# Is the price worth it?



## vishay

Hi Forum 

I need some advice for my situation.

I'm currently living as a foreigner in the U.S., in my 30's, single, working in the automotive sector, decent pay of ~90k USD/year, living in the suburbs. Not rich by any means, but enough for a very comfortable life.

I've been offered a permanent job position with a different company in the outskirts of Tokyo, 6M JPY/year. Includes health insurance and transportation costs. No housing allowance. Bonuses already included in the annual salary too.

Overall, it seems to me that after taxes and adjusted cost of living, I would be poorer in Japan than in the U.S. On the other side, my personal thoughts are that the professional experience in Japan and a domain of the language could boost my career once I decide to return to the U.S. after some 3-4 years.

As for the questions:

1) Do you think I'm going too low with 6M JPY/year based on what I already make in the U.S.? Is it a fair price to pay for the experience working there?

2) Do you think that the working experience in Japan will be valued in the U.S. once I decide to return? I would like to know about any industry, but I'm specially interested in the automotive sector.

3) Would be nice if someone could share their own monthly expenses for basic stuff (housing, food, services, phone...etc) for a single person. I'm the kind of guy that cooks on weekdays and occasionally eats out on the weekends, and looks for bargains rather than splurging money.

Any advice is greatly appreciated!


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## myrrh

In order for anyone to give helpful feedback, you're going to have to be a lot more specific about what you mean by "working in the automotive sector." Frankly, unless your specific field of expertise involves programming/application development, database administration or website development/management in this specific sector, I cannot imagine a scenario where a Japanese automaker would hire you from outside Japan. (I also can't think of a single reason one would want to take a $30,000/year pay cut to take said job either....)

If your expertise *is* in one of the IT areas listed, then it might be worth the risk. As a single person, you can survive in Tokyo on 6M JPY/year. (And if you can find reasonable housing--most likely your biggest expense--you'll even be able to save.)


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## vishay

Hi Myrrh

Sure, I can give more details.

I'm going to be working in R&D as a program manager. Not so different from what I currently do now in the U.S.

Also, I wouldn't be so sure about the 30% pay cut after adjusting taxes and cost of living. 
At first, 90k USD might sound like a lot more money, but in the U.S. taxes are a lot higher than in Japan and we also need to cover transportation cost (which includes buying/leasing a car, gasoline and insurance). Also, one bedroom apartments are even more expensive than in Japan (unless you're looking to live at a nice skyscraper in the center of Tokyo, which I'm not).

Those 90k/year in the U.S. equal to about 5,000 net monthly. My fixed monthly costs are of about $2,500, which means I get to save something around 2,500 USD monthly.

With a 6M JPY/year, according to Japan's taxing system, my calculations say that I should be getting a net monthly salary of about 400,000 JPY. Also, my own investigations tell me that my fixed monthly cost should be something like 170,000 yen. That would allow me to save around 230,000 yen per month, which equals to almost 2,300 USD. It would be less than the 2,500 USD that I currently manage to save in the U.S., but not a 30% less. (Plus, Japan pays overtime, which I always do, but is never payed in the U.S.)

So, basically I would like someone to confirm if my rough calculation for a 6M JPY salary in Japan are correct, and if it's worth to get a pay cut in order to make some professional experience in Japan in the hopes that it will boost my resume and get me something better once I decide to return to the U.S.

By the way, in case it was not clear, I already have an offer letter (as unimaginable as it could be)


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## BBCWatcher

vishay said:


> At first, 90k USD might sound like a lot more money, but in the U.S. taxes are a lot higher than in Japan....


That's not usually correct.



> and we also need to cover transportation cost (which includes buying/leasing a car, gasoline and insurance).


Not exactly. Most people who live in Manhattan don't own or lease a private automobile. What you're really saying is that it's difficult to compare financial and lifestyle outcomes across borders. It is.

Also, one bedroom apartments are even more expensive than in Japan (unless you're looking to live at a nice skyscraper in the center of Tokyo, which I'm not).



> So, basically I would like someone to confirm if my rough calculation for a 6M JPY salary in Japan are correct....


Nobody is going to be able to help much unless you post a detailed budgetary comparison. If you haven't performed a more detailed calculation then you probably don't have accurate estimates.


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## myrrh

vishay said:


> Hi Myrrh
> 
> Sure, I can give more details.
> 
> I'm going to be working in R&D as a program manager. Not so different from what I currently do now in the U.S.


Is this a Japanese company or a foreign company with an office in Japan? (I'm guessing the latter, but I want to make sure.)



vishay said:


> Also, I wouldn't be so sure about the 30% pay cut after adjusting taxes and cost of living. At first, 90k USD might sound like a lot more money, but in the U.S. taxes are a lot higher than in Japan


Look, I'm from the States and live in Japan, and have had an equivalent income in both countries. Unless you are now living in, say, Manhattan, I am VERY sure that your pay cut in Japan will work out to be just about 30% after adjusting for taxes and cost of living. You will be paying national and local taxes (and into the pension fund after the third year). Also, and among many, many other things, when the company says they "will pay for health insurance," they really mean that they will be paying the employer's share of this burden...and you will be paying the rest. To give you an idea, my 9 million yen/year works out to 6.7 million after taxes...and that's with four underage kids acting as deductions.



vishay said:


> Also, one bedroom apartments are even more expensive than in Japan (unless you're looking to live at a nice skyscraper in the center of Tokyo, which I'm not).


Unless you're going to be staying in a guesthouse (chiefly for backpackers who neither need nor want privacy), you will be paying well over $1,000/month for that one bedroom apartment, not counting Key and Gift monies (deposits), monthly utilities (high), etc. (I also cannot emphasize how small that one-bedroom apartment will be--much smaller than anything you're used to, I'm guessing.) Food also is very expensive in Tokyo--yet another reason why it consistently ranks among the top three most expensive cities in the world. 



vishay said:


> Also, my own investigations tell me that my fixed monthly cost should be something like 170,000 yen.


Not in Tokyo. 



vishay said:


> (Plus, Japan pays overtime, which I always do, but is never payed in the U.S.)


Everyone works unpaid overtime in Japan as well. If this is a foreign company with an office in Japan, you *might* be okay with consistently asking for it to be paid. If this is a Japanese company, however, I would be very careful about repeatedly asking for paid overtime.


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## larabell

Hmmm... quoting seems to be buggy at the moment...



> Unless you're going to be staying in a guesthouse (chiefly for backpackers who neither need nor want privacy), you will be paying well over $1,000/month for that one bedroom apartment...


That's not necessarily true. Where I'm living is only about 30 minutes outside of the Yamanote loop and there are many decent apartments for singles in the 80-man range (just less than US $800 at today's rates). Small... certainly. But a single person living in Japan for just a couple of years shouldn't have so much stuff that living small would be out of the question. Plus it's possible to trade-off a slightly longer commute for a better price on housing. Get 45 minutes outside the city and you should be able to get a place for 60-man.

Now... that price isn't for "one bedroom", it's for one room, typically with a unit bath/shower/toilet and what passes for a kitchen basically in the same room as everything else (save for the unit bath). But a lot of singles live that way here. The question wasn't whether one could live a life of luxury on that low a salary but whether one could survive at all.



> Everyone works unpaid overtime in Japan as well.


The OP mentioned R&D as a Program Manager. That sounds salaried to me (as does quoting the salary in annual terms). That means overtime will be expected and almost certainly not paid. In my experience, it doesn't matter whether it's a Japanese company or a foreign subsidiary of a non-Japanese company -- Japanese work rules will likely apply unless you have an agreement with your employer to the contrary. If you expect to be supplementing your income with overtime pay, get that in writing before you come over.


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## myrrh

larabell said:


> Now... that price isn't for "one bedroom", it's for one room, typically with a unit bath/shower/toilet and what passes for a kitchen basically in the same room as everything else (save for the unit bath).


Right, it's certainly possible to find a studio apartment--i.e., a single room w/o a separate bedroom--for the price you mentioned in the suburbs of Tokyo.



larabell said:


> The question wasn't whether one could live a life of luxury on that low a salary but whether one could survive at all.


If you look at my first post, you'll see that I wrote the exact same thing. I'm really just arguing against the idea that the tax burden and cost of living in Tokyo (!) is somehow substantially (30%!) cheaper than in the US. Heck, I'm from NYC--it's very possible to find cheap housing there too, cheaper even that what you describe for Tokyo. The fact that such exceptions exist doesn't make NYC an inexpensive place to live, right?



larabell said:


> The OP mentioned R&D as a Program Manager. That sounds salaried to me (as does quoting the salary in annual terms). That means overtime will be expected and almost certainly not paid. In my experience, it doesn't matter whether it's a Japanese company or a foreign subsidiary of a non-Japanese company -- Japanese work rules will likely apply unless you have an agreement with your employer to the contrary. If you expect to be supplementing your income with overtime pay, get that in writing before you come over.


Japanese law stipulates that it's not whether you're salaried or not per se, but whether you are classified internally as "kanri kantoku sha" (roughly translated as "management") or not in that company's internal ranking system that matters. Thus, it depends on the employer more than on your title or job responsibilities--e.g., I've been classified as "kanri kantoku sha" at one employer and not another, despite having the exact same job title and duties at both. (Not sure if this makes sense....) 

Snip>

My point is, though, that even if I had the right to ask for overtime pay (as I do now despite being salaried and technically in management), my very Japanese employer would "frown" (understatement) on my asking for it except in very exceptional circumstances. (And I have in those circumstances.)


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## vishay

OP here. Great discussion, thank you all for your points of view.

Now let me explain where I'm coming from with my calculations. 

Warning: This is going to be a long post and be filled with numbers. I’m not expecting you to be experts in calculating taxes, but if you find something wrong in my calculations please let me know.

According to Japan’s tax law, we must first deduct "Employment Income Tax", "Health Insurance" and "Pension Payments" from the Gross annual salary to get the Taxable income.

If gross salary = 6M JPY, then:

Income Tax = (Annual income x 20%)+540,000 ---> (6M x 0.20)+540,000 = 1,740,000
Health and Pension = 4.99% and 8.56% of gross salary ---> (6M x .499)+(6M x .856) = 813,000

Then, we make these deductions to the gross salary and we get: 
Taxable income = 6M - 1,740,000 - 813,000 = 3,447,000

According to tax brackets, this taxable income falls in the range of 20%. Then we get:
Income tax = Taxable income x 20% = 3,447,000 x .2 = 689,400

Finally, we multiply this by 2.1% to pay the earthquake recovery tax and we get = 14,477.

To this number we need to add the inhabitant tax which is = [(Last year’s gross salary - employment income deduction - health and pension payments) x 10%] + 4,000
---> [(6M - 1,740,000 - 813,000) x 0.1]+4,000 = 348,700

*I might not pay inhabitant tax for the rest of this year, and pay incomplete for the next year, but let’s calculate it at 100% for practical purposes

Total income tax = 363,177

Now we subtract the total income tax to the gross salary and we get:
Net annual income = 6M - 363,177 = 5,636,823

We subtract health insurance and pension contributions and we have:
Take home pay = 5,636,823 - 813000 = 4,823,823

Divide by 12 to get monthly take home pay = 4,823,823/12 = 401,985

Are you still with me?

Then, I mentioned before that I estimate my monthly expenses to be in the range of 150,000 – 170,000. Let’s go with the biggest number.

Apartment: 85,000
I’ve actually found 1K and some 1DK apartments in this range even in downtown Tokyo. Again, they’re not fancy or luxurious, but that is how most single salarymen live. I plan to live in the suburbs closer to work, so maybe I can get something cheaper, but let’s go with this number for now.

The following estimations are based on what I used to spend during my days as a student in Japan some years ago. Some things might have gotten more expensive, so I already inflated the numbers a bit and cross checked them against various testimonies I’ve found on the web.

Water: 3,000
Electricity: 4,000
Gas: 3,000
Cellphone: 8,000
Internet: 7,000
Groceries: 40,000
Misc: 20,000
*Company pays for transportation

Total = 170,000

Monthly savings = 401,985 – 170,000 = 231,985. Or roughly 2,300 USD.

As for my current situation, I’m not going to go into the details of how to calculate taxes for the U.S. because is not the point of discussion, but I can tell you that from a 90K gross annual salary, my monthly paycheck is of about 5400 USD after federal and state taxes and health insurance have been subtracted. And my living costs are easily around 2,400 per month, which includes a one bedroom apartment rent, car lease, car insurance, gas, all services, groceries and leisure. That means that currently, I manage to save roughly 3,000 USD per month.

Now, for the other good question. Based on the above numbers, my savings would take a 23% cut (2300 vs. 3000 USD). 

I know this will be a very personal decision, but I still would like to know your opinion or hear anyone’s personal experience. Is this paycut worth the risk of working in Japan? Is it going to pay off once I return to the U.S. and my resume includes international experience and domain of the Japanese language? What about moving to another job in Japan? Is that something easy to do? (here in the U.S. is so easy….. at least in the automotive industry)

Sorry for the long post, and thank you


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## Billfish

Everyone is different however those that come here for the experience and the culture, not the money, tend to be more successful and certainly a lot happier.

Like any city, Tokyo can be as expensive or as cheap as you want it to be. It depends on your lifestyle.


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