How to Move Abroad Part IV
This is the 4th in the series of blog posts on how my wife and I will be moving abroad.
You can find all of the blog posts and podcast episodes where I am chronicling our journey and the decision-making process on the How to Move Abroad and Take Your Job With You Series Page. This blog post will be about the business side of moving to Mexico and a podcast episode I will publish next week about the personal side of the journey. When it publishes I will link to it in this post.
We arrived in Riberas del Pillar on Saturday, June 23rd after a 3-day drive from Austin Texas to Riberas del Pillar. We are staying in an 800-square foot house that we are renting for $620 per month for 3 months. This is a little community between Ajijic and Chapala where Americans and Canadians live, i.e., it is an expat community. This is our 3rd trip to the North Shore of Lake Chapala for increasingly longer periods of time to get acclimated.
In this blog post, I want to focus on the technology, financial and business issues that I am working to resolve.
Let’s start with technology.
Technology – Wireless Services
I am a long-standing AT&T customer for my wireless provider. My first tech startup was acquired by Lucent, the former AT&T equipment provider and I still get significant discounts on my service even though I left them in 2003. I currently have a 20GB data plan which also gives me free calling to and from Mexico.
The only issue is I have to dial all telephone numbers from my iPhone 6S contact app. I enter the number into the contact app and dial from there. If I want to dial a number in Mexico I have to append 011 52 to the beginning just like I was making an International call to Mexico from the U.S.
My clients, friends, and family can dial my AT&T number and my phone rings like I was home. AT&T has fairly good service in Mexico for calls. When I am in Chapla or Ajijic I connect to the Internet via AT&T LTE service. However, Riberas del Pillas only has 3G service.
It really depends on my location to determine the quality of the service I get.
Technology – Internet
The North Shore of Lake Chapala is only a short distance from Guadalajara Mexico, which is the 2nd largest city in Mexico. High-speed Internet is easily available in Guadalajara but not here. Most of the technology is very old and options are few. That is changing.
At least one company is exploring laying fiber optic cables to Ajijic area. AT&T is now offering unlimited Internet access for your home for a fixed price. It is nothing like the Google Fiber service I have back in Austin but it is getting better.
As everyone will tell you, you have to be prepared for the worst. It is not unusual for electricity to go out for long periods and have the Internet go out for even longer periods. If I need to, I can go down the street to a coffee shop and use my AT&T data plan and tether my MacBook Air to my iPhone.
This is a cash society. Only Walmart takes credit cards. Yes, there is a Walmart and it is a big one at that. It is not unusual to see an armored car pull up in front of a store and have well-armed guards get out. Believe me when I say they are well armed.
There are a small number of ATM machines, all located at bank locations or Walmart, where we can withdraw money from our U.S. based credit union accounts. I withdraw 7,000 pesos at a time, which is approximately $350.
Where you take money out does matter. You will pay about $5 in ATM fees and the exchange rate will vary from ATM to ATM. I have gotten anywhere from 18.75 to 19.75 peso to the dollar since our arrival. I will eventually get a Charles Schwab money market account that refunds all of your foreign ATM fees.
When we return early next year, we will establish a permanent residence and therefore, be able to open a bank account in Mexico. Once established you can wire or transfer money when the exchange rates are favorable. There are banks in Mexico that have affiliations with U.S. banks that allow for seamless transfers but I need to do a lot more research.
My plan is to establish a mailing address in Austin with one of several mail services. I will continue to work with individual clients and run the Career Pivot Community membership website, which is currently in beta phase. If I am out of the U.S. for 330 days and all of my income comes from the U.S. I will owe no income tax on the first $105,000 that I earn from the business. I will still need to pay self-employment tax (SSI and Medicare) which is approximately 15%.
I will be visiting with a lawyer on this trip to understand how this relates to my visa status and paying Mexican Income Tax. Mexico taxes residents on worldwide income and therefore, my visa status could put me at risk. I am planning on using a tourist visa initially, which allows me to stay for up to 180 days, and then possibly move to a temporary resident visa, which is good for 4 years.
What is Next?
Our plan is to live here like a resident and not a tourist. We will be tracking our expenses carefully and working on using public transportation. We want to walk as much as possible which so far has been a minimum of 4 miles per day.
We return the end of September and will be looking for a long-term rental that we can return to in early January. I expect that to be under $800 per month maximum with all services included (water, gas, Internet,…).
I am a recovering engineer (yes, there is a 12-step program for that,) and I have a system for everything. I would be happy to answer any questions you might have. Just enter them in the comment section below.Marc Miller
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Congratulations Marc! You are a pioneer the first of many Americans to move down south for a lower cost of living. Internet is crucial seems Mexico upgrading Internet service but electricity going down is another issue how about water, do you have ac or a car? Make it happen Marc.
Water is an issue but not what you think. Like in most of Mexico there is not enough pressure from the central water district. Therefore, every house has a cistern in the ground and on the roof.
Almost no one here has AC. Why you only need it for a short time in April/May timeframe.
We do have a car this time. A lot of expats come here and do not bring a car. Public transportation and taxis are cheap and easy to use.
Ian Bond says
Have you estimated your monthly savings in cost of living?
Numbeo.com seems to indicate you may be able to save 60% or so. I’m sure there’s friction costs, like remote mail devices and telephony expenses.
Our experience living abroad fir 4 years that the tax savings, combined with daily savings, is powerful. In fact my wife is a full co-owner of our businesses, which gives us double the FEIE exclusion you mention. Good luck!
I have not done a complete analysis yet. I still have to understand the tax implications but I am roughly figuring on getting a positive cash flow difference of $40-60K. Particularly, after I factor in renting out our condo in Austin.
No question that the difference will be quite large and I am planning to do some ROTH IRA conversions in the first few years.