Getting Down To Business, Part One

Expat Diary June 17, 2008: How To Make a Living

As most of you reading this know, I left Bali a few days ago for the Philippines. Not the first time I have done this but this time, I have no clear idea when I will be back. Bali being an island paradise, as well as a second home to me, folks have asked why I did this.

Well, the first reason is the usual one: my visa ran out and I had to go somewhere. But there are greater things at work. As part of my blogging about expat living to help others considering the same move, and also for my own diary, I’m going to talk about the next step in the evolution of this adventure.

I’m Not Going Back, Jim

In what I’m sure is going to be the least surprising thing I’ve ever written, I’ve decided to make my departure from the United States semi-permanent. I’m still planning to come back later this year and there’s another trip back (for a show) in the works in 2019, so I will probably (unless the political situation really deteriorates) be around the U.S. a little bit, particularly if there’s work there. I have some Karma Frog projects still hanging fire that I hope to complete. But unless something happens I don’t expect, I’m going to be living in Asia for the forseeable future.

There are a lot of reasons for this decision, and I’ll probably leave them for another blog. There is one factor overriding all others, though: health care. This hit me when I had to get a crown replaced in Bali. $250 for this is a reasonable cost, one I can absorb. When I heard about how much it would have cost in the U.S., it was a come-to-Jesus moment. I’ve already commented on the relative costs of health care there to here, and how much more of a ridiculous pain in the ass everything is in the U.S. because of insurance and the various reimbursement and approval hassles. That just crystallized my thinking.

Now, everyone has their own opinions of Obamacare and of our current president’s approach to same. For the purposes of this blog, how you feel about it is irrelevant, because I have to look to my own situation. For me, Obamacare (after getting screwed initially) has been a net plus. It’s enabled me to get affordable insurance that (up until I changed insurers this year) worked reasonably well.

With the new changes to Obamacare, all the tea leaves are indicating that premiums will go up significantly and most particularly for people in my age bracket. There’s also the possibility that certain kinds of conditions may no longer be covered or price many of us out of the market. It is likely that starting in 2019, insurance in the U.S. will cost substantially more, and cover less.

Looking to the future, I forsee an endless spiral of trying to work harder and harder to cover more and more expensive health care as I age. That’s not sustainable, particularly with my neck issues. Whereas if I stay in Asia, where costs are manageable, once I am established I can use my nest egg to hopefully grow my situation economically and perhaps help a few other people along the way.

I might have made the same decision anyway. I like it here, despite the flaws and dangers. But to the extent I was thinking about the possibility of coming home, having to deal with the expensive and dangerous boondoggle that is our health care system “trumps” all other concerns. I’d rather take my chances in the Third World than trust my physical and financial well-being to the American health care system.

A Guy’s Gotta Eat

Having made that decision, I started to think about what exactly needed to be done if I was going to make this work. There are a lot of moving parts that I’ll cover in Part 2, but the #1 issue is having stable cash flow. Making a living.

It’s not that I’m broke. I have money in the bank. But that’s not enough; you can have a million dollars and if you don’t have cash flow, you’ll be down to zero before you know it. Also, you need that money for emergencies like a health problem or investing in your personal infrastructure. If you’re constantly dipping into your savings to stay alive then the next time you get hit with a one-time expense, it’s going to really cut into your cushion. Over a long period of time it’s not sustainable – and sustainability is the whole ball game.

The first step was to figure out what a current frugal monthly nut would be, and get under it. I’ve already done that. The next step was to figure out just how much money I would need to get in a safe place to be here long term. The answer is not that much. If I can get to a monthly income of around $1,100, I’ll be kind of like the Social Security trust fund – losing money on a regular basis, but solvent for the forseeable future. If I can get up to around $1,500, I should be good to go long-term. More than that is better, of course. There’s a lot of things I’d like to do that I can’t really do on that income. But if I can get to that nut, I’m solid. I do have some income, from Karma Frog work, from investments, and (thanks to you, dear reader) from subscriptions to this blog…but there’s only been one month since I left where that amount has gotten anywhere near $1,000. So I have some work to do.

The fun thing about this is because (by American standards) this isn’t really a lot of money, I am free to experiment and get creative figuring out ways to reach that number. Having gotten my expenses down, I have some time to get this together. There are some perimeters. I need to work smarter not harder, since there’s a direct inverse relationship to how much time I spend behind a computer and how I feel health-wise.

There’s another much bigger factor to consider, though. It goes to the reason I left Bali, and also is the part of this blog budding ex-pats should focus on.

Can I Cross The Line And Pray, I Can Stay Another Day

(All of what I write below is from my own research and anecdotes I have collected from other expats over the past nine months. I’m not claiming the same level of authority on this topic as someone who has done this for years and years, nor offering any legal or personal warranty on this topic. But if you are thinking about becoming an expat, this should be a good overview to start from)

If you’re going to be an expat, most of the problems you’re going to encounter are eminently solvable. There’s really only one thing that’s the key to everything: where your money is coming from. If you choose carefully, even a modest income is going to sustain you for years and years…but unless you already have enough passive income from retirement or investment, it’s not just as simple as moving to another country and setting up shop. It soooo isn’t.

Sovereign countries in general take a dim view of visa violations. This can be a bigger danger to an expat than being thrown in jail on a criminal beef. They’re happy to have you in the country, spending money and helping the local economy (and putting money in government coffers), but you need to stay on top of your visas. If you want to work there, you need to be very aware of what the local laws and attitudes are – and they tend to change all the time.

You basically have two choices (or some combination of the two) – work locally, or work online. Working locally has one big disadvantage: you’re making local money, which means your purchasing power is eroded because your pay is more in line with the local pricing structure. It has one big potential advantage which is if you are working legally for a local employer, they can get you right with your visas and making so you can stay long-term without any governmental hassles.

But…be wary. Companies shell out a lot of money for foreign workers and they tend to attach conditions to employment which can become traps if the employer is unscrupulous (or if the employee doesn’t take it seriously enough). To give one example: I looked into the possibility of teaching English in Indonesia. It can be done, but in exchange for the school shelling out the money to get you a work permit, it is common for them to require a year’s commitment. If you get into it and don’t like it, tough – because they will have possession of your passport and the immigration guy at the airport will not let you out. And if your employer is a jerk, he can change the conditions of your employment (say, tripling your classes) to make your life miserable.

I’m not saying that isn’t a good option for some people, and I certainly would consider a job offer over here if it was something that worked for me. But in general, that’s not the kind of a situation I want to put myself in. Being freelance, I can pace my work for my own health and interest, and arrange my time so that all the things I do to make a living work in tandem to advance my life. I also don’t want to simply rebuild a virtual cubicle around myself in some exotic location. I want to have time to go to the beach, or else what’s the point?

There are, of course, people that work “unofficially,” just as there are in our own country. Sometimes, this can be fine, particularly if it’s something informal like tutoring someone in their own home. But if you get caught, look out. In some countries, immigration takes a very dim view of this. Know the lay of the land – and the people you are dealing with – before you go down this road.

Nomad Means Nomad

That gets us to a job description that I’m sure you have heard before: “digital nomad.” This refers to someone whose job is location-independent and can be done entirely or almost entirely online. For an expat this is a very good way to go. The most prominent upside: it allows you to conduct business as an entity of your home country regardless of where you happen to be at.

This has huge advantages. The biggest one is obvious: you’re making the pay scale of your own country, not the country you are living in. Also, you will be paying tax and dealing exclusively with clients of your own country (or through the business in your own country), which keeps your paperwork simple and you may not need to file taxes or claim residency in your adopted country. (note I said may. It depends very much on the local laws and especially how long you stay in an individual country. If you are there for more than a set length of time – in Indonesia it’s six months – you may have to file a tax return regardless of whether you are claiming any local income or not)

Sounds perfect, right? Well, it kind of is, but there’s one big sticky wicket. Pretty much across the board, in any country in the world, working of any kind without a work permit is not allowed. Cambodia used to be the main exception but they have recently tightened their rules (something I will research further when I go there next month). And unfortunately, there aren’t any visas available in any country that I am currently aware of that will allow you to work as a digital nomad legally (at least not limited to this kind of activity – I have heard of working visas that allow freelance work under their overall umbrella). Incidentally, if you have information to add in this regard that I don’t know about, please feel free to comment below.

However, if you are technically a tourist, doing work entirely for people out of the country and with financial transactions entirely out of the country, are you really working in the country you are staying in? This is the big grey area in immigration law, and this is why it’s so important to know your local situation, because it really is up to the country you are a guest in to decide how strict they want to be on this issue. Many countries simply don’t care – as long as you are there, spending money, and not taking work away from locals, they’re happy to have you. The longer you stay, however, the more likely the immigration folks are going to become suspicious and ask pointed questions. This may not lead to anything, or it may lead to them gently informing you you need to shell out for another kind of visa so that the government gets their proper cut. Or it could land you in jail. You really need to know the local situation.

In the short term, the best way to avoid this problem is to keep moving. There’s a reason they call digital nomads “nomads.” They don’t set up shop in one place for too long. If you are hanging out in a country for a period of one, two, or three months, you can credibly claim to be a tourist and the local country is unlikely to have a big issue with you unless you do something stupid like open a hot dog stand on the main street. But if you stay longer, questions will be asked and you may run afoul of local rules and regulations. If you want to be a digital nomad, it’s a good idea to be a nomad. And don’t advertise it.

Why I Left Bali

As I said above, from the research I have done and the people I have talked to, the general gist I have gotten is: if you want to be a digital nomad, just do it discreetly, do not overstay your welcome in a given country, and most likely no one will bother you. It’s very improbable that someone’s going to come crashing in on your door and accuse you of working illegally on your laptop in your room.

There is one place where I have heard of this happening though, and that place is…Bali, Indonesia.

Now, don’t get me wrong. There are tons of digital nomads on Bali, in fact I see them in coffee shops and working spaces all the time. This kind of scenario is, from all accounts, rare. But Indonesia’s enforcement of visa laws against working illegally are the strictest I have heard of thus far. Because of their history of foreign exploitation and also the avalanche of foreign yoga instructors, dive instructors, etc. that have come to Bali and taken away local jobs, they take this very seriously. People have been deported for volunteer work, on the theory that by doing the job for free, they are taking work away from an Indonesian. One fellow who overstayed his visa got thrown in jail for fixing a projector on a cruise ship – the idea being that he was acting in a professional capacity in so doing. The Indonesian government actually offers a bounty for turning in people working illegally.

These are extreme examples. It’s not likely they’re going to go raid a working space any time soon and deport all the bule (though if I was going to be a digital nomad in Bali I myself would not do it so openly as that). The one thing I am quite sure of, though, is that it will be impossible to ever perform again as musician if I locate myself permanently in Bali, at least not without going through a fairly expensive artist visa process (or marrying a local). In Sanur, one prominent local businessman and musician got an immigration warning after his sit-in with a local band exceeded three songs.

None of this has thus far affected me because I have done very little work since I left the United States anyway. However, looking forward, I have to think extremely carefully about how to stay on the good side of all the countries I will be staying in. Initially, working online for American (and other) clients is going to be the way to go. Most of the countries in southeast Asia will not have a big issue with this provided I follow the unspoken rules listed above. But Indonesia might, particularly if I stay there for a long period of time.

This does not mean I’m never going back to Bali…but I need to establish other places to operate from first, so I can say, honestly, when I return there again that all my business is being conducted elsewhere. I also need to assess various local situations first hand to make sure of where the unofficial boundaries lie and what my options are. Figuring out what am I going to do, and where I am going to do it, is my focus right now. In Part 2 of this blog, I’ll write about what my plans are for that.

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