Monday, February 19, 2018

Would We Already be Financially Independent Abroad?

An interesting possibility has presented itself in the Done by Forty household. We could potentially be financially independent immediately, if we changed our plan a bit, and sold our home.

If we sold our house, and maybe our one remaining rental property while we were at it, we could blatantly steal the plan that Kristy and Bryce at Millennial Revolution and Jeremy and Winnie at Go Curry Cracker have used to enjoy a financially independent, and somewhat location-independent, life.

Assuming we could similarly find affordable housing to rent abroad, and that we could leverage traveler's health insurance, we might be able to rock an inflation-adjusting $40,000 annual budget...indefinitely.

How is this possible? First, selling the properties would free up equity, and put it to work. But the straw that stirs the drink is geographic arbitrage. Rent in much of the world just isn't as pricey as owning our current home in Arizona.

I have to admit it's a tempting option. For one, slow travel is already a goal in our post-FI plan. But instead of just living in a new country for three months while our future kiddos are on summer break, what if we just kept working through a series of travel visas? Maybe I could put my teaching credential to some use, Mrs. Done by Forty and I could home school the kids during the day, then ramble around a new foreign city with the fam in the afternoons?

It doesn't help that the one big hurdle in our current plan for summer slow travel happens to be our house itself. Even if we just travel during the summers, who will keep the pool and yard maintained while we're off in another country for three months? Should we worry about someone breaking in while it's vacant? And does our insurance cover us for a fire if no one's been in the house for over 30 days?

Selling the home answers those questions.

Plus, maintaining a house is a pain in the ass some days. After failing to clear a clog in our shower on Saturday, I finally waved the white flag and called a plumber. It's a reminder that there are ongoing costs with owning.

We have fifty year old pipes that need to be babied, until they eventually need to be replaced. The roof will only last so long. The carpets will eventually get nasty. Renters get to avoid all that junk. Financially independent renters get to do that while also jetting off to new countries every few months if they feel like it.

But then I remember that, despite the costs and the occasional DIY failure, we love our home. We can see ourselves staying here long term, having family over to open presents by the fire during the holidays, and swimming in the pool during our crazy Arizona summers.

And we're proud of our home. Whatever you want to call the pride of ownership, I think we have it.

Plus, we love our community of friends here: playing D&D and board games, having friends over for our Bachelor fantasy drafts, and playing kickball. It's all a lot of fun, and it's not because of the games we play. It's because we're lucky to have a close-knit group of people around us who we love.

And anyway, I remember those years of renting during my twenties, and they weren't a decade-long wet dream of housing bliss. Getting landlords to finally make repairs was usually harder than it should have been. Getting them to believe those repairs were their financial responsibility required a minor miracle. And rent went through the roof during our time in San Diego: way faster than inflation.

Still, even though renting wasn't perfect, and even though we love our home and community, there's something intriguing about the notion of travelling the world full time. It's like an impossible-sounding adventure that we just realized could be real, if only we gave up the life, home and community that we love. It's a trade off, and a big one.

At least part of the allure, I think, is that we could just reach financial independence right now. In the marathon run towards our big financial goal, it seems there's a little known shortcut: if we hang a left, we can see the finish line.

For now, I guess I just like knowing the option is there.

In our case, I think this is a good illustration of how renting can offer a more efficient way to reach financial independence, and provide additional options once you get there. If there's a financial benefit in owning our home, it's only going to be seen in the long term, as the benefits of a low interest fixed rate mortgage coupled with inflation work their magic over a few years or decades. As always, you should run your own numbers, and decide what trade-offs you're willing to accept. But renting might get you to financial independence more quickly.

Even if we keep our home, I suppose there are ways we could still try out full time travel for a while. When pitching this half-baked idea to Mrs. Done by Forty today, she asked, "Aren't we having a baby soon? Why don't we see what traveling with the kid is like and, if it's fine, then we can rent out the house for a year and see if we even like slow travel?"

As usual, I'm reminded that my wife is much smarter than me. The next time I start typing out plans for big, sudden life changes, someone please make sure that I run them by Mrs. Done by Forty first.

*Photo is from fdecomite at Flickr Creative Commons.


  1. I see a little "grass is greener" going on here. :) I guess I'm lucky? in that I don't have so much of a travel bug that I want to do it full time. I like having a home base and routine. So that settles at least that part...for me. For you it sounds like you kind of do too? I think the influence out there pounds in our heads that owning a home in a neighborhood and living there comfortably for some time is, like, taboo!

    1. Hey Tonya. I think you're right and that the grass does seem greener abroad (although in Ireland and Scotland, it probably really is).

      We're in real, two-paths-diverged-in-a-wood scenario here. I know what Frost would tell us to do but I'm genuinely not sure what we'd be happier doing. As usual, Mrs. Done by Forty gives a pretty measured approach: try it out for a while first.

    2. As Jerry Seinfeld quipped, "Sometimes the road less traveled is less traveled for a reason!"

  2. Well, that's an interesting idea. Honestly traveling full time like that sorta sounds like hell on earth to me, but I am pretty much a dyed in the wool homebody. At one point, back in my 20s, I thought it would be great fun to get a Eurorail pass and simply live out of a backpack for a year traveling through Europe - but I can't imagine wanting to do it for any longer than that, even back then.

    One of the things I learned living abroad for a year is that there's a big difference between traveling in a foreign country and living in one full time. Having to navigate a different culture - especially when there's a language barrier - can be really exhausting. It's hard to make meaningful connections with people when you have trouble communicating on more than a basic level, and I found myself feeling fairly isolated. Maybe it's different now with such easy access to technology, but for me, there came a point when the constant adventure thing wore thin.

    I can vividly remember the first day I returned to the US. I was sitting on a bus listening to random strangers conversing with each other, and I suddenly realized that I could tune in and out of each conversation without any effort at all. It was such a relief to realize that I wasn't gonna have to work so hard just to deal with the very basics anymore, that I almost burst into tears.

    Of course, some of that goes away if you stick to English speaking countries, but even there, living in a foreign culture is... well, it's foreign. For me, at least, it was hard to feel at ease when I was constantly "stepping in it" one way or another, simply by not understanding the cultural norms.

    Anyhow, I'm not trying to argue you out of it. Perhaps you have a greater adventure tolerance threshold than I do. But I do think that Mrs. DBF is wise to want to try it out before committing.

    1. Hi ECL! As always, thanks for the thoughtful comment. You always make me reconsider my initial points in the post.

      The longest stretch of travel we've had is about 4 weeks, and perhaps 7 or 8 weeks total in a year. That's obviously a far cry from what we're talking about. We probably should try it out for 3 months or a year before making any big life changes, like selling the homestead.

      Thankfully, Mrs. Done by Forty is more or less fluent in Spanish due to her time in Peru. South America might be our first stretch, just due to that and the low cost of living, and our familiarity with some parts of it. But I totally see what you're saying about the hurdles of not being able to connect with the people, and the resulting feelings of isolation.

      As always, there's a balance to be struck between jumping in with both feet (as I have a tendency to do) and between letting the reasonable doubts we have on big goals prevent us from trying for the worthy ones.

      The rub is finding out which big goals are the worthy ones in the first place...

    2. I also have the sneaking hunch that parenthood might turn out to be a little bit different than what you are imagining.

    3. Hmmm. Well that is almost guaranteed, isn't it?

    4. I lived in China for two years and ECL has it generally correct IMHO. I had my Chinese speaking wife and in-laws doing all of the dirty work for me (e.g., negotiating a lease, getting us electricity and internet, etc.) but still it was "work". I also lived in Mexico City for a summer (in a hotel while I worked there).

      Luckily I'm such an introvert that to some degree I found the isolation (even when out and about) somewhat comfortable, but then frustrating whenever I had to get something done.

      Loved the experience, but I agree with ECL that it wears over time. Maybe most relevant to you DBF, is that it was when my wife was pregnant that we scrambled to get back to the U.S.

      Air pollution is very bad in many countries (and not great in some parts of U.S.). Increased prevalence of asthma due to air pollution is very real. Tainted food supply (in China) is real. And those first few years (0 to 5 years old) are very formulative to future health. So we bailed on China as our now super healthy and smart (of course!) boy was about to be born ;-)

    5. Additional note: One of the reasons many Chinese are moving their money and families to the U.S. West Coast (dramatically affecting real estate prices) is for better environmental conditions for their kids. Having lived there, I totally get it.

    6. That's good perspective, Tin. Mrs. Done by Forty has lived abroad for a year, but I haven't been outside our country for long stints and, even when I have, it's only being in a country for a week max before I move on to the next one.

      I probably need more experience before we can say whether this is something we want to pursue long term.

      Good points about pollution and, more broadly, just having our kids' interests in mind. I'm sure it'll take having the kids to really understand, but I imagine our goals will change quite a lot.

      China probably is lower on our list now.

  3. "As always, you should run your own numbers, and decide what trade-offs you're willing to accept."

    Exactly. Do whatever makes sense for your situation--as long as you run the numbers!

    Looks like you guys are seriously winning at life since you have the option to FIRE right now IF YOU CHOOSE too. That's the beauty of FI, you have options :D Great article, and excited to see what you guys decide going forward. Like Mrs.DbF said, you could wait to see what it's like after you have your baby and then see what direction you want to go. The best part is the ability to choose!

    1. Hi there, FireCracker! You guys were in mind when I was thinking this over. It's a really tempting option but the baby probably throws at least a little wrench in things (though Go Curry Cracker sure does make it seem do-able).

      In any case, I think we should at least try it. You never know until you give it a go, right? For now, I think we'll probably keep the house and wait until we can sustain FI with the mortgage in tow.

      As you said, it's nice to have the option right now though. :)

  4. I feel like Go Curry Cracker lucked out with a laid back kid or something because the idea of traveling longer than a week or two with JB makes something in me cry a little :D

    (Or that just might the ghost of my mother coming back to haunt me for being a terrible daughter... very possible. Our family is giving to hauntings.)

    I think it's a great idea to test drive and see if you like it. I'm personally a homebody and need my safe homebase where I don't have to see or socialize or work hard at making regular life work for weeks or months at a time. My top limit for being away from my dog and home is around 2-3 weeks.

    Am I mistaken in recalling you have a dog? How would your pup factor into longer travel?

    1. Hey there, Revanche. I'm certainly a homebody, too, so the urge to travel the world is kind of an odd one. Maybe I'll just like cooking dinner and curling up on a different couch, in a new city.

      And yes, we have a dog! Two of them in fact. I initially had a section in the post about them but took it out to keep the post neat and short. But yeah, we do need a good plan for bringing them along. Our half-baked idea involves a modded out Sprinter van cruising through Central and South America at the moment, maybe hitching a ride across an ocean? I really don't know. :)

    2. Amen to the laid back baby! I love that I can travel with my kids, but when we get home, I need a vacation from the vacation. One of ours would probably be cool with this lifestyle, but for another it would be a nightmare. You have a super smart wife!!!

    3. Yes, Mrs. Done by Forty is the brains of the operation. :)

      And I appreciate the feedback from someone who has knowledge of how this whole parenting thing works, Femme Frugality! I think I need to simmer down on big ideas for a bit, until we see what this kid is like. :)

  5. Doing some rough math, at the end of this year we could move to Southeast Asia and never work again, but it's not practical for us either. Being close to family and not wanting to leave the US long-term are the main variables in decision making for us.

    Also, what's different for us than for GCC is we want our kids to go to school in the US. At this point, we don't think we want to raise them abroad. That will cost us a little bit more, so we're a few years off from FI yet. It's funny how after thinking about these variables for a while, decisions/trade-offs all come with invisible $ values attached to them.

    1. Very cool that you, too, could be FI in another part of the world, Smart Money & Travel.

      Also, saw your post on rent vs. buy, and at least you'll be able to transition to full time travel more easily if things change.

      School is probably a factor we're not fully considering yet. I guess we'll find out more as the kid gets older, but for now I think I'd be down with school abroad and, maybe, coming back home for high school in the US.

  6. I really love the idea of geo-arbitrage, but it just wouldn't work with having our dogs because that arbitrage we would want to do would be abroad. That is ok....but when these kinds of posts appear it does get me thinking.

    1. I hear you, Jason. While we don't have a great plan yet, we would be bringing our dogs along, too. I'm not keen on them flying beneath a plane but I think it might be an option (maybe our only option). But going down to South America with a converted Sprinter van has some appeal...

  7. I have several coworkers that do or want to own home bases abroad ... though we all live overseas .... Actually one has several home bases ... usually min-pads around 30 sq meters that double as AirBnBs when they are not using them ... like in Italy and Greece - she bought the Greece one when their economy was in free fall .... I have a permanent base here in Asia where I now live and F.I. but not R.E. ... I do international teaching so the pay and holidays are good ... I get to live in exotic locations and have to 3 months a year to do as please whether travel or chill out with my family exploring things locally - Michael CPO - From the far side of the planet

    1. Hi Michael! Sorry for the late response -- I am bad about keeping up w/comments posted over the weekend.

      Those min-pads sound rad, and a very neat way to dip one's toe in the water. I wonder if we could afford a min-pad AirBNB business that we could then use for a while for our own use.

      And congrats on the FI, and in Asia, too! We loved our visit there about a year ago. Such a neat part of the world, and we've only seen a small slice of it.

      I actually have an English degree and a teaching credential -- I have often thought that teaching abroad could be a neat way to supplement income in FI. Maybe we can connect and you could give me the skinny?

  8. Great post!

    I'm on a 1 year maternity leave and we went to Hawaii for 5 weeks while our baby was 3-4 months and Mexico and LA for two weeks. Traveling with a baby is much different, there's not as much 'movement' and you can only do one thing a day. We didn't book our ticket to Hawaii until our baby was born because we didn't know how sleep would be. He's pretty laid back now, not sure if it was because he's taken 6 flights already in 6 months lol.

    1. What a cool way to spend your maternity leave, GYM!

      We may steal your idea, because we love Hawaii and it seems a little easier than, say, going overseas. Mexico could be cool, too.

      6 flights by 6 months is crazy impressive. Well done.

  9. I like traveling and would prefer slow traveling but I'm not sure about perpetual travel with no homebase. I definitely think that we could reach FIRE earlier though if we moved to a lower cost area...which would be pretty much anywhere since NYC is so expensive. And Mrs. DB 40 is a smart lady. Best to see how you deal with traveling with a little one. I know the GCC's do it with a kid, but sometimes I don't even want to go out to eat at a restaurant with my 2 little ones =)

    1. Good point, Andrew! I think we need to test out this sort of stuff first, and then see if we want to make it a more permanent fixture in our lives.

      We still like to kick around the idea of moving to NYC for a year or two, like we talked about in the past. I don't know if we could hack it long term (we're kind of financial wusses) but I have a ton of admiration for those who can make FIRE happen there.

      If you can make it there...

  10. It is true that you can retire with lot less money if you were to move to a cheaper country. But travel will start losing its charm after a few years. I think this is where we immigrants (from a cheaper country) have an advantage. Because we can just settle in our native countries. But I do not think most people realize that this is possible.