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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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)