Thailand, specifically Chiang Mai, has been one of two DN Meccas. They didn't have easily procured long term visas, but they allowed 'visa runs' indefinitely. Thailand has been known for rampant prostitution and poorly enforced drug trafficking. So, it has tended to attract an unsavory tourist crowd. As Thailand has modernized, it has decided to make foreign residency more difficult. While Thailand is a active Monarchy, the population has generally favored this.
While it wants to discourage 1,000 USD per month DNs in Chiang Mai and low income sex tourists in Pattaya, it does not want to discourage the well heeled tourists who populate Phuket, Koh Samui, etc. As the kind of tourist that Thailand wants to retain, I must say, I have lost interest. There are several reasons for that.
First, both Vietnam and Malaysia have become very attractive alternatives. Thailand has become 10% more expensive and while that isn't very much, it still needs to be explained why I would spend 10% more. Both Ho Chi Minh city and Kuala Lumpur are becoming bustling international cities with large (and growing) middle class neighborhoods. Da Nang is becoming a serious high buck vacation spot with top hotels, top beaches and all the modern amenities. Penang is just as good as Phuket an cheaper.
Of course, Philippines has always been a competitor to Thailand, but because of better visa requirements, Thailand was preferred. However, with the tightening of visa requirements in Thailand, the pendulum is swinging in favor of Philippines. Cambodia, which has always been an also ran in the S. E. Asia tourist trade is stepping up its game and its popularity is growing. It has always had Angkor Wat, but recently, its Southern beach communities are gaining popularity.
While Thailand wants to chase out its 1,000 USD/mo DNs, it definitely wants to attract its 10,000 USD/mo multinationalists. So, it has rolled out a new 9 month visa program. I would say that such people want the norm to be 180 days per year rather than the 90 days per half year that prevails currently. So, this program fits that bill just fine. However, when the restrictions are added to a generally higher cost of living, it just doesn't win the competition, especially with Vietnam and Malaysia.
First, you need to quarantine for 14 days. I had that in Belarus, but it was a self-quarantine with pretty loose rules. In Thailand, you have the options of 15 luxury hotels for your quarantine, but they are all overpriced and in Bangkok. Next, one must acquire 90 day accommodation, which, as is the norm in S.E. Asia, will result in a 1,000 to 2,000 USD prepayment. There is also a requirement that 2,000 USD be placed in a Thai bank and proof of 100,000 USD insurance.
All of this means that Thailand will probably be the second S.E. Asian country to partially open after Cambodia. They are limiting this to 1,200 issued visas per month. I suspect that they will not reach that quota. Why? Because to us, 'Nomad Capitalists', countries represent a marketplace. We decide our next location based upon cost of living, terms of entry, quality of life and, of course, climate. Right now, my choices are between Durres, Albania, the Turkish Riviera and Cambodia, with Thailand entering with similar factors.
Of the three, Durres, Albania is the coolest over the winter. Still, it is a zone 9 location, similar to Houston or New Orleans. However, it has a low cost of living, no hassle entry and one year stays. Alanya, Turkey, which is a very nice place and a zone 10 location. However it only gives me 90 days and currently is spiking on COVID. Thailand is a zone 11 or 12, but has much more difficult entry requirements. It is, in theory, cheaper than Durres, but more expensive than Alanya. However, it is high season and the pleasant parts like Koh Samui and Phuket are very expensive.
Of course, my decision criteria are different now than it will be when the end of the COVID pandemic expands my options. However, that won't help Thailand because it does not compete with Da Nang, Kuala Lumpur, Hoi An or Penang. Thailand was once high on the list for both DN's and multinationalists. However, now they are chasing away the former and failing to impress the latter.
Based upon climate and geography, I would definitely place South East Asia on the top of the list for Winter residence. That is true of Philippines, Malaysia, Indonesia, Cambodia and Thailand. However, of all of them, Thailand has managed to move itself to the bottom of the list.
Friday, September 25, 2020
Thailand Is Off the Table, For Now
Saturday, July 4, 2020
These Border Closures Are Mostly Stupid
I posted on my Facebook account that border closures are stupid. I suggested that an Abbott quick test could be administered before embarking on the flight and another could be administered at the destination prior to clearing passport control. Airports would need to provide a quarantine space prior to clearing passport control and provide reasonable alternatives should the disembarkation test fail.
Immediately, people claimed that the Abbott test is not accurate. Indeed there are a couple of studies that found this to be the case. However, most studies found the test to be highly accurate, over the normal FDA requirement of 95%. Still, let's use 80% accuracy. What that means is that 20% of those who present themselves for boarding will test negative and, in fact, be positive. Assuming no correlation, of those 20% who were false negatives on boarding, 20% will test negative again on disembarkation. That means that the combined false negative rate will be just 4%.
So, let's take the U.S. which has a current case rate of 0.44%. Assuming that those who present themselves for international travel have the same percent case rate as the general population, it means that the country of destination will be allowing entrance to a group with a case rate of 0.44% X 4% = 0.0176%. If the destination country has a case rate that is higher, they will actually be lowering their infection rate by letting them tourists in. For example, France has a reported case rate of 0.0889%. In other words, even with this simplistic analysis, it is clear that France should probably be allowing U.S. tourists into their country.
Keep in touch by subscribing to my Newsletter. I will keep you up to date on my travels, issues for Digital Nomads, thoughts on being a Polymath and, through my companion blog, Michaelwferguson.blogspot.com, intellectually sophisticated analysis and commentary on contemporary issues.
Immediately, people claimed that the Abbott test is not accurate. Indeed there are a couple of studies that found this to be the case. However, most studies found the test to be highly accurate, over the normal FDA requirement of 95%. Still, let's use 80% accuracy. What that means is that 20% of those who present themselves for boarding will test negative and, in fact, be positive. Assuming no correlation, of those 20% who were false negatives on boarding, 20% will test negative again on disembarkation. That means that the combined false negative rate will be just 4%.
So, let's take the U.S. which has a current case rate of 0.44%. Assuming that those who present themselves for international travel have the same percent case rate as the general population, it means that the country of destination will be allowing entrance to a group with a case rate of 0.44% X 4% = 0.0176%. If the destination country has a case rate that is higher, they will actually be lowering their infection rate by letting them tourists in. For example, France has a reported case rate of 0.0889%. In other words, even with this simplistic analysis, it is clear that France should probably be allowing U.S. tourists into their country.
There are a number of reasons why this analysis is not reliable. The one negative one is that there may be a correlation between the boarding false negatives and disembarkation false negatives. In other words, while the false negative was a 20% probability upon boarding, it is possible that when those 20% are tested upon deplaning at their destination, more than 20% of them will be a false negative again.
While this is a concern, it is swamped by the many, many positives compared to the simplistic analysis. The first and obvious one is that those who are listed as active cases know they will test positive and, consequently, they will not fly. Asymptomatic cases and those people who were so recently infected that they do not yet show symptoms. While asymptomatic cases are undoubtedly a function of identified cases, it is generally not thought that they outnumber them. In other words, while .44% of the U.S. general population is identified as active cases, the population that would likely present themselves for foreign travel would almost surely be substantially less.
The current cases is highly suspect. The primary reason is that, especially in the U.S., many people who test positive never present themselves for testing upon clearing the virus. Because of that, they are registered as a active case and are never removed. We know this is the case because the U.S. current cases are equal to 45 days of infection. We know that, on average, clearance of the virus takes about 21 days. So, while the U.S. reports .44% active cases, it is likely no higher than .2%.
So, in total, we see that those people who present themselves for international travel have a low likelihood of having the virus and an even lower likelihood of passing both a boarding and a deplaning virus check. In nearly all countries where they may land, but doing so, they will actually reduce the infection rate. Not only are these border closures destroying the local hospitality industry, it is depressing international commerce. This is clearly 'mostly stupid'.
While this is a concern, it is swamped by the many, many positives compared to the simplistic analysis. The first and obvious one is that those who are listed as active cases know they will test positive and, consequently, they will not fly. Asymptomatic cases and those people who were so recently infected that they do not yet show symptoms. While asymptomatic cases are undoubtedly a function of identified cases, it is generally not thought that they outnumber them. In other words, while .44% of the U.S. general population is identified as active cases, the population that would likely present themselves for foreign travel would almost surely be substantially less.
The current cases is highly suspect. The primary reason is that, especially in the U.S., many people who test positive never present themselves for testing upon clearing the virus. Because of that, they are registered as a active case and are never removed. We know this is the case because the U.S. current cases are equal to 45 days of infection. We know that, on average, clearance of the virus takes about 21 days. So, while the U.S. reports .44% active cases, it is likely no higher than .2%.
So, in total, we see that those people who present themselves for international travel have a low likelihood of having the virus and an even lower likelihood of passing both a boarding and a deplaning virus check. In nearly all countries where they may land, but doing so, they will actually reduce the infection rate. Not only are these border closures destroying the local hospitality industry, it is depressing international commerce. This is clearly 'mostly stupid'.
Keep in touch by subscribing to my Newsletter. I will keep you up to date on my travels, issues for Digital Nomads, thoughts on being a Polymath and, through my companion blog, Michaelwferguson.blogspot.com, intellectually sophisticated analysis and commentary on contemporary issues.
My Interest in U.S. Politics
As a Digital Nomad with U.S. citizenship, as I state often, my interest in politics are limited to four things.
Social Security
We rely on about $2,500 per month in Social Security benefits to fund our lifestyle. I am working on a series of self-published e-books which, with my decent and growing social media reach, I believe I can eventually eclipse Social Security as my primary source of income. However, until then, any negative changes to the program would be distressing.
This is not something that I worry about very much. With 43 million Social Security recipients who have a strong tendency to vote, negative impacts to current recipients would be political suicide. Because of this, the political dialogue has mostly revolved around lowering the benefits for future recipients.
In reality, because Congress has a tendency to 'bribe' large voting blocks with better government benefits, I do expect that, somehow, over time, Social Security will likely become increasingly more generous. The primary funding mechanism for this bribe, I believe, will be to eliminate some or all of the income cap. Right now, income above $137,700 is not subject to Social Security retirement tax. That has been increasing at about the same rate at incomes have increased. I expect the rate at which the income cap is increased will increase and the additional tax raised will be used to increase social security benefits.
For me, Biden v Trump, and whether the House or Senate is in Democrat or Republican hands will probably have little impact on this item. So, for now, I don't care who wins with regard to this item.
Forex USD
How much a USD will buy in the countries I visit is probably my most significant issue that can be affected by the upcoming elections. Traditionally, both Republicans and Democrats, though for different reasons, have supported a strong dollar. While Trump's policy statements would lead one to believe that the dollar would weaken under his Presidency and, for me, my standard of living would fall, that is not actually what happened. When he took office, one U.S. Dollar bought 1.94 Belarussian Rubles (BYN). It now buys 2.44 Rubles. During that time, the Ruble has seen about 19% inflation, while the Dollar has seen about 8% inflation. That means that I have seen a 14% increase in my purchasing power when I am in Belarus. I have experienced similar increases in purchasing power in the other countries I typically visit.
So, while Trump's rhetoric makes one nervous about Forex, in reality, his policies are putting more foreign currencies in my pocket. Congress is funded by people who want a strong dollar because it makes foreign labor and materials cheaper. Consequently, while I think that U.S. residents should be worried about a Democratic takeover of the Presidency and both Houses of Congress, as an expat, it really isn't that important with regard to Forex issues.
Bombing my host countries
This is obviously a place where Trump shines. I spend most of my time in Belarus, Turkey and Vietnam, at least for now, and the U.S. is not really fond of any of those countries. Belarus had a controversial election that Lukashenko's opponents are calling rigged. Turkey is causing problems with Syrian refugees and, now, offshore oil that, apparently, Greece thinks is theirs. Vietnam, while a 'communist' country actually has the least contentious relationship with the U.S. among these three. I'm in Serbia now and may spend significant time in Malaysia, so I have those countries to worry about, too.
While I am not really worried too much about this one, I guess Trump would be a better outcome than Biden. Rather than actual bombs, I am more worried about economic and diplomatic bombs. Those can affect me indirectly, through more difficult access, more limited product availability, more hostile locals, etc. Here, actually, Trump is probably as bad as anyone. He is not inclined to bomb countries, but he is very prone to sanctions and tariffs.
Foreign Earned Income Tax Credit
For expats, there seems to always be a low level concern over public opinion being somewhat hostile toward them. The attitude seems to mostly be, 'Don't let the door hit you on the way out'. However, there is reasonable concern that things could turn against U.S. DNs at any time, especially if more attention comes to the phenomenon of high income expats renouncing U.S. citizenship.
Right now, as a U.S. citizen, in theory, my worldwide income is taxable in the U.S. no matter where I live or where I work. However, right now, U.S. DNs can set up a foreign corporation to shelter income, paying oneself a salary. That income will be taxable, however, through the Foreign Earned Income Tax Credit, up to $240K (joint filers and this is not tax advice) annual income can be sheltered from U.S. taxation. However, that could go away at any time. As I have said in other posts, my primary financial benefit comes from much lower cost of living, not tax avoidance. That would be true, even if the FEITC disappeared. Still, it would be a significant new expense if Congress and the President eliminated it. Off hand, an Administration that bills itself as 'America First' would seem to be the bigger risk of eliminating expat tax preferences.
The other concern is that the Democrats, if they get into power, will increase the top marginal tax rate and then apply it to expats on their worldwide income. That is of concern to me because my goal is, in fact, to earn substantial income from the books I am writing. My goal is to sell 200K e-books per year at an average income of $5.50 each. That is a total income of $1.1 million which, I suspect, is going to be pretty average for successful Polymaths. That makes the top marginal tax rate, which starts at $612,351, relevant to me. Some Democrats are talking about doubling it or more.
In the end, it is very likely that successful U.S. citizens with location independent income will need to renounce their citizenship as a purely defensive move. However, the U.S. has already made renunciation more difficult for their citizens than for almost any other country. Additionally, if it is determined that you renounced in order to avoid taxation, any future requests for a visa will be denied. It is even possible that at some time in the future, Congress and the President will make renunciation so difficult as to make it impossible for all practical purposes.
While it is not wholly clear whether Democrats or Republicans or Donald Trump or Joe Biden would be better outcome based upon the four stated political issues, when I look to the future, the Democrats appear more dangerous simply because I strive to be financially successful and they will be more inclined to take my earnings, even if I am living and working outside the U.S.
Right now there are an estimated 9,000,000 U.S. citizens living outside of the country. While they tend to slowly lose interest in the U.S., they can and should submit absentee ballots in order to assure that they will continue to enjoy the many benefits that they enjoy today.
Keep in touch by subscribing to my Newsletter. I will keep you up to date on my travels, issues for Digital Nomads, thoughts on being a Polymath and, through my companion blog, Michaelwferguson.blogspot.com, intellectually sophisticated analysis and commentary on contemporary issues.
- Take care of my Social Security income stream
- Protect the value of USD on the Forex markets
- Don't bomb the places I visit.
- Don't screw with expat tax treatments
Social Security
We rely on about $2,500 per month in Social Security benefits to fund our lifestyle. I am working on a series of self-published e-books which, with my decent and growing social media reach, I believe I can eventually eclipse Social Security as my primary source of income. However, until then, any negative changes to the program would be distressing.
This is not something that I worry about very much. With 43 million Social Security recipients who have a strong tendency to vote, negative impacts to current recipients would be political suicide. Because of this, the political dialogue has mostly revolved around lowering the benefits for future recipients.
In reality, because Congress has a tendency to 'bribe' large voting blocks with better government benefits, I do expect that, somehow, over time, Social Security will likely become increasingly more generous. The primary funding mechanism for this bribe, I believe, will be to eliminate some or all of the income cap. Right now, income above $137,700 is not subject to Social Security retirement tax. That has been increasing at about the same rate at incomes have increased. I expect the rate at which the income cap is increased will increase and the additional tax raised will be used to increase social security benefits.
For me, Biden v Trump, and whether the House or Senate is in Democrat or Republican hands will probably have little impact on this item. So, for now, I don't care who wins with regard to this item.
Forex USD
How much a USD will buy in the countries I visit is probably my most significant issue that can be affected by the upcoming elections. Traditionally, both Republicans and Democrats, though for different reasons, have supported a strong dollar. While Trump's policy statements would lead one to believe that the dollar would weaken under his Presidency and, for me, my standard of living would fall, that is not actually what happened. When he took office, one U.S. Dollar bought 1.94 Belarussian Rubles (BYN). It now buys 2.44 Rubles. During that time, the Ruble has seen about 19% inflation, while the Dollar has seen about 8% inflation. That means that I have seen a 14% increase in my purchasing power when I am in Belarus. I have experienced similar increases in purchasing power in the other countries I typically visit.
So, while Trump's rhetoric makes one nervous about Forex, in reality, his policies are putting more foreign currencies in my pocket. Congress is funded by people who want a strong dollar because it makes foreign labor and materials cheaper. Consequently, while I think that U.S. residents should be worried about a Democratic takeover of the Presidency and both Houses of Congress, as an expat, it really isn't that important with regard to Forex issues.
Bombing my host countries
This is obviously a place where Trump shines. I spend most of my time in Belarus, Turkey and Vietnam, at least for now, and the U.S. is not really fond of any of those countries. Belarus had a controversial election that Lukashenko's opponents are calling rigged. Turkey is causing problems with Syrian refugees and, now, offshore oil that, apparently, Greece thinks is theirs. Vietnam, while a 'communist' country actually has the least contentious relationship with the U.S. among these three. I'm in Serbia now and may spend significant time in Malaysia, so I have those countries to worry about, too.
While I am not really worried too much about this one, I guess Trump would be a better outcome than Biden. Rather than actual bombs, I am more worried about economic and diplomatic bombs. Those can affect me indirectly, through more difficult access, more limited product availability, more hostile locals, etc. Here, actually, Trump is probably as bad as anyone. He is not inclined to bomb countries, but he is very prone to sanctions and tariffs.
Foreign Earned Income Tax Credit
For expats, there seems to always be a low level concern over public opinion being somewhat hostile toward them. The attitude seems to mostly be, 'Don't let the door hit you on the way out'. However, there is reasonable concern that things could turn against U.S. DNs at any time, especially if more attention comes to the phenomenon of high income expats renouncing U.S. citizenship.
Right now, as a U.S. citizen, in theory, my worldwide income is taxable in the U.S. no matter where I live or where I work. However, right now, U.S. DNs can set up a foreign corporation to shelter income, paying oneself a salary. That income will be taxable, however, through the Foreign Earned Income Tax Credit, up to $240K (joint filers and this is not tax advice) annual income can be sheltered from U.S. taxation. However, that could go away at any time. As I have said in other posts, my primary financial benefit comes from much lower cost of living, not tax avoidance. That would be true, even if the FEITC disappeared. Still, it would be a significant new expense if Congress and the President eliminated it. Off hand, an Administration that bills itself as 'America First' would seem to be the bigger risk of eliminating expat tax preferences.
The other concern is that the Democrats, if they get into power, will increase the top marginal tax rate and then apply it to expats on their worldwide income. That is of concern to me because my goal is, in fact, to earn substantial income from the books I am writing. My goal is to sell 200K e-books per year at an average income of $5.50 each. That is a total income of $1.1 million which, I suspect, is going to be pretty average for successful Polymaths. That makes the top marginal tax rate, which starts at $612,351, relevant to me. Some Democrats are talking about doubling it or more.
In the end, it is very likely that successful U.S. citizens with location independent income will need to renounce their citizenship as a purely defensive move. However, the U.S. has already made renunciation more difficult for their citizens than for almost any other country. Additionally, if it is determined that you renounced in order to avoid taxation, any future requests for a visa will be denied. It is even possible that at some time in the future, Congress and the President will make renunciation so difficult as to make it impossible for all practical purposes.
While it is not wholly clear whether Democrats or Republicans or Donald Trump or Joe Biden would be better outcome based upon the four stated political issues, when I look to the future, the Democrats appear more dangerous simply because I strive to be financially successful and they will be more inclined to take my earnings, even if I am living and working outside the U.S.
Right now there are an estimated 9,000,000 U.S. citizens living outside of the country. While they tend to slowly lose interest in the U.S., they can and should submit absentee ballots in order to assure that they will continue to enjoy the many benefits that they enjoy today.
Keep in touch by subscribing to my Newsletter. I will keep you up to date on my travels, issues for Digital Nomads, thoughts on being a Polymath and, through my companion blog, Michaelwferguson.blogspot.com, intellectually sophisticated analysis and commentary on contemporary issues.
Friday, July 3, 2020
Why I Left the U.S.
The primary reason I left the U.S. was to avoid the high cost of living. Suppose you are a couple with retirement income of $2,500 per month. You can live on that in the U.S., but it will be a very modest lifestyle. However, in Brest, Belarus, for example, where we live seasonally, that income will spend like $8,250 per month. Suppose your retirement income is $5,000 per month. Your lifestyle will be about average if you live in the U.S., but in Brest, it will spend like $18,500 per month. So, in a way, the more you earn, the more absolute benefit you gain from leaving the U.S. in favor of a low COL (cost of living) country.
This is not solely a characteristic of Belarus. Rather, it is a characteristic, primarily, of Eastern Europe and South East Asia. For example, in Alanya, Turkey, $2,500 spends like $7,570 and $5,000 per month spends like $15,140. In Da Nang, Vietnam, $2,500 spends like $7,360 and $5,000 spends like $14,720. In Kuala Lumpur, $2,500 spends like $7,525 and $5,000 spends like $15,050 per month.
There are clearly some issues that must be addressed before an Eastern Europe/ Southeast Asia lifestyle can be undertaken. The first is residency permissions. These can range from a visa free stay, usually 30 to 90 days, if available, to a tourist visa stay to, again, if available, a residence permit which is usually for one year or more. For a U.S. passport holder, this is not difficult, though it can take some planning. Ukraine, Turkey, Cyprus, Bulgaria, Serbia, and several other Eastern European countries allow 90 day stays, either visa free or with a simple Internet visa, out of every 180 days. A few of these allow unrestricted stays if you purchase a home. If not, this will require at least one move during the summer months. By the way, because my wife holds a Belarus passport, I am entitled to residency. For others, stays in Belarus will likely be limited to 30 days though two visa runs per year are allowed.
Vietnam allows 6 month stays with a simple visa, acquired via the Internet in about two or three days, and Malaysia allows 90 days but, with a simple visa extension, allows 5 months. Philippines, Indonesia, Thailand and Cambodia all are somewhat more restrictive. but most do have mechanisms for extending one's stay. Some countries, such as Thailand, are very accommodating for U.S. Passport holders with incomes over $3,000 per month but are cracking down on the $1,000 per month Digital Nomads that swarmed Chiang Mai. There are still every 30 day visa runs but they are becoming more difficult.
Low cost of living is one thing. However, one must also consider the quality of life. Many of the men of my generation were conscripted and sent to Vietnam where they experienced a third world squalor with which they were unfamiliar. Americans who grew up during the cold war remember depictions of Eastern Europe as bland, impoverished and restrictive. This is a critical consideration because having substantial purchasing power in a country with a low standard of living may not be very comfortable. My wife and I spent a week at a Jamaican Sandals. It was magnificent, but once we left the resort, we were immediately confronted with extreme poverty. No matter how much money we had in our pockets, there wasn't much to buy because the locals couldn't afford the items that we would want.
This is not solely a characteristic of Belarus. Rather, it is a characteristic, primarily, of Eastern Europe and South East Asia. For example, in Alanya, Turkey, $2,500 spends like $7,570 and $5,000 per month spends like $15,140. In Da Nang, Vietnam, $2,500 spends like $7,360 and $5,000 spends like $14,720. In Kuala Lumpur, $2,500 spends like $7,525 and $5,000 spends like $15,050 per month.
There are clearly some issues that must be addressed before an Eastern Europe/ Southeast Asia lifestyle can be undertaken. The first is residency permissions. These can range from a visa free stay, usually 30 to 90 days, if available, to a tourist visa stay to, again, if available, a residence permit which is usually for one year or more. For a U.S. passport holder, this is not difficult, though it can take some planning. Ukraine, Turkey, Cyprus, Bulgaria, Serbia, and several other Eastern European countries allow 90 day stays, either visa free or with a simple Internet visa, out of every 180 days. A few of these allow unrestricted stays if you purchase a home. If not, this will require at least one move during the summer months. By the way, because my wife holds a Belarus passport, I am entitled to residency. For others, stays in Belarus will likely be limited to 30 days though two visa runs per year are allowed.
Vietnam allows 6 month stays with a simple visa, acquired via the Internet in about two or three days, and Malaysia allows 90 days but, with a simple visa extension, allows 5 months. Philippines, Indonesia, Thailand and Cambodia all are somewhat more restrictive. but most do have mechanisms for extending one's stay. Some countries, such as Thailand, are very accommodating for U.S. Passport holders with incomes over $3,000 per month but are cracking down on the $1,000 per month Digital Nomads that swarmed Chiang Mai. There are still every 30 day visa runs but they are becoming more difficult.
Low cost of living is one thing. However, one must also consider the quality of life. Many of the men of my generation were conscripted and sent to Vietnam where they experienced a third world squalor with which they were unfamiliar. Americans who grew up during the cold war remember depictions of Eastern Europe as bland, impoverished and restrictive. This is a critical consideration because having substantial purchasing power in a country with a low standard of living may not be very comfortable. My wife and I spent a week at a Jamaican Sandals. It was magnificent, but once we left the resort, we were immediately confronted with extreme poverty. No matter how much money we had in our pockets, there wasn't much to buy because the locals couldn't afford the items that we would want.
When I visited Minsk, Belarus in 2002, the lines in grocery stores were still there as depicted as the norm during the Soviet Union era. You would wait in line for five minutes to ask for a loaf of bread and then you would spend another five minutes in a different line in order to pay for it. That was for bread. If you wanted other things, there would be other lines.
So, the concern isn't invalid; however, it is mostly outdated. Whatever the truth of this image of Eastern Europe and Southeast Asia may have been in the past, it most certainly is not the case today. Many of these places are very pleasant tourist destinations catering to first world visitors and providing first world accommodations, restaurants, shops and services. Probably the most exquisite beach side restaurant I have so far visited was in Alanya, Turkey. That is saying something because I lived in Miami for six years.
Even if a location is not a tourist destination, nearly all of the cities in these regions have residents of the global Information Age economy and consequently contain neighborhoods that are modern, pleasant and affluent. For me, Brest, Belarus is one of the most pleasant residential cities in the world. It has a magnificent shopping street with lots of boutiques and sidewalk cafes. It has gorgeous parks. Green Market is probably the best grocery stores I have ever visited. My wife just bought a pair of Pierre Cardin shoes and visits The Colors of Benetton regularly. Because Brest is relatively small, the selection is more limited than in, say, Warsaw or Minsk, but there is quality shopping. There are neighborhoods where a 3,000 ft² (280 m²) house is small and people drive BMWs, Mercedes, Maseratis, etc.
Clearly, one may visit the U.S., Western Europe, Japan, Hong Kong, South Korea, Singapore as a tourist. There is the Louvre in Paris, the restaurants of Tokyo, the monuments of Washington, D.C., the fashion of Milan, the beaches of Cote d'Azur, etc. The key is that, while there is much to see in these regions, when it comes to places to live, none of them make much sense. They are just too expensive.
Parenthetically, many retired Americans and Digital Nomads choose to settle in Mexico, Panama, Belize, Colombia, Ecuador, Argentina, etc. In these countries, rather than your dollar spending like three dollars, they will spend like two dollars. For some, the proximity to the U.S. justifies a lower standard of living. For us, we see no sense in cutting our standard of living by 1/3.
There is also the language issue. I can communicate with relative ease in English, Russian and German and I am adding Spanish and Mandarin to the list. While Brest, Belarus is a gracious town, with a charming shopping street lots of sidewalk cafes, and beautiful parks, few people speak English. For me, that is not an issue, but it is a serious consideration before one decides to take advantage of the lower cost of living in Eastern Europe and Southeast Asia. For example, in Turkey, even though I stayed in a tourist town, English was uncommon. However, when I added Russian and German to the mix, I found many more people with whom I could communicate. And of course, today there are effective, if a bit cumbersome, translator programs.
Taken, in total, our lifestyle easily handles all of the considerations above and our passports make travel relatively uncomplicated. In summary, I say that our modest income affords us a 3* lifestyle. By adding writing, I am hoping to turn that into 4*. However, if it never happens, it won't be a disaster.
This leads me to reason number two for leaving the U.S. I have spent my life almost entirely in the U.S. and it is well past the time for me to see the world. By splitting our time between Brest, Belarus, Alanya, Turkey and Da Nang, Vietnam, in what Andrew Henderson calls the Trifecta Strategy, not only are we becoming very familiar with three places in different parts of the world, we are opening up whole regions to easy visitation. For example, assuming that the EU borders open up for U.S. citizens before the summer ends, we will likely take the train from Brest to Krakow, Poland and spend a week there - maybe two. It is truly one of the top romantic cities in the world and also, though not the Louvre, Hermitage or Met, it, surprisingly, has an art collection valued at $3 billion which includes one of only 15 extant da Vinci paintings. Furthermore, a week's vacation there will only cost us about $500 to $600 more than our normal budget. That compares to our old vacation budgets of $3,000 to $5,000.
Alanya, Turkey also is a gracious place to live with an abundance of first world apartments for rent and Kleopatra Beach may be the best beach on the Mediterranean with several inexpensive beach clubs that would be right at home on the Cote d'Azur. It not only provides us with easy, fast and inexpensive access to the archaeological ruins of the region (including Athens), but also to the romance of the Greek Islands, and short, inexpensive flights to other interesting spots, such as Egypt and Dubai.
Whether we ultimately choose Da Nang or Kuala Lumpur (or perhaps Penang) as our Winter home in SE Asia, it provides us with easy access to the vacation spots of Indonesia (Bali), Malaysia (Penang), Thailand (Phuket) and Philippines (Boracay), tourist spots like Hoi An and Angkor Wat and even, as a splurge, Hong Kong and Macau.
Being a Digital Nomad allows one to shed the provincialism that is common for most people. I advocate at least one year of world travel upon retirement for everyone and earlier if you can acquire a location independent income. One should see Paris, Mount Kilimanjaro, the Pyramids, the Great Wall, etc. However, for many, such as us, we are also in the exploratory phase of being Trifecta DNs. By that I mean, we will eventually have at least two, and possibly three, home bases. But, first, we must travel the world so that we choose the locations that are best for us. Will any of them be in the U.S.? It is highly unlikely, simply because the U.S. is just too expensive.
We retired with a pension income of between $2,500 and $5,000 per month. That is a pretty typical range and, though some portion of Social Security benefits and world wide ordinary income are subject to U.S. taxation, we owe no taxes on that amount. This is partially due to a significant tax exclusion of Social Security benefits.
However, I am writing, both as an independent essayist and columnist and as an author of non-fiction books. These are becoming more lucrative endeavors for those who engage in them because the Internet allows one to keep 70% to 80% of the ad revenue or purchase price one generates. In the past, writers typically received 15% to 20% of the revenue generated from their efforts. So, one can survive on 1/4 to 1/5 as many readers or earn 4X to 5X more for the same number of readers.
For this income, as a U.S. citizen, I am subject to taxation no matter where I live or where I work. If I expatriate, (live outside the U.S. for at least 330 days per year), we may exclude up to $215,200 of foreign 'earned' income. This income can be earned without taxation by setting up a foreign corporation that actually receives the revenue and pays me a salary. In addition, we can claim a $24,800 standard deduction, which means that we will be exempt from taxation on our first $240,000 of income. If we lived in the U.S. we would likely pay over $43,000 in Federal Income Taxes. Since, if we did live in the U.S., it would likely be in Florida, we would not be subject to State Income tax.
This is a unique issue for U.S. Passport holders. Of all significant countries, only U.S. citizens are subject to taxation on worldwide income. Because of this, for expats with seven or eight figure annual income, often the only viable option is to renounce U.S. citizenship and a growing number of them are doing just that. Without asserting that I will, suppose I wrote a million seller. If it sold for $10 of which I kept $8, I would earn $8 million in that year. I would owe nearly $3 million in taxes on that, even though I was living in Brest, Alanya and Da Nang. One can avoid this tax liability by renouncing citizenship, but it must be done before you earn the $8 million.
It should also be pointed out that some Democratic Members of Congress have proposed increasing marginal tax rates to as much as 70%. This may cause a flurry of defensive renunciations if the Democrats take the Presidency and both Houses of Congress in November, 2020. Under any circumstances, living in the U.S. when one has location independent income is a huge tax liability risk, especially if one is engaged in activities where windfall income is not unreasonable.
These are the practical reasons why I left. Essentially, by leaving, I have a much higher standard of living with no significant tax liabilities, a diversity of environments and interesting cultures and sights to be seen. That should be, and is, enough reasons. However, I have some philosophical reasons as well, There are basically two.
First, I consider myself to be a citizen of Western Civilization and I am proud of it. From moral, political, economic and cultural standpoints, the Enlightenment was singularly the most significant event in history. From blue jeans to Bach, Western culture has been adopted by much of the world. Through free enterprise, Western Civilization has given the world almost every technological advance that we enjoy today. However, my identity is with Western Civilization, not the U.S.
Unfortunately, if you live in the U.S. in the minds of Americans and the world, you are an American. I spent a lifetime trying to make the distinction between being American and being a Westerner and, almost completely, without success. When people ask me where I am from, I say, 'Everywhere and nowhere'. Still, that is no more than a partial indemnification from being labeled an American.
I wish it was possible to be a citizen of Western Civilization. However, it is not. So, when I write articles and books, they are written by an 'American Author' and, as such, are often taken to be written from an American perspective. For me, this is definitely not the case. The article I wrote on the Crimean situation was dramatically at odds with all of the 'Western press'. It wasn't pro-Russian, either. I am very harsh with the U.S. with regard to its penchant to stick its nose into everyone else's business.
This is important because I want my writing to be interpreted as intelligent, erudite and mostly free of any partisanship or provincialism. That is certainly easier to do if I am NOT living in the U.S. and, even better, if I am not really living anywhere. This was a driving reason for me to leave the U.S., though I recognize that unlike the practical reasons I have given, will be a compelling reason for very few people.
Second, to put it bluntly, I don't want to be 'owned' by any country. This ownership is made most clear by the claim that the United States makes upon my income no matter where I live or where I earn that income. Yes, they exempt a substantial amount of income. However, by exempting that income they are asserting that they could take some or all of it. They say that they have the authority. They reserve the right to conscript one for military service. Again, they presently do not, and under no circumstance would they likely conscript someone in my age group. However, by reserving the right, they are claiming 'ownership' of me. They can order me to jury duty. Based upon court order they can revoke my passport. Right now, they will do so if the IRS claims that I owe them over $52,000 or a State authority claims that I have more than $2,500 of child support arrears. Again, the important point is not whether I am subject to any of these limitations. It is that, by claiming these authorities, they are asserting that I am their subject. I am owned.
Furthermore, the U.S. claims, by virtue of one's citizenship, an absolute right to one's information. Not only, even if you live outside the U.S., are you required to submit complex and extensive reports, the U.S. has badgered foreign governments into agreeing to report financial information on U.S. citizens residing in or doing business in their country. It seems that the U.S. government has no compunction against exercising the principle of 'might makes right'. While, for me, this is mostly offensive on philosophical rather than practical grounds, many foreign banks will not open bank accounts for U.S. citizens because of the reporting requirements and legal exposures.
Because of the above, a growing number of higher income U.S. citizens are acquiring foreign passports 'just in case'. The greatest fear is that through some FATCA reporting, the IRS decides that they owe over $52,000 in unpaid taxes, penalties and interest. This is not some rare thing. In 2019, the IRS directed the State Department to revoke nearly 400K passports. Suddenly, your passport is revoked and you can't travel. Furthermore, because it is an administrative, not a criminal, procedure, one is guilty until proven innocent.
Because of this, a number of small countries, mostly in the Caribbean, are selling citizenship for varying six figure amounts. That seems like a lot of money, but to a six or seven figure person it is simply prudent. It also can be a predicate to renunciation of citizenship, which is becoming progressively more common. While you can exempt about $240,000 of income from taxation, for the seven and eight figure income person, that can still leave a very hefty tax liability to a country that they have left. For example, suppose I sold one million e-books at $8 net income each. Yes, I can exempt $240,000 of it from taxation, but most of the $8,000,000 would be subject to a 37% tax. That is millions of dollars of tax liability to a country where I do not live or work and from which I require no services.
If my writing career is sufficiently successful I will acquire a couple of Caribbean passports and then renounce my citizenship. As I said, when you hold a U.S. passport, the U.S. government claims sovereignty over you, what I consider to be ownership, and that is risky. The Caribbean passports are different. They understand that, in exchange for $100,000 to $150,000 plus some fees, they are selling you a travel document. All five of them allow for visa free travel within the Schengen region and U.K. and have visa free travel to between 119 and 136 countries in total. They will not impose income taxes on any foreign income, nor will they impose residency requirements nor will they assert rights of sovereignty.
This is extremely important to me and why it is a goal to operate with a handful of 'travel document' passports. It is not that I don't want to be owned by the U.S., specifically, but rather that I don't want to be owned by any country.
Andrew Henderson, the Nomad Capitalist, renounced his U.S. citizenship several years ago. He does not cite legal or tax reasons. When he speaks of it, he mostly talks about never feeling 'at home' in the U.S. He finds it to be a bad identity fit. So do I. I am often asked, 'Where is it better?' Well, I have a couple of responses to that. The first is, 'I am not leaving the U.S. in favor of someplace better. I don't want to be an American but that doesn't mean that I want to be a Swede or a Korean. Why must I be anything?' I mean, I need a travel document, but if, for example, I acquire a Granada passport, that doesn't mean I am Granadan. If it did, I wouldn't get that passport. I'd get a different one.
Lastly, and this is more of a general take than one that applies to the U.S. I like that, wherever I go, I am just visiting. Your ethnic arguments, your political arguments, your cultural arguments aren't mine. I don't feel a need to become embroiled in local arguments and, frankly, the locals almost always prefer that I don't. People, when they find out that I was born in the U.S. almost always ask me about U.S. politics. What I tell them is that I only have threefour issues. One, don't screw with my Social Security. Two, don't do stupid things with the USD that decreases its value in the Forex markets, three, don't change my tax exemptions of foreign income unless you want them to be less and four, don't bomb places where I might be.
As I write this article, people have been marching in the streets, rioting and looting, seizing a part of the country and calling it CHAZ or CHOP or whatever. None of these are my issues and I am happy about that. When I am in Turkey, the Syrian crisis issue is not mine. When I am in Vietnam, the kerfuffle over the South China Sea is not my kerfuffle. I float above local and regional issues because, in a couple of months, I will be gone.
Andrew Henderson sometimes refers to people like he and I as 'citizens of the world'. I don't like that reference because, for me, it conjures up images of pledging fealty to and granting sovereignty to the United Nations. I prefer multinationalist as a terminology and I would be even happier with anationalist, though I think it would come off as pretentious for most people. Still, it is likely the most accurate.
Making the decision to leave the U.S., on one hand, is a simple economic one. If your income is location independent, the 'first world' is just too expensive. Even if you earn $1 million per year, wouldn't it still be better to live in Alanya or Da Nang and have purchasing power of $3 million. In the U.K. a live-in domestic costs between £250-£550 per week. In Da Nang he or she will cost that in a month. That difference exists whether you have $2,500 per month in income or $250,000 per month in income.
Still, the decision to leave is more complex than a straight economic decision, as I have explored here. There are issues of national identity, political risks, interpersonal factors and more. A U.S. passport is a bit more of a boot out the door than, say, a British passport. However, I do advocate the Trifecta Strategy or something like it for anyone with location independent income. Many Brits winter in Dubai and then summer on Costa del Sol or Cote d'Azur, rarely returning to their home country. When I was in Alanya, I ran into Germans, Swedes, Poles and more who winter in Turkey. They do so for climate, for cost of living, for tax benefits, etc.
This is quite likely a wave of the future.
So, the concern isn't invalid; however, it is mostly outdated. Whatever the truth of this image of Eastern Europe and Southeast Asia may have been in the past, it most certainly is not the case today. Many of these places are very pleasant tourist destinations catering to first world visitors and providing first world accommodations, restaurants, shops and services. Probably the most exquisite beach side restaurant I have so far visited was in Alanya, Turkey. That is saying something because I lived in Miami for six years.
Even if a location is not a tourist destination, nearly all of the cities in these regions have residents of the global Information Age economy and consequently contain neighborhoods that are modern, pleasant and affluent. For me, Brest, Belarus is one of the most pleasant residential cities in the world. It has a magnificent shopping street with lots of boutiques and sidewalk cafes. It has gorgeous parks. Green Market is probably the best grocery stores I have ever visited. My wife just bought a pair of Pierre Cardin shoes and visits The Colors of Benetton regularly. Because Brest is relatively small, the selection is more limited than in, say, Warsaw or Minsk, but there is quality shopping. There are neighborhoods where a 3,000 ft² (280 m²) house is small and people drive BMWs, Mercedes, Maseratis, etc.
Clearly, one may visit the U.S., Western Europe, Japan, Hong Kong, South Korea, Singapore as a tourist. There is the Louvre in Paris, the restaurants of Tokyo, the monuments of Washington, D.C., the fashion of Milan, the beaches of Cote d'Azur, etc. The key is that, while there is much to see in these regions, when it comes to places to live, none of them make much sense. They are just too expensive.
Parenthetically, many retired Americans and Digital Nomads choose to settle in Mexico, Panama, Belize, Colombia, Ecuador, Argentina, etc. In these countries, rather than your dollar spending like three dollars, they will spend like two dollars. For some, the proximity to the U.S. justifies a lower standard of living. For us, we see no sense in cutting our standard of living by 1/3.
There is also the language issue. I can communicate with relative ease in English, Russian and German and I am adding Spanish and Mandarin to the list. While Brest, Belarus is a gracious town, with a charming shopping street lots of sidewalk cafes, and beautiful parks, few people speak English. For me, that is not an issue, but it is a serious consideration before one decides to take advantage of the lower cost of living in Eastern Europe and Southeast Asia. For example, in Turkey, even though I stayed in a tourist town, English was uncommon. However, when I added Russian and German to the mix, I found many more people with whom I could communicate. And of course, today there are effective, if a bit cumbersome, translator programs.
Taken, in total, our lifestyle easily handles all of the considerations above and our passports make travel relatively uncomplicated. In summary, I say that our modest income affords us a 3* lifestyle. By adding writing, I am hoping to turn that into 4*. However, if it never happens, it won't be a disaster.
This leads me to reason number two for leaving the U.S. I have spent my life almost entirely in the U.S. and it is well past the time for me to see the world. By splitting our time between Brest, Belarus, Alanya, Turkey and Da Nang, Vietnam, in what Andrew Henderson calls the Trifecta Strategy, not only are we becoming very familiar with three places in different parts of the world, we are opening up whole regions to easy visitation. For example, assuming that the EU borders open up for U.S. citizens before the summer ends, we will likely take the train from Brest to Krakow, Poland and spend a week there - maybe two. It is truly one of the top romantic cities in the world and also, though not the Louvre, Hermitage or Met, it, surprisingly, has an art collection valued at $3 billion which includes one of only 15 extant da Vinci paintings. Furthermore, a week's vacation there will only cost us about $500 to $600 more than our normal budget. That compares to our old vacation budgets of $3,000 to $5,000.
Alanya, Turkey also is a gracious place to live with an abundance of first world apartments for rent and Kleopatra Beach may be the best beach on the Mediterranean with several inexpensive beach clubs that would be right at home on the Cote d'Azur. It not only provides us with easy, fast and inexpensive access to the archaeological ruins of the region (including Athens), but also to the romance of the Greek Islands, and short, inexpensive flights to other interesting spots, such as Egypt and Dubai.
Whether we ultimately choose Da Nang or Kuala Lumpur (or perhaps Penang) as our Winter home in SE Asia, it provides us with easy access to the vacation spots of Indonesia (Bali), Malaysia (Penang), Thailand (Phuket) and Philippines (Boracay), tourist spots like Hoi An and Angkor Wat and even, as a splurge, Hong Kong and Macau.
Being a Digital Nomad allows one to shed the provincialism that is common for most people. I advocate at least one year of world travel upon retirement for everyone and earlier if you can acquire a location independent income. One should see Paris, Mount Kilimanjaro, the Pyramids, the Great Wall, etc. However, for many, such as us, we are also in the exploratory phase of being Trifecta DNs. By that I mean, we will eventually have at least two, and possibly three, home bases. But, first, we must travel the world so that we choose the locations that are best for us. Will any of them be in the U.S.? It is highly unlikely, simply because the U.S. is just too expensive.
We retired with a pension income of between $2,500 and $5,000 per month. That is a pretty typical range and, though some portion of Social Security benefits and world wide ordinary income are subject to U.S. taxation, we owe no taxes on that amount. This is partially due to a significant tax exclusion of Social Security benefits.
However, I am writing, both as an independent essayist and columnist and as an author of non-fiction books. These are becoming more lucrative endeavors for those who engage in them because the Internet allows one to keep 70% to 80% of the ad revenue or purchase price one generates. In the past, writers typically received 15% to 20% of the revenue generated from their efforts. So, one can survive on 1/4 to 1/5 as many readers or earn 4X to 5X more for the same number of readers.
For this income, as a U.S. citizen, I am subject to taxation no matter where I live or where I work. If I expatriate, (live outside the U.S. for at least 330 days per year), we may exclude up to $215,200 of foreign 'earned' income. This income can be earned without taxation by setting up a foreign corporation that actually receives the revenue and pays me a salary. In addition, we can claim a $24,800 standard deduction, which means that we will be exempt from taxation on our first $240,000 of income. If we lived in the U.S. we would likely pay over $43,000 in Federal Income Taxes. Since, if we did live in the U.S., it would likely be in Florida, we would not be subject to State Income tax.
This is a unique issue for U.S. Passport holders. Of all significant countries, only U.S. citizens are subject to taxation on worldwide income. Because of this, for expats with seven or eight figure annual income, often the only viable option is to renounce U.S. citizenship and a growing number of them are doing just that. Without asserting that I will, suppose I wrote a million seller. If it sold for $10 of which I kept $8, I would earn $8 million in that year. I would owe nearly $3 million in taxes on that, even though I was living in Brest, Alanya and Da Nang. One can avoid this tax liability by renouncing citizenship, but it must be done before you earn the $8 million.
It should also be pointed out that some Democratic Members of Congress have proposed increasing marginal tax rates to as much as 70%. This may cause a flurry of defensive renunciations if the Democrats take the Presidency and both Houses of Congress in November, 2020. Under any circumstances, living in the U.S. when one has location independent income is a huge tax liability risk, especially if one is engaged in activities where windfall income is not unreasonable.
These are the practical reasons why I left. Essentially, by leaving, I have a much higher standard of living with no significant tax liabilities, a diversity of environments and interesting cultures and sights to be seen. That should be, and is, enough reasons. However, I have some philosophical reasons as well, There are basically two.
First, I consider myself to be a citizen of Western Civilization and I am proud of it. From moral, political, economic and cultural standpoints, the Enlightenment was singularly the most significant event in history. From blue jeans to Bach, Western culture has been adopted by much of the world. Through free enterprise, Western Civilization has given the world almost every technological advance that we enjoy today. However, my identity is with Western Civilization, not the U.S.
Unfortunately, if you live in the U.S. in the minds of Americans and the world, you are an American. I spent a lifetime trying to make the distinction between being American and being a Westerner and, almost completely, without success. When people ask me where I am from, I say, 'Everywhere and nowhere'. Still, that is no more than a partial indemnification from being labeled an American.
I wish it was possible to be a citizen of Western Civilization. However, it is not. So, when I write articles and books, they are written by an 'American Author' and, as such, are often taken to be written from an American perspective. For me, this is definitely not the case. The article I wrote on the Crimean situation was dramatically at odds with all of the 'Western press'. It wasn't pro-Russian, either. I am very harsh with the U.S. with regard to its penchant to stick its nose into everyone else's business.
This is important because I want my writing to be interpreted as intelligent, erudite and mostly free of any partisanship or provincialism. That is certainly easier to do if I am NOT living in the U.S. and, even better, if I am not really living anywhere. This was a driving reason for me to leave the U.S., though I recognize that unlike the practical reasons I have given, will be a compelling reason for very few people.
Second, to put it bluntly, I don't want to be 'owned' by any country. This ownership is made most clear by the claim that the United States makes upon my income no matter where I live or where I earn that income. Yes, they exempt a substantial amount of income. However, by exempting that income they are asserting that they could take some or all of it. They say that they have the authority. They reserve the right to conscript one for military service. Again, they presently do not, and under no circumstance would they likely conscript someone in my age group. However, by reserving the right, they are claiming 'ownership' of me. They can order me to jury duty. Based upon court order they can revoke my passport. Right now, they will do so if the IRS claims that I owe them over $52,000 or a State authority claims that I have more than $2,500 of child support arrears. Again, the important point is not whether I am subject to any of these limitations. It is that, by claiming these authorities, they are asserting that I am their subject. I am owned.
Furthermore, the U.S. claims, by virtue of one's citizenship, an absolute right to one's information. Not only, even if you live outside the U.S., are you required to submit complex and extensive reports, the U.S. has badgered foreign governments into agreeing to report financial information on U.S. citizens residing in or doing business in their country. It seems that the U.S. government has no compunction against exercising the principle of 'might makes right'. While, for me, this is mostly offensive on philosophical rather than practical grounds, many foreign banks will not open bank accounts for U.S. citizens because of the reporting requirements and legal exposures.
Because of the above, a growing number of higher income U.S. citizens are acquiring foreign passports 'just in case'. The greatest fear is that through some FATCA reporting, the IRS decides that they owe over $52,000 in unpaid taxes, penalties and interest. This is not some rare thing. In 2019, the IRS directed the State Department to revoke nearly 400K passports. Suddenly, your passport is revoked and you can't travel. Furthermore, because it is an administrative, not a criminal, procedure, one is guilty until proven innocent.
Because of this, a number of small countries, mostly in the Caribbean, are selling citizenship for varying six figure amounts. That seems like a lot of money, but to a six or seven figure person it is simply prudent. It also can be a predicate to renunciation of citizenship, which is becoming progressively more common. While you can exempt about $240,000 of income from taxation, for the seven and eight figure income person, that can still leave a very hefty tax liability to a country that they have left. For example, suppose I sold one million e-books at $8 net income each. Yes, I can exempt $240,000 of it from taxation, but most of the $8,000,000 would be subject to a 37% tax. That is millions of dollars of tax liability to a country where I do not live or work and from which I require no services.
If my writing career is sufficiently successful I will acquire a couple of Caribbean passports and then renounce my citizenship. As I said, when you hold a U.S. passport, the U.S. government claims sovereignty over you, what I consider to be ownership, and that is risky. The Caribbean passports are different. They understand that, in exchange for $100,000 to $150,000 plus some fees, they are selling you a travel document. All five of them allow for visa free travel within the Schengen region and U.K. and have visa free travel to between 119 and 136 countries in total. They will not impose income taxes on any foreign income, nor will they impose residency requirements nor will they assert rights of sovereignty.
This is extremely important to me and why it is a goal to operate with a handful of 'travel document' passports. It is not that I don't want to be owned by the U.S., specifically, but rather that I don't want to be owned by any country.
Andrew Henderson, the Nomad Capitalist, renounced his U.S. citizenship several years ago. He does not cite legal or tax reasons. When he speaks of it, he mostly talks about never feeling 'at home' in the U.S. He finds it to be a bad identity fit. So do I. I am often asked, 'Where is it better?' Well, I have a couple of responses to that. The first is, 'I am not leaving the U.S. in favor of someplace better. I don't want to be an American but that doesn't mean that I want to be a Swede or a Korean. Why must I be anything?' I mean, I need a travel document, but if, for example, I acquire a Granada passport, that doesn't mean I am Granadan. If it did, I wouldn't get that passport. I'd get a different one.
Lastly, and this is more of a general take than one that applies to the U.S. I like that, wherever I go, I am just visiting. Your ethnic arguments, your political arguments, your cultural arguments aren't mine. I don't feel a need to become embroiled in local arguments and, frankly, the locals almost always prefer that I don't. People, when they find out that I was born in the U.S. almost always ask me about U.S. politics. What I tell them is that I only have threefour issues. One, don't screw with my Social Security. Two, don't do stupid things with the USD that decreases its value in the Forex markets, three, don't change my tax exemptions of foreign income unless you want them to be less and four, don't bomb places where I might be.
As I write this article, people have been marching in the streets, rioting and looting, seizing a part of the country and calling it CHAZ or CHOP or whatever. None of these are my issues and I am happy about that. When I am in Turkey, the Syrian crisis issue is not mine. When I am in Vietnam, the kerfuffle over the South China Sea is not my kerfuffle. I float above local and regional issues because, in a couple of months, I will be gone.
Andrew Henderson sometimes refers to people like he and I as 'citizens of the world'. I don't like that reference because, for me, it conjures up images of pledging fealty to and granting sovereignty to the United Nations. I prefer multinationalist as a terminology and I would be even happier with anationalist, though I think it would come off as pretentious for most people. Still, it is likely the most accurate.
Making the decision to leave the U.S., on one hand, is a simple economic one. If your income is location independent, the 'first world' is just too expensive. Even if you earn $1 million per year, wouldn't it still be better to live in Alanya or Da Nang and have purchasing power of $3 million. In the U.K. a live-in domestic costs between £250-£550 per week. In Da Nang he or she will cost that in a month. That difference exists whether you have $2,500 per month in income or $250,000 per month in income.
Still, the decision to leave is more complex than a straight economic decision, as I have explored here. There are issues of national identity, political risks, interpersonal factors and more. A U.S. passport is a bit more of a boot out the door than, say, a British passport. However, I do advocate the Trifecta Strategy or something like it for anyone with location independent income. Many Brits winter in Dubai and then summer on Costa del Sol or Cote d'Azur, rarely returning to their home country. When I was in Alanya, I ran into Germans, Swedes, Poles and more who winter in Turkey. They do so for climate, for cost of living, for tax benefits, etc.
This is quite likely a wave of the future.
Friday, June 5, 2020
A Coming War Between High Tax Nations and Multinationalists
Andrew Henderson, the Nomad Capitalist, speaks often about taxation of Multinationalists. By blurring the line between resident and visitor, this growing community is making it progressively more difficult for high tax nations to extract income based taxation from them. Mr. Henderson focuses on the increasing pressure to constrain the Nomad Capitalist's efforts to avoid taxation. However, I believe that high tax countries will eventually abandon this effort in favor of increased consumption based taxes. This, will, in fact, destroy the Digital Nomad's ability to avoid taxation.
A big part of this trend will be related to an increasing percentage of high income individuals who will have location independent income. Take a blogger who has 100K readers for their typical article (I have exceeded this for selected articles and intend to exceed it routinely over the next couple of years) and has net revenue of 3.00 USD per year per reader. This is a very small player in the independent columnist world, but he or she will earn 300K USD per year. Their income is location independent and it places them in the top 2% of the population in income, even in developed countries. These people present a general problem for countries but, importantly, also a specific problem of how to extract a significant percent of their 300K USD in the form of taxes.
Most high tax countries view their high producers as a kind of involuntary sugar daddy to the rest of the population. Ample research demonstrates that a 80%-20% Pareto distribution describes value added in all but the most menial of tasks. Yet, distribution of purchasing power almost always is less than 80%-20%. Some of this is probably justified (See An Information Age Income Model), however, much of it is nothing more than governments commandeering wealth and income from the high producers because they can.
This is not lost on high producers. Unless they identify with the local nation and decide voluntarily to disproportionately support it, the progressivity of income tax may be viewed as institutionalized theft and something to be avoided, if possible.
The Multinationalist lifestyle weakens identification with a person's country of birth and does not always get replaced by the adoption of a new country of residence. Suppose a U.S. citizen decides to have a winter home in the Bahamas. Their 'sense of place and community' is reduced because of the four months, or so, that they spend in the Bahamas. Now, suppose they visit Limassol, Cyprus for a summer break, fall in love with it and decide that they want to spend four months in the summer there. Add a month per year of world travel and they are now spending just three months per year in the U.S. If their income is global and their time is mostly spent offshore, they, quite likely, over time will lose an American identity and start building a Multnationalist identity. At that point, they might quite reasonably begin to resent a 40% or higher U.S. income tax rate. This is, actually, what is leading to an increasing number of U.S. citizens renouncing citizenship.
The situation is different for most European citizens. Imagine a wealthy Brit who decides to winter in Dubai. Then after a summer in Monaco, decides to make that country a permanent summer locale. Because of the tax laws in the U.K., the wealthy U.K. citizen does not pay British income tax and, because neither Dubai nor Monaco have income taxes, he or she does not pay any income tax. Andrew Henderson is very much concerned that such people will cause the U.K. and other European nations to adopt the 'worldwide income' model of the U.S. It could be, in fact, that over time high income Multinationalists holding almost any passport will find it necessary to renounce their high tax nation citizenship.
Actually, Multinationalists are not fleeing high tax nations solely or, in many cases, primarily to avoid taxes. In my case, cost of living issues was the primary driver. For example, my wife and I are U.S. passport holders. However, I can set up a corporation in Turks and Caicos, pay us salaries and through the Foreign Earned Tax Credit avoid taxes on up to 240K USD per year. However, there are plenty of places around the world that have fully modern neighborhoods with the cost of living no more than 1/3 that of the U.S. Not only does that increase my effective income to 720K USD per year, if I live the Multinationalist lifestyle, I will pay no income tax. On the other hand, in the U.S., I will pay 70K USD or more in income taxes. So, I will be able to choose between a 720K USD lifestyle as a Multinationalist and a 170K USD lifestyle as a U.S. resident. Because there are wonderful places to live internationally, this is not a difficult choice to make.
Multinationalists also can become frustrated with regulations imposed by virtue of their residence in a high tax country. Some of these regulations, such as FATCA can follow the Multinationist from country to country. There are also business regulations that may confound their efforts to run their enterprise. Right now, there are several drug regimens in human trials that could substantially reverse the aged phenotype and not only increase lifespan, but also return older people to a more youthful phenotype. Of course, if these treatments prove to be safe and effective, in order to deliver them within the U.S. and, to a lesser degree, in Europe, the provider will be required to obtain very costly and time consuming approvals. Consequently, these treatments will likely start in countries with lower requirements for approval. As the treatments move offshore, the owners of the treatment providers will likely move offshore as well.
There is also the not insignificant matter of climate, geography and culture. The affluent U.S. citizen winters in the Caribbean and the affluent Brit winters in Dubai primarily because of the warm climate and tropical beaches. While, both the U.S. and Europe have some wonderful summer locations, many wonderful ones are also in low tax, low cost of living countries.
As the global economy becomes more dominated by intangible goods and services and therefore location independent and the number of affluent people with a location independent income stream increases, the high tax, high regulation countries, primarily of North America and Western Europe will find it progressively more difficult to hold onto their high producers.
It is likely true that for a period of time the high tax nations will strive to thwart the Multinationalist's effort to avoid the taxation of income in countries where they hold a passport but do not reside. However, it will be met by resistance and ongoing efforts to circumvent these efforts. In the extreme situation, which the U.S. is beginning to experience now, the high value added, location independent producers will start renouncing citizenship in their home country. In other words, the high tax nations, ultimately, cannot win the battle. They will need to move on to other tactics.
In the final analysis, there is no way that high tax nations can win the residency battle. Simply put, if a person has 10 million USD of annual location independent income, there is no way that they can be convinced over the long run to reside in a country that will take 4 million USD to 5 million USD of that as the cost of residence. People when they are young are indeed conditioned to think of their national identity as an important component of their personal identity. However, for many, that fades with age. Also, culturally, that is weakening over time. There is absolutely no doubt that young Americans are less patriotic as a group than older Americans were at the same age.
The argument has been made that Multinationalists use the infrastructure of the country they visit without paying for it. My experience, however, is that Multinationalists, Digital Nomads and Nomad Capitalists are not inclined to evade reasonable taxation. They wish to avoid confiscatory taxes that are designed to fund transfer payments from them to less affluent citizens. These may or may not be appropriate for members of the national community, but not for visitors. They cannot benefit from the social welfare system and reasonably do not wish to contribute to it. If one identifies as a member of the community, they may have a tolerance for that. However, if I am visiting, I am willing to pay for roads, police, emergency services, etc. and through sales taxes, VAT, property taxes, I do.
Andrew Henderson uses the phrase, 'Go where you are treated best' and this is, in fact, the mantra for the affluent Multinationalist and/or Nomad Capitalist. What he emphasizes is that when you consider what travel document is best, it may not be what you consider best for your tax residence, your physical residence, your business residence, your banking residence, etc. Nations who wish to gain access to the wealth of the growing population of affluent Multinationalists will need to compete for their business.
High tax nations, as a rule, believe that wealthy people have an obligation to fund less affluent people and that the tax system has a right to commandeer such funds. For the most part, the U.S. is fine with France taxing their wealthy and Japan taxiing their wealthy, but, in increasing measure, are offended by wealthy people who, while they are not residing in a high tax country, are not having a proportionate share of their income commandeered by some country. So, a war is taking place between wealthy multinationalists and high tax countries.
Andrew Henderson is correct that high tax countries are trying to make the lives of wealthy multinationalists progressively more difficult. There are two major fronts. High tax nations other than the U.S. are trying to increase tax liability of Multinationalists residing in low tax or no tax countries. In other words, they may begin moving toward declaring some taxability of international income for expats. In the U.S., since there is already taxation of worldwide income, renouncing citizenship is becoming more and more difficult.
Andrew Henderson, from time to time, lists the ways that high tax countries are attempting to extract taxes from wealthy Multinationalists. He also, from time to time, argues that these restrictions on tax avoidance will likely become more onerous. This, then, means war. We can reasonably expect that an increasing number of affluent (and even not so affluent) InfoAge workers will leave their high tax nation, if they live in one, and, discovering that it is not sufficient to avoid native country taxation, will also renounce their citizenship.
As I have stated often, tax avoidance has not been my primary motivation for leaving the U.S. The primary reason is Cost of Living (COL) improvements. Suppose I earn 120K USD globally. I can live in, say, Danang/Hoian, Vietnam where 1.00 USD spends like 2.94 USD. So, the 120K USD spends like 353K USD. Now, I also will avoid about 30K USD in taxes that I would pay if I lived in the U.S. So, while the 30K USD is important, the 233K USD improvement in COL is far more important.
However, to the U.S., the 30K USD is very important and my decrease in COL is invisible to them. Clearly, they can afford to lose my 30K USD, but if 10 million InfoAge workers do the same thing, the 300 billion USD in lost revenue is far more than their savings due to a decrease in government services. The U.S. may try to transfer this lost revenue onto the remaining affluent citizens, but this simply encourages those citizens to leave, as well. They can lower government expenditures, but this will anger their voters.
While, obviously, a looming tax revenue problem, strategically, the situation is even worse for the high tax nations. For example, Andrew Henderson left the U.S to create his Nomad Capitalist business and, with time, renounced his citizenship. His business grew and now he employs a whole team to assist him. He lists 12 associates and they are overwhelmingly not U.S. citizens or even from the U.S. Most are from Eastern Europe. In other words, the U.S. has not only lost Mr. Henderson's tax revenues, it has also lost the tax revenue of 12 associates. Additionally, the income of all 12 is being spent elsewhere. As a strategy, this is a particularly bad one that will enhance the GDP of low tax nations at the expense of the GDP of high tax.
One might counter by saying that, while this multinationalist lifestyle sounds good, it does require one to live in a third world country. Thirty years ago, there would be significant truth to that. However, the 'third world' is changing. For example, in Vietnam, the countryside is still mostly rice paddies. Ho Chi Min City and Hanoi are still definitely what one imagines when one thinks of S.E. Asia. However, Danang/Hoian is not.
Today, Danang, Vietnam is a modern city, with high rise apartments along a world class beach, shopping centers and fine restaurants. And it maintains the low COL. A 200 m^2 luxury condo right on 'China Beach' may cost about 500K USD rather than the minimum of 1.5 million USD that it would cost in Miami. And, this is just the beginning. Alanya, Turkey, where I am riding out the Pandemic, has magnificent beachfront condos for similar prices and also has fine restaurants. It tends to have shopping streets full of boutiques rather than shopping centers, however. The fact is, while high tax nations do, in fact, have some residual prestige, that is decreasing and is more reputation than actual superiority.
In summary, the high tax nations of Western Europe and North America are at a distinct competitive disadvantage and, in the absence of a dramatic turnaround, are going to lose this war. The loss will not just be because of their high tax status. Frankly, only small portions of N.A./EU can compete with the climate in several parts of the world, most notably, Eastern Europe and S.E. Asia. N.A./EU suffers from over-regulation which stymies economic growth and increases taxes. Also, with Muslim refugees in Western Europe and a violent, lawless underclass in the U.S. safety concerns have been turned on their head. When I came to Turkey, some of my friends in the U.S. asked me if I was worried about violence. Clearly, the riots ravaging most U.S. cities right now casts doubts on the significance of that concern.
In the end, the norm will be to charge for infrastructure through consumption taxes. You pay while you are there. If you travel to a different location, you will pay their infrastructure costs until you leave. Social welfare programs will need to be the sole purview of income taxes, if they are used at all. As a Multinatinalist, I am perfectly willing to pay for roads, police, parks, etc. and I will do so for the time that I am there via the purchases I make.
P.S: here is an example of what is drawing Multinationalists out of N.A./EU. The photo above is of the Master Bedroom of a 3 BR, luxury apartment with golf and beach access. It is located between Danang and Hoian. Its price, for 108 square meters, is 99K USD. This is affordable and at a level of luxury that is very difficult to afford in N.A./EU. One can easily understand that tax avoidance is not the number one reason for wintering in Danang.
These types of condos, whether in Sunny Isles Beach, FL or Danang, Vietnam are being bought by an international group. In Danang, they are dominated by residents from U.S., Canada, Australia, China, Japan, Korea, Russia and a fair number of affluent locals. For Multinationalists, it will be a seasonal residence generally occupied from January - May.
A big part of this trend will be related to an increasing percentage of high income individuals who will have location independent income. Take a blogger who has 100K readers for their typical article (I have exceeded this for selected articles and intend to exceed it routinely over the next couple of years) and has net revenue of 3.00 USD per year per reader. This is a very small player in the independent columnist world, but he or she will earn 300K USD per year. Their income is location independent and it places them in the top 2% of the population in income, even in developed countries. These people present a general problem for countries but, importantly, also a specific problem of how to extract a significant percent of their 300K USD in the form of taxes.
Most high tax countries view their high producers as a kind of involuntary sugar daddy to the rest of the population. Ample research demonstrates that a 80%-20% Pareto distribution describes value added in all but the most menial of tasks. Yet, distribution of purchasing power almost always is less than 80%-20%. Some of this is probably justified (See An Information Age Income Model), however, much of it is nothing more than governments commandeering wealth and income from the high producers because they can.
This is not lost on high producers. Unless they identify with the local nation and decide voluntarily to disproportionately support it, the progressivity of income tax may be viewed as institutionalized theft and something to be avoided, if possible.
The Multinationalist lifestyle weakens identification with a person's country of birth and does not always get replaced by the adoption of a new country of residence. Suppose a U.S. citizen decides to have a winter home in the Bahamas. Their 'sense of place and community' is reduced because of the four months, or so, that they spend in the Bahamas. Now, suppose they visit Limassol, Cyprus for a summer break, fall in love with it and decide that they want to spend four months in the summer there. Add a month per year of world travel and they are now spending just three months per year in the U.S. If their income is global and their time is mostly spent offshore, they, quite likely, over time will lose an American identity and start building a Multnationalist identity. At that point, they might quite reasonably begin to resent a 40% or higher U.S. income tax rate. This is, actually, what is leading to an increasing number of U.S. citizens renouncing citizenship.
The situation is different for most European citizens. Imagine a wealthy Brit who decides to winter in Dubai. Then after a summer in Monaco, decides to make that country a permanent summer locale. Because of the tax laws in the U.K., the wealthy U.K. citizen does not pay British income tax and, because neither Dubai nor Monaco have income taxes, he or she does not pay any income tax. Andrew Henderson is very much concerned that such people will cause the U.K. and other European nations to adopt the 'worldwide income' model of the U.S. It could be, in fact, that over time high income Multinationalists holding almost any passport will find it necessary to renounce their high tax nation citizenship.
Actually, Multinationalists are not fleeing high tax nations solely or, in many cases, primarily to avoid taxes. In my case, cost of living issues was the primary driver. For example, my wife and I are U.S. passport holders. However, I can set up a corporation in Turks and Caicos, pay us salaries and through the Foreign Earned Tax Credit avoid taxes on up to 240K USD per year. However, there are plenty of places around the world that have fully modern neighborhoods with the cost of living no more than 1/3 that of the U.S. Not only does that increase my effective income to 720K USD per year, if I live the Multinationalist lifestyle, I will pay no income tax. On the other hand, in the U.S., I will pay 70K USD or more in income taxes. So, I will be able to choose between a 720K USD lifestyle as a Multinationalist and a 170K USD lifestyle as a U.S. resident. Because there are wonderful places to live internationally, this is not a difficult choice to make.
Multinationalists also can become frustrated with regulations imposed by virtue of their residence in a high tax country. Some of these regulations, such as FATCA can follow the Multinationist from country to country. There are also business regulations that may confound their efforts to run their enterprise. Right now, there are several drug regimens in human trials that could substantially reverse the aged phenotype and not only increase lifespan, but also return older people to a more youthful phenotype. Of course, if these treatments prove to be safe and effective, in order to deliver them within the U.S. and, to a lesser degree, in Europe, the provider will be required to obtain very costly and time consuming approvals. Consequently, these treatments will likely start in countries with lower requirements for approval. As the treatments move offshore, the owners of the treatment providers will likely move offshore as well.
There is also the not insignificant matter of climate, geography and culture. The affluent U.S. citizen winters in the Caribbean and the affluent Brit winters in Dubai primarily because of the warm climate and tropical beaches. While, both the U.S. and Europe have some wonderful summer locations, many wonderful ones are also in low tax, low cost of living countries.
As the global economy becomes more dominated by intangible goods and services and therefore location independent and the number of affluent people with a location independent income stream increases, the high tax, high regulation countries, primarily of North America and Western Europe will find it progressively more difficult to hold onto their high producers.
It is likely true that for a period of time the high tax nations will strive to thwart the Multinationalist's effort to avoid the taxation of income in countries where they hold a passport but do not reside. However, it will be met by resistance and ongoing efforts to circumvent these efforts. In the extreme situation, which the U.S. is beginning to experience now, the high value added, location independent producers will start renouncing citizenship in their home country. In other words, the high tax nations, ultimately, cannot win the battle. They will need to move on to other tactics.
In the final analysis, there is no way that high tax nations can win the residency battle. Simply put, if a person has 10 million USD of annual location independent income, there is no way that they can be convinced over the long run to reside in a country that will take 4 million USD to 5 million USD of that as the cost of residence. People when they are young are indeed conditioned to think of their national identity as an important component of their personal identity. However, for many, that fades with age. Also, culturally, that is weakening over time. There is absolutely no doubt that young Americans are less patriotic as a group than older Americans were at the same age.
The argument has been made that Multinationalists use the infrastructure of the country they visit without paying for it. My experience, however, is that Multinationalists, Digital Nomads and Nomad Capitalists are not inclined to evade reasonable taxation. They wish to avoid confiscatory taxes that are designed to fund transfer payments from them to less affluent citizens. These may or may not be appropriate for members of the national community, but not for visitors. They cannot benefit from the social welfare system and reasonably do not wish to contribute to it. If one identifies as a member of the community, they may have a tolerance for that. However, if I am visiting, I am willing to pay for roads, police, emergency services, etc. and through sales taxes, VAT, property taxes, I do.
High tax nations, as a rule, believe that wealthy people have an obligation to fund less affluent people and that the tax system has a right to commandeer such funds. For the most part, the U.S. is fine with France taxing their wealthy and Japan taxiing their wealthy, but, in increasing measure, are offended by wealthy people who, while they are not residing in a high tax country, are not having a proportionate share of their income commandeered by some country. So, a war is taking place between wealthy multinationalists and high tax countries.
Andrew Henderson is correct that high tax countries are trying to make the lives of wealthy multinationalists progressively more difficult. There are two major fronts. High tax nations other than the U.S. are trying to increase tax liability of Multinationalists residing in low tax or no tax countries. In other words, they may begin moving toward declaring some taxability of international income for expats. In the U.S., since there is already taxation of worldwide income, renouncing citizenship is becoming more and more difficult.
Andrew Henderson, from time to time, lists the ways that high tax countries are attempting to extract taxes from wealthy Multinationalists. He also, from time to time, argues that these restrictions on tax avoidance will likely become more onerous. This, then, means war. We can reasonably expect that an increasing number of affluent (and even not so affluent) InfoAge workers will leave their high tax nation, if they live in one, and, discovering that it is not sufficient to avoid native country taxation, will also renounce their citizenship.
As I have stated often, tax avoidance has not been my primary motivation for leaving the U.S. The primary reason is Cost of Living (COL) improvements. Suppose I earn 120K USD globally. I can live in, say, Danang/Hoian, Vietnam where 1.00 USD spends like 2.94 USD. So, the 120K USD spends like 353K USD. Now, I also will avoid about 30K USD in taxes that I would pay if I lived in the U.S. So, while the 30K USD is important, the 233K USD improvement in COL is far more important.
However, to the U.S., the 30K USD is very important and my decrease in COL is invisible to them. Clearly, they can afford to lose my 30K USD, but if 10 million InfoAge workers do the same thing, the 300 billion USD in lost revenue is far more than their savings due to a decrease in government services. The U.S. may try to transfer this lost revenue onto the remaining affluent citizens, but this simply encourages those citizens to leave, as well. They can lower government expenditures, but this will anger their voters.
While, obviously, a looming tax revenue problem, strategically, the situation is even worse for the high tax nations. For example, Andrew Henderson left the U.S to create his Nomad Capitalist business and, with time, renounced his citizenship. His business grew and now he employs a whole team to assist him. He lists 12 associates and they are overwhelmingly not U.S. citizens or even from the U.S. Most are from Eastern Europe. In other words, the U.S. has not only lost Mr. Henderson's tax revenues, it has also lost the tax revenue of 12 associates. Additionally, the income of all 12 is being spent elsewhere. As a strategy, this is a particularly bad one that will enhance the GDP of low tax nations at the expense of the GDP of high tax.
One might counter by saying that, while this multinationalist lifestyle sounds good, it does require one to live in a third world country. Thirty years ago, there would be significant truth to that. However, the 'third world' is changing. For example, in Vietnam, the countryside is still mostly rice paddies. Ho Chi Min City and Hanoi are still definitely what one imagines when one thinks of S.E. Asia. However, Danang/Hoian is not.
 |
| Danang, Vietnam |
Today, Danang, Vietnam is a modern city, with high rise apartments along a world class beach, shopping centers and fine restaurants. And it maintains the low COL. A 200 m^2 luxury condo right on 'China Beach' may cost about 500K USD rather than the minimum of 1.5 million USD that it would cost in Miami. And, this is just the beginning. Alanya, Turkey, where I am riding out the Pandemic, has magnificent beachfront condos for similar prices and also has fine restaurants. It tends to have shopping streets full of boutiques rather than shopping centers, however. The fact is, while high tax nations do, in fact, have some residual prestige, that is decreasing and is more reputation than actual superiority.
In summary, the high tax nations of Western Europe and North America are at a distinct competitive disadvantage and, in the absence of a dramatic turnaround, are going to lose this war. The loss will not just be because of their high tax status. Frankly, only small portions of N.A./EU can compete with the climate in several parts of the world, most notably, Eastern Europe and S.E. Asia. N.A./EU suffers from over-regulation which stymies economic growth and increases taxes. Also, with Muslim refugees in Western Europe and a violent, lawless underclass in the U.S. safety concerns have been turned on their head. When I came to Turkey, some of my friends in the U.S. asked me if I was worried about violence. Clearly, the riots ravaging most U.S. cities right now casts doubts on the significance of that concern.
In the end, the norm will be to charge for infrastructure through consumption taxes. You pay while you are there. If you travel to a different location, you will pay their infrastructure costs until you leave. Social welfare programs will need to be the sole purview of income taxes, if they are used at all. As a Multinatinalist, I am perfectly willing to pay for roads, police, parks, etc. and I will do so for the time that I am there via the purchases I make.
 |
| Golf and Beach Condo in Danang, Vietnam |
P.S: here is an example of what is drawing Multinationalists out of N.A./EU. The photo above is of the Master Bedroom of a 3 BR, luxury apartment with golf and beach access. It is located between Danang and Hoian. Its price, for 108 square meters, is 99K USD. This is affordable and at a level of luxury that is very difficult to afford in N.A./EU. One can easily understand that tax avoidance is not the number one reason for wintering in Danang.
These types of condos, whether in Sunny Isles Beach, FL or Danang, Vietnam are being bought by an international group. In Danang, they are dominated by residents from U.S., Canada, Australia, China, Japan, Korea, Russia and a fair number of affluent locals. For Multinationalists, it will be a seasonal residence generally occupied from January - May.
Saturday, March 14, 2020
Designer Brands: Fake or Diverted?
As I stroll the streets of Alanya, Turkey, I see shop after shop of designer fashions, from Michael Kors purses to Nike shoes to Hugo Boss shirts. The prices are crazy. Everyone assumes that they are fakes. The Nike shoes and Michael Kors purses are obvious knockoffs of poor quality. However, some of the items I see are clearly real.
I bought a Hugo Boss polo shirt for 5 Euros. I am quite confident that I didn't get 'ripped off' with a fake. How do I know this? One, the hand and feel of the fabric. This is very high quality fabric. Second, is the detailing of the construction with all the small quality features one sees in expensive clothing that isn't there in the cheaper clothes. It has the carefully reinforced collar, biased cuffs, etc. Third, is the stitching. Knockoffs are sewn on low quality machines. The designers insist on more expensive machines and more careful stitching techniques. Fourth, and the kicker, was that the buttons are Hugo Boss imprinted. This is not a cheap thing to fake.
These shops have an owner and then helpers who are taught in the methods of the aggressive sell. And believe me, if you respond to them, they are on you like glue. For whatever reason, I got approached by the owner and he started talking to me about my clothes and my 'style'. This guy was actually quite knowledgeable in fashion. He told me that he could sell me a Hugo Boss shirt for 10 Euro. As I tried to walk away, he dropped his price to 5 Euros. So, I stopped and said, 'OK, take it out of the plastic and let me look at it. I expected it to be an obvious fake.
He did so, I noted all the things above and looked at him with a suspicious eye and said, 'This is real. Where did you get it?' He smiled and said, 'From the company who makes clothes for Hugo Boss to be sold in Europe'. Suddenly, I got it. This wasn't fake. It was diverted. I turned it inside out and, yup, the tags had been clipped. That was done so that Hugo Boss couldn't tell from which of its many contractors it had come.
So, this is how it works, Company X manufactures Hugo Boss shirts for the designer. Hugo Boss orders 10,000 of these shirts at $3.00 each, directs them to be drop shipped into various European countries where they are wholesaled for 20 Euros and retailed for 40 Euros. However, the manufacturer makes 11,000 of them, ships the 10,000 as instructed, clips the tags and sells the 1,000 locally. So, the 40 Euro designer shirt sells for 5 Euros here. It isn't a knockoff, it is diverted merchandise.
The designer isn't really even that upset. If they can identify a specific subcontractor, they will probably drop them for breach. But, they can't and they understand that the person who buys a 'knock off' Hugo Boss in Alanya, Turkey is not their customer anyway. They would never buy a 40 Euro Hugo Boss in, say, Milan. So, it isn't really costing them any sales.
Here is the kicker for me and why I bought it. I was paying a fair price for ANY polo shirt. And after careful inspection, this was a very high quality shirt. Name or not, at 5 Euros it was a deal. Now, at another shop, they were selling a woman's polo shirt with the Ralph Lauren logo on it. I inspected it and it was a piece of crap. It was obviously a fake rather than diverted merchandise and was not worth the price they were asking. The point is that if you know fashion, you can't get screwed. Quality is quality whether the name is fake or not.
Now, there is one shop that sells designer fragrances, from Versace to Dolce Gabanna to Chanel. The owner's kid goes down to the beach and attacks tourists with offers. By the time I was done talking to him, he was willing to let me have five for 20 Euros - total, not each. That included, Aqua di Gio for men, Dolce Gabanna Light Blue, Chloe, etc. In other words, this was 400 Euros of designer fragrances. Anybody who thinks these are fakes doesn't understand the finances of fragrances.
Since I was the accountant for the company that manufactured Calvin Klein fragrances, I do understand how the fragrance industry works. The actual cost to produce an $80 bottle of quality fragrance is around $2 or $3 dollars. Mostly what you are buying is the cost of formulation and testing. That, and the name, which in a way is the same thing. When you buy a 'Taylor Swift' or 'Katy Perry' fragrance, you are not really buying the name so much as you are buying her assurance that this is, in her opinion, a good fragrance.
The other important point to understand is that, in addition to the economies of scale in R&D, there are massive economies of scale in manufacturing. Even if you are 'knocking off' the design of the box and bottles, you still need to incur the cost of set up. A bottle that will cost Calvin Klein $0.80 in quantities of 250,000 might cost $5.00 in a quantity of 1,000. The same is true with printing the box. In other words, 'short runs' are prohibitively expensive.
For these reasons, I initially concluded that the fragrances this guy was trying to sell me were stolen. It happens out of the back of trucks and out of warehouses. I knew a homeless guy who was going around Sunny Isles Beach selling Ralph Lauren polo shirts for $5.00 each. He was in cahoots with a warehouse guy who was stealing them and then they split the proceeds. They did get caught eventually, but they got away with it for about six months. I assumed that these fragrances were coming from the same source.
That may, indeed, be the explanation. But they may also be diversions with the full knowledge of the contract manufacturer as I believe is the case with my Hugo Boss shirt.
In addition to the designer brands being sold at very low prices, there are also Turkish brands of similar quality being sold at such prices and even less. Turkish cotton is sublime. Because of all the contract manufacturing, there is the equipment and expertise to fabricate quality clothes. And, because the Turkish Lira went into free fall a while ago, your dollars or Euros just buy a whole lot. So, if you come to Turkey, bring an empty suitcase or no suitcase at all. Luggage is also very inexpensive here. Just bring a carry-on and $200 for clothes when you get here. You will have a very nice wardrobe of good quality clothes.
I bought a Hugo Boss polo shirt for 5 Euros. I am quite confident that I didn't get 'ripped off' with a fake. How do I know this? One, the hand and feel of the fabric. This is very high quality fabric. Second, is the detailing of the construction with all the small quality features one sees in expensive clothing that isn't there in the cheaper clothes. It has the carefully reinforced collar, biased cuffs, etc. Third, is the stitching. Knockoffs are sewn on low quality machines. The designers insist on more expensive machines and more careful stitching techniques. Fourth, and the kicker, was that the buttons are Hugo Boss imprinted. This is not a cheap thing to fake.
These shops have an owner and then helpers who are taught in the methods of the aggressive sell. And believe me, if you respond to them, they are on you like glue. For whatever reason, I got approached by the owner and he started talking to me about my clothes and my 'style'. This guy was actually quite knowledgeable in fashion. He told me that he could sell me a Hugo Boss shirt for 10 Euro. As I tried to walk away, he dropped his price to 5 Euros. So, I stopped and said, 'OK, take it out of the plastic and let me look at it. I expected it to be an obvious fake.
He did so, I noted all the things above and looked at him with a suspicious eye and said, 'This is real. Where did you get it?' He smiled and said, 'From the company who makes clothes for Hugo Boss to be sold in Europe'. Suddenly, I got it. This wasn't fake. It was diverted. I turned it inside out and, yup, the tags had been clipped. That was done so that Hugo Boss couldn't tell from which of its many contractors it had come.
So, this is how it works, Company X manufactures Hugo Boss shirts for the designer. Hugo Boss orders 10,000 of these shirts at $3.00 each, directs them to be drop shipped into various European countries where they are wholesaled for 20 Euros and retailed for 40 Euros. However, the manufacturer makes 11,000 of them, ships the 10,000 as instructed, clips the tags and sells the 1,000 locally. So, the 40 Euro designer shirt sells for 5 Euros here. It isn't a knockoff, it is diverted merchandise.
The designer isn't really even that upset. If they can identify a specific subcontractor, they will probably drop them for breach. But, they can't and they understand that the person who buys a 'knock off' Hugo Boss in Alanya, Turkey is not their customer anyway. They would never buy a 40 Euro Hugo Boss in, say, Milan. So, it isn't really costing them any sales.
Here is the kicker for me and why I bought it. I was paying a fair price for ANY polo shirt. And after careful inspection, this was a very high quality shirt. Name or not, at 5 Euros it was a deal. Now, at another shop, they were selling a woman's polo shirt with the Ralph Lauren logo on it. I inspected it and it was a piece of crap. It was obviously a fake rather than diverted merchandise and was not worth the price they were asking. The point is that if you know fashion, you can't get screwed. Quality is quality whether the name is fake or not.
Now, there is one shop that sells designer fragrances, from Versace to Dolce Gabanna to Chanel. The owner's kid goes down to the beach and attacks tourists with offers. By the time I was done talking to him, he was willing to let me have five for 20 Euros - total, not each. That included, Aqua di Gio for men, Dolce Gabanna Light Blue, Chloe, etc. In other words, this was 400 Euros of designer fragrances. Anybody who thinks these are fakes doesn't understand the finances of fragrances.
Since I was the accountant for the company that manufactured Calvin Klein fragrances, I do understand how the fragrance industry works. The actual cost to produce an $80 bottle of quality fragrance is around $2 or $3 dollars. Mostly what you are buying is the cost of formulation and testing. That, and the name, which in a way is the same thing. When you buy a 'Taylor Swift' or 'Katy Perry' fragrance, you are not really buying the name so much as you are buying her assurance that this is, in her opinion, a good fragrance.
The other important point to understand is that, in addition to the economies of scale in R&D, there are massive economies of scale in manufacturing. Even if you are 'knocking off' the design of the box and bottles, you still need to incur the cost of set up. A bottle that will cost Calvin Klein $0.80 in quantities of 250,000 might cost $5.00 in a quantity of 1,000. The same is true with printing the box. In other words, 'short runs' are prohibitively expensive.
For these reasons, I initially concluded that the fragrances this guy was trying to sell me were stolen. It happens out of the back of trucks and out of warehouses. I knew a homeless guy who was going around Sunny Isles Beach selling Ralph Lauren polo shirts for $5.00 each. He was in cahoots with a warehouse guy who was stealing them and then they split the proceeds. They did get caught eventually, but they got away with it for about six months. I assumed that these fragrances were coming from the same source.
That may, indeed, be the explanation. But they may also be diversions with the full knowledge of the contract manufacturer as I believe is the case with my Hugo Boss shirt.
In addition to the designer brands being sold at very low prices, there are also Turkish brands of similar quality being sold at such prices and even less. Turkish cotton is sublime. Because of all the contract manufacturing, there is the equipment and expertise to fabricate quality clothes. And, because the Turkish Lira went into free fall a while ago, your dollars or Euros just buy a whole lot. So, if you come to Turkey, bring an empty suitcase or no suitcase at all. Luggage is also very inexpensive here. Just bring a carry-on and $200 for clothes when you get here. You will have a very nice wardrobe of good quality clothes.
Friday, March 13, 2020
Turkey 3/13
I guess I officially became a Digital Nomad two years ago. However, I really just moved to Brest, Belarus for two years. Since I left on January 8, I have become a true nomad and I am learning things quickly. I am in Alanya, Turkey until May 15, because there was a sale on a condo (160 USD for 15 days) and I didn't notice that it was non-refundable. Also, they took the money immediately, so while I have enough cash on hand, I won't feel too loose with my money until April 3 when my next pension comes.
Another thing I have learned is that a balcony overlooking the sea is wonderful when you have a gracious woman to share it with. Alone, I don't go out there. It just reminds me that I am alone. I switch to my new condo reservation (same hotel) on March 16 and at that time, if they want a premium to stay in this apartment, I'll move. They all have balconies, but most have partial sea views, not the full on view I have here.
Another thing I have learned is that it is pretty easy to get screwed up, visa-wise. My 90 days in Turkey run out on May 24, but I can't re-enter the Schengen zone (Warsaw in my plans) until May 28. So, I'm going to do something interesting when my May 15 checkout arrives. First, I will take a bus to Antalya and stay in a hostel for one night. That is a two hour and fifteen minute trip. The next day I will take the 11 hour bus trip to Istanbul and say in a hostel for one night there. The next day I will take a 3 1/2 hour train to the Edime, Turkey which is right on the border with Bulgaria. I will stay there at its one hostel ($10). That will be May 18.
The evening of the next day I will take the night train to Sofia, Bulgaria. The whole cost, bus from Alanya to Antalya, bus from Antalya to Istanbul, train from Istanbul to Edime and night train from Edime to Sofia will cost a grand total of $35.
I need to stay in Sofia from at least May 19 to May 27. That is because I cannot stay in the Schengen zone for more than 90 days out of any 180 days. I was in Warsaw for 50 days, leaving me 40 days. But my 180 days don't expire until July 6. That means that I can't enter the Schengen zone until May 27. If I do at that time, my days from the previous 180 days expire at the same rate as my days in my new 180 days accumulate. I then must leave Schengen by August 25.
Of course, if Sofia is very nice, I can stay longer and I might. The hostels and hotels are about the same as in Alanya and slightly less than in Warsaw. I will be staying in hostels when I get to Warsaw for the simple reason that I want to meet people. You don't when you stay in an apartment. At least not as much.
On August 25 I will go to SE Asia. I can essentially stay there forever if I want. Taiwan, Philippines, Vietnam, Malaysia and Thailand all provide me with 90 day stays and I can stay up to 6 months in Vietnam if I want without being taxable. Malaysia does not tax foreign income. They all allow 'visa runs' that can refresh 90 days if I am particularly enamored of a place.
An, as of yet, unanswered question is whether a return of 90 days or more to Europe in the summer is worthwhile. Actually, the worst months in SE Asia are September and October. However, those are good months in Kaohsiung, Taiwan, so fleeing the climate is simply not necessary. The reason would more likely be a desired dose of EuroAmerican culture.
In the meantime, the weather in Alanya is nice enough. It is usually sunny and the temps are in the 18C to 22C range (64F to 72F) and getting warmer. The sea is beautiful and the restaurants are good and they are inexpensive. There is a lot of inexpensive clothes and once I get my next pension check, I will probably buy some clothes to hold me over until Hoi An. I could do it now by pulling some funds out of my reserves. However, I have learned from experience that once you do that you keep finding reasons to do it again and the next thing you know your reserves are shrinking instead of growing. Still, I will probably do some window shopping tomorrow.
Another thing I have learned is that a balcony overlooking the sea is wonderful when you have a gracious woman to share it with. Alone, I don't go out there. It just reminds me that I am alone. I switch to my new condo reservation (same hotel) on March 16 and at that time, if they want a premium to stay in this apartment, I'll move. They all have balconies, but most have partial sea views, not the full on view I have here.
Another thing I have learned is that it is pretty easy to get screwed up, visa-wise. My 90 days in Turkey run out on May 24, but I can't re-enter the Schengen zone (Warsaw in my plans) until May 28. So, I'm going to do something interesting when my May 15 checkout arrives. First, I will take a bus to Antalya and stay in a hostel for one night. That is a two hour and fifteen minute trip. The next day I will take the 11 hour bus trip to Istanbul and say in a hostel for one night there. The next day I will take a 3 1/2 hour train to the Edime, Turkey which is right on the border with Bulgaria. I will stay there at its one hostel ($10). That will be May 18.
The evening of the next day I will take the night train to Sofia, Bulgaria. The whole cost, bus from Alanya to Antalya, bus from Antalya to Istanbul, train from Istanbul to Edime and night train from Edime to Sofia will cost a grand total of $35.
I need to stay in Sofia from at least May 19 to May 27. That is because I cannot stay in the Schengen zone for more than 90 days out of any 180 days. I was in Warsaw for 50 days, leaving me 40 days. But my 180 days don't expire until July 6. That means that I can't enter the Schengen zone until May 27. If I do at that time, my days from the previous 180 days expire at the same rate as my days in my new 180 days accumulate. I then must leave Schengen by August 25.
Of course, if Sofia is very nice, I can stay longer and I might. The hostels and hotels are about the same as in Alanya and slightly less than in Warsaw. I will be staying in hostels when I get to Warsaw for the simple reason that I want to meet people. You don't when you stay in an apartment. At least not as much.
On August 25 I will go to SE Asia. I can essentially stay there forever if I want. Taiwan, Philippines, Vietnam, Malaysia and Thailand all provide me with 90 day stays and I can stay up to 6 months in Vietnam if I want without being taxable. Malaysia does not tax foreign income. They all allow 'visa runs' that can refresh 90 days if I am particularly enamored of a place.
An, as of yet, unanswered question is whether a return of 90 days or more to Europe in the summer is worthwhile. Actually, the worst months in SE Asia are September and October. However, those are good months in Kaohsiung, Taiwan, so fleeing the climate is simply not necessary. The reason would more likely be a desired dose of EuroAmerican culture.
In the meantime, the weather in Alanya is nice enough. It is usually sunny and the temps are in the 18C to 22C range (64F to 72F) and getting warmer. The sea is beautiful and the restaurants are good and they are inexpensive. There is a lot of inexpensive clothes and once I get my next pension check, I will probably buy some clothes to hold me over until Hoi An. I could do it now by pulling some funds out of my reserves. However, I have learned from experience that once you do that you keep finding reasons to do it again and the next thing you know your reserves are shrinking instead of growing. Still, I will probably do some window shopping tomorrow.
Friday, February 28, 2020
Turkey
It was a long trip with short flights, Warsaw to Athens to Istanbul to Antalya.
I arrived in the Athens airport about 9:30 P.M. with a connecting flight to Istanbul at 7:45 A.M. So, I was overnight in the airport. First, the Athens airport is not a major airport. Warsaw Chopin airport is no great shakes, but Athens is even less impressive. You take buses to and from the plane sitting on the tarmac and the terminal itself looks like it is out of the 1950s. Furthermore, and I readily admit that I know nothing of the challenges of Athens, but there are roving squads of police, some carrying fully automatic assault rifles.
I was hoping that I might be able to nap a bit, but I got approached by a squad of them. One of them said some thing in Greek and I explained that I speak English. One of the other police officers approached me and said in English, "Are you sleeping in the airport?" I said, 'I'm trying. My flight doesn't leave until 7:45 A.M. and I'd like to get a bit of rest.' He looked at me skeptically and said, 'Show me your passport and boarding pass'. I did so, he looked at them and then asked, 'Why are you going to Istanbul?' I answered, 'I am going to Alanya, where I have rented an apartment on the beach for three months.'
He then got a lot friendlier, but at the same time another police officer with lots of rank (three somethings), came up and started talking, sternly in Greek, with my police officer, pointing at me liberally and looking, generally, not very friendly. I listened to this for awhile and then everybody wandered off after rousting a homeless guy. The big boss never did look at me with anything other than disdain. The welcome mat to Athens definitely didn't feel left out.
I ran into a young, British lad on his way to a Syrian refugee camp to volunteer for a year before attending University. He was particularly keen on political issues and we talked nearly all night. He looked at my blog and then we exchanged e-mail addresses and promised to stay in touch. It made the 10 hour layover not at all unpleasant. We also chatted a bit with a mother and two college age daughters from Seattle. Of course, the Wuhan virus is a hot topic for most travelers.
I flew from Warsaw to Athens and then Athens to Istanbul on Aegean Air. The fare for both was just $102. That included only carry-on luggage and, I just barely got my suitcase and backpack to meet the weight requirements. I did that by wearing a whole lot of clothes. When I got to check in, they said, 'What the heck' and let me check my suitcase through to Istanbul for free. There were two particularly friendly young ladies who also were at the gate and smiled at me a whole lot. I am not exactly sure why, but I seem to be memorable.
For the low cost of Aegean airlines, I was surprised that they fed me dinner on the first leg and breakfast on the next leg. At dinner I asked the flight attendent how much a red wine would be and she told me that it was free. So, I said, 'All righty then' and she pulled out a SPLIT!! For those who don't know, that is half a bottle of wine. Crazy.
When I got to Istanbul, I had a six hour layover to Antalya. The Instanbul airport is at least 5 times larger than it needs to be. There is a whole lot of walking past empty check-ins and security areas. When I got to passport control, there was no waiting. The young man asked why I was coming to Turkey. I told him that I had rented an apartment on the sea in Alanya and I was going to 'veg out' for three months. He just smiled and stamped my passport. You get an e-visa but they put no visa in your passport. So, that saves some room. Every time I go to Belarus they take up two whole pages.
I took Onur Air from Istanbul to Antalya, which was $71. But the seats were nice and I actually had enough leg room which was odd. The Antalya airport was sort of what I have heard Turkey is like. The airport WiFi is 2 Euros per hour, but you still need a Turkish SIM card. So, I went to the airport cell phone vendor, but they wanted $42 for the basic package that I paid $3 for in Poland. I was surprised by how cheap Poland was, but this was way too much. One restaurant had WiFi but they wouldn't give me the password until I ordered. So, I ordered a chicken curry. Then he said, 'But you need to order a drink, too'. I said, 'Don't push it or I will not buy anything!' So, he reluctantly gave me the password.
The chicken curry was good and it came with bread, french fries, and a Russian dish, Olivia, which is like a mayonnaise based salad. The price was a reasonable (for an airport restaurant) $6. I had booked an inexpensive ($25 per night) hotel in old town. It was small, but cute. The Antalya Old Town rather reminds me of Avalon on Santa Catalina Island.
I met a young, Korean college girl (Sophie) in Warsaw and we hit it off. She is very bright, funny and unlike most of the other people in the hostel, was inclined toward museums and Chopin concerts. She flew back to Korea for Spring semester on Feb 10, but because of the Wuhan virus, her semester got postponed (25% of her class is Chinese). So, we agreed to meet in Analya and since I have an apartment she is couch surfing for a minimal subsidy of the rental.
In Antalya, after meeting her for a not very good dinner and some awful Turkish music, I went back to the hotel and slept for about 12 hours. The next morning we met up for breakfast, walked around Antalya, had some lunch and then went to the bus station to take a two hour bus ride to Alanya. For some reason, Nomad List gives Alanya a bad rating for walkability. Why, I don't know. The beach is about 2 km long and the city goes back only about 6 blocks before it runs into the mountain. After Warsaw, everything seems ridiculously close.
The apartment is 60 m^2, but I'm sure that includes the two balconies. The first apartment had a partial ocean view on one balcony and faced the mountains on the other side. Sophie was disappointed and asked if we could go downstairs and see if we could get an apartment that faces the beach. They said yes, but that it would be an additional 20 Lira (about $3.25 per day). I told her that I would pay half if she would pay the other half and she agreed. It was worth it.
The apartment is incredible for $400 for the month. But, it is still a $400 per month apartment. The Kitchenette is a hot plate. The tap water is undrinkable (I"m used to that from Belarus), It has one heater in the bedroom and the living room can get chilly at night. They do have a lot of very heavy blankets, though. They only have hot water for part of the day and right now, the water heater is broken. The Internet is bad. The Android works...barely, but the Windows apps work almost not at all. Fortunately, Blogger is one of the few sites that does work.
I reserved this place in two week increments and I am going to visit a real estate office and see if I an get something more pleasant for April and May. However, if not, this is definitely good enough. Years ago, my wife and I rented an apartment on the beach in Marcos Island and this is better. So, it will definitely do. Beach places do tend to be a little more rustic.
If you go anywhere in Europe or East Asia, the pop music is Western 12 tone scales. However, in Turkey the regular music that you will hear in restaurants, stores, buses, etc. is the weird Arabian sounding music. It makes me sick to my stomach. Sophie is also no fan.
After arriving, we went to the grocery store and bought some food. When we brought it back we discovered that only about half of it is edible. Oh well, live and learn. Generally, the Turkish Riviera, as they are starting to call it, is very pleasant, but don't come here for the food, the music or for hot showers. I will tour Western style apartments later, because they are inexpensive and really look very luxurious. They mostly cater to upscale Russians who want a condo by the sea. OK, that kind of describes my wife.
More later.
I arrived in the Athens airport about 9:30 P.M. with a connecting flight to Istanbul at 7:45 A.M. So, I was overnight in the airport. First, the Athens airport is not a major airport. Warsaw Chopin airport is no great shakes, but Athens is even less impressive. You take buses to and from the plane sitting on the tarmac and the terminal itself looks like it is out of the 1950s. Furthermore, and I readily admit that I know nothing of the challenges of Athens, but there are roving squads of police, some carrying fully automatic assault rifles.
I was hoping that I might be able to nap a bit, but I got approached by a squad of them. One of them said some thing in Greek and I explained that I speak English. One of the other police officers approached me and said in English, "Are you sleeping in the airport?" I said, 'I'm trying. My flight doesn't leave until 7:45 A.M. and I'd like to get a bit of rest.' He looked at me skeptically and said, 'Show me your passport and boarding pass'. I did so, he looked at them and then asked, 'Why are you going to Istanbul?' I answered, 'I am going to Alanya, where I have rented an apartment on the beach for three months.'
He then got a lot friendlier, but at the same time another police officer with lots of rank (three somethings), came up and started talking, sternly in Greek, with my police officer, pointing at me liberally and looking, generally, not very friendly. I listened to this for awhile and then everybody wandered off after rousting a homeless guy. The big boss never did look at me with anything other than disdain. The welcome mat to Athens definitely didn't feel left out.
I ran into a young, British lad on his way to a Syrian refugee camp to volunteer for a year before attending University. He was particularly keen on political issues and we talked nearly all night. He looked at my blog and then we exchanged e-mail addresses and promised to stay in touch. It made the 10 hour layover not at all unpleasant. We also chatted a bit with a mother and two college age daughters from Seattle. Of course, the Wuhan virus is a hot topic for most travelers.
I flew from Warsaw to Athens and then Athens to Istanbul on Aegean Air. The fare for both was just $102. That included only carry-on luggage and, I just barely got my suitcase and backpack to meet the weight requirements. I did that by wearing a whole lot of clothes. When I got to check in, they said, 'What the heck' and let me check my suitcase through to Istanbul for free. There were two particularly friendly young ladies who also were at the gate and smiled at me a whole lot. I am not exactly sure why, but I seem to be memorable.
For the low cost of Aegean airlines, I was surprised that they fed me dinner on the first leg and breakfast on the next leg. At dinner I asked the flight attendent how much a red wine would be and she told me that it was free. So, I said, 'All righty then' and she pulled out a SPLIT!! For those who don't know, that is half a bottle of wine. Crazy.
When I got to Istanbul, I had a six hour layover to Antalya. The Instanbul airport is at least 5 times larger than it needs to be. There is a whole lot of walking past empty check-ins and security areas. When I got to passport control, there was no waiting. The young man asked why I was coming to Turkey. I told him that I had rented an apartment on the sea in Alanya and I was going to 'veg out' for three months. He just smiled and stamped my passport. You get an e-visa but they put no visa in your passport. So, that saves some room. Every time I go to Belarus they take up two whole pages.
I took Onur Air from Istanbul to Antalya, which was $71. But the seats were nice and I actually had enough leg room which was odd. The Antalya airport was sort of what I have heard Turkey is like. The airport WiFi is 2 Euros per hour, but you still need a Turkish SIM card. So, I went to the airport cell phone vendor, but they wanted $42 for the basic package that I paid $3 for in Poland. I was surprised by how cheap Poland was, but this was way too much. One restaurant had WiFi but they wouldn't give me the password until I ordered. So, I ordered a chicken curry. Then he said, 'But you need to order a drink, too'. I said, 'Don't push it or I will not buy anything!' So, he reluctantly gave me the password.
The chicken curry was good and it came with bread, french fries, and a Russian dish, Olivia, which is like a mayonnaise based salad. The price was a reasonable (for an airport restaurant) $6. I had booked an inexpensive ($25 per night) hotel in old town. It was small, but cute. The Antalya Old Town rather reminds me of Avalon on Santa Catalina Island.
I met a young, Korean college girl (Sophie) in Warsaw and we hit it off. She is very bright, funny and unlike most of the other people in the hostel, was inclined toward museums and Chopin concerts. She flew back to Korea for Spring semester on Feb 10, but because of the Wuhan virus, her semester got postponed (25% of her class is Chinese). So, we agreed to meet in Analya and since I have an apartment she is couch surfing for a minimal subsidy of the rental.
In Antalya, after meeting her for a not very good dinner and some awful Turkish music, I went back to the hotel and slept for about 12 hours. The next morning we met up for breakfast, walked around Antalya, had some lunch and then went to the bus station to take a two hour bus ride to Alanya. For some reason, Nomad List gives Alanya a bad rating for walkability. Why, I don't know. The beach is about 2 km long and the city goes back only about 6 blocks before it runs into the mountain. After Warsaw, everything seems ridiculously close.
The apartment is 60 m^2, but I'm sure that includes the two balconies. The first apartment had a partial ocean view on one balcony and faced the mountains on the other side. Sophie was disappointed and asked if we could go downstairs and see if we could get an apartment that faces the beach. They said yes, but that it would be an additional 20 Lira (about $3.25 per day). I told her that I would pay half if she would pay the other half and she agreed. It was worth it.
The apartment is incredible for $400 for the month. But, it is still a $400 per month apartment. The Kitchenette is a hot plate. The tap water is undrinkable (I"m used to that from Belarus), It has one heater in the bedroom and the living room can get chilly at night. They do have a lot of very heavy blankets, though. They only have hot water for part of the day and right now, the water heater is broken. The Internet is bad. The Android works...barely, but the Windows apps work almost not at all. Fortunately, Blogger is one of the few sites that does work.
I reserved this place in two week increments and I am going to visit a real estate office and see if I an get something more pleasant for April and May. However, if not, this is definitely good enough. Years ago, my wife and I rented an apartment on the beach in Marcos Island and this is better. So, it will definitely do. Beach places do tend to be a little more rustic.
If you go anywhere in Europe or East Asia, the pop music is Western 12 tone scales. However, in Turkey the regular music that you will hear in restaurants, stores, buses, etc. is the weird Arabian sounding music. It makes me sick to my stomach. Sophie is also no fan.
After arriving, we went to the grocery store and bought some food. When we brought it back we discovered that only about half of it is edible. Oh well, live and learn. Generally, the Turkish Riviera, as they are starting to call it, is very pleasant, but don't come here for the food, the music or for hot showers. I will tour Western style apartments later, because they are inexpensive and really look very luxurious. They mostly cater to upscale Russians who want a condo by the sea. OK, that kind of describes my wife.
More later.
Friday, February 21, 2020
A General Plan or Goal
Becoming and/or being a Digital Nomad requires more thought and planning than living in one's native country and even more than being an expat. You need to put extra effort into planning your travels, your finances, your tax liabilities, your visa limitations, and, quite importantly, your social universe. I will deal with the social thing in a different post. Here I am thinking about travel, residency, finances and taxation.
I can spend 6 months per year in the EU. I can spend 6 months per year in Turkey. I can spend 6 months per year in Vietnam. So, those three places are quite enough. However, I do intend to engage in a modified Trifecta. To explain, Andrew Henderson suggests three residences around the world, spending 4 months in each. Since most places allow 90 days at a time and don't tax your income if you are 'in country' for less than 180 days per year, one should be fine for both visas and taxation.
I say mine will be modified because my three likely will be Alanya, Turkey, Hoi An/Danang, Vietnam and "travel". I can easily stay within guidelines with that structure. It might look like this
January through March, Hoi An
April through May, Alanya
June through August, Travel
September through November, Alanya
December Hoi An
Surprisingly, a couple can execute this with a modest income. In the seasons that I will be residing there, rents in Turkey are in the $500 per month range for one bedroom serviced (hotel style) apartments. In Hoi An, Vietnam, $500 per month can get a 2 or 3 BR furnished house on a three month lease. Of course, cost of travel destinations will vary significantly. This means that the lifestyle is supportable on $2,000 per month combined income.
However, the U.S. allows about $120K of international income to be excluded from U.S. taxation. So, a couple, both earning DN income at that maximum level will have a completely different lifestyle than the one described above. They will be able to afford luxury apartments, houses and/or villas and will be able to do a luxury 'travel' season, as well. The most luxurious homes in Hoi An rent for about $1,300 per month. In Alanya, there are some apartments in ultra luxury complexes that go for as much as $2,000 per month. Both places have about a 3X PPP ratio, so these would be pretty expensive in the West.
In such locations, both of which are premium tourist locations, a rental budget of $3,000 per month is sufficient to have a luxury home in both locations on annual leases. That means they can be used as 'base of operations' or a place where you can keep your "stuff". With a $20K per month A/T income, that leaves an excess housing budget of about $4,000 per month or about $48,000 per year or $16,000 per month for the three travel months.
This is equivalent to about a $400K annual Pretax income if one lived in EuroAmerica. In other words, this will provide a couple with a 'jet set' style lifestyle. The question then becomes, 'How realistic is a $120K DN income?' Well, it is far from easy but it is realistic if one has the talent, skills and drive.
I will focus on writing because that is what I do and what my target travel mate will do. It is a complex issue and as the saying goes, 'there are lots of ways to skin this cat'. (EWWWW!). I will look at Leonardo bloggers and book writers, mostly. For Leonardo, I direct you to Leonardo & The Polymath article on my blog. Since I have not yet written on the book writing, I will lay it out briefly here.
There is a new way to write books. It is the self-publishing of e-books. The most effective approach is to write short, low price point books and build a fan base through Internet based self-promotion. Suppose you write three novellas per year that are price pointed at $3.00 per title. You will promote it primarily through your preferred social media, Facebook, Twitter, Instagram, etc. Amazon will take 30% and will give you little in return. Therefore, it is better to use Paypal and paywall site for download. You will net about $2.80.
So, in order to earn $120K per year, you will need to sell $120,000/$2.80 = 42,857 copies. If you write three per year, that is just a little over 14,000 per title. This is similar to Kevin Kelly's '1,000 true fans' strategy. Except, you get 10% as much per fan and, consequently you need 10X as many fans. However, they really don't need to be 'True Fans' for a total of $9 per year of purchases.
14,000 fans are more difficult to get than you might imagine. Facebook allows you 5,000 'friends' and, combined with an 'author page' you can, with some effort, get a free mailchimp list of close to their 2,000 limit. But, that still leaves you 12,000 sales short and with an annual income of about $17,000. You can add to that with a popular blog and/or instagram account. Of course, word of mouth is the key to reaching 14,000 sales.
You can encourage WOM, of course. But, in the final analysis, either your work product is good enough to stimulate it or it isn't. So, simply put, launching off in this direction is a risk. However, if you are good, it isn't a big one. My model is slightly different with a higher price point but fewer books. If I write two 50K word books per year with a price point of $10, I will need to sell a total of about 12,600 copies in total or about 6,300 each. I have sufficient social media presence to make a good start at that. I think that 2,000 each is practical starting point which means an income of about 40K USD in year one. With my other income sources, I will be able to have a comfortable lifestyle.
So, that is my general plan and my goal. It has two pieces. One is to acquire a DN travelmate. I will leave that private, save to say that it likely will not be a problem. The second is to acquire and plan a an $8K per month increasing to $20K per month DN lifestyle over two years. I'm thinking in terms of the $20K per month lifestyle, since the lower income lifestyle will only be for a year or two. Since, I will spend no more than 'travel time' in the high cost regions of EuroAmerica and high income East Asia (Japan, S. Korea, Taiwan, Hong Kong, Macau, Singapore, etc) that will be about as relaxed a lifestyle as one might imagine.
My guess is that in Turkey and Vietnam we will set a budget at about $12,000 per month, of which $3,000 will be year around occupancy costs. So, we will save $8,000 per month for nine months and have an $17,000 current earnings per month during the travel months. That is $72,000 + $51,000 = $126,000 / 3 = $41,000 per month budget for travel. That, of course, means that very high cost travel destinations such as London, Paris, Monaco, Macau, Tokyo, etc. will be easily within reach and we can stay in premium rooms in 4 & 5 Star hotels. At $8K per month income, we will be staying at more modest hotels and rooms, but still very nice.
I repeat that this plan and goal is not easy but is achievable. Also, I want to emphasize that the 'market' for polymath writers is about 60,000,000 people in EuroAmerica alone. That is about 5% of the most intellectually sophisticated adults. So, acquiring a loyal fan base of 14,000, though not easy, is something that can be available to literally thousands of polymaths.
So, if it appeals to you, it is realistic and you should, as Nike puts it, Just Do It. I am.
I can spend 6 months per year in the EU. I can spend 6 months per year in Turkey. I can spend 6 months per year in Vietnam. So, those three places are quite enough. However, I do intend to engage in a modified Trifecta. To explain, Andrew Henderson suggests three residences around the world, spending 4 months in each. Since most places allow 90 days at a time and don't tax your income if you are 'in country' for less than 180 days per year, one should be fine for both visas and taxation.
I say mine will be modified because my three likely will be Alanya, Turkey, Hoi An/Danang, Vietnam and "travel". I can easily stay within guidelines with that structure. It might look like this
January through March, Hoi An
April through May, Alanya
June through August, Travel
September through November, Alanya
December Hoi An
Surprisingly, a couple can execute this with a modest income. In the seasons that I will be residing there, rents in Turkey are in the $500 per month range for one bedroom serviced (hotel style) apartments. In Hoi An, Vietnam, $500 per month can get a 2 or 3 BR furnished house on a three month lease. Of course, cost of travel destinations will vary significantly. This means that the lifestyle is supportable on $2,000 per month combined income.
However, the U.S. allows about $120K of international income to be excluded from U.S. taxation. So, a couple, both earning DN income at that maximum level will have a completely different lifestyle than the one described above. They will be able to afford luxury apartments, houses and/or villas and will be able to do a luxury 'travel' season, as well. The most luxurious homes in Hoi An rent for about $1,300 per month. In Alanya, there are some apartments in ultra luxury complexes that go for as much as $2,000 per month. Both places have about a 3X PPP ratio, so these would be pretty expensive in the West.
In such locations, both of which are premium tourist locations, a rental budget of $3,000 per month is sufficient to have a luxury home in both locations on annual leases. That means they can be used as 'base of operations' or a place where you can keep your "stuff". With a $20K per month A/T income, that leaves an excess housing budget of about $4,000 per month or about $48,000 per year or $16,000 per month for the three travel months.
This is equivalent to about a $400K annual Pretax income if one lived in EuroAmerica. In other words, this will provide a couple with a 'jet set' style lifestyle. The question then becomes, 'How realistic is a $120K DN income?' Well, it is far from easy but it is realistic if one has the talent, skills and drive.
I will focus on writing because that is what I do and what my target travel mate will do. It is a complex issue and as the saying goes, 'there are lots of ways to skin this cat'. (EWWWW!). I will look at Leonardo bloggers and book writers, mostly. For Leonardo, I direct you to Leonardo & The Polymath article on my blog. Since I have not yet written on the book writing, I will lay it out briefly here.
There is a new way to write books. It is the self-publishing of e-books. The most effective approach is to write short, low price point books and build a fan base through Internet based self-promotion. Suppose you write three novellas per year that are price pointed at $3.00 per title. You will promote it primarily through your preferred social media, Facebook, Twitter, Instagram, etc. Amazon will take 30% and will give you little in return. Therefore, it is better to use Paypal and paywall site for download. You will net about $2.80.
So, in order to earn $120K per year, you will need to sell $120,000/$2.80 = 42,857 copies. If you write three per year, that is just a little over 14,000 per title. This is similar to Kevin Kelly's '1,000 true fans' strategy. Except, you get 10% as much per fan and, consequently you need 10X as many fans. However, they really don't need to be 'True Fans' for a total of $9 per year of purchases.
14,000 fans are more difficult to get than you might imagine. Facebook allows you 5,000 'friends' and, combined with an 'author page' you can, with some effort, get a free mailchimp list of close to their 2,000 limit. But, that still leaves you 12,000 sales short and with an annual income of about $17,000. You can add to that with a popular blog and/or instagram account. Of course, word of mouth is the key to reaching 14,000 sales.
You can encourage WOM, of course. But, in the final analysis, either your work product is good enough to stimulate it or it isn't. So, simply put, launching off in this direction is a risk. However, if you are good, it isn't a big one. My model is slightly different with a higher price point but fewer books. If I write two 50K word books per year with a price point of $10, I will need to sell a total of about 12,600 copies in total or about 6,300 each. I have sufficient social media presence to make a good start at that. I think that 2,000 each is practical starting point which means an income of about 40K USD in year one. With my other income sources, I will be able to have a comfortable lifestyle.
So, that is my general plan and my goal. It has two pieces. One is to acquire a DN travelmate. I will leave that private, save to say that it likely will not be a problem. The second is to acquire and plan a an $8K per month increasing to $20K per month DN lifestyle over two years. I'm thinking in terms of the $20K per month lifestyle, since the lower income lifestyle will only be for a year or two. Since, I will spend no more than 'travel time' in the high cost regions of EuroAmerica and high income East Asia (Japan, S. Korea, Taiwan, Hong Kong, Macau, Singapore, etc) that will be about as relaxed a lifestyle as one might imagine.
My guess is that in Turkey and Vietnam we will set a budget at about $12,000 per month, of which $3,000 will be year around occupancy costs. So, we will save $8,000 per month for nine months and have an $17,000 current earnings per month during the travel months. That is $72,000 + $51,000 = $126,000 / 3 = $41,000 per month budget for travel. That, of course, means that very high cost travel destinations such as London, Paris, Monaco, Macau, Tokyo, etc. will be easily within reach and we can stay in premium rooms in 4 & 5 Star hotels. At $8K per month income, we will be staying at more modest hotels and rooms, but still very nice.
I repeat that this plan and goal is not easy but is achievable. Also, I want to emphasize that the 'market' for polymath writers is about 60,000,000 people in EuroAmerica alone. That is about 5% of the most intellectually sophisticated adults. So, acquiring a loyal fan base of 14,000, though not easy, is something that can be available to literally thousands of polymaths.
So, if it appeals to you, it is realistic and you should, as Nike puts it, Just Do It. I am.
Saturday, January 11, 2020
Warsaw II
Well, I'm settling in. I love the place, both the hostel, itself, and the surrounding area. I spent a lot of time yesterday wandering around. I found a quality grocery store about 1.2 km south. About .3 km north is 'Old Town' where my wife and I honeymooned in 2002. It has gotten much, much more developed and is worth seeing if you are in Eastern Europe. I am on a street called Krakow Prospect. That is not the Polish spelling or pronunciation. But I just can't seem to easily retain all the extra letters.
'Old Town' is a central courtyard about three blocks by three blocks with two offshoot roads in each direction. One of them enters a large square with a large 'cultural museum'. It then turns into Krakow Prospect. There is no automobile traffic on it and it varies in width from about 50' to 150'. Immediately to the south of 'Old Town' is the Royal Palace. Then going south there is the Main Library, one of the grand churches of Warsaw, then the Presidential Palace. The other side of the street is restaurants and shops with hotels above, of which one of them is mine. Immediately to the south are two grand, five star hotels, Hotel Bristol and Raffles (yeah the same one). Farther south on both sides of the street is the Ministry of culture and something (not sure what). Another church. Then the Polish Academy of Sciences (huge building) and then the University of Warsaw.
Farther south Krakow Prospect turns into Nowy Swiat (new world) Road that is lined with high end shops and fancy restaurants, etc.
I have decided to stay in Dream Hostel until February 3. Then, I may stay in Warsaw, go back to Brest (if I have the visa), go to Vilnius or possibly Prague. To be honest, I could live in Dream Hostel quite easily. I have no real desire to leave. The room mates don't bother me and, well, the price is definitely right.
In Brest, my two bedroom apartment was $200 per month. I paid about $50 in utilities and my groceries were about $150 per month. So, my fixed costs were $400 per month and I spent about $100 discretionary for a total cost of $500 per month. Dream Hostel is $340, so it is $90 per month more. But, then, no place is cheaper than Belarus, except perhaps, Nepal and a few places in India.
I got some food and it is very cheap. I do not expect my grocery budget to be much more than Brest and maybe even less. I just came from there. I got a 500ml shower gel, 1.5# of chicken thighs, 7 polish sausages, 20 medium eggs, 2 different kinds of ramen, and 2 500 ml cans of beer. It came to a little over $8. So, I am lowering my daily food budget from $10 to $5. My single frustration is that, so far, I cannot find any sugar-free soda. Otherwise, 4 fried eggs and a kielbasa for breakfast, mushroom soup and ramen for lunch and chicken thighs for dinner.
I learn, think and write during the day and sight see, socialize and watch movies during the evening. If I socialize I can have a beer or two and at $.50 each not feel guilty. Nice life, I think. And, at $500 per month, very manageable for nearly anyone. Of course, U.S. Passport holders can only stay for 3 months out of 6. But I may try Odessa, which also allows 3 months out of 6. One could bounch back and forth indefinitely and with $40 train tickets, no transportation issues.
Oh, by the way, the bulletin board said that Friday and Saturday night are beer pong. But, last night anyway it didn't happen. The coffee shop was busy but subdued. I talked to one young man from Mainland China, a Greek, an Italian and the 'successful blogger' who is from Russia. All conversations were short and mostly I watched a Hallmark RomCom.
'Old Town' is a central courtyard about three blocks by three blocks with two offshoot roads in each direction. One of them enters a large square with a large 'cultural museum'. It then turns into Krakow Prospect. There is no automobile traffic on it and it varies in width from about 50' to 150'. Immediately to the south of 'Old Town' is the Royal Palace. Then going south there is the Main Library, one of the grand churches of Warsaw, then the Presidential Palace. The other side of the street is restaurants and shops with hotels above, of which one of them is mine. Immediately to the south are two grand, five star hotels, Hotel Bristol and Raffles (yeah the same one). Farther south on both sides of the street is the Ministry of culture and something (not sure what). Another church. Then the Polish Academy of Sciences (huge building) and then the University of Warsaw.
Farther south Krakow Prospect turns into Nowy Swiat (new world) Road that is lined with high end shops and fancy restaurants, etc.
I have decided to stay in Dream Hostel until February 3. Then, I may stay in Warsaw, go back to Brest (if I have the visa), go to Vilnius or possibly Prague. To be honest, I could live in Dream Hostel quite easily. I have no real desire to leave. The room mates don't bother me and, well, the price is definitely right.
In Brest, my two bedroom apartment was $200 per month. I paid about $50 in utilities and my groceries were about $150 per month. So, my fixed costs were $400 per month and I spent about $100 discretionary for a total cost of $500 per month. Dream Hostel is $340, so it is $90 per month more. But, then, no place is cheaper than Belarus, except perhaps, Nepal and a few places in India.
I got some food and it is very cheap. I do not expect my grocery budget to be much more than Brest and maybe even less. I just came from there. I got a 500ml shower gel, 1.5# of chicken thighs, 7 polish sausages, 20 medium eggs, 2 different kinds of ramen, and 2 500 ml cans of beer. It came to a little over $8. So, I am lowering my daily food budget from $10 to $5. My single frustration is that, so far, I cannot find any sugar-free soda. Otherwise, 4 fried eggs and a kielbasa for breakfast, mushroom soup and ramen for lunch and chicken thighs for dinner.
I learn, think and write during the day and sight see, socialize and watch movies during the evening. If I socialize I can have a beer or two and at $.50 each not feel guilty. Nice life, I think. And, at $500 per month, very manageable for nearly anyone. Of course, U.S. Passport holders can only stay for 3 months out of 6. But I may try Odessa, which also allows 3 months out of 6. One could bounch back and forth indefinitely and with $40 train tickets, no transportation issues.
Oh, by the way, the bulletin board said that Friday and Saturday night are beer pong. But, last night anyway it didn't happen. The coffee shop was busy but subdued. I talked to one young man from Mainland China, a Greek, an Italian and the 'successful blogger' who is from Russia. All conversations were short and mostly I watched a Hallmark RomCom.
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