A regular feature of The Motley FoolRule Your Retirement newsletter service is our success stories -- profiles of people who have become financially independent. One of the most remarkable stories is about Billy and Akaisha Kaderli, who at age 38 left their fast-track lives, moved to the Caribbean, and started traveling the world. We caught up with Billy and Akaisha in Phuket, Thailand, where they are spending a month bodysurfing. Billy explains how they manage their finances while traveling the world.
Managing your portfolio on the road creates some challenges. We have been wandering the globe for 17 years and have a good bit of experience at this.
Outside of the United States and Europe, most people cannot afford to own a personal computer. Because of this, lucrative businesses called cyber cafes have sprung up everywhere. In these cafes, computers are provided for public use with a fee paid by the minute or the hour. The equipment is often brand new, with high-speed connection and features such as Skype, voice over Internet protocol, video cams, headsets with microphones, and print services available. If you happen to have your own notebook, you can handily connect through their system.
Long-distance money management
Because our portfolio is 100% equities, we use these cafes to manage our finances. We sell shares of our Fidelity (FSMAX) or Vanguard (VFIAX) S&P 500 index funds every month to meet our living expenses.
Once sold, the proceeds automatically sweep into our Fidelity money market account, and then we use our debit cards at a local ATM, which gives us cash in the currency of the country we're visiting without the hassle of using travelers' checks and with a more favorable exchange rate. Fidelity doesn't charge a fee for these withdrawals unless there are more than four transactions per month.
It's from these accounts that we pay our "normal" monthly bills back in the U.S. (telephone, utilities, home and health insurance, etc.), using the automatic payment systems widely available. Another advantage of this withdrawal plan is that we are more in control of our income tax bracket. If the market has a nice run-up, we can take out a couple of months of income in advance, or defer the transaction until the following year for tax purposes. Because the amount we live on is relatively small, we are able to keep our tax bracket low.
Cash or credit
We each have a separate card from different accounts, one being a Visa and the other a MasterCard. This is insurance for us in case an account is blocked for any reason or in case of theft. Since toll-free 800 numbers do not work outside of the U.S., and depending on where we are, there can be large time differences. For example, in Thailand, the New York Stock Exchange opens at 8:30 p.m. and closes at 4 a.m., not exactly convenient business hours. You don't want to deal with an account issue while you're on the road. Having individual cards from independent accounts gives us the ability to access money while we straighten out any problems. We do carry credit cards, but only for emergencies, because using them for a cash advance is very expensive. It's important to note that outside of the U.S., vendors generally add a fee for using a credit card. We have been quoted an additional 10% charge or more, plus the amount your card company is going to nick you on the currency exchange rate.
With the coup in Thailand last September, there are now two exchange rates: One for in-country, and another for off-shore. (How international currency traders let the government get away with this is beyond me.) The spread is 7% now, meaning that if we use our U.S.-based credit card, we are automatically losing 7% plus the charges our card company will add. If we use an ATM machine, we get the better rate. Recently we saved more than $50.00 buying airline tickets with cash instead of using a credit card. That might not be much in the States, but here in Thailand, that's a lot of noodles.
For this reason, we stick to using hard currency as often as possible.
As you can imagine, things do not always go as planned. Perhaps the ATM machine may run as if to dispense cash, only to give you a receipt and no money instead. This happened to us in western China, and because we don't read the language, this was quite a stressful experience. However, once we calmed down, we noticed that the receipt was printed in English as well and showed us that no cash had actually been charged against our account. Nonetheless, we check our accounts daily to be sure there is no unusual activity.
To us road warriors, this is common sense.
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In 1991, Billy and Akaisha Kaderli retired from the brokerage and restaurant businesses to a life of international travel. Visit their website at RetireEarlyLifestyle.com, and check out their new CD book, The Adventurer's Guide to Early Retirement.