In yesterday’s post I mentioned that, as part of paying off the final part of my debt, I drained the piggy bank. I also said that wasn’t a joke. Instead, it’s the result of finally paying attention to 1–something I learned when I was a kid and 2–something I saw a friend do in high school.

When I was growing up, my paternal grandparents used to put their spare change in a large mug. When we visited, my sister and I used to divvy up the contents and go on cheap toy and candy binge. There was usually about five dollars in the jar (about $22 now) and it was there every time we visited. (Along with a jar of candy my grandmother always kept full, but that’s another entry).

In high school, after we moved back to Kansas, my friend Darren appeared to have a rule where he never broke/spent a twenty dollar bill ($45 now). The result was an impressive pile of twenties at one end of his room that, if I remember correctly, he eventually spent on a new shotgun. (Remarkably, I never stole any of those twenties. Damn my Christian upbringing. Also SHOTGUN.)

Decades later, after I arrived in Japan, I found myself confronted with large handfuls of large change. Japan basically did away with it’s equivalent of the $1 and $5 dollar bills and replaced them with coins. Remembering my grandparents, I started saving my change in a jar. I also stopped spending change and instead spent notes, even if I had enough change to make the purchase. This had two results: 1–it made me think I was spending more than I was–I had seven 1,000 yen notes this morning, now I only have three. What have I done? 2–One day’s change could add up to a lot.

A fistful of Yen. This is about $20.

The other advantage of using the jar is I got to see the money grow. This was awesome and rather inspiring, but because it was coins, it was annoying to sort and carry so I never spent it. Eventually, when the jar got full, I dragged it down to the bank and deposited it, much to the annoyance of the bank. I’ve paid for vacations in Japan and plane tickets home with the change.

Note: Now, I know that many wise and financially literate people would argue that I should have cashed the change out sooner and sent it some place where I could earn interest on it. Those people are absolutely correct, except they’re overlooking the psychological importance of actually seeing the money grow. It is much more powerful than seeing the numbers in a bank account change.

The other thing I did started when, in 2,000, Japan began printing 2,000 yen notes. The public reaction was underwhelming. People in the USA have more excitement over and interest in dollar coins than the Japanese had for the 2,000 yen note. They were difficult to spend because merchants didn’t want to deal with them and no one changed out machines so that they could accept 2,000 yen notes. They therefore made a great savings source. I saved every 2,000 yen note I got and then eventually cashed them in. I did the same when Japan released new 1,000 yen notes. I saved every crisp one I found as well as every old one.

This latter idea, saving a certain kind of bill, is what I encourage my friends and family in the USA to do. Stop spending ten dollar bills. Just stick them in a jar. It’s weird at first, but you have to want to see that jar fill up.

Finally, the last thing I did, and still do to build up extra savings beyond the 20% or so of each paycheck we already save, is to be my own greedy bastard banker. Every time I take money out of my account, I charge myself an outrageous 20% ATM fee. For example, if I take out 10,000 yen, I immediately pull out 2,000 yen and put it in an envelope in my bag. As soon as I get home, I put it in my savings pouch. (Yes, I know: banks, interest, etc. In my defense, most Japanese savings accounts pay no more than .02%. That’s not 2%, that’s .02%) and exchanging into dollars costs money so it’s better to build up some cash.

If I know I’ll be spending the money on frivolous stuff, I tax myself an extra 10%. I know, I know. Some one should regulate me, so to speak.

To steal from Hemingway, sort of, I got into debt two ways: full speed ahead and then significantly faster than that. I got out of debt the same way Mike Campbell went bankrupt: “gradually and then suddenly”.

Basically, I was the sucker who enjoyed the “free” credit cards handed out in the student unions at universities. This was combined with an “I can’t be broke; I still have checks left” attitude and student loans. That combination would eventually put me around 100,000 dollars in debt with no Ph.D. (long story that) and no Porsche. I didn’t even have a decent watch. (Although I did get a good laptop so all was not lost.)

Part of my reason for going to Japan, besides taking a break from academia, was to get some cash and pay off some credit card debt.

About the time I was thinking about proposing to She Who Must Be Obeyed (then known as She Who Would Eventually Be Obeyed) I started making token payments on my student loans. They didn’t even cover the accruing interest, but I did it to establish the habit of sending regular payments. At this time, I still didn’t know how much I owed and denial played games with my math abilities. I told She Who Would Eventually Be Obeyed what I thought the number was and, surprisingly, she stayed around.

It turns out I was only off by 25,000 dollars or so. When I told She Who Would Eventually Be Obeyed what the real number was she had a much stronger reaction. Because we were already engaged at that point, she could have called off the engagement and sued me for lying. (Side Note: Japanese can also have marriages annulled if they find out their partners lied about such important things.) I pointed out that I didn’t have anything worth suing for and that being stupid was not the same thing as lying. (To this day she still doesn’t quite agree with that assessment.)

A year or so after I started the token micro-payments, I started a debt-snowball to get rid of my credit card debt and get my entire debt down to just my student loan. My financial illiteracy created and printed a payment plan that paid off everything in under ten years and would have worked great except I forgot to account for interest. I scribbled corrections on that printout and then kept it as a reminder to pay attention and figure out what the hell I was doing. (And also to print out an actual debt amortization schedule.)

Once I got to having only the student loan, I started throwing every loose yen I could at the debt, and also managed to start some actual savings. The loan number slowly crept down and I celebrated every time it crossed a 10,000 milestone. Early on, I to got the point where I could completely pay off my credit cards every month. I’m pleased to say I haven’t rolled over any credit card debt to a second month in 10 years.

Then, after the 2011 earthquake and tsunami, I noticed that our total net worth, as pathetic as it was on a single salary (plus lots of part-time jobs), was actually bigger than the total amount still owed. The constant earthquakes and the constant threat that we might have to move suddenly (and leave my job behind) told me it was time to get rid of the debt completely.  I closed out some CDs, drained the piggy bank (not a joke, but a long story) and sent it all in. For one glorious month, my debt handler Sallie Mae owed me money (that they eventually just disappeared as “fees”.)

Since then, we rolled most of the old loan payment into savings (well at least until last year when we did some traveling, both expected and unexpected). Even nearly three years later, it is still very odd not having to worry about making a payment and dealing with creditors. I admit I still hold my breath every time a clerk runs a credit card approval during a purchase.

Surprisingly, suddenly having  this odd little thing called “cash” around didn’t start burning a hole in my pocket like I feared it would. I did decide to share the wealth a bit buy buying knives and some other goods from new makers and artisans and I also helped out an old friend. Other than that, we’ve been saving and it’s surprisingly relaxing.