If you've got a digital business that really only requires a connection to the net to do business, your concerns boil down to having a cost structure that maximizes your profit while providing you with a high quality of life. Being productive is difficult in an environment where you're miserable. Having a high quality of life isn't a guarantee of success, but it sure makes it easier to be productive.
The problem is that most of the really enjoyable places aren't exactly what we'd call "low-cost" and in order to live in a nice place you're business will have to really produce, or you'll have to hold down a job while you try to build your internet business. At some point this juggling act gets out of hand and your business will demand enough time that you can no longer hold down a job to pay the bills. If your internet business isn't producing enough to pay the bills, your only options are to downsize and cut expenses, burn capital in hopes that your business will produce more later on or give up on the business altogether.
Those can be hard choices. Our vote is to minimize expenses and save as much money as long as possible. The lower your burn rate the longer you last, and thus the better your chances of success.
For many people, this means trying to find a low-cost location that still provides high-quality infrastructure, and that usually means living somewhere that isn't that desireable and doesn't offer a very high quality of life. Sure, there are places in Kansas where they're practically giving away houses, but who wants to live in Kansas? The people who want to live in Kansas are already there, but the state has a declining population because of all the people who are moving out. Same goes for North and South Dakota. Just think "40 degrees below zero" and you'll get an idea why.
Most entrepreneurs agree that they are more productive in a pleasant environment.
Radically Lower Your Costs By Moving Offshore
One of the best solutions to the dilemma is to move abroad to a low-cost location with excellent infrastructure, and in this article we'll discuss the relative advantages of Margarita Island.
Margarita is an island off the coast of Venezuela, and it's the largest of the three islands that make up the Venezuelan State of Nueva Esparta. Margarita is the lowest-cost island in the Caribbean, but it has the added advantage of not being an independent country. If you've been to other Caribbean islands, you already know what we're talking about: Island nations have to be self-supporting, and they usually do this through the mechanism of sky-high customs fees, so everything on the island is very expensive.
Margarita has excellent infrastructure, with DSL available in the major cities of the island. Margarita is also known as a "free port" which doesn't mean that there are no customs duties, but rather that the national sales tax (14.6%) doesn't apply there. It has an airport with direct flights to Frankfort and Toronto (but not to the US- for that you have to transfer at Caracas), so travel isn't that difficult. It isn't like other island locations where "you can't get there from here- you have to go someplace else first."
Cost Of Living On Margarita
Where Margarita Island really shines is the low cost of living. A single person or a couple can live comfortably on less than 00 a month (if they own their own home or apartment), and that includes having a housekeeper and going out to eat at nice restaurants several times a week. The low cost of living is combined with tropical island living- you only need a single wardrobe, and formal dress is practically unheard of down here.
Housing: Housing costs are reasonable. If you're looking for an apartment in a nice area, plan on spending somewhere between k and k for a nice 2 bedroom 2 bath (quite often you can find fully furnished apartments for sale). Rental apartments can be had for anywhere from 0.00 to 0.00 a month for really nice places: ocean view, secure building, nicely furnished, nice neighborhood. Housing in less desireable neighborhoods will run anywhere from 0.00 to 0.00 a month, but your Spanish had better be pretty good.
Medical Insurance and Medical Costs: Medical insurance for an individual will cost about 0.00 to 0.00 per month, although if you're young and healthy you can do without and just go to the public clinic if you get sick (they're free). Your Spanish needs to be good enough for basic communication, and if you're hospitalized you must have someone who isn't sick who can help care for you (the public hospitals don't provide linens, blankets or meals). Medical costs for dental work are really cheap (typically 10% to 15% of what you'd get charged in the US), and just about any medical procedure you can imagine is available on Margarita for 15% to 20% of what you'd pay in the US. If you've got a young family, you'll really see your costs drop.
Having a baby by C-section will cost about 00.00 (all inclusive) for a 2 day stay at a good private hospital.
Having a baby naturally would cost about 00.00 (all inclusive) for a 2 to 3 day stay at a good private hospital.
Getting braces with a good orthodontist will cost about 0.00 to 00.00, depending on how much work is required.
Minor liposuction is a hundred dollars or so, major liposuction will go upwards of 0.00 to 0.00.
A major cosmetic overhaul, combining liposuction with a facelift and a breast-job will be less than 00.00.
Chelation therapy (IV with Sodium EDTA) is about .00 per session.
Basic doctor visits cost about .00 to see a good private physician.
Vehicle Insurance: Getting insurance for vehicles offers you two choices: Full coverage or liability only. The full coverage costs about 15% of the book value of your vehicle annually. Liability insurance costs about 0.00 annually. It doesn't matter what kind of vehicle, they don't care if you have a drivers license or not, and there is very little paperwork if you're in an accident and they have to pay.
Vehicles: Used vehicles are expensive, new vehicles are cheap (compared to the US), and for lots more information read our article on buying a vehicle on Margarita [http://bulletproofretirement.com/public/220.cfm]. The cost of everything associated with owning a vehicle is cheap. We just had a water pump replaced, and the cost was .00: parts were .00, labor .00. Gasoline is about 12 cents per gallon, so get used to filling your tank with pocket change.
Food: Food costs are highly variable compared to the US, based on what you want to eat and whether you can eat the local products or whether you're brand-loyal to an imported brand. We see our food costs hovering around 1/2 of what we spent in rural Kentucky, but we don't buy a lot of processed food.
Entertainment: This is a highly variable expense. Going out to eat is cheap, with a 4 to 5 star restaurant costing .00 to .00 for two, including a few drinks per person. Buying a bottle of wine will adjust the price according to your tastes in wine (wine is also cheap). Dinner and coffee for 2 at a nice restaurant will cost less than .00, and you can eat a full meal at a lot of places for about .00 to .00. Movie tickets cost about .00 and going to the beach can cost anything from nothing (bring your own umbrella, drinks and food) to .00 to .00, depending on whether you rent an umbrella and chair and eat at one of the beachfront restaurants. Going to an internet cafe costs about 50 cents per hour, and sitting at the mall people watching doesn't cost anything.
Phone: Plan on spending about .00 to .00 a month for combined home phone and cellular phone, and if your area can get DSL, you can look up the charges on CanTV's webpage to see what you'd have to pay.
Electric: Depends on your accomodations and usage. We have friends who pay about .00 a month, and we've paid about 0.00 a month running the AC 24/7 in a large apartment. Some people bribe a power company guy to "fix" their meter so that it's somewhat slow, and some people just hook up a wire to the power line (an illegal hookup). It's common.
Water: Water is pumped over from the mainland, and it's unbelievably cheap: maybe .00 to .00 per month. Garbage pickup is included in the water bill. If you have an apartment you'll probably see this expense covered in your condo fees.
Getting Residency
Americans are hung up on the idea of doing things "by the book" but Latin America isn't like that: in most cases there is a solution to your problem that involves paying an official to take a special interest in getting your problem solved. It's possible to live on Margarita as a tourist, going to the airport every three months and paying someone at Immigration about .00 to stamp your passport with an exit and entry stamp, extending your stay another 3 months. You're only supposed to be able to do this once, but they don't care. You're spending money on their island and you aren't causing problems, so what's the problem? You want to stay? You have money? No problem.
It's also possible to get a permanent residency visa without too much trouble, and there are lawyers on the Island who can help "expedite" this issue for a fee. You're paying them for their help and what they do to get you taken care of is their business. The permanent residency visa is good for 5 years and you can get a Cedula (national ID card) so you won't have to carry your passport around with you. This makes you legal, and you won't have to worry about your immigration status.
Permanent residency status qualifies you for citizenship after a while (the amount of time depends on when the next election is- it seems Señor Chavez has been allowing people to become citizens if they'll vote for him). This is a great deal because Venezuela is issuing Andean Community passports that meet all the security requirements for travel in the modern world, and it's good for visa-free travel to 56 countries, including almost all of Europe. In today's world having a second passport is an extremely wise idea: you don't know what the future holds.
Doing Business
The ideal situation is to sell to the US or Europe (charging US or European prices) while living in a really low-cost place area that provides a high quality of life. Margarita is perfect for a digital entrepreneur who wants to do this. The money you make will go a lot further than you'd believe, and what you don't spend you can either save and invest or put back into your business.
Regulation of digital businesses on Margarita is non-existent. There are no licenses, permits or other issues involved. You can pretty much do what you want- and it isn't a matter of hiding, there's nothing to hide from. Because your status is essentially that of a tourist, you're handled with kid-gloves: the authorities don't want to annoy the goose that lays the golden eggs, so tourists are pretty much left alone to play and spend money.
Taxation is another interesting issue. As a US citizen, if you reside outside the US you've got an ,000.00 tax exemption (your wife can also make ,000.00), so you've got tax-free income between ,000.00 and 2,000.00. Venezuela doesn't tax you on money you make outside the country, so in effect you've got the best of all worlds: an extremely low cost of living, high quality of life and no taxes.
What it comes down to is having a business model that works, and having the time to do business. A business model that wouldn't support you in the US might very well give you a lifestyle on Margarita that you couldn't ever have in the US. If you put the time and effort into your business you might eventually see it grow into a really nice income producer. While it's growing you'll avoid taxes and have a really low cost of living. At such a time as your income is high enough, you can take your business anywhere in the world that has a 'net connection.
We don't know of any place in the US where you can have such a low cost of living and high quality of life as Margarita, and with its excellent infrastructure it's a perfect place for a digital entrepreneur.
Copyright 2006 Bulletproof Retirement
All Rights Reserved
| Price : $124.99 | Post Date : Jan 24, 2012 09:00:10
