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Location Independence

Is Not Paying Taxes Immoral?

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I have made it pretty clear I want to pay as little in taxes as possible. Recently I did a guest post over on MakingSenseOfCents where a few people mentioned they don’t think it is right to not pay taxes.

I understand both sides of the coin.

I am grateful for all those who before me paid taxes to ensure that I had affordable education when I was a child at school, for the decent roads that are in New Zealand and for the public healthcare system. I recently posted about what growing up poor taught me about money and revealed that both my parents relied on welfare when I was growing up, despite them not living together.
I can’t imagine what life would have been like for my invalid father without such benefits, provided by tax payers.

So… Why am I Okay With Not Paying Taxes? 
Firstly, I have no intention of living in New Zealand for the foreseeable future. Although New Zealand is extremely beautiful, I do not feel connected to the country. I feel it is relatively expensive, compared to many other countries I have visited, even including the United States and Spain. Why should I pay taxes when I am no longer using any of the services, even as far as using the roads?

Secondly, none of my income is derived from New Zealand. I have no New Zealand clients; I operate completely independent of New Zealand. If New Zealand exploded I would be devastated, but my business in no way would be changed.

Thirdly, I’ll be a tax resident of somewhere else. When I first decided I wanted to minimise my tax bill, I had thought it might be enough to be a non-tax resident of New Zealand and not become a tax resident of anywhere else and simply pay on tax. While that is possible, it probably wouldn’t stand up to a tax man if he came chasing after me. Instead, I have decided I will most-likely pursue a permanent residency in Panama under the Friendly Nations Visa. Although my personal income that is earned overseas and reported in Panama will be exempt from tax, I will be paying some tax due to the business I will have to create for the visa.

In my case, as I am severing my ties with New Zealand and not using any of the services, I think not paying taxes is moral. If, when I apply to be a non tax resident, my application is granted, then New Zealand has deemed me disconnected enough to not pursue taxing my income. Obviously I will be nervous in the weeks following my departure to find out what my status is, but I think I should be approved as I own no land here and generate no income in the country.

When Is Not Paying Taxes Immoral?
I think that not paying taxes is immoral if you’re breaking the law of any country in order to minimise your tax bill.
I think not paying taxes is immoral if you are operating under the table in a bid to avoid tax.
I think not paying taxes is immoral when you’re using all the country’s services and yet not contributing your fair share.

What I am doing is some clever tax planning while taking advantage of the fact that I am location independent.

To be honest, if my partner never wanted to return to New Zealand I would be quite content spending my days soaking up the sun, drinking out of fresh coconuts and enjoying $5 hourly massages.

If I consistently earned $21,000 a month for every month of the year – I’m not quite at that level, but would like to be – I would save around $70,000 a year in taxes. That’s basically like being paid $70,000 a year to go live in Panama.

So tell me what do you think? Is not paying taxes something you feel is immoral, or given the chance would you like to legally save a considerable portion of your income?

My Plan to Save 90% of My Income

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Last month I made a ridiculous $21,000.

My ultimate monthly goal is $30,000 a month and I would really like to reach that point by the end of the year.

As many of you know it’s often not as simple as just willing an extra $10,000 a month – it can take a lot of work, sweat, tears and even a healthy dose of luck.

While I work on building up my monthly income, number of clients, number of websites, there’s something else I can do to increase my savings rate: lower my expenses.

Sure, I could cut out the few coffees I order a week, start biking around instead of driving and become vegetarian to save money, but how would my quality of life be? I’m already quite frugal.

For my partner and I, a young couple without many responsibilities, there are a few things we can do to dramatically increase our savings rate and it’s all part of my plan to save 90% of my income:

1) Become Non Tax Residents Legally
I’ve written about our plans to become non-tax residents already, so I wont rehash that, but please consider my tax rate is around 30% of my income. By not paying tax I’m essentially giving myself a 30% pay increase, by simply leaving the country. That’s an extra 30% I can push into my savings account. That’s a big difference. It’ll be really nice getting paid and knowing that all the money transferred into my account is my money.

2) Lower Our Living Expenses
Sure, this is obvious – but we’re going to the extreme. We’re leveraging our currency against a cheaper currency and going to spend our time overseas. Where will we go? That’s open for now, but we’ll be starting on the little island of Bali in Indonesia. In a part of Thailand I really like, for example, an apartment is about $300 per month. Our apartment in New Zealand is $360 per week. By simply moving to another country – one that I really like anyway – my living expenses would become a third or a quarter of what they used to be.

Factor in the flights and some luxuries and I think I’d be sitting at about half of the expense of living in New Zealand, but to a higher standard of living.

Last month I saved about 50% of my income – add in the extra I could save from not paying tax – 30% and the extra from living expenses I think I’d be able to save around 90% of my income, each month.

What am I Going to do with that 90% of Savings? 
First, I’ll do a happy dance! I remember being a student and literally having nothing spare each week.

I think I will focus on my student loan, because now that we’re leaving the country it is a liability; I’ll have to pay interest on it now. One thing I am very interested in is investing. I know nothing about it. I understand property investment, however, because we’re applying to be non-tax residents of New Zealand I wont be allowed to own property in the country so that might be something we re-visit at a later stage.

For now I’m focused on getting our apartment unpacked, maintaining my income and making my work more efficient, but I have my eyes firmly on saving 90% of my income.

How much of your pay do you save? 20%? 30%? 50%? Let me know in the comments below

Our Plan to Pay NO TAXES Legally

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I don’t like paying tax… I mean I understand the logistics of it and why you should pay tax, especially if you’re a resident of a country. But as I’ve mentioned a few times on this blog, it is my goal to be location independent with my partner and travel the world and we’re leaving in two months.  I feel like, if we’re traveling the world, paying for our own insurance (comprehensive travel insurance that includes medical coverage) then why should we pay tax while we’re not here?

If I make my target of $20,000 for this month, which is looking a tiny bit unlikely, my month’s tax bill will be around $7,000. That is a pretty big sum of money and if you factor it as an annual figure, it starts to get pretty huge. I would much, much, much prefer to keep that money in the bank and I think I’ve figured out a way this is possible.

When we leave New Zealand, we can apply to be non-tax residents. There’s a form you have to fill it and the criteria is being out of the country for a certain number of days and proving you do not have an enduring relationship with New Zealand. We might run into problems here as we both have student loans. My original plan with my student loan was to pay it back as slowly as possible, but the student loan might be considered an enduring relationship with New Zealand, in which case I’ll be dramatically changing my approach and paying it off as quickly as possible. Bare in mind that around 4-5 months of tax savings would completely wipe my loan for me, so getting it paid off sooner than later is a big help.

The other thing that would be an enduring relationship with New Zealand is my car, which I was thinking about keeping but realistically might be better to sell or to gift to my dad. I’m undecided about that at this stage, but have two months to figure it out.

The final issue I might run into is my bank accounts and the fact I have credit cards in New Zealand. I am sure I have a great credit history, but this is something we’ll have to see.

What I’m Going to do to Pay No Taxes LEGALLY:

1) Apply to be a non-tax resident as soon as I leave the country
They’ll look at my loan, bank accounts and then they’ll make a decision whether I’m a tax resident or not. I’m already planning to open a bank account in another country and will move all my “business” banking to that account

2) Open up a bank account in UAE – a country that does not charge ANY tax on international income.
I have already looked into this and it is possible to open up a bank account with a debit card in Dubai with only a visitor’s visa. I can pick the card up in store, it should take about a week to process, but if I have left before it’s finalised they can post it to me elsewhere in Europe.

3) Spend the longest part of any year in a country that doesn’t charge income tax on international earnings.
As I wont be a resident anywhere, i.e. staying long enough to be a resident or applying for a resident visa rather than just being on a tourist visa, I wont actually be liable for tax anywhere, but I think by spending the largest portion of the year in a country that doesn’t charge tax on international earnings is a smart move, just as a safety net. Places that we are looking at that would be appropriate for this are: Panama, Costa Rica, Guatemala, Malaysia, Singapore, Hong Kong and the UAE.

We were originally looking to move to Panama and set up a LLC there for residency, but I kind of want the “easiest” way to do this. There’s a lot of advantages to us basing ourselves in Asia, as it’s fairly close to New Zealand and very, very cheap. However, I’ve not been to central America and from the photos it does look amazing, so we might just end up happy there anyway. Learning Spanish is a pretty big bonus for us!

The Downsides to being a Non-Tax Resident

Limited Time in NZ
My father’s pretty sick and probably doesn’t have very long left, so I feel a bit conflicted about moving overseas and limiting the amount of time I can spend in the country knowing his health is on the down. There’s also a court case that will be happening some time next year that I would like to be present for. In a 364 day period I only get 39 days in New Zealand – not sure if that’s just for the first year or every year – which is a pretty restrictive, especially considering the circumstances. However, I’m at the age where I need to start thinking about the future too and the opportunity to save both mine and Ben’s tax money is pretty appealing. Realistically we could save $100,000 a year if we both worked hard in tax savings alone. This is a crazy amount of money to me and I know money isn’t everything, but I think my dad knowing I am getting a jump start in life would mean a lot to him.

Paying Back my Student Loan Fast
I didn’t really want to do this, but I think it’s the best shot I have at becoming a non-tax resident and it’s probably best for me in the long term, too.

No Investing in New Zealand
If I bought a rental property in New Zealand, it would probably make me a tax resident as I would be earning an income from the rent and I would have a permanent place of abode here, which is one of the criteria for an enduring relationship with the country. Likewise, I wont be investing in mutual funds as any profits are taxable, once again making me a tax resident. It’s a bit of a shame as this is something I was pretty excited about, but I think in the long run not paying tax will have much better returns.

So hopefully this all works out… this is something I’ll keep you guys updated with as I think it’s going to be a long process. I’m a bit nervous about the logistics of opening up a UAE bank account, but that’s probably only because it’s something new… and different. Hopefully the process goes smoothly and I can stop paying tax very, very soon.

Have you ever considered being location independent so you could pay no tax? Would you like a location independent lifestyle or are you happy staying put? Let me know in the comments below. 

Announcement: We’re Leaving – For Good.

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Hooray! I’ve been wanting to make this post for many months now: tickets are booked, the deal is sealed and we’re leaving in 2 months and 6 days, but who’s counting?

I am.

You see, I am a traveller. I love traveling. I love exploring new places. As I mentioned, one of the many benefits of working online is that you can work anywhere.

New Zealand, where I’m from, is expensive. Rent is expensive, petrol is expensive, food is expensive – LIFE IS EXPENSIVE HERE.

A few years ago I read the Four Hour Work Week, I was taken by the picture of the hammock on the cover. I wanted to only work four hours a week and I wanted a lot more hammocks in my life.

I’m still working towards that goal and while I’m not quite down to four hours a week, I’m moving closer towards the hammock goal.

We’re becoming location independent.

So where are we going? 

Our flights are booked from Christchurch to Bali, where we’ll spend 4-5 weeks surfing, visiting temples, admiring the beautiful rice paddy fields, snorkelling, sunbathing, exploring and of course working a bit too.

This is my partner, Ben’s, first trip to Asia and I’m very excited to be going along with him.

From there we’ll head to Singapore for a few days before making our way to Europe for an unknown length of time. Maybe a month, maybe two, maybe even three.

We’ll see how we feel when we’re there.

You might be wondering when we’ll be back? Well, what if I told you “we don’t know”

We’re leaving on a one way ticket and we’ll travel as long as it feels good and right. Because New Zealand is so expensive and we work online, we can move somewhere warmer, cheaper, more interesting and save money while being on holiday.

It’s a very special opportunity and we don’t know how long online work will be so good, so we want to make the most of it.

In between now and then we have a lot to sort out:
We have to unpack an entire apartment
Get Ben a new passports
Get properly vaccinated
Sort out all our business expenses and tax stuff
Find a good work/life balance

One other thing I’m looking into is not being a tax resident of New Zealand and maybe being a tax resident of no-where! Is this even possible? Technically if we move around enough, we shouldn’t have to pay tax anywhere in theory… but in reality? I’m not so sure.

So there we have it, a little announcement of what we’re up to!

Have you ever worked while traveling? Would you like to? Where would you go? Let me know in the comments below

5 Perks of Being an Online Entrepreneur

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I love working online; I love the lifestyle, freedom and flexibility it allows me.

Today, while in a store, the store attendant asked me what my job was. I never really know what to say, so always answer along the lines of

“I’m self-employed, I do a bit of advertising and blogging”

Surprised, people often ask “How’s that going for you?”

And I want to reply “REALLY GOOD”, but I just down play it and say “it’s pretty cool”

Which is just the biggest understatement of my life. I love the work I do and I think there are some serious perks to being an online entrepreneur and here they are:

1) Extremely Low Start Up Costs
Depending on what you get into, chances are working online is going to allow you to have really low start up costs. All I needed was a good quality laptop and an Internet connection and I was set to go. It really depends on what you do online as to what the costs are, for example if you decide to do some freelance writing online the start up costs are extremely low. If you intend to open a drop-ship company, well your start up costs are still extremely low compared to a traditional store. This means there’s very little investment needed, especially if you already have a computer and an Internet connection.

2) You can work ANYWHERE
My partner and I have decided we no longer want to live in New Zealand, so guess what we’re doing? We’re just up and leaving. I have a serious love of travel and I’d rather spend my 20s exploring the world than being stuck in the same town I grew up in. So in two months, we’ll be setting off to Asia for about 5 weeks, then Europe for a few months and then back to Asia or maybe Hawaii – who knows. Because New Zealand is so expensive, it’ll actually be cheaper for us to be on holiday. I’m looking forward $7 hourly massages!

3) You’re Your Own Boss
Today I decided I wanted to go out and buy some things for my upcoming travels, so I did that until 4pm, then I went to the gym and now I’m working in the evening as I’m way more productive. If I randomly decide I want to go out to breakfast with friends? No problem, I just go. No asking someone’s permission, no having to be at work at a certain time – no rules!

4) Effort = Reward
One thing I’ve noticed since working for myself is if I work harder I see the results… in my bank account. When I worked in traditional jobs and worked really hard, I might see a little commission but often my extra work was rarely rewarded and if it was, it wasn’t proportionate to the extra effort. Now I feel like I am in control of my destiny, the more I work the more I’m rewarded. It’s very motivating.

5) No Crappy Work Politics 
I used to work in a law firm and there were a lot of office politics. I worked with some people who were relatively incompetent but because we were in a team environment, we all shared the blame equally for the others shortcomings, which annoyed me. There was gossip, bitchiness… it wasn’t the best place to be and before I left I began to resent work. I don’t really work with anyone, although my partner does the same stuff as me from home and he’s a great person to work around.

There’s also the fact you can work in your pyjamas, there’s no commute to work and you can sleep in… All pretty awesome perks if I may say so.

Do you work online? Would you love to work online or do you enjoy working in a traditional job? Let me know in the comments below! 

Does Money Make You Happy?

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This is something I thought about as a child, a lot.

Does Money Make You Happy?

I grew up in a pretty tough situation with my family; I was raised by a single parent, my dad. He was on a disability benefit due to severe injuries in his back. We always rented, moved around a lot and life was week-to-week with very little breathing room for anything that unexpected that cropped up.

It was pretty hard, but as a child I was very happy and content. It wasn’t until I became a teenager and spent more time with other friends and their families that I realised I had missed out on a lot.

As a child I’d write lists of what I’d do if I won the lottery: I’d buy a brand new  house, a nice new car, help my family out with bills and have spare money for all the “wants” I was missing out on.

I thought I’d be happy then.

At the moment I’m earning quite a lot of money, have a lot of deposable income and while my house is still rented, it’s pretty nice and I have a great car.

Am I the happiest I’ve ever been? Nope.

The happiest I’ve ever been is the period in time where I had the least money I’ve ever had and was spending the least I’ve ever spent.

…What? Well, let me explain:

I was volunteering in Cambodia at the beginning of 2011. My days would follow a rough routine of sleeping in, going down to the orphanage to help teach English classes for a few hours and play with the kids. In the evenings we’d go and sit around a large dinner table, talking with all the other volunteers from each corner of the world. Then we’d generally have a few drinks, play card games and go to karaoke.

I remember one day during this time that I noticed my cheeks were aching. They were so sore. It was a feeling I hadn’t felt before and I realised it was because I had smiled so much that my cheeks were aching.

That’s happiness.

Was I rich? Nope. I was spending about $10 per day, which is the least amount of money I’ve spent since I moved out of home. My bank account was pretty dismal and I was slowly eating away at my savings, but I was happy. Genuine, face sore from smiling, couldn’t be any more content, happiness.

So the question is:

Does money make you happy?

No. I don’t think so. That’s not why I am chasing money, or aiming to earn $20,000 for the month of May.

Money provides options, opportunities, freedom, health, wellbeing and security. 

Money allows me to feel more confident about my future, to allow my to help my family and to explore my passion: travel.

I’m not chasing money for happiness and I don’t suggest you should either.

What do you think? Do you think money buys happiness? Does money make you happy? Let me know in the comments below. 

Engineering my Dream Lifestyle

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I’m in the process of engineering my dream lifestyle, but I’ve gone through a bit of a rebellious stage. When I first started freelancing I was so happy that I didn’t have to conform to anyone else’s schedule that I rebelled by sleeping in until midday and staying up until the early hours of the morning, citing that I was a night owl and more productive then.

I think the truth is, I’m most productive when I set aside some time and have a solid to-do list to work through. Now I‘ve stopped falling victim to superman syndrome and have hired a virtual assistant to manage my emails so I can sleep through the night, I’m starting to shift towards engineering my dream lifestyle.

So what exactly would I like to feature in my dream lifestyle?
* Summer weather all year round (location independence)
* A decent portion of the year spent volunteering
* Sleeping in, but still rising at a respectable time
* A large portion of the year spent traveling or at least living overseas
* Working only partial days, to leave time for hobbies, exploring and fun stuff
* Growing a portfolio of investments that generate passive and semi-passive income
* Read More

This year is the year of working towards my dream lifestyle. I’m blessed that parts of my work are pretty close to where I’d like them to be, but I also want to drastically increase my income which does mean more work! Let’s look at how I’m going to move closer to engineering my dream lifestyle.

Summer Weather All Year Round
I used to joke that I was solar powered… but now I don’t think it’s much of a joke. When the weather is cold, wet or just miserable my mood often reflects it. Occasionally I like a rainy night to fall asleep to, but for the most part I would rather be basked in sunshine. The truth is, I don’t have to endure any winters because my work isn’t tied to once place. This year my partner and I are going to Europe for their summer and avoiding the New Zealand winter. So… we’re working on it. I’ll have to endure a little bit of winter this year but hopefully after he’s caught the travel bug we’ll live summers back to back.

A Decent Portion of the Year Spent Volunteering
I actually don’t have anything mapped out this year in terms of volunteering. I’ve volunteered overseas in two places; a few times in an orphanage/village school in rural Cambodia and also in an English school in Laos. I’m not sure if I could find a place to volunteer in Lisbon or Alicante, especially as I don’t speak the native languages, but I’ll look into it closer to the time. I’d really like to do some volunteer work with animals this year, so that might be an option there. Next year I think I’ll map out a chunk of the year I can spend volunteering. I think a month of the year would be a good amount of time for me.

Sleeping in, But Still Waking At a Respectable Time
Ok, this is a big one. Ideally I think I’d like to start my working day between 9.30-10 in the morning, early enough that I can get enough done for the day, but still later than most people so I feel like I’m getting a perk. Over the next month I’ve got so much to work on I’ll be aiming to get up fairly early.. but we’ll see!

Working Only Partial Days
This is something I’d really like to factor into my life, especially before we get to Spain. Maybe working for a few hours in the morning then heading out the door for the afternoon to enjoy the beach, museums, galleries and Spanish culture. I don’t think the 9-5 lifestyle gives you enough time to enjoy life, so I want to engineer my life with enough free time.

Growing a Portfolio of Investments That Generate a Passive and Semi-Passive Income
I believe building up assets as young as possible is key to financial freedom later down the track. My goals are: $12,000 in emergency funds, $10,000 in a managed fund, then I’m going to start saving for an investment property. First I need to get my savings sorted, but this is my goal for this year.

Read More
Since buying a Kindle I’ve read so many more books than usual – it breaks down the barriers to reading, which for me were going to actually get a book and the cost of buying books. I really enjoy reading both educational books and non fiction – I hope I can continue to power through books as I think it’s good for my mind and a great way to unwind.

This is definitely a work in progress, but these are all things I can easily work on this year. I feel like I’m getting closer and closer to my ideal lifestyle.

If you could engineer your dream lifestyle what would you have to include? How far away from your dream lifestyle are you? 

My Thoughts on Location Independence

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“If you don’t like where you are, change it. You’re not a tree – Jim Rohn”

I’ve always dreamed of travel, ever since I was a kid. During my first few years at school I was obsessed with France and the French language. I wanted to be French, more than anything… and as that was clearly not going to happen any time soon, the next best thing was going to France. The dream was realised when I was 21 and first went to Europe. That trip sparked something inside of me and I knew that it was the beginning of something special.

I love travel. I love the novelty of being somewhere new. I love that it’s temporary, so you feel obligated to see as much as possible.

As a child I thought of travel as something you do when you put your real life on hold. Something you could do for a few weeks a year, before returning to your every day life. Temporary.

As an adult, I now see that it’s entirely possible to travel to your heart’s content, while moving forward with other important areas of your life.

Location independence is the result of being able to earn your money wherever in the world you go. Now, if you’d been quick on the property market, invested well and had a massive portfolio of properties then you could probably life off the rent and spend your time sampling fresh coconuts in as many countries as possible. For most, that kind of lifestyle was unattainable but the Internet’s changed the game a little – it’s balanced out the playing field for those who are ready and willing.

When I first started freelance writing, I did so traveling around Europe. I came home for a while, but wasn’t really in the mood to be back so headed off the Asia. Each week I was getting paid – more than I used to in my old job – and spending my spare time exploring beautiful places and meeting new people.

A lot has changed for me since I first started working online. I have a partner whom I really care about – who is thankfully in the same line of work as me. He has a strict training schedule so we can’t be as free as I once was in terms of travel, but we’re still going to be location independent.

In three months we’ll be boarding a flight to Singapore to spend a few days traveling around. Then we’ll fly to Madrid and I’ll show him a city I loved so dearly and the best churros I’ve ever tested. We’ll take a train to Valencia and explore around before settling in Alicante for a month of two. Then we’ll head to France and travel around Europe before moving to Lisbon for a few months. Sounds like a dream, doesn’t it? But for us it’s entirely possible because we earn online  – we’re location independent.

There are hubs around the world where location independent people are flocking to, because they’re cheap, have good culture and a great atmosphere. The most common places I know of are: Berlin, Germany; Ubud/Bali, Indonesia and Chiang Mai, Thailand. For most, these places are cheaper than their own countries which means they can leverage the currency, save more, and afford to work less and invest more time on projects that inspire them.

It’s not just young people who are traveling the world freely, earning money online – there are traveling families too. My favourite example is FlashPacker Family who have recently just expanded their family to four.

The only barrier to you achieving your dreams is you! What’s your ideal lifestyle? Would you like to be location independent or do you prefer having a home base?