Money Is Relative

According to a recent report by CareerBuilder, 78% of full-time US workers live paycheck to paycheck, and 71% of all US workers are currently in debt. Guess what? I’m an American with absolutely zero debt, and I almost always make at least twice as much as my total cost of living each month. To top it all off, I generally work less than 15 hours per week. So, how do I manage to do this? Well, I work online for companies in developed countries (primarily the US), but I spend the vast majority of my time in developing countries with relatively low costs of living. In the US, I think that many people get fixated on salary alone; however, this is not the right way to think about money. People should focus on salary relative to the local cost of living. In certain places, $1,000 per month is an enormous amount of money (e.g. the annual GDP per capita in Cambodia is just under $1,100). In other places, you couldn’t even rent a 1 bedroom apartment for a month with $1,000. My point is that money is relative. There’s no way to gauge how good a salary is without knowing the cost of living context. Back when I was a sophomore in college, I was hating the daily grind of being an engineering student. At some point during that school year, I realized that I could actually have a high quality of life in a developing country by creating an online business that generates a minimum of $1,000 per month. That was a light bulb moment. I figured that it couldn’t be that hard to consistently earn at least $1,000 per month with an online business. I ultimately decided to drop out of college and make building an online business my primary goal. I began my journey by taking an online course called 3M1K. Since then, my life has changed dramatically.

Puerto Vallarta Sunset

I snapped a photo of this sunset in Puerto Vallarta on my 2nd day here.

My Cost of Living Expenses vs. My Revenue

Roughly 1.5 years later, I’m writing this blog post from beautiful Puerto Vallarta, Mexico. I’m living here with a local friend. He was kind enough to rent a spare room in his apartment to me for a month at a cost of only 3000 Mexican pesos ($157). The apartment itself is pretty basic, but the location is excellent. I’m about 1 kilometer away from a 24/7 Walmart, a mall, and the beach. I can take a local bus for 8 pesos ($0.42) and get to the historical center of Puerto Vallarta in about 30 minutes or less. Including all other local expenses (daily food, a gym membership, transportation, etc). I’ll spend around $500 during my month here. Keep in mind, I’m not spending like a tourist that is only here for a few days. Instead, I’m spending like a middle-class local for the entire month. Puerto Vallarta is definitely a city that caters to tourists, but you can save a lot of money by living like a local, not a tourist. For example, go to a food stand on the street and buy a filling torta for 32 pesos ($1.67) as opposed to spending 200+ pesos ($10.45+) at a restaurant that caters to tourists. Better yet, I can buy my own groceries and cook for myself to live even more economically. It’s also important to think about unexpected expenses. I will address these expenses, but I won’t include them in my calculation since they are, by definition, not typical. If I had to visit a doctor due to a medical emergency, then I would probably pay less out of pocket for high quality private care here in Mexico than paying for any type of healthcare in the US (with or without insurance) for the following two reasons: 1) US health spending per capita is higher than it is anywhere else in the world and 2) medical debt is the number 1 source of personal bankruptcy filings in the US (20% of Americans under 65 with health insurance had trouble paying their medical bills over the past year).

Now that you know what my expenses are like, I’ll go over my revenue. I’m an independent freelancer, so my work derived income can fluctuate significantly from week to week. I have a few long-term backbone jobs, but many of my jobs are short-term (e.g. a one-off 2 hour consulting session). Despite these fluctuations, I rarely struggle to earn at least twice as much as my cost of living. Earlier this week, I landed a long-term job that pays $75/hr. The vast majority of my clients pay me at least $50/hr. The lower paying clients simply hired me when I had less experience and charged lower rates. To give you some perspective, I started landing online jobs a little over a year ago. I started with a shitty web dev job that paid $9/hr in September of 2016. By March of 2017, I was ecstatic to land an AdWords job at $25/hr. Now in October of 2017, I’m getting paid $75/hr to manage $10,000 in ad spend per month for the client that just hired me. In other words, I went from practically minimum wage to $75/hr in just over a year without a college degree. If that’s not a success story, then I don’t know what is. For the sake of simplicity, let’s just say that my average rate is around $60/hr. That means that I’d have to work just under 17 hours per month to hit my goal of earning twice as much as my monthly cost of living.

Now let me give you some income context for local Mexicans. According to a 2014 report produced by Mexico’s National Institute of Statistics and Geography, the average hourly wage in Mexico is 31.3 pesos ($1.64). And people in the US wonder why so many Mexicans want to go work in the US. Sure, the US is way more expensive than Mexico, but remember that it’s all about relativity. Let’s say that a given person can earn and spend in such a way that their monthly profit margin is 20%. In other words, that person saves $2 for every $10 earned, and the rest goes to expenses. As it turns out, a 20% profit margin for a US wage is way more money, and some of that money can be sent back to Mexico as remittances to support financially struggling family members.

snow

Compounding interest that works in your favor is beautiful, just like this photo.

Invest Your Savings Over Time For a Snowball Effect

So what about me? What do I do with the money I save due to a minimum profit margin of 50% every month? I put most of that money into long-term investments (a nice mix of high-risk and low-risk), and I put the rest of the money into a checking account for taxes, long-distance travel expenses, and any unexpected emergency expenses that might come up. I’m not a financial advisor, but I’ll go over my own personal investment strategy since it has been working well for me. Before I go any further, I’d like to clearly express that you should never invest any money that you can’t afford to lose. For high risk investments, I like to invest in various cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Lisk. I have also invested thousands into Bitcoin cloud mining and a website called BitConnect. To be fair, BitConnect could quite possibly be one enormous ponzi scheme. I decided to invest in BitConnect for three main reasons: 1) even if it is a ponzi, I don’t expect it to stop before I recoup my investment since it still has so much momentum, 2) if it isn’t a ponzi, then I’ll be doing incredibly well within a few years, and 3) I would be just fine financially even if I lost everything that I put into the platform. Between my Bitcoin mining and Bitconnect investments, I passively make about $40 worth of Bitcoin per day on average. You can check out my support page if you’re interested in learning more about crypto investing. That page has links to a lot of useful crypto sites. For low-risk investments, I’d recommend a Roth IRA and at least one low fee index fund.

By diligently investing most of your savings each month and continuously reinvesting any profit from your existing investments, you’ll gradually create a snowball effect. At a certain point, your investments will generate enough money for you to comfortably live in a developing country without the need to work. To keep busy, you could just start focusing on some hobbies you’re passionate about. Alternatively, you could keep working and pouring money into your investments until they’re large enough to support you in a developed country. Just don’t choose to relocate to the US because you probably still won’t be able to afford the healthcare there.

debt

Debt can do more than tear marriages apart. It can completely ruin your life.

Live Below Your Means

In case you haven’t figured it out by now, this is a radically different approach to life than what’s pushed onto us by society. The key to this way of life is to live below your means. If you make, on average, $4,000 in revenue each month, then you should live somewhere with a total monthly cost of living that ranges from $500 to $2,000 and just pocket the difference each month. Don’t live somewhere that costs $3,500 per month just because you can afford it. That’s only going to slow you down. Unfortunately, live below your means is not what you hear growing up in the US. Unless you were fortunate enough to have been born into extreme wealth, you hear the following responses to these common desires:

Desire: I want a degree from a higher education institution.

Response: Just go into massive debt to get a degree because, while we all claim to value higher education, we don’t value it enough to fully fund it publicly. You might not be able to get a job afterwards, but you definitely won’t be able to get one without a degree because only rare outliers like Bill Gates and Mark Zuckerberg have been able to do that.

Desire: I want a car because, by design, there’s literally no viable public transportation options in my city and urban sprawl has made my city unwalkable.

Response: Just go into massive debt and get one. Oh yeah, one more thing. You can’t buy a car directly from the car company…you have to buy it from a dealership, so people that solely act as middlemen can make money.

Desire: I want a house.

Response: Go take out a mortgage and work a 9 to 5 job that sucks the life out of you for the next 25 years to pay it off. Hopefully, a devastating financial recession doesn’t strike between now and then. If you happen to lose your soul-crushing job through no fault of your own, we’ll just swoop in and foreclose your home. Are you ready to sign yet?

Desire: I want healthcare.

Response: Well, you’re in luck because here in the good ole USA we have a wildly cost-inefficient healthcare system that likes to profit off of the services and medications that you need to live a healthy and fulfilled life. There’s even this super popular show called Breaking Bad that’s about this guy that literally starts producing crystal meth in order to afford his cancer treatment. Speaking of drugs that are insanely addictive, our healthcare industry began and exacerbated the US opioid crisis by flippantly prescribing opioids to patients. Now, here’s a medical bill for $10,000. Don’t worry though because your insurance company said they can pull a few strings to pay $100 for you. Aren’t you proud to live in the greatest country on earth? For the record, I better not catch you exercising your first amendment right to peacefully protest during the national anthem at the next concussion-inducing professional sporting event. I despise SJWs, yet I ironically get triggered like a SJW when people disrespect the flag and the anthem. Unlike those players, the football stadium is my safe space. Besides, treating those concussions sure does generate a lot of profit, so let’s not disrupt that gravy train.

Ok, I got really carried away with that last one, but I hope you get my point. By design, the US is not a place where you can easily live below your means. When you live below your means, the people behind huge industries in the US don’t make as much money off of you. All of the things I mentioned above predominantly help rich people get richer. The US runs on debt. The rich people that issue that debt make a lot of money in the long run. What I have proposed in this article is a better way forward that rebels against this debt by design system.

Conclusion

With this article, I’m primarily trying to target people that either haven’t started going down the path of debt yet or people that have just begun to go down this path. I realize that most people are already too far down this rabbit hole of debt to really make any meaningful life changes. The further you go down the hole, the harder it is to extricate yourself. I’m not saying it’s impossible; I’m just saying that it gets progressively harder with more time and more loans. I was 2 years into university, but I dropped out right before I was about to start accumulating debt. I had no idea what the future would hold; however, I knew that I didn’t want to go down that traditional debt-ridden path. 1.5 years later, I just wish that I had started working on my own business even earlier. If you are skeptical of the traditional path like me, please consider trying this alternative. It changed my life for the better, and I’m willing to bet that you’d be in agreement with me if you tried it yourself for at least a year. If it doesn’t work out or you simply don’t like it, you can always go back to that traditional route. If you enjoyed reading this article, then please consider sharing this post on social media and dropping me a line in the comment section down below. Take care!

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