A better title would be "How to leverage your income far more effectively".
How much money do most of us flush on rent, cars, overpriced houses, and other things. If you add it up over 10-15 years the opportunity cost of living in the US is over $1M for most people.
All that so that we can eat a horrible western diet, watch cable news, and work for prestigious firms in hopes of retiring at 70.
> If you add it up over 10-15 years the opportunity cost of living in the US is over $1M for most people.
And you get the opportunity of living in the U.S. I certainly think this is worth >$1M over a lifetime.
I like living in the U.S. I like having a car, and the associated freedom to take a day trip anywhere in the Bay Area. I like living in a suburban neighborhood where's there's trees and greenery, and yet stores, restaurants, and other conveniences are all nearby. I like being able to work on exactly the same stuff I do for fun and yet get paid for it. I like that I'm surrounded by some of the best & brightest immigrants from around the world in my job. I like my "horrible western diet", which basically consists of being able to eat whatever variety of food I feel like. I can have Mexican for lunch, fresh fish for dinner, Belgian waffles for breakfast the next day, Indian food for lunch, and Chinese for dinner. Is there any other country where you'll get similar variety?
Whenever I've visited other countries (notably China, but also Germany/Austria/New Zealand), I've always felt that they were nice places to travel, but I certainly would not want to live there. Well, except New Zealand. I could imagine retiring there, but I'd hate to waste my 20s and 30s there.
Happiness is knowing what you want, going for it, and having the courage to say "Nope, I don't think so" when people tell you you ought to want something else.
And get paid western wages. If you live in thailand you get paid thailand wages, and thailand connections for the most part, which are locally adjusted for the cost of living downwards.
I am living in Bangkok right now at €500 (euro, ok) a month and before I clicked this I was wondering if it would mention Asia.
You won't believe how many 'old western people' actually live here in Thailand (mostly the coast areas) or Indonesia for that matter.
I do it. My base expenses are less than $500 / month in the Philippines.
10,000 furnished apartment.
~5,000 food
~2,500 visa
~1,300 internet
~1,200 electricity
Total: 20,000 / 47.5 = $421
I'm probably forgetting some things. There are misc expenses which would bring me up to the $500.
That's not to say I actually live here for that though. Those are my actual expenses and I can get by with just those but I choose to have a little more fun. Beer is really cheap here but it adds up if you go out a lot. A 1/4 lb McD's meal is 135 pesos, so your expenses go up if you eat out a lot.
You can nearly cut that rent fee in half if you go for an unfurnished apartment but you have to pay more initially to put in your own furnishing.
You won't be traveling on a budget that low but you have to leave the country once every 16 months (I think) for a visa run if you are on a tourist visa.
Another big one is taxes. So if you are running your own business then you have to make $500 / month after taxes.
I would say that $750 is a pretty decent figure for a single person not living high on the hog. As the article mentions, for $4,000 / month you can live like a king.
Anything I'm forgetting?
ETA: This is for Dumaguete in the Philippines. Cebu is more expensive and Manila is more expensive than Cebu.
ETA2: I didn't add local travel expenses because if you stay in Dumaguete for a decent amount of time you might as well buy a motorcycle for around PHP 40,000. Gas is cheap because you don't use much. Dumaguete has banned taxis so your only option is a trike which typically costs a total of PHP 60 to go downtown and back.
Doing it in Thailand (have been for almost 5 years):
rent: 90 euro, car: 65 euro, food/drinks: 300 euro, visa: 10 euro, health insurance: 15 euro, other: 50 euro
Me and my girlfriend life a very comfortable lifestyle and we really don't cut back that much; eating out here is cheap (as long as you stay away from tourist spots) and we take regular short trips around Thailand and other parts of south east asia.
Check out http://locationindependent.com/blog/ - written by a couple that are "still travelling between some of their favourite countries including Thailand, South Africa and the Caribbean"
The funny thing to me about this article is I am already living in a country where you can live reasonably well with 500$/mo (I born and live in Venezuela). But you know what? This cheap third world country is a big piece of shit because of its political situation (Chavez).
So, from my point of view, I am just planning how to leave my country. But move to another third world country?? No way man... I would prefer to live in a expensive first world country and work as developer/codemonkey/entrepreneur/whatever.
So, if you choose to "retire" to a cheap third world country, check its political situation and background. Now, if you just don't care to be rescued by UN blue helmets when shit hits the fan, just be my guest...
That said, it is a fantasy, unless you intend on your retirement getting cut short by death prior to you exhausting your money. The standard recommendation for someone who is much older (i.e. can rely on death to moot insolvency with greater probability) is that the safe withdraw rate is 4%.
With a withdraw rate of 4% and a standard mix of stocks and bonds you can be fairly confident that, assuming the future looks something like the past, you will not run out of money within your lifetime. (Most people will in fact see their money "go infinite", i.e. their portfolio expands faster than their withdraw rate and when they eventually pass away their heirs and government get to toast their name quite a bit. However, the prudent investor doesn't plan on being "most people", they plan on being the unlucky sod who bought at the top and sold at the bottom.)
The biggest problem with the 6% figure is that it ignores inflationary pressure. If you're stuck with extremely low risk investments (as you are once retired), you should really be looking at levels around 1 to 2% over inflation. At 2% over inflation (long term rate around 5%), withdrawing 6% annually (growing the withdrawal amount to keep up with inflation), you'll only last about 20 years, assuming no mishaps. Withdrawing 4%, the commonly recommended value, lasts more like 35 years; the average American retirement isn't that long, but it has a significant increase in expenses at the end.
That's currently a slight stretch given interest rates in most OECD nations, but definitely achievable without effort over a longer term (eg, 6% pa for 10 years).
wait... live comfortably on 2,000 a month, and live on 4,000 a month as a king?
Heck, I live on around 3,000 a month (after fairly aggressive savings by American standards) in a middle sized city and it's very comfortable. I could live comfortably on 2,000 a month if I wasn't working! (That's for one, mind you.)
Well, 4k USD per month is ~130k THB. The purchasing power of the Baht means that that is about equivalent to ~10k USD. (As an example, a can of Coke costs 12 THB in a 7/11).
130k will buy you a lot of luxury in Thailand. You can get a very good condo for 30k per month. You can each out for every meal of every day for about 1.5k per diem, so 45k for food. That still leaves 55k for spending on going out, buying clothes, utilities, gadgets, etc. etc. That is more than "comfortable".
Even 70k per month is more than enough for a very comfortable lifestyle. Local food costs < 100 THB per meal, so you could eat for less than 300 THB per day. A reasonable condo is only 20k if you're willing to live away from the tourist areas.
I'm curious about safety. I know this is probably an exaggeration based on too much media exposure, but my impression is that some of these places have high rates of kidnapping and the like. And it seems that if you were a westerner, especially if you were old, you'd stand out as a target.
Standard of living isn't everything. One of the best times of my life was in China, lifting weights, hiking up mountains, spending nights in temples, drinking tea, and meeting local people some of whom had never seen a white person before.
If you've never spent 3+ weeks in a country that's very different economically/socially than your own, I'd recommend it. You might like it, might not. I've had mixed experiences with different countries. I quite enjoyed China and Malaysia, Eastern Europe not so much.
But we all have different tastes - there's a meme in the USA that it's the "greatest country in the world" - I reject the notion that there is a greatest country in the world. Just different places for different people at different times in their lives.
There are some elements of standard of living which are measurable, such as services, infrastructure and other things. But some elements are can't be measured and are up to the preferences of the individual. I can still be happy in the Philippines with an otherwise lower standard of living. If you get the opportunity to live abroad, do it.
[+] [-] grandalf|17 years ago|reply
How much money do most of us flush on rent, cars, overpriced houses, and other things. If you add it up over 10-15 years the opportunity cost of living in the US is over $1M for most people.
All that so that we can eat a horrible western diet, watch cable news, and work for prestigious firms in hopes of retiring at 70.
[+] [-] nostrademons|17 years ago|reply
And you get the opportunity of living in the U.S. I certainly think this is worth >$1M over a lifetime.
I like living in the U.S. I like having a car, and the associated freedom to take a day trip anywhere in the Bay Area. I like living in a suburban neighborhood where's there's trees and greenery, and yet stores, restaurants, and other conveniences are all nearby. I like being able to work on exactly the same stuff I do for fun and yet get paid for it. I like that I'm surrounded by some of the best & brightest immigrants from around the world in my job. I like my "horrible western diet", which basically consists of being able to eat whatever variety of food I feel like. I can have Mexican for lunch, fresh fish for dinner, Belgian waffles for breakfast the next day, Indian food for lunch, and Chinese for dinner. Is there any other country where you'll get similar variety?
Whenever I've visited other countries (notably China, but also Germany/Austria/New Zealand), I've always felt that they were nice places to travel, but I certainly would not want to live there. Well, except New Zealand. I could imagine retiring there, but I'd hate to waste my 20s and 30s there.
Happiness is knowing what you want, going for it, and having the courage to say "Nope, I don't think so" when people tell you you ought to want something else.
[+] [-] elai|17 years ago|reply
[+] [-] jrnkntl|17 years ago|reply
[+] [-] kqr2|17 years ago|reply
[+] [-] theoneill|17 years ago|reply
[+] [-] gexla|17 years ago|reply
10,000 furnished apartment. ~5,000 food ~2,500 visa ~1,300 internet ~1,200 electricity
Total: 20,000 / 47.5 = $421
I'm probably forgetting some things. There are misc expenses which would bring me up to the $500.
That's not to say I actually live here for that though. Those are my actual expenses and I can get by with just those but I choose to have a little more fun. Beer is really cheap here but it adds up if you go out a lot. A 1/4 lb McD's meal is 135 pesos, so your expenses go up if you eat out a lot.
You can nearly cut that rent fee in half if you go for an unfurnished apartment but you have to pay more initially to put in your own furnishing.
You won't be traveling on a budget that low but you have to leave the country once every 16 months (I think) for a visa run if you are on a tourist visa.
Another big one is taxes. So if you are running your own business then you have to make $500 / month after taxes.
I would say that $750 is a pretty decent figure for a single person not living high on the hog. As the article mentions, for $4,000 / month you can live like a king.
Anything I'm forgetting?
ETA: This is for Dumaguete in the Philippines. Cebu is more expensive and Manila is more expensive than Cebu.
ETA2: I didn't add local travel expenses because if you stay in Dumaguete for a decent amount of time you might as well buy a motorcycle for around PHP 40,000. Gas is cheap because you don't use much. Dumaguete has banned taxis so your only option is a trike which typically costs a total of PHP 60 to go downtown and back.
[+] [-] mjnaus|17 years ago|reply
rent: 90 euro, car: 65 euro, food/drinks: 300 euro, visa: 10 euro, health insurance: 15 euro, other: 50 euro
Me and my girlfriend life a very comfortable lifestyle and we really don't cut back that much; eating out here is cheap (as long as you stay away from tourist spots) and we take regular short trips around Thailand and other parts of south east asia.
[+] [-] winanga|17 years ago|reply
[+] [-] mariana|17 years ago|reply
So, from my point of view, I am just planning how to leave my country. But move to another third world country?? No way man... I would prefer to live in a expensive first world country and work as developer/codemonkey/entrepreneur/whatever.
So, if you choose to "retire" to a cheap third world country, check its political situation and background. Now, if you just don't care to be rescued by UN blue helmets when shit hits the fan, just be my guest...
[+] [-] Dilpil|17 years ago|reply
[+] [-] patio11|17 years ago|reply
Six percent annually.
That said, it is a fantasy, unless you intend on your retirement getting cut short by death prior to you exhausting your money. The standard recommendation for someone who is much older (i.e. can rely on death to moot insolvency with greater probability) is that the safe withdraw rate is 4%.
With a withdraw rate of 4% and a standard mix of stocks and bonds you can be fairly confident that, assuming the future looks something like the past, you will not run out of money within your lifetime. (Most people will in fact see their money "go infinite", i.e. their portfolio expands faster than their withdraw rate and when they eventually pass away their heirs and government get to toast their name quite a bit. However, the prudent investor doesn't plan on being "most people", they plan on being the unlucky sod who bought at the top and sold at the bottom.)
[+] [-] mynameishere|17 years ago|reply
http://finance.yahoo.com/q?s=tlt
...that's as safe you'll get.
Insured munis at 5
http://finance.yahoo.com/q?s=pza
Emerging at 6
http://finance.yahoo.com/q?s=emb
Junk at 13
http://finance.yahoo.com/q?s=jnk
Mix and match.
[+] [-] gambling8nt|17 years ago|reply
[+] [-] netsp|17 years ago|reply
[+] [-] JacobAldridge|17 years ago|reply
That's currently a slight stretch given interest rates in most OECD nations, but definitely achievable without effort over a longer term (eg, 6% pa for 10 years).
[+] [-] Dilpil|17 years ago|reply
[+] [-] ibsulon|17 years ago|reply
Heck, I live on around 3,000 a month (after fairly aggressive savings by American standards) in a middle sized city and it's very comfortable. I could live comfortably on 2,000 a month if I wasn't working! (That's for one, mind you.)
[+] [-] fuzzbang|17 years ago|reply
130k will buy you a lot of luxury in Thailand. You can get a very good condo for 30k per month. You can each out for every meal of every day for about 1.5k per diem, so 45k for food. That still leaves 55k for spending on going out, buying clothes, utilities, gadgets, etc. etc. That is more than "comfortable".
Even 70k per month is more than enough for a very comfortable lifestyle. Local food costs < 100 THB per meal, so you could eat for less than 300 THB per day. A reasonable condo is only 20k if you're willing to live away from the tourist areas.
[+] [-] msluyter|17 years ago|reply
[+] [-] fuzzbang|17 years ago|reply
jim.farang gmail.com
[+] [-] eleitl|17 years ago|reply
6% and "safe" these days does not sound doable.
[+] [-] socratees|17 years ago|reply
[+] [-] lionhearted|17 years ago|reply
If you've never spent 3+ weeks in a country that's very different economically/socially than your own, I'd recommend it. You might like it, might not. I've had mixed experiences with different countries. I quite enjoyed China and Malaysia, Eastern Europe not so much.
But we all have different tastes - there's a meme in the USA that it's the "greatest country in the world" - I reject the notion that there is a greatest country in the world. Just different places for different people at different times in their lives.
[+] [-] gexla|17 years ago|reply