Those of you who know me well, know I am a cheap bastard. So, how did I agree to this seemingly expensive proposition? Well, it’s actually not that expensive. At least not compared to the cost of living in Hawaii.
As much as we adore Hawaii, it’s very expensive to live here if you want to have a quality of life, that is – eat good food, live in a nice place, and occasionally travel internationally. It cost us between $10,000 and $12,000 a month for the six of us. Since I come from a third-world country, such amounts are distressing to me and unfathomable. My first temptation is always to live in a shoebox and have a draconian budget.
Several years ago I came across an article mentioning median household income of families around the world. I was surprised (but really should not have been) that US was leading the pack of developed countries, including Western Europe. Theoretically then, one should be able to survive on US income in Europe. If one is to live like a local. When we did a speed trip through Europe a few years ago, it was pricey but manageable. Most of the expenses came from lack of planning – we would look for an accommodation and transportation while already on the ground.
So, my theory is that we can live in Europe and live well on between $3,000 and $5,000 a month, which includes leasing a 3-bedroom apartment, occasionally eating out, going to the museums and concerts, and traveling. To fit this budget, we looked at the places with relatively inexpensive cost of living, such as Marseilles (cheaper than Paris), Berlin (cheaper than Munich), Edinburgh (cheaper than London), Spain (cheaper than Italy), Turkey (cheaper than all of the above). Each place is also well-located for side-trips to more expensive neighbors. At the same time, all the selected places had to be interesting in their own right since exploring is a big part of our goal and we are looking for the culturally rich places. It is possible to live in even cheaper places but it wouldn’t be as nice or interesting.
The math then comes down to – do we want to spend $10,000 to $12,000 a month to live in Hawaii or $3,000 to $5,000 to live in Europe? It’s $7,000/ month (post-tax!) difference. in other words, one of us could stop working altogether, we would travel the world, and still end up keeping more money than now. Enter the cheap bastard and the answer is pretty obvious.
A million dollar question is, how to live in inexpensive European cities while drawing an expensive American salary? Considering that we would like to save between $2,000 and more per month for the future, we need minimal income of $5,000 to $7,000. Here’s what we decided to do:
– Sell our expensive Hawaii real estate, getting rid of gigantic mortgages and loans associated with them;
– Buy inexpensive rental properties on the Mainland, paying in cash, and setting up rental income of $1,000 to $2,000/ month;
– Sell our businesses and parking the cash in liquid investments bringing another $1,000 to $2,000/ month
– Keep web branch of one of our businesses where clients are subscription-based and which can be managed remotely, another $3,000 to $5,000/ month;
– Or, without selling the businesses, organize them in a way that does not require hands-on management and maintains most of the current income they bring.
Of course, even if everything goes as planned, it is still unsettling to go untethered around the world, dragging two old folks and two kids with us. But, the two rental properties all paid for and one of them sufficiently large for all of us to live in and another one covering our minimal living expenses, is our safety net. Plus, several businesses that are unrelated and healthy, and multiple skills between the two of us. I think we will be OK. The Russians have a saying: “Those who do not risk, do not drink champagne.” Here, it applies literally!