New International Banking Solution for Small Business and Digital Nomads

One of the significant hassles of a the new digital economy is that national borders are largely irrelevant to digital businesses but the banking infrastructure is still stuck in the past. Dealing with international payments is a hassle and can be expensive.

Transferwise has been providing good service for years in helping people move money between currencies at transparent and reasonable rates and with good service. They have a very interesting new service: Borderless banking. They allow you to create an account based on many countries in Europe as well as in the USA (about 30 states so far).

This is a great service, as I have written: finding an international business bank as a digital nomad is challenging.

You may hold funds in your Borderless account in 15 different currencies at the this time. You may send money to someone else using 50 different currencies via Transferwise. With a Borderless account you will be able to accept payments as a local company from Europe, UK and the USA – those paying you can send electronic payments as they normally do using their bank (the process is seamless to them, they treat your bank account just like any other they make payments to).

image showing the currencies Transferwise allows

Transferwise allows you to hold Borderless balances in these 15 currencies.

The fees are mainly a fee to change currencies (often between .5 and 1%) which is very reasonable. So if you hold money in USD and want to pay someone in Mexican Pesos you pay 1% (reduced to .7% over $10,000). USD to Indian Rupee is .9% (reduced .7% over $10,000).

Importantly currency conversion takes place at the real mid-market rate for the currencies (many banks hide fees by giving you bad conversion rates).

In checking costs on their site I have noticed changing from USD to another currency is often higher than from another currency to USD. For example, Euro to USD is 1%, USD to Euro is .5%. USD to Singapore dollar is 1% (reduced to .5% at $5,000) while the reverse is .5%.

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Proof of Onward Travel

One of the annoying worries is the possibility of an airline asking for “proof of onward travel” before checking you into your flight. Airlines do this theoretically because they may be liable for getting you back out of the country. Airlines also check that you have a visa for the new country for this reason (which also confirms you have a passport).

It makes sense that they check that you have a passport with a visa for the destination. Still you could be rejected from entering even with the visa. If that happened I don’t see what good it would do to have a plan reservation in 50 days going somewhere. I suppose the country might push the responsibility for getting you out of the country to your departing airline but I seriously doubt it. If you claim you can pay to leave I would have to imagine if some other party gets stuck with the bill it is likely the airline that delivered you.

photo of Air Asia airplane at Yogyakarta, Indonesia airport

Air Asia airplane at Yogyakarta, Indonesia airport

I suppose it could also be the airline only gets stuck if you don’t have proof of onward travel. And if you have that proof they are still responsible for getting you back but someone else pays until someone can collect the money from you (and gets stuck with it if you never pay). This seems pretty unlikely for most “normal” travelers from rich countries that have credit cards which would just be billed for whatever cost there is.

It sure seems to me that credit cards should add a perk to “gold cards” (or even less fancy card types) that promise to bill whatever costs accrue due to you being forced out of the country to you (and just like other costs the credit card issuer is stuck paying the cost if you don’t pay them back).

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6 Tips To Help You Achieve A Better Retirement

Many people are already planning on working for a longer time because they don’t have enough money for retirement. Those reading the blog and focused on taking a different approach from the common one (either FI/RE or digital nomad or something else) already understand the traditional mindset of working hard and buying what you want (even if you go into debt) is more and more difficult. Some specifics of this post use terms that make sense in the USA (like IRA) but the ideas are universal.

The economy is no longer as robust after the financial crisis in 2007. While the recession is over, the cost of living has gone up. What’s more, there aren’t as many options to earn a high income unless you work in the technology sector. There is so much competition for even high skill jobs that it’s easy for employers to pay less than they used to in the past.

Those focused on FI/RE do consider retirement (obviously) but digital nomads for all the other ways I think this lifestyle is appealing often don’t consider the long term at all. And this is a serious problem.

For traditional employees and digital nomad and other freelance type employees one of the biggest challenges with planning for retirement is not the economy. While the economy certainly is a significant factor, it’s not the only one. You also have to take a look at your money management skills. There may be many ways that you are paying too much and saving too little. If this is the case, then it’s vital that you learn new ways of making your money go farther.

recliners and palm trees on the beach

Photo by John Hunter in Langkawi, Malaysia. Prepare so you can retire to this, or even combine FI/RE and digital nomad ideas and work here (with lower expenses) while working toward retirement.

With that in mind, here are 6 ways to save your dreams of retiring at age 65 or even earlier.

  1. Are You Adding to Your Retirement Savings With Each Paycheck?
    Direct some of your paycheck to a 401(k) or IRA and you will soon be above average in preparing for your retirement.
    One of my favorite tips to nearly painlessly greatly improve your retirement life is to put some of every raise you get toward retirement savings. For example, if you get a new job (or a raise) that gives you an extra $5,000 a year in income set aside $2,000 into a retirement account (every year). As you get further raises do the same thing.
  2. Where are you spending your money?
    You may have more control of your money than you think. Take a look at your recurring expenses. Can you spend less on cable? Cable companies make millions because of the fascination people have for entertainment. Is it possible that you could spend the same amount of time sitting in front of the TV doing something else — like starting a new hobby that will be more personally enriching? What about electricity? Perhaps, you can use a local electrical supplier if you live in an area that has energy deregulation. This site explains how you can buy cheaper electricity in a deregulated market like Texas.
  3. Do you need to upgrade your car, phone, TV, laptop so often?
    In the past, buying a car every three years made fiscal sense because you would save on repair costs. However, cars are now made much better and will run well for many years. By buying a car less often and looking after it better, you could save tens of thousands of dollars because every time you drive a new car off the lot, it depreciates in value. Computers used to become painful to use (as the new software took advantage of and thus required the big gains made in hardware to work well – this is much less true today). This money could go toward your retirement.
  4. Do you have money leaks?
    It doesn’t take much to spend money on small inconsequential things. An evening with friends, a latte when you’re tired, an extra few boxes of your favorite snacks when grocery shopping… all these things can add up quickly. You can also save thousands every year by skipping the convenience of eating out and learning how to cook nutritious meals at home. While it isn’t necessary to become a tightwad overnight, wincing when things are a few dollars above your comfort level, increasing your awareness of how you’re spending your money will help you realize that many of the things you buy aren’t giving you that much satisfaction in the first place.
  5. Do you use your credit card almost reflexively?
    Paying with your credit card is convenient, but you do have to remember that even if you keep up with your monthly balance, you are still paying more for the things you bought because you’re being charged interest, perhaps even high interest. Since it’s so easy to whip out a credit card then to carry cash or try to figure out if you have enough money to use your debit card to make a purchase, it’s only too easy to buy more things than you intended. I pay for nearly everything that I don’t buy online in cash.
  6. Do you postpone money management?
    Since you are busy most of the time, it’s easy to shrug off the basics of money management—keeping a budget, living within the budget, and saving a little every month. You use excuses like promising yourself that you’ll start your retirement savings when you earn a little more or pay off your credit cards. Unfortunately, life doesn’t stop long enough to give you enough time to plan everything perfectly. Even if you have started to budget, are you sticking with it? And if you have stashed away some cash, are you now looking for ways to keep that money active?

Changing Habits is Challenging
While these six ideas are easy enough to grasp and won’t require any financial wizardry to put into action, the challenge is breaking bad habits and replacing them with good ones. It’s uncomfortable, of course, but if you do, it will be rewarding in the long run. The earlier you get started, the better your retirement options will be.

Vanlife in the USA

I have been reading about the possibilities of living in a van (customized to be a small RV) for several months. I am getting more interested in this idea. The cost of living in the USA is so high, especially if you want to travel – which I do.

The combination of where I want to travel (National Parks, National Forest and nature largely) and the cost effectiveness for van living works out very well. You can often park for free in US National Forest and BLM land. Also the cost of campgrounds is much less than any form of lodges, motels or hotels; so even in the instances you pay for lodging the costs are greatly reduced.

Another option for free parking are many Wal-Marts across the country actually don’t mind RVs and vans parking overnight. Many other businesses are hostile to just using their parking lot overnight when it isn’t being used. I must say this is something that greatly increases my opinion of Wal-Mart. I am not a huge fan in general but this is a very real positive action they are taking. It definitely encourages me to shop there.

Stealth parking on city streets or parking lots is another option with van living. Often cities seek to stop such living which is why the stealth part is important. Some cities and residents are more apposed to the practice than others. Obviously if there are negative externalities from you parking your van for a long time that will encourage people to seek to stop that. But if you don’t make anyone’s life worse there is much less likely to be an issue.

Even if you don’t it can make residents, police or security guards nervous (which I understand is possible in some instances) and that is something that again makes it more likely you will be bothered and maybe not allowed to park. I am still in the early phase of learning about all this but it does seem a tactic of driving to a sleeping spot at night and leaving early in the morning is a good idea. And moving around so you don’t park in the same spot (that people will notice anyway) for long periods of time.

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One of the words I learned recently is boondocking, which is free camping and at least when I have read about it means also off the grid (no electrical connections, water…) for your RV (or a van that is able to plug in to services). I knew that this was somewhat available on USA Federal Government lands (BLM and forests) but I think it is much more available than I thought (I am still learning so…).

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Reporting on the Noise Level of Lodging Options

I would love a service that reports on the noise level of hotel rooms, apartments for rent etc.. I am far more sensitive to noise than others. And in my nomadic existence the most annoying thing for me was noisy places. Even in renting out apartments on a regular lease I had serious problems with extreme noise issues.

Reading reviews will provide some level of noise warnings when past travelers complain about noisy conditions. But this is time consuming (reading through lots of reviews to try and see) and not very accurate. Technology could provide a better alternative, even if it still isn’t perfect.

No solution is going to be perfect but it would be nice if there was a device that you could put in rooms and it would measure the decibel level and record loud noises. I would image smart engineers could design it to automatically categorize many noises. The device could then provide a report of how noisy it is and what kind of noises were recorded.

The idea is the device could be placed in empty rooms/apartments and create a record. That record could then be shared with prospective renters. I realize there are issues with making this work. But I think the market is significant.

One big market to consider (likely the biggest by far) for selling such a device and service to would be large hotel chains. They could gather data on noise issues in their rooms. They could make improvement and measure the improvements. They could gather data on what measures work and which don’t. They could use data to guide reservations for those expressing a desire for a very quite room to the rooms that best fit their needs. I also think for apartments there could be a bit market.

I realize the number of people that noise is as big an issue as it is for me is small. But there are a reasonable number of people that are bothered by noise that such a service would be worthwhile I think.

I sure hope someone fills this need. And if someone is already offering such a product and service I hope the market adopts it quickly.

Noisy fans are good for providing white noise to cover distracting noise. That is very helpful in many cases. It isn’t so great at covering up loud hallway noise (though with the right room setup and fan placement it can be ok in some rooms). The integrated units in the walls can be decent but for example are usually not good for dealing with hallway noise. And also some are designed so you can’t run the fan all the time (it only goes on if cooling or heating is needed): if you are creating a hotel (or the heating and AC system) make sure the fan can be set to run at all times.

Related: Gadgets to Mask Noise and Help You Sleep or ConcentrateTurn Windows Into Sound Canceling FiltersDealing with Noise Pollution in Your CondoFinding Places to Stay to Stay with Decent wifi

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Leaving on a Jet Plane

In this post I expand on my comment on Reddit, to this comment:

> If I had one piece of advice for anyone really (really wanting, not
> just dreaming about) wanting to be a DN, it would be: buy a plane ticket!

This is advice for if you want to a digital nomad next week.

If your preference is to increase your odds of having a successful digital nomad experience then I suggest taking longer. Do 3 things:

1) Get experience earning money in a location independent way (you can do that where you live more easily than anywhere else).

2) Save up some money. This item most people will skip but it is helpful. It can be hard for many people to do. And if you don’t want to you can do well without saving much. But you do increase the risks of running into money problems that you could have smoothed over with savings.

3) Travel to where you would like to be a nomad for a trial run. If you want to do it in SE Asia take some time visiting and seeing what it is like. Travel in the way you plan to as a digital nomad. Don’t stay in nice hotels if your digital nomad plan is to live cheaply.

As with all this advice you can ignore the particular advice and learn from even just doing part of it (visiting but staying in much nicer places and being just a tourist will tell you more than never going at all), but doing more will prepare you better (and let you learn if it is what you really want to do).

Some might require extra steps, maybe to earn location independent money you will need to learn a new skill, and maybe need to gain experience etc..

view from my porch (with laptop in forground, plants and another cabin in the photo), Luang Prabang

View from my porch in Luang Prabang, Laos. This was a great place to work (not my average location to work, one of my favorites). I tethered my laptop to my cell phone connection which was fine (you could stream video), it did fail for about 20 hours over 2 days but otherwise was good.

Just leaving on a jet plane tomorrow does work for some people. But I think there are many more people it doesn’t work for than it would work for.

And truthfully many people don’t want to take the time to do a thorough job of the 3 steps I mention. You don’t have to do a thorough job if you don’t want, but it will give you a better chance to succeed and enjoy your experience.

There are also many other sensible things to do first: learn about visa rules, pack well, deal with things like health insurance, deal with mail (family, friend or service) – you often need a physical address at home for some things, find good sources or information on living as a digital nomad, figure out how you will handle banking (it can be a real pain to find an international business bank as a digital nomad), and on and on. You can read about these things on my post here and in some posts on my Curious Cat Travel Destinations blog and many other good blogs.

Related: Financial Independence Retire Early (FIRE) and Location Independent WorkingLocation Independent Living Can Be In Your Comfort Zone and a Good ExperienceTransfer Money Between Currencies Using New Providers Not Banks And SaveMy Early Experience as a Digital Nomad: Part Two

Health Insurance Considerations for Digital Nomads

Health insurance is something that many young healthy people don’t think about. And many digital nomads are young healthy people, though not all of them are. And if you are from most rich countries you may not think about health insurance as your country makes it pretty easy to just be treated if you have health care needs, without a need to have bought health insurance.

But when you are traveling outside your country health insurance is important. I am not very familiar with the details of how health coverage works for all the different countries so you will have to figure it out for your own country. It wouldn’t amaze me if European countries set up some kind of reciprocal care agreements but I have no idea if they do (they should if they don’t).

In the USA we know what a nightmare health insurance is. The ludicrously expensive USA health care plans generally don’t provide any coverage when you are outside the USA (even inside the USA, but not in your own state there are severe limitations). There are many wonderful things about the USA but the health care system is a nightmare and has been for decades.

If you are going to fly off and become a digital nomad one of the critical items to consider (though many don’t give it the attention it needs) is health insurance. It is true that in many countries you can pay out of your own pocket for health care that would bankrupt you if you used the USA health care system and tried to pay out of your own pocket (tens of thousands of people go bankrupt in the USA due to health costs).

If you use good personal financial planning practices you should have at least 6 months of expenses in an emergency fund (and I would strongly suggest at least a year for any digital nomads). That emergency fund should be able to pay for routine medical visits in many countries (Malaysia, Thailand, India, Indonesia, Vietnam, Singapore… – I would imagine this is true in most countries, but certainly not the USA.) without a need for health insurance.

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Economics: Digital Nomads, Visas, Foreign Currency

This is a slighted edited version of my comment to someone asking about countries that have laws specifically detailing digital nomads are allowed to work on tourist visas. My background is in economics and investing based on economic understanding.

The question of digital nomads working encompasses legal questions (do I need a special visa etc.), regulatory realities (regardless of what the law says how is it enforced at the ground level?) and economics (I am talking here about the benefits to the country economically from having digital nomads).

I like the economic thinking that should drive what the government’s wish to accomplish. The prohibition against work on tourist visas makes sense when work is defined as it was historically (being hired by a company in the country that otherwise would have hired a citizen). So when I am thinking about it I find thinking about the macroeconomic level view and how that is manifest in laws and policy. From a practical standpoint of being a digital nomad what really matters is how that all gets filtered down to the government employees on the ground making decisions.

Few laws say what is legal, they normally say what is not. I would imagine few countries specifically say it is legal to do work from another country (as a digital nomad, as a employee answering an business email on their vacation, as a private investor reading the news and using the internet to buy or sell a stock, as a writer writing a book that will be published back home, an entrepreneur refining ideas to launch a new business back home or whatever).

The laws usually are pretty clear you can’t apply for jobs and get hired by a company inside that country to do work in that country on a tourist visa.

“Thailand” has said it is ok to work as a digital nomad (work for some company outside the country) while on a tourist visa. But these pronouncements by officials don’t carry much weight with other officials so they are not worth much.

What is helpful is knowing the prohibitions against working are primarily about not having foreigners take jobs of the citizens. Digital nomads don’t do that. So they are not meant to be prohibited anymore than the other examples (an executive participating in a conference call from work while on vacation etc.).

But since it isn’t clear cut it can be confused by officials as something not allowed. It is much easier not to have to get low level officials to comprehend the intent of the laws. They think of it as tourists can’t work in the country and that is essentially true. But how “work” is defined is the issue; and digital nomad work doesn’t fit the description of work in that context.

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Financial Independence Retire Early (FIRE) and Location Independent Working

My plans were similar to the now popular (within a small but committed group of people) Financial Independence Retire Early (FIRE) movement. I was more focused on lifestyle and increasing my financial independence (as apposed to striving for complete financial independence in order to retire very early).

My thoughts were more along the line of being able to avoid a full time job and possibly do some consulting, run my own business (with a lifestyle goal rather than a make millions goal) and have investments that supplement that income. I also wanted to be able to have that possible from wherever I chose to live. Often you are quite limited on where you can live (especially cheaply) if you require a high paying job.

I also understood by living more frugally I gave myself lifestyle options. Living frugally allows you to save money. But it also lets you experience what living on less is like and you know if that is what you want. It is for me. I would much rather have freedom from having to earn a bunch of money to allow me to spend lots of money.

John Hunter with lake and mountains in the background

John Hunter, Bear Hump trail, Glacier Waterton International Peace Park.

I think Financial Independence Retire Early (FIRE) concepts fit very well with a subset of digital nomads. Those focused on FIRE don’t have to be digital nomads (in fact a very small percentage is) and digital nomads don’t have to be concerned with FIRE (in fact, few are). But they are both, at the core, about putting your life first and not letting your life on the 9 to 5 job hamster wheel drive your major life decisions.

Combining FIRE and location independent work provides some valuable benefits. If you have some investments saved up that can be tapped as you travel that can meet some of your living costs, this aids on of the bigger challenges – how to earn money while you travel. And if you travel frugally you can reduce your costs (below what you speed where you used to live).

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Start-Up Chile – An Innovative Program for Global Entrepreneurs

I am very impressed with Start-Up Chile. It is a Chilean Government run program that attracts early stage, high-potential entrepreneurs to bootstrap their startups in Chile, using it as a platform to go global. The goal of the program is to position Chile as the leading innovation and entrepreneurial hub of Latin America.

Silicon Valley provides huge benefits to the USA economy. Many countries are envious of this advantage and wish they could gain such economic benefits. But there is a big gulf between wishing and accomplishing. That path requires doing many things right.

Start-Up Chile alone is but a small step in the right direction. But it is a very interesting one. And they have kept it up for several years now. It is amazing how many efforts to create inviting climates for entrepreneurs start with a great flourish as diminish to nothing within 5 years.

Panoramic view of northeastern Santiago

Panoramic view of northeastern Santiago, as seen from the hills of Parque Metropolitano in Providencia. Visible in the background are Apoquindo and Sierra de Ramón. via wikimedia

For the current application (open during the month of September) Startup Chile is looking especially for startups in robotics; healthcare and biotech; clean energy; and education.

In my opinion the benefit for entrepreneurs is worthwhile (and especially strong for those in Latin America) but I am even more impressed with the sense the Chilean government is showing for talking concrete steps to boost the entrepreneurship climate in Chile. There are quite a few very good efforts to incubate startups. Few government though are doing much beyond talk. Singapore is another country that is taking fairly smart actions (which isn’t so surprising given Singapore’s long term evidence of smart government).

Many countries understand the benefits of creating a strong climate for entrepreneurs. And given the especially easy location independence of internet based businesses there is a public relations battle for attracting these entrepreneurs (even if most countries don’t seem to have caught onto this reality).

Chile has been getting great publicity from Startup Chile and if they can successfully build on that success they will gain a very nice advantage at very little cost. Like so many startups the Startup Chile program itself has to make sure it builds from the base it has built instead of just fading away.

Related: Finding an International Business Bank as a Digital NomadTransfer Money Between Currencies Using New Providers, Not Banks, and SaveLeading Economic Freedom: Hong Kong, Singapore, New Zealand, Switzerland (Chile was ranked 10th in the world)International Migrants: Economics and Banking