The financial advantages of being a "Digital Nomad"

[Gabe]

Pugchief and I were chatting privately, and I realized that some of it might be of interest to the forum.

If you're not familiar, the somewhat cheesy term "digital nomad" refers to the subculture of people who travel indefinitely while working remotely (usually from coffee shops or co-working spaces). In contrast to backpackers, they generally rent a place and stay in a country for at least a few months to achieve some semblance of a stable work routine. I'll be joining their ranks in a couple months when my girlfriend and I move to SE Asia.

The advantages from a financial perspective:

a) Geographical arbitrage - earning a US salary or bootstrapping a start-up from a location where the cost of living is an order of magnitude cheaper, thereby dramatically increasing your savings rate or extending the start-up runway. In Thailand, $1000/month is very comfortable for two people. $2000/month and you're frequently eating at the nicest restaurants, getting daily massages, etc.

b) Taxes - the FEIE (foreign earned income exclusion) exempts you from paying federal income tax after 330 days of being outside of the US (if there are less than 330 days left in the tax year, you can file an extension to buy more time to reach the threshold).

c) Health care - many of these cheaper countries have stellar health care systems with very reasonable costs, so you also dodge the ballooning costs for US health care (there's a whole medical tourism industry built on this). All you really need is a ~$1k/year travel insurance plan through a company like worldnomads.com, which also covers theft of your personal belongings.

Assuming you also establish your last domicile in an income-tax free state prior to leaving the country, the FEIE exempts up to $101,300 for 2016. If you have an LLC and Individual 401k, not even considering tax-deductible expenses, you can earn up to $137,850.62 and pay no income tax on it. All you'd pay is the 15% self-employment tax. For me personally, that's well above the income threshold where I'd rather work less than make more.

You generally apply for tourist visas and when they expire do quick "visa runs" to neighboring countries for the specified number of days before returning (assuming you want to stay longer). If you're using US banks, the countries you travel through have no way of knowing you're working and earning taxable income.

If you're itching to travel and can do your job or run your business via the internet, it's something to consider.

[Austen Heller]

c) Health care - many of these cheaper countries have stellar health care systems with very reasonable costs, so you also dodge the ballooning costs for US health care (there's a whole medical tourism industry built on this). All you really need is a ~$1k/year travel insurance plan through a company like worldnomads.com, which also covers theft of your personal belongings.

On 'Inside Man', Morgan Spurlock does exactly this, he flies to Thailand to the Bumrungrad Int'l Hospital, and gets every test that he can think of done, and it only ends up costing a few thousand bucks.  Great idea.

http://www.cnn.com/2015/01/28/tv/medica ... nside-man/

The whole digital nomad thing sounds very cool.  Mark Leavy, doesn't that describe you?

[ochotona]

I love Thai food.

[Mark Leavy]

Yes, I've been doing this for about 3 years, and I believe that Jake (also on this forum) does it also.  We have slightly different approaches as he can take advantage of his UK citizenship.

All of my income is from investments so I don't get to participate in the US's foreign earned income tax exemption.

In a nutshell, my residence is a mail forwarding service in Sioux Falls, SD (USA) and everything I own is in a small knapsack that fits under the seat in front of me.  My income is all USA federally taxed (no state taxes).  I don't buy health insurance (just pay the penalty) and if I ever need health care I plan to pay cash for any medical services locally.

Right now the dollar is pretty strong - so life is good.  I'm in Mexico now - heading farther South in a bit, then a stop back through the states and off to Europe for the end of the year.

Jake has been a doing a series of podcasts recently that cover some of the mechanics of it all.  Well worth listening to.

[barrett]

...everything I own is in a small knapsack that fits under the seat in front of me.

I never got all my earthly possessions down to a small knapsack but I used to travel that way. I would routinely get grilled upon arriving back in the US, along the lines of, "You say you were gone for six weeks and this is all the luggage you have? I don't think so buster!" And I would inevitably have a couple of items in my pack that I hadn't used.

It's easier to travel super compact in hot dry countries because laundry can dry while you're out having dinner.

[dualstow]

EDIT: found it. Voluntary life.http://www.thevoluntarylife.com/
Does anyone have a link to Jake's podcast on this topic? I used to listen to the pp stuff, but it's been awhile.

[dualstow]

The amazing thing is not that Jake is a nomad, but that he's a nomad & married! I was playing the podcast last night and my wife and I agreed that we could never pull this off. Gosh, it would be great to not have to worry about things like city codes and furnace filters!

[Pointedstick]

Seems relevant: http://www.fortgalt.com

[Libertarian666]

Seems relevant: http://www.fortgalt.com

Yes, Chile sounds like a great place to move to!
Aside from the volcanoes, earthquakes, tsunamis (https://www.worldnomads.com/travel-safe ... r-concerns) and dishonesty (http://escapeamericanow.info/dishonesty ... nightmare/), anyway.