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

Should I Sell or Keep My House When I Become a Nomad?

My friend Andrew published a post: So You Want to Travel The World But You Own a House (Or Apartment) which prompted me to add a comment and I figured I would share and expand on that comment here.

Owning rental property can be a wonderful way to help support your nomad, location independent lifestyle. Rental property can provide a source of regular income to supplement your earnings. Of course, getting a rental property into that state is usually something that takes time, or a huge downpayment.

I have found dealing with property management folks to be extremely annoying. First they charge ludicrous amounts (in my opinion), especially for places that have high rents (they normally charge a % of rent + huge amount to rent the place out). These costs greatly reduce the investment appeal of renting out your property. On top of paying them a huge amount they are not very customer focused (to me paying them, or to those seeking to find a place to live).

15 years ago I started renting out my first house and obviously created a web page for it. Nearly none of the expensive professionals did that back then. Only years later they finally were dragged into catching up. And still today, they post not nearly enough useful information.

Still it can be that even with these costs and frustration it makes sense as an investment (especially in the last few years when investment climate is so challenging).

Often the decision to rent out your home (versus selling it when you leave) is impacted by your long range plans. If you want to move back into your house in a year or two or five that limits your options. You may have to accept a bad investment to keep that option open. Especially if you are just going to go give the nomad idea a try for a year, selling may not be wise (unless you don’t want to return to your house even if the nomad idea doesn’t appeal to you once you try it).

photo of a house

Another consideration, even if you don’t care about moving back into the same house, but plan on moving back to the same city, is that if you sell and real estate values climb you could find yourself priced out of the market.

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Transfer Money Between Currencies Using New Providers Not Banks And Save

One of the annoyances of travel and even more so with business (for digital nomads or expats) is converting money between currencies. It actually is fairly easy now for a traveler but can be costly. When you have a business and need to convert between currencies it can be very costly.

Using ATMs to get cash in the local currency normally give better rates than you can get in most other ways. And you are unlikely to be outright swindled any more than large banks do (which if you follow the news is a great deal, scandal after scandal of illegally taking from customers in violation of the law). The transaction costs of ATMs can be ludicrously high. In Thailand all banks seemed to have agreed to charge foreign cards $6 for a transaction. That is crazy. But you don’t have much leverage.

Schwab, and a few other, financial institution will reimburse you for ATMs fees. Many digital nomad and international travelers make sure to get such an ATM card which is wise.

And you can occasionally find banks that are must more customer friendly. The MayBank in Siem Reap, Cambodia didn’t have ATM charges for me. And I found a bank in Hoi An, Vietnam that didn’t charge either (I can’t remember the name). It may well be that they just didn’t charge do to deals between the banks so I don’t know who else it would work for.

Even though the currency exchange rates are normally not too bad on ATMs or using a credit card they are still weighted in the banks favor. And I don’t know of any banks that disclose how wide a profit margin they take for simple currency transactions (and I am sure it fluctuates depending on the situation).

When you need to transfer money (for example if you are paid in US$ but have a bank account elsewhere or if you are making a big purchase in another location) and convert currencies you can find the financial institutions taking advantage of you. There are several currency exchange services that have stepped into this business opportunity created by the large margins financial institutions have been taking from their customers.

One such service is Transfer Wise. As Transfer Wise says “Banks charge 5% in hidden fees. People on TransferWise pay 0.5%.” While banks might want to argue they don’t disclose the hidden fees and bad exchange rates they use so they don’t have much in the way of an evidence based argument to make.

TransferWise saves you money by matching your money at the mid-market rate. There’s just a small service fee and it’s all shown upfront. You can read more about our pricing here.

To demonstrate the possible savings you’ll get by using TransferWise, an average bank fee and exchange rate is shown. It’s based on independent research from Charterhouse Ltd, obtained on November 2014. The research looked into the costs of sending 1000GBP from a UK bank account, to another bank account in Germany. From this data, other currency route savings, fees and average exchange rates are worked out as well.

They still serve largely the USA and Europe but hopefully will expand further (they are also in India).

CurrencyFair is another good option and they posted a blog post looking at the costs of using old banks and even TransferWise – Money Transfer Companies Compared. The costs (including hidden costs of the banks are huge). The costs between these two are close (Currency Fair said at the time for express service they were significantly cheaper). CurrencyFair is actually a peer to peer service to match people needing to make transfers that balance each other out.

photo of currency: China, Hong Kong, Singapore, Malaysia, Thailand, Cambodia, Vietnam, USA

SE Asia, and beyond, currency: China, Hong Kong, Singapore, Malaysia, Thailand, Cambodia, Vietnam, USA. USA currency is used in Cambodia for most things and USA currency is used most airports to pay visa fees to the governments. Photo by John Hunter, see more photos of my travels.

If you are moving large amounts of money it definitely makes sense to seek out protection from old fashion banks ripping you off. These are the same banks agreeing to likely over $500 million in fines for currency manipulation (because even these huge profits on the backs of customers couldn’t satisfy bankers demands for multi-million dollar bonus for hundreds of employees at these banks every year).

CurrencyFair offers a peer to peer marketplace that lets you set a offer price and if someone agrees you can even been market exchange rates. Of course, if your currency happens to be a bit under-demand at the time you may get a bit less than market price. TransferWise sets the price based on the forex markets and then it is just up to supply on the demand on their marketplace to determine if you can find someone to take the other side of the trade.

Related: Negative Interest Rates and the US DollarFinding an International Business Bank as a Digital NomadCredit Card Currency Conversion CostsMicroFinance Currency RiskWhy the Dollar is Falling (2009)

Motivation and Delivering Solutions When You Work for Yourself

When you work for a company you have clear expectations for performance. If you become your own boss, for example as a digital nomad, you operate in an system that doesn’t have the same structures to enforce you focus and deliver. In many ways this is exactly what people seeking the digital nomad life want, but it also can bring challenges.

If you find yourself having difficulty getting yourself to work without a boss what can you do?

Doing what you are passionate about is important. As an entrepreneur working for yourself, if you feel work is a chore that you want to avoid, you can easily to avoid it.

But it is likely it isn’t that you want to avoid work, you just don’t have the urgency to “deliver” working solutions quickly without some extrinsic pressure (boss or…).

To do lists work for some people. You focus yourself with specific targets. If that doesn’t work, a virtual assistant to track progress and serve as a personal re-enforcement mechanism can work, for some people. Publicly making a commitment can work for others (on your blog, or on fb or to your customer or to your spouse or parent…).

The virtual assistant is partially a combination of a to do list and a public commitment along with someone to enforce evaluating progress on the to do list.

Habits are a powerful influence on behavior. For some people all that is needed is creating the habit of working in the morning for 4 hours and then enjoying the rest of the day. They can then focus every day for a specific period of time and don’t waste time procrastinating or being distracted with other matters.

For some people setting up rewards for themselves can work. Once I achieve x then I can (get a new game, take a weekend trip to the beach…).

What is important is finding a solution that works for your psychology. Some digital nomads don’t need any of these tactics, but for some these tactics can be useful.

It is possible that the reason you have trouble focusing on work is that you just don’t care about what you are working on now, so you should look at the bigger picture and find something your are passionate about. But I think, in most cases, this type of issue with motivation or difficulty with procrastination is more likely to be a smaller matter of just creating a bit of urgency to deliver.

So the question is how do you do create an urgency to deliver in a way that works for you and leaves you with a situation you enjoy. Certain tactics would drive some people crazy. But what matters if not some perfect solution for everyone, but finding one that works for you.

Related: Finding an International Business Bank as a Digital NomadSupporting Virtual WorkersStatistics on EntrepreneurshipDelivering working software (Deming’s ideas on management)

Housing Savings by Living as a Nomad

When I started by overseas adventure I lived in Johor Bahru, Malaysia. Among the reasons I chose to move to Malaysia was to save money (from the costs of living in the USA) and to travel in SE Asia.

In some ways it worked well. Living was as cheap as I expected, which actually surprised me. I figured I would find costs were not as low as I was able to estimate from online sources. I didn’t travel as much as I planned though.

The lack of travel could be overcome by just being more diligent about making it a priority. But I tried and it just didn’t happen. Partially I think I subconsciously delayed things due to cost. I starting looking into a nomadic lifestyle and decided to give that a try.

I don’t think I am particularly well suited to a nomadic life. I like the stability of a home. I do like to travel, but I also do find I put it off or just don’t get around to it as much as I would like (while I had a real job it was even worse, which is part of the reason for moving to SE Asia in the first place). But while I am not particularly well suited to the lifestyle I also figured I can possibly try it (while for many it just won’t work at all).

View from the porch of my cabin in Luang Prabang, Laos.

View from the porch of my cabin in Luang Prabang, Laos. I had a 20 Gb data cell plan that was excellent for under $25.

One of the big advantages of a nomadic lifestyle if you want to travel is you eliminate your primary housing expense. So when you are traveling your housing expenses are just the place you are staying while you travel not that plus your main housing.

One of the big attractions to a nomadic life in low cost areas, for those from high cost areas, is the financial savings. People can go very cheap for housing or middle of the road or enjoy luxury housing they couldn’t afford in a high cost area. I go more for the middle of the road choice, which to the budget people seems extravagant luxury and the those getting very nice places for much less than they could at “home” see as unnecessary hardship.

I had a somewhat nice condo in Johor Bahru on the 16th floor with a view of Singapore and a pool and basketball court. I could walk to places downtown or take short taxi rides for a couple US$. That cost about US$850.

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Finding an International Business Bank as a Digital Nomad

Dealing with banking issues is one of the most difficult aspects of a small digital nomad business. Finding a bank for a small business isn’t easy. Add to that dealing with international banking and things get very challenging.

Finding a bank that will accept deposits via wire, provide a credit card for your business, has good online tools and you trust isn’t easy. I ran across a very useful post recently:

The Best Offshore Banks of 2014 which includes a good deal of information on the 30 best banks according to them, for example:

Butterfield Bank

Established: 1858.
Jurisdictions: Bermuda, Bahamas, Cayman Islands, Guernsey, UK.
Minimum deposit/balance: 5,000 BMD/USD/GBP for business banking, 250 – 500,000 BMD/USD/GBP for private banking.
Personal banking: Residents preferred.
Commercial banking: Yes, international.
Private banking: Quite strong.
Remote account opening: In most cases.
Mobile app: iOS, Android.
Cards: Full coverage, available in USD and GBP.
Website: http://www.butterfieldgroup.com/

All things considered, the finest bank in the Caribbean and Bermuda. 2009 to 2010 were rough years for the bank, but they bounced back to profits by the following year. Although the share price took a massive dip, but the Butterfield signature quality was never compromised.

Card services are some of the best in the region, with two airline partnerships being available (AAirways and British Airways).

Internet banking is strong but the mobile banking app, although light-years ahead of other banks in Bermuda and the Caribbean, leaves a lot to be desired.

It provides enough information for you to screen through and find some good options for you. And then you can do more research and pick one to try out. I would definitely do more research, you shouldn’t trust 1 internet post to find a bank.

Singapore Merlion with the financial district in the backgound

Singapore Merlion with the financial district in the backgound

Finding a bank that accepts EFT deposits from the USA makes a big difference but this can be a challenge. Many internet companies still are stuck a decade or two ago as far as banking is concerned. Many only pay via EFT or check. Some will also pay via paypal. The options are limited for people in many countries (with poor mail system and paypal is also not available to people in many countries).

Of all my efforts in creating a digital nomad existence banking has been by far the biggest negative surprise. It has just been a huge hassle. I may well look to using one of these banks if I can find a better option for me.

Some that look interesting to me for digital nomad businesses are: Butterfield Bank (Bermuda, Bahamas, Cayman Islands, Guernsey, UK), Crèdit Andorrà (Andorra, Panama), DBS Bank (Singapore, Hong Kong, Malaysia/Labuan, Taiwan), FirstCaribbean International Bank (Anguilla, Antigua and Barbuda, Bahamas, Barbados, British Virgin Islands, Cayman Islands, Turks and Caicos Islands), Standard Bank (Isle of Man, Jersey, Mauritius, South Africa, Ghana, Angola, Singapore, South Africa, UAE)

It has been awhile since I created this blog and haven’t posted to it, but my plan is to be more active posting here in the future.

Related: International Migrants: Economics and BankingPrivate Foreign Banking Deposits by CountryThe Importance of Long Term Disability InsuranceGoing Nomad in SE Asia