About this blog

In a nutshell, this blog is for people like me who have high relative incomes and for whom most conventional financial advice does not apply. I considered not letting on where I live and what I do but I don't think it's going to hold for the life of this blog so here it is: I live in Korea and teach English at a university. I also have other English-related jobs and run a small business with my Korean-born wife. The business is related to, you guessed it: English.

Living in Korea isn't for everyone, and a lot of English teachers come here and leave within a few months. However, for those who stay it's easy to make a lot of money here. Most teachers typically take on what are known as 'private classes', meaning that they go around and teach small groups of kids in private homes. For this, the pay is W50,000 per hour, which is about $55 - tax free. It is also possible to run a little 'study room' in your own home (if you have the room). It is not unheard of to combine the two and make 7k - 8k per month - all tax free. In fact, it's easy: get one private class and let the mother of the kids know that you are looking for more and it will mushroom. I will write more about living and working in Korea in another post but suffice it to say that money is why most English teachers come here. The exchange rate for the Korean Won is currently about W925 to US$1, and the starting pay at most language institutes is around W2m, or about $2200, plus free housing.

The two sources of earned income combined with the business and the investment income I have at present put me well into the 90th percentile of all American earners - which means that I make north of 100k - after all taxes! The tax rates are very low here in Korea; my effective rate is less than 4%. In addition, I get a $80,000 foreign earned income exclusion, which, with the help of a few basic deductions like an IRA and my standard deduction and exemptions, essentially wipes me off the US tax rolls too. I would have to earn over $140k in the US to have the spending power I have here. There are other benefits to living here but those will go into a future post that deals with living and working here.

I have sought advice on what to do with the 8k - 10k we save every month. I'll get into how we managed to get to this point but first some background. We are in our early 40s and own our apartment (see earlier posts) free and clear. Taxes on it are only (the equivalent of) a few hundred dollars a year. We drive a 2 year old Kia that we paid 12k for in cash in 2005. We both use credit cards but the ones that are from Korean banks are automatically paid off every month while the US-based ones, used mostly for vacations and gift-giving, get paid off in full every month. There are few temptations in the area where we live - no Starbucks and no shopping centers that aren't an arduous drive from home. Our place is small so we can't buy too many things as that will clutter it up. In short, we just don't spend much every month - our total cost of living is less than W1m a month, which is about US$1ooo. We don't have expensive habits and my ever-frugal Korean wife watches every penny like a hawk - it's in her nature to do so. The one thing that we do spend money on is travel: once every 18 months we allow ourselves a 2-month vacation that usually includes stops in Europe and the USA. We love these trips and while we don't spend foolishly while on vacation, we don't constantly look to save a buck or two with the hotels, meals and car-rentals. In other words, we lower our frugality antennae and enjoy the sights and go out of 'savemode'. In 2007 we went to Tuscany (plus Skye and Yorkshire in the UK and Country Kerry in Ireland), and and I came home with a handmade leather briefcase that I spotted in a shop in Siena, buying it (after dickering a little) from the artist who created it. My wife similarly went a little off the rails in a woolen shop in Killarney. Even while on vacation, we stayed in three-star places, ate at inexpensive restaurants, rented the smallest car possible, and flew RyanAir a few times!

I have a graduate degree in an English-related area. That helped me get the university job. I also do part-time proofreading online, based in Korea. I read somewhere that if you can make yourself indispensable to your employer, you will be justly rewarded. I applied that idea to the part-time job in two ways, first by making myself available to proofread at a moment's notice and second by turning in flawless papers by going over them a second time before submitting them as finished work. I always catch a few errors by doing this. I have also cultured a relationship with the organization who hired me, not an easy task considering that it's 100% online. Additionally and without going into too much detail, my business serves a niche here in Korea that apparently no one has thought of. It is just getting off the ground and still has room to grow. Finally, we have some investment income in the form of monthly dividends that add to our bottom line (presently, however, this income is in DRIPs). Those four things have put us financially where we are now. Pretty simple.

We hope to retire in 10 years - that's the goal. I have extrapolated out my income and savings habits to 2017 and most accounts predict that we will have a net worth of more than $1m by that time, even assuming only a 6% return on our investments and no increase in the price of our apartment, which seems unlikely. We have no children will not have any. Unless we buy a house sooner in the US (this is undetermined as yet), we plan to move there in 2017 (I will be 51), buy a place, and just live comfortably and simply. I plan to buy a nice car - probably used, and will seek to avoid taxes and fees on everything, which I expect will be our biggest expenses after retirement. After the move and after paying cash for the house, we expect to have over $600k to live on.

The crux of this blog is this: why does conventional wisdom say that you need 70% of your income in retirement?! What the heck do I need with $70,000 a year while all I want to do is relax with a nice view and enjoy a good book most days or take a pleasant walk? How much does that cost? In truth, we probably need $25k a year in today's money), for taxes and upkeep on the house and so that my wife can fly to Korea when she wants. We already have some passive income - this blog represents my efforts to secure more passive income, through communicating with others and learning about how to build it. Traditional sources that say you need 70% or more of pre-retirement income aren't helping me and the one other source that I've looked into extensively, rental income, seems to be a losing game at this stage: why anyone would buy a buy-to-rent property that is a lock to lose money every month considering taxes, fees and everything else is one of the great mysteries of life at this stage of my education. I have looked far and wide in the USA at buying a multi-unit building with a view to securing cash flow amounting to more than 6% of my initial outlay (not including fees) on a yearly basis. It seems impossible, so I am hoping that someone will comment and enlighten me as there must be something I am missing ... I understand the tax breaks that are involved with owing rental property but remember: I already have my taxes down to zero. What then? Why should I put $60k down on a 300k property that at best nets me $100 a month income and more than likely brings in nothing or results in a net loss? Seemingly people do this when a CD at 5 % would bring in $250 a month, which would pay my (future) property taxes. Like I said, it's a mystery to me.

So, the two main points of this blog are viable ways to secure passive income in retirement that don't involve a losing proposition (such as real estate right now) and understanding 'outside the box' strategies with which to maybe fund my retirement starting in 10 years considering the assets that I and my wife will have at that time. More to come...