We’ve traveled for years. When John and I first met, we traveled with a band (he worked as a professional musician at that time). Then, a few years after Lydian was born, we sold almost everything and packed up what was left to travel full-time in an RV. We stayed in the United States for our travels when we were young. But when Lydian turned 10, we started traveling overseas. With each year that passed, we spent more and more time abroad, visiting more and more countries, some of them more than once. And now, we’re leaving the United States for good. We’re selling everything. Our home base will be elsewhere. It will be wherever we are.
Our family has a lot of practice at traveling, but for newbies who are thinking about taking to the road full-time, it’s important to realize that there is a learning curve. And it’s not just about learning things in a cerebral way. There’s a lot of emotional learning too. We’re still navigating some of the emotional twists and turns associated with being digital nomads. Culture shock and home-sickness still happen to us. We’re not immune to feelings of yearning or to the desire for familiarity.
Becoming a digital nomad who travels outside of your home country requires experience and/or comfort with being in places where people don’t speak your language or do things like you do. But beyond the mental and emotional aspects of permanent existence in The-Far-Away-Place, there are quite a few pragmatic bits to consider as well. These can really trip you up if you’re on the fence about becoming a full-time digital nomad. Approach the process step-by-step.
For us, the process of becoming digital nomads was complicated. We had a lot of experience traveling all over the world for extended period of time, but we owned a gigantic old school building that we’d spent years renovating. On top of that, we were involved and in charge of some large community events and activities in Nebraska. We’d worked hard to try to build not only our home and our businesses, but also the community. So we were really attached to those things. It took a while for us to let them go emotionally.
Once we were ready though, we started learning some things. Below is a bullet list of some of the most important tax-related things we learned about becoming digital nomads. For us, becoming digital nomads was a no-brainer financially. Because John and I both work online, it doesn’t make sense for us to live in the United States. Technically-speaking, each year that we went back to do our Halloween festival, we lost about 50% of our income in taxes because we had to be there in the United States for more than 35 days to do it. By living abroad we could’ve kept that income. We simply would’ve needed to live outside of the United States for 330 days of the year or more.
- If we work online and we live outside of the United States for 330 days per year or more (they count it down to the HOUR, so don’t screw up your calculations, folks), we meet the physical presence test and we don’t have to pay income taxes.
- No matter what, as long as we’re U.S. citizens, we have to pay Social Security and Medicare taxes. In 2017, this is about 7% of our income.
- If we live outside of the United States for 330 days per year or more, we don’t have to pay for health insurance and we also don’t have to pay the tax for NOT paying health insurance. Of course, the U.S. healthcare system is in a state of flux, but as of this writing in June, 2017, it isn’t necessary to pay healthcare taxes or premiums if you live outside the country.
- To avoid state taxes in Nebraska, we had to move our residency to Texas, but digital nomads can choose from a variety of different states if they’re leaving permanently. We used the Escapees RV Club to establish residency in Texas for this purpose, but some digital nomads establish residency in Florida instead. The Escapees RV Club also provides a mail scanning service, which is really important. They collect our mail and either forward it, scan it, or store it. In theory, we should have very little mail, but since we’re not getting rid of our U.S. citizenship just yet, we still need a mailing address.
Where we choose to live in the world makes a big difference for us in terms of our cost of living. This was something I didn’t believe or understand fully until we made the commitment to actually move abroad. We’d traveled a lot, but we’d stayed in vacation rentals and we never paid an electric bill. Though we often noted the cheaper groceries that were available in almost every other country in the world outside of the U.S., we never integrated enough to find out how much cheaper the cell phone service is in other places, or how much more affordable it is to find high-speed Internet. We never guessed that technologies like Internet speed would be better in places like Mexico or Nicaragua than they are in the United States. But it’s true. Our cost of living went down by 75% when we moved to Mexico opening up a whole new set of possibilities for us in terms of work and lifestyle. Below is a cost comparison of our lives in the United States versus our lives in Mexico to demonstrate the difference.
- Groceries in the United States – $1300/month vs. Groceries in Mexico – $160/month
- Electric bill in the United States – $600- $1200/month vs. Electric bill in Mexico – $50/month
- Slow, shitty Wifi in the United States – $150/month vs. Excellent, super-fast Wifi in Mexico – $50/month (also includes cable TV)
- Water in the United States – $40/month vs. Water in Mexico – $50/month
- We owned our property in the United States, but paid about $90/month just in property taxes. In Guanajuato, Mexico, we looked at 2 bedroom, 1 bathroom apartments that included utilities for $250/month! With an apartment like the ones we looked at that include utilities, our total cost of living would only be about $600/month.
- Healthcare services are about 82% cheaper than they are in the United States and there are far more alternative health options available in Mexico.
- We still have to pay for car insurance in the United States, but we choose the cheapest, most basic plan Then, we get Mexican car insurance which is much more affordable. We have to carry both plans, which varies in price depending on the type of vehicle you drive. In most places in Mexico and other countries throughout the world, public transportation makes car ownership unnecessary.
One thing that John and I learned early in our travels was that there are several things to expect, emotionally in terms of travel. First of all, it’s unnatural for humans to travel perpetually. Most digital nomads establish a “base”. We’ve always called it our “home base”, but just “base” makes more sense and it’s less charged because that word “home” isn’t in there mucking things up. Travel, real travel, is exhausting. For those of you who have gone on cruises or spent time in resorts and never traveled outside of tourist zones, believe me, you have no idea how tiring it can be to travel. Having a base where you know where the grocery store is, where the doctor’s office is located and what to expect when you get “home” is really important. We like to set up “base” and then go on “outbound” trips from there. For example, in Peru, we set up base in Lima, but went on outbound trips to Iquitos, Puno, Cusco (Machu Picchu), and Nazca. Lima was a shitty, gray, and unfriendly city, but we were able to dock in there and live our daily lives, do our work, and rest up to go on small adventures.
If you don’t already work online or if you don’t have a line of work that travels well, this is something to work toward. John and I get a lot of work through Upwork, but this medium isn’t as friendly to freelancers as it used to be five years ago. That being said though, there are tons of new opportunities sprouting up for people who are interested in living and working abroad as digital nomads. There’s a lot that I could say on this topic, but I’ve said more about it already in other articles about working remotely.
Finally, I’ve been learning about dual citizenship as an important facet of becoming a true digital nomad (so to speak). Dual citizenship has numerous potential benefits for people who travel full-time and it’s something I plan to learn more about once we complete the initial process of severing ties with the states. For example, it would be easier for us to get into Russia with a passport from a country other than the United States. And we’d probably be safer traveling under passports from a different country in some places in the world. It’s just another layer of digital nomadism that we need to consider.
John Talks About His Remote Work (video)