilled labor in this list. In the case of the latter, I don't include it because foreign workers who do unskilled labor generally don't shoulder the burden of their costs of living alone (nor do unskilled Japanese workers, for that matter). Also, I frankly have very little experience with such workers. I can only say that the minimum wage in Tokyo tends to be about 1000 yen an hour but only college and high school kids are expected to take jobs in that pay range. I cannot say for sure, but I believe unskilled (legal) foreign laborers tend to make about 150,000 yen a month in Tokyo. Illegal foreign workers make about 10,000 yen a day.

However, research on the Internet shows that skilled "blue collar" laborers are not so badly paid:

Bricklayers	17,700
Carpenters	21,900
Electricians	17,700
Plumbers/pipefitters	17.600
Sheetmetal workers	15,900
Structural iron/steel workers	16,100

Rates reported in Japanese yen per 8 hour day.
Source: Japan Society of Cost and Project Engineers, November 2004.

Information obtained here.

In fact, if these figures are correct, they are paid more than I was when I worked in a Japanese office (I used to make about 14,000 yen a day).

The main difference between teachers and regular Japanese employees is that teachers and some foreign employees salaries tend to remain flat (or at least be capped at a relatively lower salary) regardless of seniority whereas Japanese staff tend to see consistent upward movement in their salaries. That being said, teachers and foreign employees tend to start at a somewhat higher salary to begin with than a freshman Japanese employee.

And finally, before I get a ton of comments from people saying they know a thousand Japanese people who are making much less than teachers, keep in mind that the average complaining Japanese staff person will indicate their salary to you sans bonus figures (and you don't get the bonuses they do). The vast majority of Japanese staff members get a summer and winter bonus of about 2 months salary (sometimes more, and on rare occasions less). That means that for every 12 paychecks you get, they are actually getting 16 paychecks. They just aren't getting all of their salary on a monthly basis so a person who claims they are poor because they receive 200,000 yen a month actually makes 266,666 yen a month once her bonus is factored in as monthly pay.

Stocks

For many years, one of the lessons I conducted for my former company included the topic of "gambling". Over the years that I taught this lesson, I'd guess that I heard and read opinions from about 500 different people on this topic. The fact that the Japanese don't recognize how much gambling occurs in their culture wasn't the surprise as they can be myopic when it comes to acknowledging vice in their culture. The thing that was surprising was how many of them wrote long essays on the fact that they considered investment in stocks a form of "gambling."

In some ways, they did have a point. Like gambling, the stock market is something you put money into and hope will yield positive results. The students who equated stocks with gambling mentioned that it was akin to horse racing (which is a very popular form of gambling in Japan). They said that people who are relatively successful betting on the horses research them and know the smartest ways to bet to win overall. Additionally, certain horses with high odds of winning yield low winnings and the long shots yield high ones just as "safe" stocks offer low dividends and risky ones yield high ones. Finally, like playing the stock market, there is an element of dumb luck involved. There are people who invest smart, of course, but there are also those who just get lucky because the way the wind will blow in a particular market is hard to predict. And favorable winds that boost your investment's value could turn ill at any time just as that "sure thing" horse could have a slow day or stumble and lose.

Because of this attitude, most Japanese have generally been pretty skittish about investment in stocks. It's certainly not that they aren't willing to do the work involved in learning about it but rather that the lack of predictability makes them uncomfortable. One of my students did invest a small amount in the her husband's company's stock but she only did it as a small form of "insider trading". That is, she invested when her husband knew something was going to happen that had a nearly 100% chance of increasing the stock's value. She and her husband made about 100,000 yen ($880) then promptly divested before what went up had a chance to go back down. Their hasty retreat once a profit had been made lead me to wonder if one reason stocks aren't something Japanese people like to invest in is because you have to sell your assets at the right time or risk losing all you've "earned" should your stocks' value depreciate. I guess this offers another parallel to gambling. If you "let it ride", you might get more money, but if you're conservative and take your winnings and leave now, you may miss a valuable opportunity and regret it.

Lately though, there has been a market that some of the Japanese have grown comfortable playing in and that's the currency market. There's a growing number of housewives who have been chasing currency values in an attempt to boost their family's nest eggs. I can't say for sure why this is the type of investment that has drawn them in but I suspect it's because money is something they feel comfortable speculating on as it's easy to identify with. Even though the forces which shape the relative values of various currencies are complex and deep, I imagine that it feels more "real" and concrete than a company's business performance and market forces which affect their success.

It could also be that the Japanese have witnessed a lot of scandal and have been through a bubble which shows them so very clearly that what goes up, can come crashing down. After you've seen Japan move from a country associated with cheap junk to a point where it is perceived as having the greatest companies producing the best products in the world only to see it come floating down again as it was left behind in the tech boom of the 90's, you have to think that investing in the future of various companies is a gamble you don't want to take.

Maintenance Fees

"Wet paint" signs near the newly-painted step up to our entryway.

If you sign a rent contract in Japan, there's a good chance that a small amount of money will be added to your monthly rent as a "maintenance" fee. Often this fee is around 2000 yen ($17.43) per month. That means that you're forking over a little over $200 a year for this added service.

This fee is supposed to represent shared costs of maintaining the property by all tenants. It doesn't have anything to do with what happens inside your apartment as that is covered by your cleaning deposit. If anything needs to be repaired inside, it'll be deducted from your deposit when you leave.

The entryway to our apartment. The "ceiling" above was freshly painted as was the pipe you see slightly further back than the fire extinguisher. The closest door is our single female neighbor's. The furthest is our single male neighbor's. Our door is obscured by the pipe.

Since our apartment building is small (only 6 units - 3 on the first floor and 3 on the second), there isn't much in the way of maintenance on a regular basis. Mainly, the landlady sweeps up in front of and behind the building about once every 2-4 weeks. Since these are very narrow spaces, it takes her about 10 minutes tops to do both. Other than that, there are two fluorescent lights in the entryway which our maintenance fees are supposed to cover the electricity for and the cost of replacement bulbs. I should note, however, that the one just outside our door flickered for over a year before it was replaced.

Our landlords are nice and helpful people and I couldn't ask for any better but this fee is a complete crock for the most part. There is no way that it costs anywhere near the 12,000 yen a month our landlord's collect from the entire building for them to care for the exterior of the building. The only time when you can see a serious investment in the exterior is on the type of occasion we experienced recently.

The entryway of both the first and second floors as well as the stair railing to the second floor were painted over the last few days. I believe that this is the second full-scale repainting of these areas in the 18 years we've been in this apartment. While I'm sure it takes a bit of money for this sort of remodeling, I'm also sure it doesn't cost as much as 9 years worth of maintenance fees for 6 apartments. I guess the money may also cover certain other types of major repairs such as fixing the roof or replacing the crappy plastic floors on the verandas (they're very thin and not safe to stand on) but I've not noticed anyone making such repairs since we moved in.

The paint in the "ceiling" above the entryway had been peeling horribly over the last 5 years or so. I'm talking about huge flaking curls, not some tiny little cracks so it definitely could have used a freshening up. I'm guessing that one of the apartments above us must be due for a vacating though because I can't see why they'd choose to spiff up the place now after letting it go for so long unless another potential tenant was going to look the place over.

To be honest, I didn't really care much about the peeling paint and I don't think most people looked up and saw it. In fact, the two days of painting were by far more annoying than the peeling paint. The entrance to our place is incredibly narrow and painting the "roof" over the walkway required it to be entirely blocked off as a man had to prop up and stand on a scaffold to reach it. There were also paint fumes wafting in our front window for about 48 hours and they still haven't dissipated entirely. I'm pretty sure I'm a little dumber from brain cell death due to inhalation of these fumes so excuse any typos that get through from this point forward.


Not everything that could have used a touch up got the once over though. The glass and fence pictured above separate our apartments from the landlord's garden and the glass is cracked and the frame disintegrating but it hasn't been repaired. It gives the place a little bit of an "abandoned building" look on that side.

Despite how it may sound, I'm not really complaining about my rent or even having to pay a shared up-keep expense. I just find it slightly annoying that this "fee" is actually just a way to increase your rent by tacking on a few extra thousand yen each month but calling it something other than what it is. I guess it's a little bit like those "postage and handling" fees you pay for items you order through the mail which are a great deal more expensive than the shipping price you see on the label and would only be justified if the person doing the packing was making $50 an hour and the box cost about $2. You know you're getting overcharged for something just so that the person you're paying carries zero risk of ever spending more than you're being asked to pay.

Bonus Points

A recent order we made through Amazon Japan.

If you've done much shopping in Japan, you'll soon learn that the Japanese are wild about the concept of bonus points. I'm not sure where this started but the first bonus point system of any great utility that I encountered was through electronics seller Yodobashi camera. When you make a purchase, you can sign up for a gold plastic card and they will add points each time you buy something. At some time of your choosing, you can use those points to buy something else.

The Yodobashi system translates directly back to store credit and is relatively straightforward. You get 10% of your purchase back in points and each point is worth 1 yen in store credit. If you buy one big ticket item at Yodobashi, say a refrigerator for 50,000 yen, you'll get 5,000 yen worth of store credit to spend on something else. You can use the points at any time to pay in part for any item if you don't have enough to cover the cost of the entire item. The only thing you can't do is get cash back.

While most of the time such point systems tend to come along with higher overall price tags at the merchant, that isn't necessarily the case in Tokyo. While Yodobashi isn't always the cheapest place for everything, it is cheaper for some things so you can often get those points for purchases you'd make at their shop anyway.

In what I'm pretty sure is a move to compete with shops like Yodobashi which offer such points, Amazon Japan started offering them with purchases about a year ago. The screen shot above shows an order my husband and I made today for a USB headset which we're getting nearly for free because of points we accumulated via Amazon Japan. Since we were buying these items from them anyway, this is a rather nice little bonus. Amazon America does not offer a similar system nor do they offer the free shipping for all Amazon store items that Amazon Japan does. This makes the level of service via Amazon Japan rather significantly better than that in the U.S.

I'm not sure if any place in the U.S. consistently offers a point system which accumulates store credit in this way. When I lived there, most of my experiences with point systems were at fast food places like Subway or frozen yogurt places which stamped a card and gave you a free serving when you filled it up. I must say that I like the system Amazon Japan and Yodobashi use quite a bit better than the "buy 10, get 1 free" bonus system.

Getting a Japanese Credit Card

The doorbell rang today (Sunday) and a postman was standing in his rain suit with a registered letter. The last time I got a registered letter in Japan, it was from the local ward office demanding I cough up my delinquent health insurance payment or they'd go to my company and tell on me. This wasn't much of a threat because I'd quit my job about a year ago at that time but I paid anyway and now they love me again.

I wasn't exactly pleased to see another registered letter and wondered who was going to threaten to run off and tell my mommy on me this time, especially since I'm not behind in any payments now. Fortunately, it was just the bank sending me a new credit card to replace the one which is at this very moment approaching complete obsolescence. I believe this is my third renewal since getting a Japanese card and all I remember is that the first one was really nice-looking with a grey and black representation of Botticelli's Birth of Venus on it. The re-issued one looked pretty much like the one above, blue and boring.

If you read forums or blogs, you find a lot of hostility when it comes to foreigners (not) getting cards issued by Japanese banks. A lot of this is justified because it is difficult to get a card if you're not Japanese. The banks are afraid you'll spend to your maximum credit limit and blow the country so they don't want to issue cards to people who have been here a short time or haven't shown job stability. In my case, I was able to get a card after working at my company for about 5 years. My company asked me if I wanted a card (I didn't request one) and did all the paperwork for me. It surprised me that it was so simple given all I'd heard.

If you read forums frequented by foreigners, you get a lot of misinformation about what you have to do to qualify for a card. I've heard people say you have to be able to read the fine print, which is written in Japanese, and therefore you can only get a card if you are fluent. This is simply not true. I never read the agreement nor even had it translated for me by someone else. It's also sometimes said that you must have an official hanko (personal ink stamp seal) to get one and this is also not true.

These days, it's probably easier to use a shop which really wants to issue cards to help you get a card. Costco in Japan, for example, is more than happy to sign you up and they're very gaijin-friendly. It's also easier to get the sort of cards that charge an annual fee (like Master Card) than the free ones. The truth is that Japanese financial institutions aren't stuffing credit cards into people's hands like candy into a child's Halloween bag like they are in the U.S. They're a bit more wary, particularly with people who are potentially a bad risk because they have no incentive to be responsible for their debts, and frankly, a lot of short-term visitors lack such an incentive. It's not too much to ask that people show some sort of commitment to their life here (staying more than a year) and the ability to pay off their debts (by having a steady job) before handing them a card.

If you really want a card, I suggest having your visa sponsor apply on your behalf just after they renew your second contract. Most accountants in companies are willing to lend a hand though you may be out of luck if you work for a monolithic fast food school that doesn't offer any sort of support to its employees (such as Nova).

Some people might wonder why someone who resides in Japan must have a Japanese card when a card from any country is just as usable at shops or for on-line purchases. The main reason they're good to have is that it saves you charges for (two) currency exchanges. If my husband and I use our U.S. card, we have to transfer yen to dollars to put money in our U.S. bank account to cover the charge. This is a time-consuming and expensive process which we prefer to do with great infrequency. Additionally, we lose money on the exchange since the true rate is not charged when doing a currency exchange (if it's ¥123 to the dollar, we'll probably pay ¥125 to the dollar). If the purchases are made in Japan, the disadvantageous exchange rate is applied twice. Essentially, we buy in yen, it's converted to U.S. dollars when charged to a U.S. card and it's paid in dollars which were converted from yen. In the long run, having a Japanese card can save you a tidy bit of change.

Double My "Fun"

Click on this smaller picture for a more readable large one. The gray areas are what we pay. The numbers on the left are income levels.

This morning, my husband and I scrutinized the documentation that came with my ward taxes and discovered that the rate has been doubled from 5% to 10%. That's a hike from 3% to 6% for the local ward taxes and an increase from 2% to 3% for the Tokyo-to taxes.

I may be reading the letter I received incorrectly but it appears that those who make less than 2,000,000 yen a year (a bar which I am very far below) have had their rates doubled and those who are above 7,000,000 yen have actually received a reduction from 13% to 10% total taxes. The charts I received indicate that a flat rate for both the ward and Tokyo-to is now applied to everyone regardless of income.

There is some other information at the bottom of the page which I can't understand well enough to make conclusions about so I've solicited Luis for help (hoping he can get his Japanese girlfriend to have a look on my behalf). I'm hoping this information explains what appears to be an attempt to expand the gap between the poorest and the richest by taxing those of us at the low end more and those at the higher end less.

I don't usually read gaijin.pot's boards but this has been a topic that has been discussed quite a bit recently. It seems that ward taxes are being boosted because income taxes have been lowered but you're still going to pay more in the end. The idea is that the federal tax money that used to go to the local government will be paid directly to them via city taxes rather than first paying it to the federal government and having them hand it over to the local governments.

I mentioned previously that I got all my tax money back. Well, if this system is at it appears, I'm about to pay every yen of it back in ward taxes anyway.

Slowest Calculations Ever

In previous posts, I've mentioned that city ("ku") taxes and health insurance rates are calculated based on the previous year's income and not on one's current income. That means that becoming unemployed doesn't reduce the amounts of these two expenses until at a year after you stop working. Conversely, you pay nothing the first year but you don't often figure that out when you first arrive in Japan until something happens to change your income.

I stopped working about one year and eight months ago and I didn't receive a bill for city taxes based on my now substantially-reduced income until today. Up until two months ago, I was still being asked to pay based on my old full-time salary. This was growing increasingly frustrating as the combined expense of city tax and insurance was more than half of my monthly part-time salary. I still haven't received any adjusted bill for health insurance though I'm guessing it won't be far behind.

There are several points about this situation which have been immensely annoying to me. One was the fact that it took closer to two years than one to re-calculate my bill based on an income which is about 1/12 what it once was. If I'm only a year behind, why does it take 1.6 years to do this calculation? I actually know part of the answer to that question. It's because taxes are filed in March and it seems the deciding year's wages are calculated from January to December of the previous year. That adds 3 months to the adjustment time right there.

Once the taxes are filed and accounted for, it seems it takes another 3 months for the various departments to get their act together and send out new bills. I guess my city taxes are spent on something other than paying enough people to figure out how much I should pay in city tax and insurance. I'm guessing it's being squandered on putting 3 bicycle cops on every corner so I can never park my bike anywhere except right in front of my apartment building.

The most irritating thing about this is that, past a certain point, I started to ignore these inflated bills because I knew they couldn't be correct for such a long period of time and that once someone somewhere got around to it, I'd be getting more appropriate bills. While it seems no one could spare a moment to adjust my taxes and insurance, there were plenty of staff on the job sending out inflated bills like clockwork every month with accompanying threatening notes with big red lettering and exclamation marks demanding I pay up or they'd contact my company, take possession of my possessions, garnish my wages, or sell my first born (should I have one) into indentured servitude.

The adjusted city tax bill that came today was for only 4,000 yen which is greatly more in line with what I should be paying on a meager part-time income. The last bill which I ignored was for 30,000 yen and there's no mention of it anywhere in the envelope with the new bill so it seems that my conclusion that I was being overcharged and it'd fix itself eventually was right. I'll be keeping my fingers crossed that the health insurance will be similarly more wallet-friendly soon.

Banking in Japan

When I first arrived in Japan, I got hired by Nova conversation school and got my first taste of "how things work" in Japan from a financial point of view. First of all, your company chooses the bank you will be paid into based on the bank it does all its business with. The Japanese don't use checks except for rare business transactions so you're paid by direct transfer. If you're new and can't read or speak Japanese, a representative of the company will usually dutifully trot down to a bank with you and you can sit around being confused and writing exactly what you're told to write onto the various forms shoved in front of you.

You can open other bank accounts at different banks, of course, but you'll have to manage moving the funds from the bank your company uses to the bank you want to use and you'll have to pay a transfer fee of about $3.50 each time you make a transfer unless you want to carry around wads of cash. Since you don't get any interest to speak of on Japanese bank accounts (.2%-.5% in general on regular savings), there's really not much point in sending your money somewhere else.

Most mundane business is done using automatic teller machines (ATMs) rather than dealing face-to-face but one does need to do some activities with a real person. The process of arranging for payments to be made as automatic deductions from one's bank account, sending money overseas, and buying traveler's cheques are among those activities which require interaction with a real person. It was the latter which took my husband and I to our bank today.

Dealing face-to-face is a predictably drawn-out experience when it comes to anything requiring foreign currency exchange of any kind. There is never a line for such things so you can get waited on right away. The clerks are meticulous every step of the way and feel obliged to point out the exchange rate on a digital display at least twice to make sure you know what you're getting into. We actually were told four times by two different people.

Once you've communicated what you want, the clerk skitters off and gets the proper forms. You fill them out while she (or he) watches over your shoulder. If you make a mistake, you generally get to do it all over again. The form is then taken away and carefully scrutinized by crack teams of bank personnel for 10 minutes or more (this happens no matter how long or short the form is) and you're asked to move from the seat in front of the desk and sit in a waiting area.

Invariably, someone will rush over to you and say they require something else. It doesn't matter what you give them initially. You could give them every document you own and all your identification and they'd still need something else. If you give them your gaijin card, they'll want your passport. If you give them both of these, they'll probably want your employment contract. I don't think they really need the information, they just have to come over and ask for one more thing.

When the forms have endured all the scrutiny they can bear before bursting into molecules from the sheer force of the inspection they've received, you will be called back over to receive whatever it is you came for. In our case, it was $1000 worth of traveler's checks. The exchange rate we paid was 122.58 yen to the dollar. The math is pretty easy on that one so I said "122,580 yen" when the fellow (who spoke English) came over to explain the cost. He wouldn't take my word for it though and used a calculator twice to verify the total. He repeated the process for the 1% fee though anyone with a grade school education could have done it. Form must be followed at all costs.

After some confusion about where the envelope was to tidily put away all the paperwork and cheques, they gave us the pen and package of pocket tissues pictured above and thanked us with a smile. They are at times pointlessly meticulous but always polite.

Our current bank is Mizuho which was a new bank created from the consolidation of some other banks (including my former bank Daichi Kangyo). At some point in the not too distant past, a lot of banks joined up because of fiscal imprudence on the part of the banking industry on the whole. I guess that merger helped Mizuho scrape up the funds for a better mascot so we now get "Hello Kitty" gifts. In the past, Daichi Kangyo's motif was a pink flower design and no cartoon characters were associated with it. My first bank account ever in Japan had Peanuts characters as mascots. Snoopy was on my first banking card.

I'm never sure why banks feel obliged to have cartoon characters as a part of their advertising or card designs. I'm pretty sure that it does nothing to improve the number of people who bank there since so many people just use the bank their companies use. It certainly doesn't improve any sense of the bank being reliable or trustworthy to know "Hello Kitty" is on their side.

Magazines

Click this picture to see a full-size one.

The other day while I was waiting in a long line at the supermarket, I saw a woman walk up to the magazine rack near the check-out counter and bypass the top magazine to take one from beneath it. This isn't uncommon behavior in any country since, even in the U.S., the front copy commonly is perused by people in order to decide whether or not they want to buy one.

During my long wait, another woman came up to the rack and pulled out a publication that was tied up in the same manner in which you see bundles of newspapers. This was done to hold a bonus book of some sort inside the magazine. She proceeded to manipulate the magazine in multiple ways in order to extract the book so she could look at the cover. One might easily imagine that this bent the magazine up a bit but no one in the shop paid her any mind.

One thing you learn early on in Japan is that the Japanese shopkeepers aren't nearly as uptight about people manhandling magazines as those in the U.S. There's an episode of The Simpsons where the local convenience store owner, Apu, tells customers who are looking through a magazine, "hey, hey, this is not a lending library..." I think that pretty much sums up the attitude of American merchants toward customers reading the magazines instead of buying them.

Conversely, in Japan, there is a long-standing tradition of "tachiyomi". This is where customers stand in the shop and read. Though some shops post signs asking customers not to do this, they often do it anyway. It's not unusual to see crowded banks of readers in places like 7-11. If it becomes too bad, some of them will seal their publications in plastic bags. Given that people will hold and manipulate magazines for far longer periods of time in Japan than in the U.S., you can see why people would skip the front copy and purchase one further back.

For those of us who are in the market for English magazines, there's generally nothing on the racks of any use in mainstream shops. There are some places which carry imports - Tower Books, Kinokuniya, and the National Azabu gift store (above the supermarket). All of the foreign magazines you buy from these places are very expensive. Sometimes the price is as high as three times the U.S. cover price depending on the publication.

Subscriptions to foreign magazines are somewhat better price-wise but you either have to pay much more for airmail or wait a couple of months to get your magazines. If you're a serious fan of magazines but don't want to fork over a ton of money for something which is of temporary amusement, you may want to consider digital subscriptions via Zinio. Zinio distributes a wide variety of publications that can be used with its proprietary reader software (available for both Mac and PC but the Mac version is smoother-acting and better-looking). The reader is especially designed to emulate the real magazine reading process as well as incorporate some enhancements for marking content.

Most of the magazines purchased via Zinio are the same price as a U.S. subscription no matter where you live. Women's magazines, in particular, are a serious bargain when bought in this fashion. Woman's Day and Redbook, for instance, are less than a dollar an issue. Computer magazines are also a relative bargain when subscribed to in this fashion. The big three, MacWorld, PC World, and PC Magazine are all about $20 a year. Another thing you can do, if it is of interest to you, is subscribe to and receive uncensored men's magazines. Anyone who has lived in Japan knows these types of magazines have all the areas which show pubic hair scratched out.

There are both good and bad points to getting your magazines this way. The best point is that you get them in as timely a fashion as possible and they are quite cheap. If you look at it in terms of yen, you're getting a U.S. publication for less than a price of a 500 ml. Coke at a convenience store. As impulse buys go, you wouldn't hesitate to pick it up for that price at a shop. Additionally, a digital copy doesn't take up space in your home, waste paper or get mangled in transit.

On the down side, many start with the problem of not being able to physically hold a magazine while reading it as the tactile experience is very important to many people. While you can print out pages of some (possibly many) of Zinio's digital issues, some are print-disabled or limit how much you can print. Some magazines also let you send copies to friends but it seems that most do not. This is a change from Zinio's earlier subscription situation. A few years ago when I first started getting magazines this way, I could send copies to 3 people by e-mailing them a link and they could download a copy, too.

There does appear to be some DRM going on with Zinio publications. You cannot simply copy an issue to a disc and give it to a friend to read who has the Zinio reader software installed. You also cannot blithely move your issues from computer to computer but you do appear to be able to authorize multiple computers to read the files. If you move from an old computer to a new one and have backed-up your magazine files, the new machine seems to get re-authorized to read all your user-tagged files once you download new magazines from your account.

Annotations list, highlighted text, and a sticky note.

If you've progressed to the point where reading on your computer screen doesn't bother you and you don't feel you need to hold a magazine in your hands to enjoy it, the Zinio subscriptions are a very good idea. The interface is easy to use and allows you to zoom in and out while offering sharp refocusing of the text and pictures at each of 3 zoom levels. You can also use a virtual highlighter to highlight text and use Post-Its to make on-screen notes. You can then click on an "annotations" button which will show you the pages you marked and you can go directly to them at any time. This helps you go back through archived magazines and find articles you were especially interested in without having to flip through pages.

In terms of access, archiving and price, you really can't beat digital subscriptions. You can also feel good about the fact that you aren't contributing to the wasteful use of paper.

Getting It All Back

Every year, people feel annoyed at the prospect of having to deal with the tediousness of filing their income tax forms. There is one thing worse than filing your tax forms and that's having to do it twice. I already finished my U.S. taxes and sent the forms off a couple of weeks ago but this past weekend my husband had to head off to the local tax office and file my Japanese taxes.

This is something I didn't have to do for many years because my company somehow took care of it. It wasn't until I stopped working that I had to do it myself for my freelance work.

In the U.S., people get several months to file their taxes but you only get one month in Japan (from February 15 to March 15). I'm guessing that might be one of the reasons why the local ward office's (wards are like little cities inside of Tokyo) offer a lot of assistance for free relative to the U.S. In our ward, my husband went to a place with about 12 tables seating 12-16 people each. There were about 15 "helpers" there who assisted people with their forms. The whole trip took him about an hour but he said most of that time was spent waiting for a helper to become available.

In general, the bureaucratic approach in Japan is a lot less mercenary than the U.S. It seems like they expect you to make mistakes even though their forms have a less complicated set of rules than the I.R.S. applies to their forms. I'm not certain but I don't think they have the same system of penalties that the U.S. has should you screw up. I think they'd just make you pay any extra tax if a mistake was found and possibly make you write a letter of apology.

In Japan, there is this "custom" of writing a letter of explanation and/or apology when you screw up official forms. My husband and I once forgot to go to the local government office within two weeks of getting our visas renewed. When we remembered about a month and a half too late, they just made us write out why we forgot and nothing more came of it. This is very fitting with the Japanese character. They don't want people to make mistakes but they don't necessarily want to penalize you strongly for having made them.

This relative flexibility has both drawbacks and benefits. In one way, it's a reflection of compassion and tolerance of human fallibility. In another, it allows for a lot of "case by case" consideration where prejudice can be selectively applied when judging people's mistakes. Because of this, you can never be quite sure where you stand when such issues come up though there is generally a good chance that you will be treated in a lenient fashion in regards to issues which involve dotting "i's" and crossing "t's".

In my case, I was pleasantly surprised to learn that I'd made little enough last year that I would be getting all my tax money back as I'd expected only to get 50% back. The thing that I'm really looking forward to though is my tax information setting my health insurance and city taxes to levels commensurate with my current income. Since both of these are always a year behind because you pay nothing at all the first year, I've been spending from 1/2 to 2/3 of my small income on these two expenses for the past year now and it's been disheartening. Supposedly, the recalculation will occur after they get my tax forms and I'm really looking forward to feeling like I'm making money for something more than paying last years insurance and tax debts.

You Get What You Pay For

Hanamasa coffee...when they say "pro", they don't mean it in a good way.

There are some things in life where price matters little because the quality isn't sufficiently important to most people to be worth the added expense and there are other things where the quality can be unacceptably poor unless you're willing to pay more. Two things where the latter is almost always the case are bread and coffee.

If you're trying to be frugal in a city with a high cost of living, it's a good idea to cut costs where you can. To that end, my husband picked up the bag of coffee pictured above at Hanamasa. It was 500 yen ($4.29) for 500 grams (about 1 lb.). For those who don't know Hanamasa, it's a store that sells food in bulk and caters to restaurants but anyone can buy from them. You find the word "pro" on a lot of their items because they want you to think that professional cooks or chefs use these brands. For all I know, they might.

This bag of coffee says the beans are 100% arabica beans. Coffee aficionados know that arabica are supposed to be good beans. The other type, robusta, is cheaper to produce since the plants grow more quickly and in climates that arabica beans cannot grow in. Robusta is frequently used to make instant coffee.

I had never actually heard of a "full city" roast (as is specified on the bag) before but apparently this is a moderate roasting level which allows both the flavor of the coffee bean and the roasting effect to come through in the coffee. Perhaps the roast is the reason we don't care much for this coffee or perhaps the cheapest arabica beans are used. I'm not sure but the coffee tastes too acidic and somewhat sour for our tastes.

What this coffee reminded me most of was the sort of mundane stuff you tend to get in Japanese restaurants. I guess that's no surprise since this is intended for restaurant use. In Japanese, it says "Classic Mountain". I think it's meant to fool people into thinking it's "Blue Mountain Blend" (which is the most popular coffee in Japan).

My husband and I tend to go for Starbucks Espresso from Costco which costs more than Hanamasa's coffee (though less than Starbucks bags at the shops). It is far more to our tastes. I wonder if there really is nothing wrong with this cheap coffee but just that he and I are used to relatively dark roasts. Somehow, I doubt that. It's unrealistic to think that cheap coffee is going to be great.

Time to File

Previously, I did a post which was an overview of the tax situation in Japan. At this time, there are a few specifics I think are worth mentioning about dealing with income tax back home. If you're a U.S. citizen residing in Japan, you should have gotten the above booklet in the mail if you've filed previously. If you haven't filed before, you'll need to contact the embassy for forms or file on-line. Those living abroad get an automatic extension so you'll have until June 15 to file but there's nothing to be gained from putting it off aside from feeding your impulse to procrastinate.

If you made less than $82,400 last year, you don't have to pay any taxes (but you still have to file) and can file most simply using the 2555-EZ Foreign Earned Income Exclusion form in conjunction with the 1040 form. I'm betting most people reading this blog, like myself, aren't making anywhere near that much while here. If you are, you can probably afford a tax accountant to take care of business for you.

In order to qualify as a foreign resident and be exempt from paying U.S. taxes, you don't have to have Japanese residence status. You just have to have been living outside the United States for 330 days during a 12-month period. You don't even have to have lived in only one country to qualify.

Your employer (or employers) should have provided you with an income statement for 2006 at the beginning of this year. They usually give you two or three copies of a small, thin form. These forms are used to file Japanese income taxes and you shouldn't have to ask for one but, if you didn't get one, you should start pestering someone about it. Even though it is all in Japanese, it's adequate proof of income for the I.R.S.

When you calculate your income in U.S. dollars, you are supposed to use the exchange rate that was active during the period in which you received the income. For 2006, the average yen to dollar exchange rate was 116.31 yen to the dollar according the U.S. Federal Reserve. I'm pretty sure this is a safe figure to use when making your calculations.

The income taxes you pay in Japan are listed on your income statement but they have nothing to do with your U.S. income taxes so you don't have to mention them anywhere or factor them into your calculations. You have to file Japanese income tax forms between February and March 15 at a local tax office. In most cases, you probably neither owe Japanese income taxes nor are owed a refund but some employers will chronically over-tax employees because it's more convenient for them to apply a blanket tax rate which errs on the side of caution. My former company, for instance, always charges 10%, which is far more than necessary.

If you've got savings back home, you'll have to include a 1099-INT form if you earned more than $1500 in interest last year. Your bank should automatically send you an interest statement each year if they are aware of your address in Japan. If you operate from a U.S. address as far as your U.S. bank is concerned but are filing as an overseas resident, you'll have to have your bank send a form off to you or get a family member to forward one to you.

My husband usually files our income tax forms each year but, given that I have a lot more free time than him these days, I'll be dealing with it this year. People usually make a big deal out of filing their income tax forms but it generally isn't all that tough if you follow the instructions given in the book. I guess it could be pretty complicated if you made a lot of money and wanted to claim a lot of business expenses to reduce your tax burden but, for most of us in Japan, it's unlikely to be all that complicated.

Disclaimer: I'm not a tax expert and am not responsible for any mistakes you might make or errors as a result of following my layman's advice! ;-)

Of Marriage and Money

A letter on Dr. Andrew MacAllister's advice blog (To Love Honor and Dismay), reminded me of a psychological survey I once read about marriage. The survey listed the top 10 things couples argued about. The number one source of difficulty among American couples was money followed by children.

In Japan, women traditionally handle the money. In some families, the women give their husbands an allowance and budget the rest for necessary expenses and savings. This situation has been diminishing as women have been making more money and working full-time and therefore starting to contribute to the household income on a more equal level. My husband and I both find when discussing this issue with students that married couples often disagree on purchases with women frequently annoyed or objecting to lavish expenditures on "toys" their husbands want to purchase. This is something that Japanese couples have in common with U.S. couples.

During my time interviewing students at my former job, a good many men told me that their wives had to do more work in the household roughly proportional to their income. That is, if a woman made the same amount of money as her husband, they'd split the housework 50-50. If she made 1/3 of his income, she had to do 2/3 of the housework. This struck me as a relatively transparent justification for not helping out around the house much.

In a situation not too far removed from the aforementioned one, some of my students have told me that they pay bills proportional to their relative incomes. If a woman makes 200,000 yen a month and her husband makes 400,000 yen, she'll pay 50% of whatever he does on necessary expenses. Among American couples, I often read that expenses are not split according to income disparities. They tend to cut bills down the middle and each pays half in couples where money is kept separate. I've often read that this is a source of resentment for the party who makes less.

Frankly, I've always found the notion that a married couple has separate bank accounts a discomfiting one. While I can understand the pragmatism of it based on high divorce rates, I find it disturbing that people will share their hearts, their bodies, and their genetic material but not their cash. If you don't trust someone enough to share your money, then you shouldn't marry him.

As the letter in Andrew's column demonstrates though, it's not always as simple as that. Sometimes people just have very different values when it comes to money and that ultimately makes a more business-like arrangement necessary to reduce the amount of difficulty a couple experiences about money. Of course, as the letter also makes clear, sometimes a strict handling doesn't solve anything, particularly when values, income and habits are vastly different.

When I quit my job a little over a year ago, I was concerned that my husband and I would start to experience difficulties because we'd have to be more careful with how we spent money. Prior to my quitting, we were generally in a good position to spend as much as we wanted so long as new cars, precious jewels, or luxury boating gear weren't on the agenda. Fortunately, our values regarding money are closely in alignment (neither of us are inclined to shop casually or spend lavishly) and we never argue over money even now that we have to be somewhat careful with expenditures. Since we also don't have any children, this means we have very little reason to argue. ;-)

The High Price of Apple's Genius Help

I posted previously that my 2-year-old, lightly-used Mac Mini seemed to have a dead hard drive. In comments, my brother-in-law suggested I "take advantage of the customer support Apple is known for." I packed up an ailing iBook and my Mini and my husband took them to the Shibuya Apple store for a consultation.

The iBook is an old dual USB 500 mhz G3. Some of the keys on the keyboard don't work and the fragile delete key fell off (though I still have the key, it just needs to be reattached). Also, there seems to be a slightly faulty connection with the display. The screen dims and you have to squeeze the area in front of the left side of the keyboard to get it to return to full brightness. Since the keyboard only has issues with random keys (1, 5, 9, Q, return, etc.) and not an overall problem, it seems like the whole thing isn't dead and the display issue is clearly a loose connection problem if a squeeze can fix it.

The geniuses told us that it'll cost 20,000 yen (about $190) to fix the keyboard and 45,000 yen to fix both the keyboard and the display issue. Considering better iBooks than mine are going for about $150-$200 on eBay, I passed on this offer.

The ultra clever geniuses wouldn't guarantee that my problem with my Mac Mini was a failed hard drive but they offered to fix it for 40,000 yen (about $380). Considering a new Mini which is far better than mine would be $600, I passed on this as well.

I'm utterly disgusted by the inflated costs of these repairs. I know for a fact that I wouldn't pay this much if I went outside of Apple's repair service for a fix. I also know that I can buy a replacement hard drive of the exact same make and size as the one currently in my Mini (and from the same manufacturer) from Other World Computing for $100 (including shipping) and put it in the Mini myself in about a half hour. I don't know where Apple buys their drives nor how much the geniuses make but they'd have to make $400 an hour and pay twice as much as the going rate to justify a 40,000 yen price tag for the hard drive fix.

Apple either overcharges on an extended warranty (3 years instead of the miserly 90 days of the initial warranty) or gouges sufficiently on repairs that you will consider buying a new computer rather than keeping your old one. Either way, the customer is going to lose out by forking over $170-$350 on the extended warranty up front, by paying exorbitant repair fees, or tossing their old machine out the window in favor of a new one.

This trip brought home that what Apple is known for is higher prices than others offering similar services and products. I'm beginning to feel increasingly that there aren't enough options out their for computer purchases as I'm fed up with Apple and I don't want to use Vista.

Dubious Accounting

I haven't been posting as much lately because I'm starting to feel a bit burnt out. I'm not burnt out on posting, mind you, but a little burnt out on dealing with heaping piles of tasks that need to be done. Posting when I'm in this state is rather difficult because I don't have much energy to accomplish more than what I'm already doing.

Last week, I did a fair bit of freelance work on top of my private teaching load (which is up to full capacity again after the holiday lull) and my husband has been sick all week. He's been a trooper and worked anyway but it's really left him worn out and prolonged his cold. For those who don't teach, teaching is one of the hardest jobs to do when you have a cold because it strains your throat constantly and requires you to project yourself at least somewhat energetically all the time. It also makes all the disgusting little maintenance things (blowing your nose, coughing, sneezing, etc.) you have to do to alleviate your discomfort much more difficult to do because you've got an audience. What's worse, you've got an audience which is part of a culture that doesn't condone nose-blowing as a socially acceptable behavior.

Since my husband has been working 9-hour days while sick, he's not been able to help out much and requires more care than usual. Some people might wonder why he doesn't just call in sick. There are a couple of reasons for that but one of them is that he doesn't get paid if he doesn't work. For teachers in Japan, I don't believe there is any such thing as a "sick day" though I guess you can take one of your 10 legally-mandated vacation days off as a sick day if you haven't already taken them as vacation days.

In my husband's case, he has no vacation days left but also his paid time off is calculated in a dubious fashion so he gets paid less for taking a day off than he would if he worked that day. This is something that my company started doing the last year of my employment but I think is really sneaky and unethical. My husband's salary is variable based on the number of hours he puts in each month. He does not work for a set salary. If he takes a day off, his school divides the previous month's salary by the number of days in the month and pays him 1/30 or 1/31 of the previous month's salary.

Of course, no one works 30 or 31 days a month so this is a lower wage than one actually makes on a daily basis. The fair thing to do is divide the previous month's salary by the number of working days in the month (generally 21-23). This accounting technique allows his company to pay him about $50 less per day taken off.

When my former company instituted this practice after years of calculating it fairly, they just said that's the way they do it as if that was an explanation for an accounting technique which is clearly designed to screw the employee over. I don't think this is a Japanese practice though. In fact, I'm nearly certain other companies in the U.S. do it as well. Companies do this petty little accounting trick to cheat employees out of their fair wages and then wonder why they, in turn, do petty little things like steal office supplies, milk breaks for a few extra minutes or slack on the job when the boss isn't around. You reap what you sow.

Taxes While Living in Japan

A recent post by Roy indirectly reminded me about something I learned about taxes in Japan. The tax situation in Japan is pretty complicated and I can't claim to understand it very well beyond personal experience but my students and former Japanese co-workers have taught me a few other things.

In terms of personal tax responsibility, Americans don't need to pay income taxes in the United States unless they make more than $75,000 a year. Needless to say, few of us are in any danger of losing our tax-exempt status. We have to file a tax form regardless of whether we owe money or not. This was a fact that my husband and I were unaware of for an extended period of time while living here and there was quite a bit of panic when we discovered we hadn't filed for well over a decade and it may result in some problems despite the fact that we owed nothing. Fortunately, we didn't get in trouble. In fact, the IRS seemed to take it all in stride and sent us 3 years of back tax forms which we filled out and sent in. Now, we're on a regular schedule but it was a bit of a worry for awhile.

We do have to pay Japanese income taxes though the rate is relatively low compared to what we'd pay in the U.S. unless we opt to pay for the same sort of benefits we get back home (unemployment insurance, social security, etc). I'm not even sure that foreign residents can collect social security if they pay into the system unless they stay for a minimum amount of time (last I heard was 10 years). I was told that we aren't required to fill out a Japanese income tax form unless we want to get a refund and, since foreign employees are usually not over-taxed, we hadn't had to do it up until last year when I started doing freelance work for my former company. For some reason, they have a set policy of over-taxing all freelance workers (10% is the set rate) so you have to file to get the excess back.

Most foreign employees don't end up paying anything beyond the bare minimum because they don't plan on staying long enough to collect social security nor do they really know their options in regards to unemployment benefits. No one explains it to you when you start your job because the companies view most foreign workers (especially teachers) as transitory. At my former company, even though it was an office job, the president used to use the excuse that my boss (an Aussie) and I weren't going to remain with the company for long so we weren't entitled to some of the perks the Japanese, who were supposedly more dedicated to the company, received. Ironically, my boss and I outlasted all but 3 of the original staff who were there when we started at the company including the president himself who sold us off to a bigger company 2 years before I quit. My former boss is still there.

The big bite that comes out of our salaries in terms of taxes is ward taxes (commonly called "ku taxes" by foreigners living in Japan). These vary from ward to ward but the more expensive ones (like ours) amount to 5% of our income. Paying only 6% or so in income tax seems a lot less impressive when you add in the ward taxes and then the cost of socialized health insurance. The insurance rate is based on income but mine was about 9% of my salary...and I didn't make that much relative to other foreigners and I made less than the average Japanese salaryman.

Most Japanese employees are cut a break on the health insurance which most foreigners don't get. A lot of companies will pay a portion of their health insurance (generally around 50%). This can be quite a healthy chunk of money. My former boss used to pay about 60,000 yen a month in health insurance and I believe he made a salary commensurate with being a Japanese manager of his age. He'd have been pretty happy to have half of that paid by someone else.

If you add all the little bits and pieces up, that's about 6% income tax + 9% health insurance +5% ward taxes for a total bite of 20% and that's without any benefits beyond the health insurance. Since most foreigners rarely use health benefits compared to their Japanese counterparts, this is a pretty sweet payday for the Japanese government, particularly since a lot of services that the tax money is used for that directly benefit the Japanese, such as community center activities (like cheap access to a swimming pool) and adult education, don't get utilitzed by foreigners either.

Anyway, one of the most peculiar things I've learned about avoiding taxes in Japan came from one of my students. I've heard from several Japanese people that inheritance taxes are incredibly high. The highest figure I'd heard was 75% of the value of the property but my student reckoned it may be closer to 60% (at least for property outside of Tokyo). That means the Japanese government gets a huge payday any time a property owner passes on. My student told me that her husband is supposed to inherit some property after his father passes away and the way that they can avoid the huge inheritance taxes is for her husband to become her father's brother. This is accomplished by having his grandfather adopt him. This allows the inheritance tax to skip a generation rather than apply to every generation. This is one of the strangest loopholes I've ever heard.

Schaedenfreude or Social Duty?

A story about a student who made a decent amount of money selling virtual weapons and gold in the on-line game World of Warcraft has been making the rounds lately. The basic gist of it is that a Chinese man who resides in Japan under a student visa was turned in for possibly violating the terms of his stay by a bank worker who noticed he was sending money home frequently.

The thing that really caught my eye was the fact that the police were notified about this by a bank worker. When my husband and I have sent money home, we have had to fill out forms that state why we are doing so. I wonder if those forms have to be turned over to the police or if the bank only has to do so at their discretion. Somehow, I imagine it must be the latter since the former would inundate the police with a lot of inconsequential paperwork. It's not the least bit uncommon for foreign workers to send money home because they are leaving Japan or they prefer to keep the money in a foreign bank because interest rates in Japan for savings accounts are something on the order of 0-.2%.

One important point about this situation is that one does not have to state one's visa status to the bank when sending money home though we do have to show them our foreign resident's card (often called a "gaijin card" by those of us living in Japan). The gaijin card does show our visa status so anyone who did the paperwork for sending money home who scrutinized the card carefully enough would see if one was a student or using a work visa.

The thing that I find troubling about this is the possibility that this is a sort of schaedenfreude (sour grapes) at a lowly Chinese student raking in the dough while living in Japan. Was he turned in because a Japanese bank worker resented seeing him make more money than himself? Or, was he turned in because the bank worker was civic-minded and told to do so? One thing that I can't help but think is that this wouldn't have happened to a white person.

There is plenty of prejudice against foreigners in Japan but the shape of it varies based on who the foreigner is. White foreigners tend to be regarded as equal or "superior" to Japanese people when prejudice applies to them. They may be seen by some as smelly, loud, overpaid and too culturally retarded to ever really grasp Japanese culture but they are not seen as socially lower than Japanese. Other Asians, on the other hand, are seen as being inferior by some Japanese. So, it wouldn't be the least bit surprising if a Japanese bank worker might be upset at seeing what he felt was a lot of cash being made by a Chinese person.

The reports about how much money was being made in this endeavor seem to dramatically range from about $50,000 to $1.3 million U.S. dollars. I know on-line gaming and the claim by the police that he made over a million dollars is far-fetched unless this student was serving as a funnel for a huge operation ran elsewhere. It's inconceivable that a single person could play the game enough to acquire enough on-line currency to make that much money, not even if he played around the clock for years. If the market were that lucrative, you'd find people quitting their jobs to play the game and sell virtual items.

Since the visa status of a student allows the student to work 28 hours a week if he has received the proper permission to engage in activities other than specified by his visa, all it would take for the student to not be in violation of his visa would be for him not to spend more than 28 hours a week handling the "paperwork" for selling the items. It wouldn't matter whether he or someone else played the game as I think the Japanese police would be hard-pressed to call game playing "work", even if it was done in the service of item farming in the virtual world.

From a personal perspective, this offers no real threat to me but it does raise an issue I had never considered. I no longer remain in Japan under a work visa. I'm here under a dependent spouse visa which means I should not make enough money to support myself. And I don't do so by a very large margin. However, a very long time ago, we decided to have my husband's salary paid into my bank account in Japan (which is only in my name) because we didn't want to go to the trouble of opening up another account. If a bank worker were to only look at the record of deposits and not consider the source in any way, it may appear that I make a full salary and in violation of my terms of stay. I doubt anything would ever come of this but it does point out how bank activity can be pretty misleading in some cases and why perhaps bank workers shouldn't be monitoring activity and reporting it to the police.